7 Feasibility Study and Financing Plan v4.0

Boosting Maternal and Child Health in Wollega: Feasibility Study and Financing Plan
ORIO Development Phase
“Boosting Maternal and Child

Health in Wollega, Ethiopia”
7. Feasibility Study and Financing Plan
prepared by
Oromia Regional Health Bureau
and
MANGO Consult
Addis Ababa, June 2013 v4.0
Prepared by MANGO Consult in cooperation with the ORHB, v4.0 1

1. Introduction 3
2. 7.A.1 Commercial non-viability and financial feasibility 4
3. 7.A.2 Socio-economic welfare impact 5
4. 7.A.3 Assumptions MMR current vs. future 10
5. Project Management Unit 11

7. Feasibility Study and Financing Plan
7A. Feasibility Study
Introduction
The present project proposal includes documents 1 through 7 that deal with different aspects of this
projects’ feasibility.
Document 1 -the studies- contains on the one hand the (1a) reports on the visits to the health centres,
hospitals and the filled out questionnaires and on the other hand (1b) the preliminary research on how
to stimulate health seeking behaviour.
Report 1a contains a description of each health centre to be upgraded and shows that they all
function well, providing all services expected of these health centres, including a number of
BEmONC. All have a maternity, an outpatient department and various additional facilities. They all
have trained staff, basic equipment, support Family Planning and they all provide policlinic emergency
services and drugs. Although some of the centres may have some spare capacity in particular
departments and at certain times, overall they usually work at high capacity. Document 1a shows that
it is organizationally, structurally and physically feasible to provide the health centres with an
additional operating theatre block and a ward and staff housing, supply and install missing equipment
and that additional qualified staff can be incorporated.
Documents 1b and 6 that describe the preliminary research and the Health Promotion Plan
extensively elaborate on why a number of women do not make use of institutional delivery services
especially in the rural areas of Wollega and how the project will make sure that sufficient pregnant
women and young mothers will visit the health centres to make use of the services. It is therefore
feasible that the facilities function at an efficient level with their newly installed capacity.
Document 2 on the social and environmental impact assessment shows that the projects’
environmental impact is very limited and under control. All health centres have a functioning waste
management protocol. The construction of facilities does not on any of the chosen sites impact
negatively on the environment. The project is environmentally feasible.
Document 3 containing the technical medical plan shows that the project is practically feasible. It
ascertains the need for operating theatres, wards and staff housing, it describes the characteristics of
these constructions and it establishes the lists of equipment and furniture required and it sets down a
procurement plan and procedures and a comprehensive maintenance programme for the
implementation and part of the exploitation phases. And most importantly of all, while taking into
account the cost of materials and equipment, transport, commissioning and training, document 3
determines that the approved ORIO budget allows for 10 health centres to be upgraded to CEmONC
level, 9 newly constructed hospitals to be equipped with MCH equipment, 7 existing functioning
hospitals to be provided with missing CEmONC equipment, 130 health centres to be provided with a
standard package of BEmONC equipment and 800 health posts with selected equipment items.
Finally, documents 1a and 3 establish that the catchment areas of all the health centres selected for
an upgrade contain more than 65,000 people each.

Document 4 -the institutional plan- embeds the ORIO project in the overall efforts of the ORHB and
the FMOH, most eloquently described by the Sector Development Plans. It describes the institutional
arrangements and procedures that will allow the ORIO project to be executed correctly and shows the
feasibility of its management in the wider context of ORHB’s efforts.
Document 5 the -human resources plan- shows that enough health personnel will be available to staff
the upgraded health centres. As is clear from various documents, since several years the ORHB and
partners are training and will continue to train exactly the type of health staff required by the project in
the exploitation phase starting -in the case of the first health centres- in 2015 and 2016. It must
therefore be considered absolutely feasible to staff the project with adequate numbers of the right
specialists.
Considering the above six aspects of the project’s feasibility, the only analyses lacking are 7A1) the
commercial non-viability of the project and its financial feasibility, 7A2) the socio-economic welfare
impact of the project and 7B) its financing plan. These are the themes treated in the below lines of
this document.
7.A.1 Commercial non-viability and financial feasibility
Commercial non-viability
The only non-public health facilities in Wollega are two denominational mission hospitals (Gimbii and
Ayira) and a limited number of health centres that are all heavily subsidized by religious
organizations. As all health facilities are therefore at the moment either financed almost exclusively by
the state (ORHB and the woredas) or by religious organizations, no type of health facility is
commercially viable at this moment in time in Wollega. Considering that there are no concrete plans
to change the financing structure of the system in the foreseeable future (payment through insurance
funds is only started to be tested in some parts of Ethiopia), the only major influence on the
commercial viability of the health care system in the years to come could be derived from the actual
ORIO project itself.
Health facility Incremental staff / facilty Total

9 Hospitals under construction 40 360
10 CEmONC Health Centers 20 200
130 other Health Centers 2,5 295
Total 855
Operating costs are the expenses which are related to the operation of the health facility such as
salaries, consumables, spare parts. The incremental operational costs and benefits that the ORIO
project causes in the Wollega health system can be described as follows. On the cost side, there are
additional personnel costs in the 9 newly constructed hospitals (estimated at 40 additional MCH
related staff) and the 10 CEmONC upgraded health centres (20 more staff) as well as 295 additional
staff members in the existing 130 health centres, resulting in a total yearly additional salary bill of
approximately € 1 million. Other operational costs of the 19 additional CEmONC centres for the
supply of electricity, water and MCH essential drugs is estimated at € 1 million yearly. So the total

