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OVERVIEW OF PRIVATE ACTORS IN THE MOZAMBICAN HEALTH SYSTEM AND RAPID ASSESSMENT OF THE SUPPLY CHAIN TECHNICAL REPORT APRIL 2019 This publication was produced for review by the United States Agency for International Development. It was prepared by ThinkWell for Management Systems International (MSI), A Tetra Tech Company

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Page 1: OVERVIEW OF PRIVATE ACTORS IN THE MOZAMBICAN HEALTH … · OVERVIEW OF PRIVATE ACTORS IN THE MOZAMBICAN HEALTH SYSTEM AND RAPID ASSESSMENT OF THE SUPPLY CHAIN TECHNICAL REPORT APRIL

OVERVIEW OF PRIVATE ACTORS IN THE MOZAMBICAN HEALTH SYSTEM AND RAPID ASSESSMENT OF THE SUPPLY CHAIN

TECHNICAL REPORT

APRIL 2019 This publication was produced for review by the United States Agency for International

Development. It was prepared by ThinkWell for Management Systems International (MSI), A Tetra

Tech Company

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MOZAMBIQUE MONITORING AND EVALUATION MECHANISM AND SERVICES

MSI Agreement No: 6110000.01.18001.BPA.02

ThinkWell Prime Contract/Task Order #: AID-656-c-17-00002

Mozambique Monitoring and Evaluation Mechanism Services (MMEMS)

DISCLAIMER

The authors’ views expressed in this report do not necessarily reflect the views of the United States

Agency for International Development or the United States Government.

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CONTENTS

ABBREVIATIONS ................................................................................................. III

EXECUTIVE SUMMARY ........................................................................................ 1

INTRODUCTION AND OBJECTIVES OF THE REPORT ................................ 6CONTEXT ................................................................................................................................................................. 6REPORT OBJECTIVES ............................................................................................................................................ 6

METHODOLOGY AND LIMITATIONS .............................................................. 7METHODOLOGY ................................................................................................................................................... 7LIMITATIONS ........................................................................................................................................................... 9

HEALTH SYSTEM CHALLENGES AND OPPORTUNITIES FOR THE PRIVATE SECTOR ................................................................................................ 10

LANDSCAPE OF HEALTH SECTOR ACTORS IN MOZAMBIQUE ............ 12PUBLIC SECTOR ACTORS................................................................................................................................. 13DEVELOPMENT PARTNERS .............................................................................................................................. 14PRIVATE SECTOR ACTORS .............................................................................................................................. 14PUBLIC-PRIVATE DIALOGUE: STATUS AND OPPORTUNITIES .......................................................... 15

PUBLIC-PRIVATE HEALTH SERVICE DELIVERY .......................................... 17PUBLIC-PRIVATE DISTRIBUTION OF HEALTH FACILITIES ................................................................... 17USE OF HEALTH SERVICES ............................................................................................................................... 18

MARKET SYSTEM ANALYSIS OF THE MOZAMBICAN SUPPLY CHAIN 24PUBLIC-PRIVATE MIX IN MOZAMBICAN SUPPLY CHAIN .................................................................... 24MARKET SYSTEM ANALYSIS OF MOZAMBICAN DRUG SUPPLY CHAIN ........................................ 28

WAY FORWARD .................................................................................................. 38CATALYZE PUBLIC-PRIVATE DIALOGUE .................................................................................................... 38STRENGTHEN THE COLLECTION, ACCESS AND USE OF STRATEGIC INFORMATION ......... 38PROFESSIONALIZE PUBLIC PROCUREMENT ............................................................................................. 39STRENGTHEN THE TRANSPORT MARKET ................................................................................................ 40