annual incremental operational cost caused by the project is assumed to be € 2 million. As all medical
care around delivery is free of charge in public health care facilities in Ethiopia by law, very little or no
income is expected to compensate for these higher costs.
No single maternal and child health care related part of the health system is commercially viable in
Wollega in 2013. The only discernible change in that pattern in the near future could be caused by the
ORIO project itself. As this project clearly augments the costs of the system without increasing its
income, the MCH related part of the system continues to be commercially non viable.
Financial feasibility
Oromia is a state with 30 million inhabitants. The ORHB runs more than 60 hospitals and supports
more than one thousand health centres and pays the salaries of more than 20.000 health workers.
The ORIO project supports various activities that the ORHB was planning to execute in the next years
including the building and equipping of hospitals, health centres and health posts and the pre and in-
service training of personnel.
The ORHB/ORIO project requires an investment on behalf of the ORHB of € 15 million. The
population of Wollega is almost five million and the average per capita income is estimated at € 300.
This means the investment made is equivalent to 1% of one year of Wollega’s estimated income.
When we consider however that the investment will be spread out over 4 years, the investment
signifies less than € 4 million on average per year and is comparable with only one quarter of one
percent of people’s income over a four year period.
In EFY 2004 (2011/2012), ORHB invested more than € 30 million in the whole of Oromia and more
than € 7 million in health infrastructure and equipment in Wollega alone. The investment required by
the ORIO project must therefore be considered to be feasible.
Incremental operational costs for the hospitals and upgraded health centres to be borne by the ORHB
are estimated at € 1 million per year. The planned operational budget for the EFY 2005 (2012/2013)
was almost € 7 million for that region. The incremental costs for the 130 health centres will be shared
by the ORHB and the Woredas. Overall, incremental operational costs are well within the bounds of
budgetary capabilities of the health authorities and represent just over one tenth of a percent of
people’s income.
7.A.2 Socio-economic welfare impact
The socio-economic welfare income of the entire project should outweigh its cost and generate a
‘welfare increase’ equivalent to at least a 10% interest rate on the investment. We analyse this by
calculating the eIRR for the entire project below.
The project consists of investments in 18 (existing and newly constructed) hospitals, 10 upgraded
health centres, 28 maternity waiting homes (Qelee Harmee in Oromifa), 130 other health centres, an
estimated 800 health posts, pre and in-service training, health promotion, maintenance, management
etc., It is therefore assumed that the array of efforts contributes to improved awareness, knowledge
and skills, enhanced triage, more ante natal care visits, a greater ability of health posts and health
centres to attend clean and safe vaginal deliveries, a large increase of the turnout at maternity waiting
homes, an important raise of skilled birth attendance, much more Caesarean sections and finally
fewer maternal and neonatal deaths and fewer injuries and (long term) disabilities.
eIRR for the entire project
Although advocacy efforts will have an effect on the whole of Wollega, the ORIO project is most
actively directed at 28 of the 59 woredas where it concentrates the investments. While the MMR in
Wollega is estimated to be 800 per 100,000 live births at this time (2013), rather complicated
calculations (presented in three contiguous tables at the end of this chapter) indicate that the
projected impact is a decrease in the MMR in these 28 woredas to 400, while the project is expected
to decrease the MMR to just below 600 in the 31 remaining woredas. The average MMR for the whole
of Wolega after the project’s implementation is estimated at 474 as can be seen in the table below:
Estimation of deaths avoided by project implementation:

Population in Wollega # 4.621.000
Population in 28 woredas # 2.837.000
Population in 31 woredas # 1.784.000
Birthrate now (2013) of pop. 3,60%
Births now #/ year 166.356
MMR now / 100.000 800
Maternal death per year now #/ year 1.331
Birth rate after project implementation of pop. 3,20%
Births after project #/ year 147.872
Maternal deaths after project #/ year 700
MMR future all Wollega / 100.000 474
Maternal deaths avoided per year #/ year 631
In order to calculate the value of a year of productive life, the following calculation is made:
Assumptions
GDPpc at official exchange rate U$ 500
Reduction because of rurality % 30%
U$/€ exchange rate # 1,30
GDPpc at official exchange rate € 269
Due to the rural settings of Wollega the productivity is supposed to be below the national average.
Therefore an ad hoc GDPp.c. deduction of 30% is made and the economic value of one productive
year in Wollega is therefore estimated to be equivalent to € 269.

Although there are additional benefits to be reaped from the project’s implementation, the following
are the more eloquent and most related to the maternal and child health objectives and the enhanced
capacity of the CEmONC facilities and HC’s and HP’s:
Estimated yearly welfare increase: # years saved welfare €

deaths avoided 631 30,00 5.093.209
neonates saved 3.784 2,00 2.037.284
disability avoided 3.153 20,00 16.977.364
other surgeries 40.000 0,20 2.153.846
outpatient attendance 300.000 0,05 4.038.462
health promotion 1.000.000 0,01 2.692.308
knowledge health workers 2.000 1,00 538.462
Total yearly welfare increase 33.530.934
Mostly rather prudent estimates are taken for the number of healthy productive years gained as well
as for the number of disabilities avoided (5 disabilities avoided per maternal death where some
studies indicate up to 8).
The above calculations indicate that -once the project is fully implemented- the welfare increase of the
population of Wollega could be in the order of some € 34 million. Where the effect of disabilities and
deaths of mothers evaded constitute the most prominent effects, the capacity to attend outpatients
more effectively and perform all sorts of other (non-maternal) surgeries is also important. Even if the
project can reach one fifth of the Wollega population (one million people) with health information that
would prolong their lives with 3 days per year (0,01 year), the yearly welfare effect of this would be
equivalent to € 2.7 M.
Computing these incremental benefits together with the depreciation on the investment over a 10
years period and the incremental operational costs assumed to kick in fully in year 2 while benefits
are assumed not to appear before year 4, the following results are obtained:
Simple calculation of eIRR:

year 1 2 3 4 10
Investment 10.000.000 10.000.000
10.000.000
Operational + deprec. costs 3.131.8213.131.821 3.131.821 3.131.821
Welfare income 33.530.934 33.530.934
Cash flow -10.000.000 -13.131.821 -13.131.821 30.399.113 30.399.113

eIRR 52,94%
With 53%, the internal economic rate of return confirms that this MCH project proposal definitely
describes one of the very best investments that Wollega and the ORHB could make in collaboration
with ORIO.

Sensitivity of the eIRR
At this high level of eIRR, there is really no factor that can influence it in such a way it would not reach
the 10% threshold. As high eIRR’s are always most influenced by delays, below we demonstrate how
the eIRR is affected by a delay in the effect of the project of one and even two years. The sensitivity
of the project to a 20% lower productivity is also shown as well as that to a 20% decrease in the
number of productive years gained.
Sensitivity of eIRR to different factors: eIRR

Delay of income with one year 39,11
Delay of income with two years 30,51
A decrease of GDPpc with 20% 43,78
A 20% decrease of years gained by mothers, neonates and disabled 46,48
All above factors combined 21,81
Even if we calculate the sensitivity of the project incremental welfare effect to a combined negative
effect of all three factors at the same time-which is very unlikely- the eIRR preserve a more than
healthy 22%.
Conclusions
The present ORHB/ORIO “Boosting Maternal and Child Health in Wollega, Ethiopia” project is not
commercially viable as the cost of health care and especially surgery is prohibitive to most inhabitants
of Wollega and no insurance schemes ensure reimbursements. No private entrepreneurs have yet
entered the health care market of Wollega and with the exception of 2 mission hospitals solely the
state offers maternal and child health care which is -by law- free of charge.
As the investment and operational costs of the project can be borne by the financially sturdy ORHB
and the woredas involved who are the direct beneficiaries, the project is financially feasible.
A simple eIRR analysis of the socio-economic welfare effect of the project using conservative
parameters confirms the high positive impact. As the high value of the economic internal rate of return
does not show any significant sensitivity to depressing factors (even if these would occur together),
we can safely conclude that the investment in the project constitutes a very worthwhile enterprise
from a welfare point of view for the population of Wollega.

7.A.3 Assumptions MMR current vs. future
Below please find the more detailed calculations of the effect of the project on maternal and child
health in the different woredas of Wollega:
Assumptions on the current situation:

MMR for women without complications 10
Calculated MMR for women with complications without SBA 7.150
MMR for women with complications in HC 200
MMR for women with complications in PH 40
Old situation for each 100,000:
Women without complication 85% 85.000
Women with complication 15% 15.000
Deliver at home 11% 11.000
Deliver at HC 2% 2.000
Deliver at PH 2% 2.000
Average MMR 800
Assumptions future situation in 28 woredas:

New situation for each 100,000:
Percentage of complications referred by triage 55%
-Of whom reach HC 10% 825
-Of whom reach CEmONC with maternity waiting home 90% 7.425
Complicated cases not found by triage 6.750
-Of whom reach HC anyhow 10% 675
-Of whom reach PH anyhow 10% 675
-Of whom deliver at home 80% 5.400
Average MMR 398

Assumptions future situation in 31 woredas:

New situation for each 100,000:
Percentage of complications referred by triage 10%
-Of whom reach HC 10% 150
-Of whom reach CEmONC with maternity waiting home 90% 1.350
Complicated cases not found by triage 13.500
-Of whom reach HC any how 20% 2.700
-Of whom reach PH anyhow 20% 2.700
-Of whom deliver at home 60% 8.100
Average MMR 594

ORIO Development Phase
“Boosting Maternal and Child

Health in Wollega, Ethiopia”
7.B Financing Plan
prepared by the
Oromia Regional Health Bureau in collaboration with
MANGO Consult
Addis Ababa, June 2013, v4.0

Introduction…………………………………………………… …………….14
7.B.1 Financial background information 16
7.B.2 Project investment budget 19
7.B.3 ORHB & ORIO deliverable time table 26
Annex A Capital Investment ORHB 30

7.B Financing Plan
Introduction
In this document 7.B the Financing Plan is outlined with the aim to confirm that it is clearly feasible for
ORHB and ORIO to co-finance the required investments for the Implementation and Exploitation
Phase. In 7.A section of this plan the project’s overall feasibility was described, summarizing and
confirming the viability and socio-economic impact.
Once the Development Phase deliverables have been accepted by ORIO and the procurement
process has been completed and approved, then ORIO will grant 50% of the investment value of the
project. The Oromia Presidency and the Oromia Regional Finance Bureau (backed by the FMOH)
confirmed that the Region will finance the remaining 50% of the investment as well as all incremental
operational costs. There are several opportunities for ORHB for realizing this:
1. ORHB could use straight forward budgetary means to finance the balance of the ORIO
project investment. The ORHB does in fact receive sufficient direct budgetary support from the
FMOH.
2. Ethiopia has put harmonized procedures in place, including the “Health Pooled Fund” (PF) to
finance the priorities under the HSDP IV. A joint financing arrangement for the MDG Pooled Fund
was set-up by the FMOH and in 2012 Partners such as DFID, the Spanish, Italian, Irish,
Australian and Dutch Development Cooperation, UNICEF, UNFPA and WHO signed up for this
Pool. So far a total of USD 326 million was disbursed in support of underfunded priorities such as
maternal and newborn health services.
Predictability of funding increased with the creation of the PF which facilities multi-year funding
and disbursing these funds in a timely way. The PF also enable the FMOH to allocate funds to
strengthen those health services most in need. European Union and World Bank funding are
expected to join the PF mechanism. For the current fiscal year the below funds are available, of
which Dutch Development Cooperation contributes € 4.4 million. As can be seen, maternal health
is the principal beneficiary of this PF.
MDG Performance Fund (million €) 2012/2013

Health extension program 3,8
Maternal health 54,9
Child health 11,1
Infrastructure 0,0
Medical equipment 24,5
Communicable diseases 15,5
Human resources 2,5
Other 2,3
Total 114,5

3. Commercial finance of this project is not considered as the MOFED is not using loans to
finance infrastructural investments in the public health sector.
4. Finally, the subject ORIO project is scalable and its implementation will cover at least 36
months meaning that in case of restricted financial space for the infrastructural investment a
match between available funds and project size could be applied in case necessary. As
mentioned in the fiscal year 2011/2012, capital investment by ORHB was in excess of € 30
million in the whole of Oromia and more than € 7 million in health infrastructure and equipment in
Wollega alone.
In this section of the Development Phase document, the key elements of the financial plan are
described. The financing scheme selected by the ORHB with support from the FMOH is budget
funding of the Region Oromia.