ANNEX 1: MARKET-BASED ANALYTICAL FRAMEWORK ......................... 41

ANNEX 1I: CATEGORIZATION OF HEALTH FACILITIES ......................... 43

ANNEX 1II: DATABASE INFORMATION ........................................................ 44

ANNEX IV: PERSONS INTERVIEWED ............................................................. 45

ANNEX V: WORKSHOP ATTENDANCE LIST ............................................... 46

ANNEX VI: BIBLIOGRAPHY .............................................................................. 48

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ABBREVIATIONS

A2A Assessment to Action

AES Anuário Estatístico de Saúde (Health Statistical Yearbook)

AMTRAMO alternative and traditional medicine

ANAFP Associação Nacional das Farmácias Privadas

(National Association of Private Pharmacies)

ANC antenatal care

ARV antiretroviral

CIF cost of insurance and freight

CIP Center for Public Integrity

CMAM Central de Medicamentos e Artigos Medicos (Central Medical Store)

CSO civil society organization

CSR corporate social responsibility

CTA Confederação das Associações Económicas

(Confederation of Economic Associations)

DAF Direção de Administraçao e Financas

(National Directorate for Administration and Finance)

DDC delivery duty contract

DHIS District Health Information System

DHS Demographic Health Survey

DNAM Direcção Nacional de Assistencia Me dica (National Directorate for Medical Care)

DNF Direcção Nacional de Farmácia (National Directorate for Pharmacies)

DPC Direcção de Planificação e Cooperação

(National Directorate for Planning and Cooperation)

DPS Direcção Provincial de Saúde (Provincial Health Directorate)

EPI Expanded Program on Immunization

FBO faith-based organization

FP family planning

GAVI Global Vaccine Initiative

GFF Global finance facility

GFTAM Global Fund to Fight Tuberculosis and Malaria

GHSC-PSM USAID Global Health Supply Chain Program – Procurement and Supply

Management

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GRM Government of the Republic of Mozambique

HRH Human resources for health

ICAP International Center for AIDS Care and Treatment Programs

IMASIDA Inquerito de Indicadores de Imunizacao, Malaria e HIV/SIDA

(Survey on Indicators of Immunization, Malaria and HIV / AIDS)

IMR Infant mortality rate

INE Instituto Nacional de Estatística (National Statistical Institute)

INGO international nongovernmental organization

IOF Inquérito sobre Orçamento Familiar (Family Budget Survey)

MCH Maternal and child health

MCTESTP Ministério da Ciência e Tecnologia, Ensino Superior e Técnico Profissional

(Ministry of Science, Technology, Higher and Technical Vocational Education)

MEF Ministério da Economia e Finanças (Ministry of Economy and Finance)

MISAU Ministério da Saúde de Moçambique (Mozambican Ministry of Health)

MM4H Managing Markets for Health

MMEMS Mozambique Monitoring and Evaluation Mechanism Services

MOH Ministry of health

NCD Noncommunicable disease

NGO Non-governmental organization

OECD Organization for Economic Cooperation and Development

PELF Plano Estrategico da Logistica Farmaceutica

(Pharmaceutical Logistics Strategic Plan)

PEPFAR U.S. President’s Emergency Plan for AIDS Relief

PESS Plano Estrategico do Sector da Saude (Health Sector Strategic Plan)

PFP Private for-profit

PHC Primary health care

PLASOC-M Plataforma da Sociedade Civil Para Sau de (Platform of Civil Society for Health)

PMI President’s Malaria Initiative

PNFP Private not-for-profit

PPD Public-private dialogue

PPM Public-private mix

PPP Public-private partnership

PSA Private sector assessment

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RMCH Reproductive maternal and child health

SADC Southern African Development Community

SDSMAS Serviços Distrital de Saúde, Mulher e Acção Social

(District Services for Health, Women and Social Action)

SHOPS Strengthening Health Outcomes through the Private Sector

SKU Stock-keeping unit

SWOT Strengths, weaknesses, opportunities and threats

THE Total health expenditure

UK-DFID UK Department for International Development

UN United Nations

UNFPA United Nations Population Fund

UNICEF United Nations International Children's Emergency Fund

USAID United States Agency for International Development

WHO World Health Organization

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EXECUTIVE SUMMARY

With a rapidly expanding population and the specter of decreasing external assistance for health on the

horizon, Mozambique needs to consider new ways to provide health services and products. Progress in

coverage and health outcomes may be at risk, and the predominantly public system still struggles to provide

quality health services to the whole population.