7.B.1. Financial background information
1.1 General financial information
Ethiopia is a land locked country of 1.1 million km2 with an estimated 84 million inhabitants. It is
surrounded by 7 countries. The capital is Addis Ababa. Over the past seven years, Ethiopia has made
substantive economic progress, recording more than 11% average GDP growth. This growth is
complemented by a strong performance in the agricultural sector, which accounts for 41% of GDP
and 85% of total employment. 10% of the workforce is employed in services while 5% work in
industries. Coffee is a major export crop. The agricultural sector suffers from frequent drought but
recent joint efforts by the Government of Ethiopia and donors have strengthened Ethiopia's
agricultural resilience, contributing to a reduction in the number of Ethiopians threatened with
starvation. Industry (construction and manufacturing) and the service sectors have an average growth
rate of 10-13%,. The construction sector has been stimulated by very large public sector investments
in infrastructure.
During this period, across the country, health service coverage and school enrolment at all levels
improved remarkably as human capital development also received significant consideration from the
government. With reference to infrastructural expansion, high quality asphalt roads and rural
community roads have been constructed all over the country and access to potable water has
improved greatly. The hydroelectric power generation capacity of the country has increased the
coverage to 41% in 2010 from 16% in 2005, telecommunication service coverage has already
reached 50% . The road density grew from 29km/1000 km2 in 2001 to 44.5km/1000km2 in 2010. The
average time taken to reach an all weather road has also been reduced to 3.7 hours in 2010 from
about 7 hours in early 2000.
By dedicating more than 60 percent of its total expenditure on social programmes involving
agriculture, health, education, water and road development during the last seven years, the
government has maximized its efforts and shown the highest level of dedication to bring about pro-
poor economic growth. The population living below the poverty line has declined to 29% in 2010
according to the Ethiopian Ministry of Finance and Economic Development.
The five-year Growth and Transformation Plan that Ethiopia unveiled in October 2010 presents a
government-led effort to achieve the country's ambitious development goals. The banking, insurance,
and micro-credit industries are restricted to domestic investors, but Ethiopia has attracted significant
foreign investment in textiles, leather, commercial agriculture and manufacturing. Under Ethiopia's
constitution, the state owns all land and provides long-term leases to the tenants; however land use
certificates are now being issued in some areas to stimulate the private sector development as
tenants can obtain more recognizable rights to continued occupancy, access credit and improve
production.
In 2011, official GDP stood at U$ 30.5 billion while GDP at purchasing power parity was estimated at
U$ 95 billion. Government expenditure stood at U$ 6 billion while revenues accrued to U$ 5.35 billion.
Public debt amounted to 42% of GDP. While GDP growth has remained high (at a real average of
almost 9% in the last three years), per capita income is among the lowest in the world at U$ 360 (U$
1,100 ppp).

Economic context
The economic context for the project is provided in earlier sections and highlighted again below.
Since 2004 growth in Ethiopia has been sustained, recording more than 11% nominal average
GDPpc growth. During this period, across the country, health service coverage and school enrolment
at all levels improved remarkably as human capital development also received significant
consideration from the government. With reference to infrastructural expansion, high quality asphalt
roads and rural community roads have been constructed all over the country and access to potable
water has improved.
The GDP per capita (US dollar) in Ethiopia was reported at U$ 374 in 2011, according to a World
Bank report published in 2012. GDP per capita is gross domestic product divided by midyear
population. The increase from U$ 120 in 2002 to U$ 374 per capita in 2011 confirms that the per
capita income for the Ethiopian population improved significantly.
The growth of the Ethiopian economy is forecasted to continue at a rate of 10.8% in 2013/14.
This continuous and two-digit high growth would place Ethiopia among the fast growing countries
in the world. The country’s merchandise exports have shown tremendous growth during the past
five years since 2002/03. The total value exports of goods increased from 0.48 billion birr in
2008/09 to 1.18 billion birr in 2011/12 registering overall growth of 146%. The 2012/2013 national
budget and five years data on major economic indicators are shown in the following table.
1.2 Highlights of 2012 national budget
The below table provides the headlines of the national budget for the year 2012/2013. Total Federal
revenue from taxes, assistance and loans reached U$ 5,74 billion. Total capital investment by the
Federal Government in 2012 amounted to € 2,27 billion and € 1.5 billion is budgeted to support the
Regions (such as Oromia in subsidies and budget support). For the achievement of the MDG’s in total
€ 830 million is reserved.

1. EXPENDITURE
Birr Birr
(A) FEDERAL RECURRENT EXPENDITURE
Administration & General Services 10.370.676.880
Economic Services 1.858.807.590
Social Services 6.969.093.200
Other Expenditures 7.612.470.000
Recurrent Expenditure Total 26.811.047.670
Euro equivalent € 1.117.126.986
(B) FEDERAL CAPITAL EXPENDITURE
General Development 1.120.207.842
Economic Development 36.581.458.250
Social Development 15.678.695.012
Other Expenditures 1.085.800.000
Capital Expenditure Total 54.466.161.104
(C) SUBSIDIES TO REGIONS 36.558.838.331
(D) SUPPORT FOR ACHIEVEMENT OF MILLENNIUM DEVELOPMENT GOAL 20.000.000.000
Federal Government Expenditure Total 137.836.047.105

2. FINANCING
(A) DOMESTIC REVENUE

Tax Revenue 87.092.800.000
Non-Tax Revenue 7.785.685.070
Capital Revenue 170.814.930
Domestic Revenue Total 95.049.300.000
(B) EXTERNAL ASSISTANCE
Multilateral Institutions 7.439.883.061
Bilateral Assistance 5.440.164.890
Highly Indebted Poor Countries Debt Relief Assistance 169.700.000
Protection of Basic Services 3.102.043.070
External Assistance Total 16.151.791.021
Euro equivalent € 672.991.293
(C) LOANS AND CREDITS
Multilateral Institutions 6.651.714.090
Bilateral Loan 1.321.774.000
Protection of Basic Services 5.037.405.188
Loans and Credits Total 13.010.893.278
Euro equivalent € 542.120.553
(D) DOMESTIC BORROWING 13.624.062.807
Total Revenue, Assistance & Borrowing 137.836.047.105


7.B.2. Project investment budget
In the table on the next page, the detailed investment budget is provided. An estimated investment
cost comparison per line item is given for the currency in which the investment will be made. On the
basis of the Development Phase activities, a more precise investment plan was calculated as detailed
in the Technical Medical Plan, Human Resources, Health Promotion and Institutional Plan.
Key differences between the Application Phase and Development Phase can be found in the mix of
construction and equipment. In the Development Phase it became clear that a larger investment in
new medical equipment is required. This is due to the fact that ORHB proposes to equip hospitals
under construction in Wollega for MCH with ORIO support as an integral part of the project. During
the site surveys it became clear that existing hospitals in Wollega have a gap in essential CEmONC
equipment items, which the project proposes to address as well for an enhanced referral system in
Wollega. As for construction: maternity waiting homes were added based on the findings in the
Development Phase. The total number of sites to become recipient of this project with CEmONC
capacity increased from 16 in the Application Phase to 28. In the Development Phase it became clear
that in order to support triage for maternal complication risks the supply of a limited number of basic
equipment items is required. A careful selection of items was made together with the Health
Extension manager of the ORHB. The equipment package to be provided to other health centers in
support of BEmONC was made on the basis of a gap analysis during the site surveys.
ORHB facilities in Wollega recipient of ORIO project

Presently functioning hospitals 9
Primary Hospitals under Construction 9
HC's to be upgraded to CEmONC 10
Other HC’s to receive BEmONC equipment 130
Health Posts to receive basic equipment 800
The costing of construction and equipment as well as management of the implementation was also
updated to reflect latest insights on required functionality and unit cost. Maintenance costs are
incorporated in the investment budget based on a per line item provision for (outsourced) labour and
parts for a period of 5 years following the warranty depending on the technology classification. This
will enable ORHB to outsource second and third line maintenance services for high technology items
to the integrator or local service organisation for a period of 5 years after the warranty has expired).
The cost for health promotion to stimulate awareness and demand for the services are detailed in the
Health Promotion Plan. A budgetary provision for technical assistance in the preparation of the ORIO
tender documents and liaison with the grant facility is included. The unforeseen cost remained at 5%.
There are no loan cost or export credit insurance premiums applicable as the required funds will be
provided 50% by the Dutch Government and 50% by the ORHB budget.

Table: ORIO project budget per line item
Overall project budget

Item unit price # €
ORIO Tender technical support 50.000 1 50.000
CEmONC Equipment for existing hospitals 100.000 7 700.000
MCH Equipment for hospitals under construction 636.999 9 5.732.995
Upgrade HC's constructing OT's, staff housing, ward 364.900 10 3.649.000
MCH Equipment for upgraded HC's to CEmONC 381.521 10 3.815.213
Construct 20 bed ward (Shambu and Gimbii hospital) 120.000 2 240.000
Equip 20 bed ward 62.354 2 124.708
Equip health posts 1.250 800 999.792
Equip other health centres for BEmONC 14.494 130 1.884.236
Blood bank equipment for collection and storage 85.000 1 85.000
Construct and furnish large maternity homes 147.000 8 1.176.000
Construct and furnish medium maternity homes 109.000 9 981.000
Construct and furnish small maternity homes 71.000 11 781.000
Refurbishment for upgraded HC's to CEMONC 5.000 10 50.000
Ambulances 50.000 15 750.000
Utilities (water, power, waste) 367.500
Maintenance hub workshops infrastructure 281.250
Maintenance spare parts medical equipment 1.748.041
Maintenance Construction 316.100
Maintenance utilities 55.125
Implementation 760.515
Logistic cost 446.408
Infrastructure, equipment and utilities sub-total 24.993.883
Training 1.506.458
Health promotion 1.300.000
Operational Research 150.000
Management 986.800
Subtotal 28.937.141
Unforeseen 5% 1.444.357
Total 30.381.498
The projected budget for the Implementation and Exploitation Phase at the time of the grant
application was € 30.219.200, which means the project overall budget has increased only 0.5% with
respect to the original budget.