Despite the absence of a public sector strategy to engage the private sector in the health system,

businesses are increasingly active in various health-related markets including service delivery, retail

pharmacies and transport of health commodities for government entities through public tenders.

Simultaneously, interest in the private sector is increasing, as evidenced by USAID’s recent Private Sector

Engagement Strategy and by the call of the Ministry of Health (MISAU) for a public-private framework in

the Health Sector Strategic Plan (PESS). This evolving landscape provides opportunities for USAID, MISAU,

other partners and private sector representatives to engage more deliberately and consistently, while

pursuing shared interests that align with the needs and goals of the Mozambican health system.

The purpose of this report is to share findings about the private sector in Mozambique’s health system

based on a rapid assessment conducted by Mozambique Monitoring and Evaluation Mechanism Services

(MMEMS). The report presents information and insights drawn from interviews of key stakeholders, focus

group discussions, survey data and review of documentation. These data were analyzed using a market

analysis framework that considers suppliers, buyers, government regulation and market bottlenecks.

Preliminary findings from the rapid assessment informed a MMEMS workshop about supply chains in

December 2018. This report includes stakeholder input from that meeting.

The report presents a landscaping of the health system as it relates to the private sector, including issues

related to public-private engagement. It then focuses on the service delivery market and, to a greater

extent, on the supply chain markets.

Key Findings: Landscaping

Private sector representatives are active in all areas of the health system, including

service delivery, human resource training and production and distribution of drugs. They also

provide key support functions such as finance, transportation and information technology services.

The table that follows lists challenges from the PESS and poses possible points of entry for the private sector based on the MMEMS stakeholder interviews, focus group discussions, the December workshop and regional experiences.

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Health System Challenges and Opportunities for Private Sector Role

Challenges Possible private sector contribution

Low investment in urban health

facilities

Can private health facilities in urban areas be leveraged to address MISAU

investment constraints? Can government prioritize public investments

to focus on the poorer segments of the population while

incentivizing wealthier segments to seek care with a private

provider?1

Noncompliance of quality

standards in both public and

private health facilities

Can MISAU bring together private provider groups to agree on simple

quality tools to establish minimum standards and a process for adherence?

High costs for management and

administration of public health

facilities and programs

Can the private sector share its expertise in efficient management process

and cost-reduction strategies? Can MISAU outsource nonmedical activities

to the private sector to reduce cost and improve efficiency?

Low productivity of public health

staff and inefficient delivery of

primary health care (PHC)

Can MISAU contract private providers to deliver cost-efficient PHC

services? Can the private sector share its expertise with MISAU to deliver

more efficient PHC services?

Limited access to health facilities,

particularly in rural areas

Can private sector providers deliver PHC closer to underserved

population groups?

Poor quality data produced for

policy and planning

Can private sector actors report data more frequently to MISAU? Can

MISAU provide the private sector with data not only on the public sector,

but also on the private sector? Is there a role for an entity outside of

MISAU to consolidate and analyze data to inform public and private actors?

Capacity to train health

professionals

Can government open MISAU or donor-sponsored clinical training2 to

private providers to improve the quality of care in the private sector?

Capacity in planning and in

monitoring and evaluation

Can government encourage the private sector to organize into private

sector representative groups? Can MISAU systematically include private

sector representatives in health policy and planning to strengthen

regulation and oversight of all health actors?

Conducive context for favorable

partnerships

Can private sector representative groups work with the government

to identify partnerships that will help address health challenges and

system gaps?