As proposed during the Round Table meeting in November 2012 with the FMOH, ORHB and ORIO,
the local currency items are to be procured and realised by the ORHB in Birr. Due to the fact that the
Birr component is less than 50% of the total project budget a balance in € will be budgeted for and
paid by ORHB as calculated below. First the overall split in Birr and € procurement is made which
confirms that 57% of the total project investment budget will have to be procured in €.
Birr €
ORHB
ORIO & ORHB
Construction
All construction activities will be procured in the most cost effective way in Birr from local building
companies with experience and track record in constructing health facilities in rural areas in
conformity with Ethiopian standards. The tender for these works will be issued in Birr. This also holds
for the minor repair works (also called refurbishment) needed in the existing Health Centers to be
upgraded to CEmONC.
Equipment
All medical equipment procurement will be in € through an International Competitive Bidding process,
except for 50% of Health Post basic equipment (kerosene steriliser, delivery bed) to be procured in
Birr.
Ambulances
The 15 ambulances will be procured in Birr as part of a pooled procurement process to reduce unit
cost and to ensure standardization.
Utilities
Bore holes with solar pumps, back-up power generation facilities and incinerators will all be procured
in Birr. As a consequence, all maintenance cost for these utilities will also be paid for in Birr.

Implementation
As this concerns predominantly the installation, commissioning and user training for medium and high
technology items these services will have to be procured in €.
Maintenance
All spare parts for medical equipment will be procured in €, while maintenance cost provisions for
newly constructed buildings will be in Birr. The construction of the maintenance hub in Nekemte and
its satellite in Dembi Dolo will be paid in Birr.
Logistic cost
In order to minimize expenses in €, the shipment of medical equipment in bulk will be through the port
of Djibouti. Containers will be forwarded to this nearest seaport on CIF Incoterm. From there, inland
transportation will be taken over by Ethiopian forwarders which will be paid in Birr to clear goods in
Djibouti and deliver on DDU Incoterm basis to the final destination in the respective woredas.
Transport cost for construction materials are supposed to be fully included in the square meter cost
price.
Training cost
Except for cost to be made for specialists to provide part of the training program and for part of the
cost of the training committee managing and controlling the execution of the training program which
have to be paid for in €, all training cost will be in Birr.
Health Promotion
All cost related to stimulating awareness and demand for the MCH services will be made and paid in
Birr. Mobile phones can be procured locally in Birr.
Operational Research
All cost related to the design, execution and reporting on the Operational Research will be in Birr.

Table: ORIO project budget per currency per item
Overall project budget Paid for in Paid for in

Item # Birr €
ORIO Tender technical support 1 50.000
CEmONC Equipment for existing hospitals 7 700.000
MCH Equipment for hospitals under construction 9 5.732.995
Upgrade HC's constructing OT's, staff housing, ward 10 3.649.000
MCH Equipment for upgraded HC's to CEmONC 10 3.815.213
Construct 20 bed ward (Shambu, Gimbii hospital) 2 240.000
Equip 20 bed ward 2 124.708
Equip health posts 800 499.896 499.896
Equip other health centres for BEmONC 130 1.884.236
Blood bank equipment for collection and storage 1 85.000
Construct and furnish large maternity homes 8 1.176.000
Construct and furnish medium maternity homes 9 981.000
Construct and furnish small maternity homes 11 781.000
Refurbishment for upgraded HC's to CEMONC 10 50.000
Ambulances 15 750.000
Utilities (water, power, waste) 367.500
Maintenance hub workshops infrastructure 2 281.250
Maintenance spare parts medical equipment 1.748.041
Maintenance construction 316.100
Maintenance utilities 55.125
Implementation 760.515
Logistic cost 200.000 246.408
Infrastructure, equipment and utilities sub-total
Training 1.206.458 300.000
Health promotion 1.300.000
Operational Research 150.000
Management 411.400 575.400
Subtotal 12.414.729 16.522.412
Unforeseen 5% 620.736 823.621
Total 13.035.466 17.346.033
The estimated project financing needs for the investments in the first four years of the implementation
and exploitation of the project can be seen in below table. In this table cash annual outflows in both
currencies are projected to finally determine the € gap which is to be bridged from the ORHB budget.
Table: ORIO project budget per line item per year

Birr € Birr € Birr € Birr € €

Overall project budget 2014 2014 2015 2015 2016 2016 2017 2017 Total
Item 2006/2007 2006/2007 2007/2008 2007/2008 2008/2009 2008/2009 2010/2011 2010/2011
ORIO Tender technical support 50.000 50.000
CEmONC Equipment for existing hospitals 700.000 700.000
MCH Equipment for hospitals under construction 1.433.249 3.153.147 1.146.599 5.732.995
Upgrade HC's constructing OT's, staff housing, ward 912.250 2.736.750 3.649.000
MCH Equipment for upgraded HC's to CEmONC 953.803 2.098.367 763.043 3.815.213
Construct 20 bed ward (Shambu, Gimbii hospital) 240.000 240.000
Equip 20 bed ward 124.708 124.708
Equip health posts 499.896 499.896 999.792
Equip other health centres for BEmONC 942.118 942.118 1.884.236
Blood bank equipment for collection and storage 85.000 85.000
Construct and furnish large maternity homes 588.000 588.000 1.176.000
Construct and furnish medium maternity homes 245.250 490.500 245.250 981.000
Construct and furnish small maternity homes 195.250 585.750 781.000
Refurbishment for upgraded HC's to CEMONC 12.500 37.500 50.000
Ambulances 450.000 300.000 750.000
Utilities (water, power, waste) 91.875 275.625 367.500
Maintenance hub workshops infrastructure 281.250 281.250
Maintenance spare parts medical equipment 437.010 1.311.031 1.748.041
Maintenance construction 316.100 316.100
Maintenance utilities 55.125 55.125
Implementation 76.052 380.258 304.206 760.515
Logistic cost 20.000 24.641 50.000 61.602 70.000 86.243 60.000 73.922 446.408
Infrastructure, equipment and utilities sub-total 0
Training 241.292 60.000 241.292 60.000 361.938 90.000 361.938 90.000 1.506.458
Health promotion 195.000 325.000 390.000 390.000 1.300.000
Operational Research 50.000 100.000 150.000
Management 61.710 86.310 123.420 172.620 123.420 172.620 102.850 143.850 986.800
Subtotal 2.105.897 2.362.965 3.606.087 4.346.162 5.071.483 5.980.635 1.631.263 3.832.651 28.937.141
Unforeseen 5% 105.295 115.648 180.304 217.308 253.574 299.032 81.563 191.633 1.444.357
Total 2.211.192 2.478.613 3.786.391 4.563.470 5.325.057 6.279.667 1.712.826 4.024.284 30.381.498
The above table can now be translated into the € gap ORHB is ready to bridge. As can be seen in the
table below, over a period of 4 budget years this gap is estimated at € 2.15 million. Provided that
ORHB delivers on time the various Birr components it agrees to fund in the first 3 years, less than €
0.5 million has to be transferred upfront per year in € to the dedicated € ORIO project account from
the ORHB budget. Only in year 4 a more significant upfront € amount is to be transferred to this
project account, namely € 1.155.729. This € ORIO project account will serve as an assured funding
for disbursements to suppliers of goods and services procured in €. This means that ORIO should
only endorse procurement in € once the 50% ORHB contribution is secured and the necessary funds
are available at the project account. In case contracts are concluded with suppliers over a longer
period than 1 year additional upfront payments will be made by ORHB to assure the required funding
is in place.
To put the required ORHB contribution in perspective it is important to note that in EFY 2004
(2011/2012), ORHB invested more than € 30 million in the whole of Oromia and more than € 7 million
in health infrastructure and equipment in Wollega alone. The investment required by the ORIO project
is therefore considered to be feasible. The feasibility of providing additional amounts of up to € 1.5
million per year in € from the ORHB budget was also confirmed by representatives of the Oromia
Presidency and Oromia Regional Finance Bureau in the meeting on June 13 th 2013 at ORHB. The
MDG PF managed by the FMOH can serve as an additional source of € funding in case needed.
2014 2015 2016 2017 Total

2006/2007 2007/2008 2008/2009 2010/2011

€ gap 267.421 777.079 954.610 2.311.458
ORHB € cash out 133.710 388.539 477.305 1.155.729 2.155.284
In below graph the Euro equivalent Birr component as well as the Euro component (in million Euro) is
shown per year. As can be seen the Birr part is smaller than the Euro part in all years with a relatively
small difference in the first 3 (budget) years of the project implementation. In year 4 when most
construction is completed and ambulances have been supplied the Euro part is Euro 3,1 bigger than
the Birr part.
(Equivalent) Euros
Timing of the supply contracts will be such that a logical sequence will be applied. For instance
delivery of medical equipment will occur only after the construction has been completed and
accepted. User training will only be provided once the equipment is on site. Maternity waiting homes
will only be equipped once Health Promotion activities have started. Provisions will be included in the
supply contracts for changes in quantities and timing, of course within certain reasonable boundaries.

7.B.3 ORHB & ORIO deliverable timetable
In order to facilitate the financial management as well as the project management of the project with
its various interdependent components, the below deliverables timetables were made. In these tables,
the activity start date and expected date of termination is listed for both ORHB and ORIO.
Construction activities for the upgraded Health Centers are to be completed for 3 sites in 2014/2015
and the remaining 7 in 2015/2016. Maternity Waiting Homes are proposed to be built in blocks of 10-
bed facilities, allowing ORHB to spread the construction over various years and have a better
utilisation as demand increases over time. Training of staff both pre- and in-service will be performed
over the time period of 3 to 4 budget years.
Table: deliverables ORHB planning
Time table deliverables ORHB

Activity started Expected
termination
EFY 2007 (2014/2015)
Build 10 upgrades of health centres (including OT, ward, 5 staff 3 finished in
housing) in Limu, Sasiga, Kiramu, Lalo Asabi, Guliso, Babo 2008 and 7 in
Gembel, Jardaga Jarte, Amuru, Anfilo, Dale Sadi 2009
Build 20-bed ward in both Gimbi and Shambu 2008
Equip 800 health posts in 28 woredas 2007/2008
Build and furnish 16 10-bed units of MWH at existing 7 public 2007
hospitals
Buy 15 ambulances and deliver them to 15 out of 28 woredas 2007/2008
Build and furnish maintenance hubs at Nekemte & Dembi Dolo 2007/2008
Train and deploy 20 IESO's 2010
Train and deploy 20 anaesthetic nurses 2008
Train and deploy 75 midwives to be stationed in HC's with too 2008
few
Train 50 existing staff members from Diploma to BSc 2008
Train 15 existing staff members from BSc to MSc 2009
Provide 30 scrub nurses with in-service training 2007
Provide in-service refresher BEmONC training to 200 midwives/ 2007
health officers
Train 20 trainers on Triage 2007
Establish base line for operational research 2007
EFY 2008

(2015/1016)
Build and furnish 40 10-bed units of MWH at upgraded HC's 2008/2009
and new hospitals

Refurbish 10 upgraded health centres 2008/2009

Install utilities at upgraded health centres 2008/2009
Train and deploy 20 anaesthetic nurses 2009
Train and deploy 75 midwives to be stationed in HC's and new 2009
CEmONC centres
Train 50 existing staff members from Diploma to BSc 2009
Train 15 existing staff members from BSc to MSc 2010
health officers
Provide in-service training on Triage to 400 HEW/ nurses/ 2008
midwives
EFY 2009 (2016/2017)
Build and furnish 25 additional 10-bed units of MWH at 2009/20010
upgraded HC's, new and old hospitals
Train and deploy 25 midwives to be stationed in HC's and new 2010
CEmONC centres
health officers
Train 60 trainers on Triage 2009
Provide in-service training on Triage to 1600 HEW/ nurses/ 2010
midwives
Provide 40 facility managers and deputies with in-service 2009
training
EFY 2010 (2016/2017)
Perform operational research 2010
Ongoing
Maintain buildings/ maintain utilities/
Transport and deliver goods mentioned above
Execute health promotion (to be planned later)
Project tendered, committees established, management
functioning
The ORIO contribution is proposed to start with financial support for equipping 7 exisiting hospitals
with essential CEmONC equipment. Provision of MCH equipment to the Hospitals currently under
construction is projected to take place in the period 2014-2016. Upgraded Health Centers will only be
equipped with new MCH equipment once the construction is completed by ORHB.
Table: deliverables ORIO planning