1 World Bank data show that public health systems disproportionately benefit middle- and upper-income groups compared to the poorest income quintiles. In response, many countries are prioritizing public health spending to benefit the poorest of the poor, leaving wealthier segments of the population to seek care in the private system. 2 Donors invest heavily in training public health staff in a variety of clinical and health delivery areas (both pre-service and in-service trainings). As a first step to improve quality in the private sector, several health ministries in East Africa have opened donor training to include private providers in the same catchment areas as public providers that are being trained. These ministries allocate a number of slots for private providers who meet certain eligibility criteria (e.g., reaching underserved populations, expanding key health services like family planning, HIV/AIDS, etc.).

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Status of public-private dialogue

MISAU has not yet defined its strategy to engage with the private sector. However,

the head of the National Directorate for Planning and Cooperation (DPC) expressed interest in

better understanding the private sector to support its objectives and the PESS strategy, and to

engage senior leadership from various departments (Permanent Secretary, Public Health and the

National Directorate for Medical Care, as well as DPC).

MISAU collects limited information on private practices, mainly restricted to licensing.

Even when MISAU consults the private sector for decision-making, it does so in a non-structured

way. Private sector actors perceive a more inclusive process as essential, especially to design the

decrees and diplomas that implement new laws.

Initial dialogue across private actors working in the supply chains during the December workshop

catalyzed interest for improved communication and structuring of the sector.

Key Findings: Service delivery market

Use of private health facilities and providers is low, even for such high-priority

services as reproductive, maternal and child health. Among the surveyed population who

visited a health facility, more than 90 percent visited a public health facility and 4 percent visited a

private facility.

Supply and demand for private health services is present in all provinces but

concentrated in urban areas. Maputo City is home to 141 of the nation’s 224 private facilities.

Highest demand for private health services is in Maputo City (12 percent), Maputo Province

(11.3 percent) and Cabo Delgado (8.0 percent).

Use of private services is greater in high-income groups, but is still very low compared to

neighboring countries.

Oversight of the private provision of services is limited. The current regulation of private

practice in Mozambique is from 1992 and is considered outdated. The Private Medical Unit based

in the National Directorate for Medical Care (DNAM) is small and lacks capacity to properly

monitor and supervise private practice.

Key Findings: Drug Supply Chain Market

Two parallel drug supply chains are active in Mozambique; one serves the public sector

and one serves private clinics and pharmacies. No coordination exists between the two.

Private actors are active in the three sub-markets of the drug supply chain:

1. Production: Two local manufacturers produce drugs in the country.

2. Wholesale: 183 private importers represent or buy from international manufacturers and

sell to the public and private sector buyers, and 87 private companies handle transport.

3. Retail: More than 845 retail pharmacies operate throughout Mozambique.

Private transportation of drugs and commodities is evolving rapidly. The Central de

Medicamentos e Artigos Medicos (CMAM, the Central Medical Store) contracts out all

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transportation to provincial warehouses. Some provinces and implementing partners also contract

private companies to reach “last-mile” distribution points.

Several factors constrain the growth of retail pharmacies, especially in rural areas,

including regulation requiring at least 7,000 people in the catchment area; the limited number of

licensed pharmacists, even in urban areas; and public sector supply of low-priced drugs to all

consumers, regardless of income.

Insufficient information about and regulation of private transport companies hampers

public and private buyers’ ability to evaluate and manage suppliers (transport companies); this

includes pricing information, as well as a list of transport companies and their capabilities, such as

cold chain. No regulation sets the standards for health commodities transportation.

The National Directorate for Pharmacies (DNF) has limited capacity to enforce its current

regulation. With limited resources and staff, the DNF is not able to conduct necessary

supervision of the pharmacy sector.

Key Findings: Bottlenecks relevant to both service delivery and drug supply chain

Complex public tendering processes and delays in payment constrain private sector

engagement with the public sector and limit entry of new companies, as larger companies are

better able to cope with delayed payments from the government.