Time table deliverables ORIO support

Activity started Expected
termination
date
2014 (EFY 2007/2008)
Fill equipment gaps at 7 existing public hospitals in Guto Gida (Nekemte), Gida 2014
Ayana, Nejo, Gimbi, Begi, Horo (Shambu), Dembi Dolo
MCH equipment installed in 10 new hospitals at Jimma Arjo, Sibusire, Mene Sibu 2014-2016
(Mendi), Nole Kaba, Abe Dongoro, Guduru, Dale Wabara (Kake), Gidami, Hawa
Galan, Abay Chomen
Equip 800 health posts in 28 woredas 2015
Fill equipment gaps at 130 existing health centres 2015
2015 (EFY 2008/2009)
Provide MCH equipment for 10 upgraded health centres at Limu, Sasiga, Kiramu, 2015/2016
Lalo Asabi, Guliso, Babo Gembel, Jardaga Jarte, Amuru, Anfilo, Dale Sadi
Equip wards at Gimbi and Shambu 2015
Provide blood bank equipment for collection and storage 2015
Ongoing
Transport, install, implement equipment; provide user training
Maintain equipment
Provide international support to training
Man committees
Man Project Advice and Compliance Office
Provide full PMU
The Project Advice and Compliance Office (PACO) will support the planning, execution and control
overview of these deliverables. The PACO will actively liaise between the project related organisms
and ORIO in The Hague and has to report to ORIO on the compliance of immediate, intermediate and
long term project deliverables such as the ones listed below. In the context of this task, the PACO will
also connect to the different departments of the ORHB represented in the Project Management
Board. It is envisaged that the PACO participates in Steering Committee meetings and in most
encounters of the Board and the two thematic Committees. The PACO maintains continuous contact
with all organisms involved in the guidance of the project, facilitating its correct execution including
the timely disbursement of ORIO funds and compliance with ORIO rules and policies.

In below table the cash outflow planning for the delivery of the various components is summarized. As
can be seen Birr and Euro deliverables occur in parallel and will take 36 months from the date of
contract signing. Although the project components are interrelated, most components are scalable.
Year 2013 2014 2015 2016 2017

Quarter 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
Project components
Dev Phase approval
Grant agreement signing
Tender: pre-qualification
Tender: request for proposal
Contract signing
Construction 2 20 bed wards
Construction upgraded HC
Construction maternity homes
Equipment existing hospitals
Equipment MCH new hospitals
Equipment CEmONC HC
Equipment other HC & HP
Training
Project Mngmt
Maintenance
Health Promotion
Operational Research
Ethiopian Fiscal Year 2.007 2.008 2.009 2.010

Annex A
EFY 2004 EFY 2005

Total public health budget for Wollega Area (Birr) (2011/2012) (2012/2013)
Investments infrastructure/ equipment etc: Utilized Plan
FMOH 148.376.341,08 161.910.432,92

ORHB + all Oromia
zones 162.801.575,55 86.267.312,85
all Oromia woredas - -
Aid 15.598.440,00 14.780.744,00

Sub-total capital
investments Oromia 326.776.356,63 262.958.489,77
1 Euro = 24 Birr

7 Feasibility Study and Financing Plan v4.0

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Boosting Maternal and Child Health in Wollega: Feasibility Study and Financing Plan

ORIO Development Phase

“Boosting Maternal and Child

Addis Ababa, June 2013 v4.0

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 1

2. 7.A.1 Commercial non-viability and financial feasibility 4

3. 7.A.2 Socio-economic welfare impact 5

4. 7.A.3 Assumptions MMR current vs. future 10

5. Project Management Unit 11

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 2

7. Feasibility Study and Financing Plan

7A. Feasibility Study

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 3

7.A.1 Commercial non-viability and financial feasibility

Health facility Incremental staff / facilty Total

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 4

7.A.2 Socio-economic welfare impact

eIRR for the entire project

Estimation of deaths avoided by project implementation:

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 6

Estimated yearly welfare increase: # years saved welfare €

Simple calculation of eIRR:

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 7

Sensitivity of the eIRR

Sensitivity of eIRR to different factors: eIRR

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 8

7.A.3 Assumptions MMR current vs. future

Assumptions on the current situation:

Assumptions future situation in 28 woredas:

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 9

Assumptions future situation in 31 woredas:

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 10

ORIO Development Phase

“Boosting Maternal and Child

Addis Ababa, June 2013, v4.0

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 11

7.B.1 Financial background information 16

7.B.2 Project investment budget 19

7.B.3 ORHB & ORIO deliverable time table 26

Annex A Capital Investment ORHB 30

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 12

7.B Financing Plan

MDG Performance Fund (million €) 2012/2013

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 13

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 14

7.B.1. Financial background information

1.1 General financial information

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 15

1.2 Highlights of 2012 national budget

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 16

Federal Government Expenditure Total 137.836.047.105

(A) DOMESTIC REVENUE

Total Revenue, Assistance & Borrowing 137.836.047.105

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 17

7.B.2. Project investment budget

ORHB facilities in Wollega recipient of ORIO project

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 18

Table: ORIO project budget per line item

Overall project budget

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 19

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 20

Prepared by MANGO Consult in cooperation with the ORHB, v4.0 21

Table: ORIO project budget per currency per item

Overall project budget Paid for in Paid for in