All private actors struggle to access capital to expand their business due to high

interest rates in the banking sector. High interest rates also compound the risk of delayed

payment because they raise the cost of financing accounts receivables. Banks also typically require

a financial guarantee to extend credit.

The rate of poverty is declining, but consumers’ ability to pay for private services or

products is limited, as the poverty rate stands at 48 percent of the population.

WAY FORWARD

Ideas generated by key stakeholders and MEMMS illustrate a range of areas where USAID, government,

businesses and other partners can harness the private sector to improve health system performance and

outcomes.

Catalyze public-private dialogue: Moving forward on any ideas will require dialogue and coordination.

1. Support the private sector to continue to form membership organizations.

2. Establish an umbrella organization that brings private sector segments together; for instance, a

health market group in the Confederation of Economic Associations (CTA).

3. Increase understanding within MISAU’s leadership on the private sector and facilitate the

creation of a cross-department task force to build government capacity to engage.

4. Form a technical advisory group, including public and private stakeholders, to define and steer

further research and dialogue on public-private partnerships for health.

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Strengthen strategic information: Accurate data on both the public and private sectors, insightful

analysis and easy access will inform dialogue and coordination, as well as strategies for actions.

1. Support market actors to collect and share market information among themselves.

2. Facilitate a discussion between public and private sectors to improve data sharing:

a) Identify constraints to private sector reporting; make it easier for businesses to share data.

b) Support MISAU to analyze and present data on the private health sector.

c) Support government units to better communicate with the markets they most affect. For example,

it was suggested that MISAU/CMAM develop an annual plan for the drug supply chain.

d) Conduct analysis on market scope, size, concentration, trends and constraints to growth.

3. Conduct a deeper market analysis of the drug supply chain to build on this rapid assessment and

the momentum of the MMEMS workshop.

Professionalize public procurement: Stakeholders engaged in the drug production and wholesale

markets all cited challenges in responding to government procurement of drugs.

1. Act together to reduce payment times and government compliance with contractual

terms.

2. Work with the banking sector on options to facilitate lines of credit to cope with late

payments.

3. Engage the private sector in tender design through a bid conference.

4. Engage the private sector to update the catalogue of equipment, medicines and other supplies.

5. Enhance capacity within MISAU to design tenders to reflect the precise requirements of the

end user.

6. Conduct market assessments prior to writing the terms of reference for tenders.

7. Establish external audit procedures to verify compliance with public procurement regulations.

Strengthen the transport market.

1. Build the capacity of private transporters and of logistics and customs companies to address special requirements of pharmaceutical logistics to ensure protocols are followed (cold chain, security, insurance).

2. Improve access and transparency of information about suppliers of transport and logistics services by developing a registry of companies and their capacities (e.g., cold chain, storage).

3. Support the DNF to develop policies and balanced approaches to regulate the transportation market for health.

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INTRODUCTION AND OBJECTIVES OF THE REPORT

CONTEXT

Mozambique faces a complex set of public health challenges, including a widespread HIV epidemic

(13 percent prevalence), a high incidence of malaria and unacceptably high maternal mortality rates

(489/100,000). To respond to these challenges, the Government of the Republic of Mozambique (GRM)

receives significant support from several international donors, including the Global Finance Facility (GFF),

Global Fund to Fight Tuberculosis and Malaria (GFTAM), the Global Vaccine Initiative (GAVI) and the U.S.

President’s Emergency Plan for AIDS Relief (PEPFAR) and President’s Malaria Initiative (PMI). Indeed,

international donors fund almost half (48.9 percent) of total health expenditures of the Mozambican public

health system and contribute a higher level of funds than the GRM does (46.35 percent).

Heavy reliance on development partners to finance the Mozambican health system has prompted the

GRM, the United States Agency for International Development (USAID) and other stakeholders to

examine domestic resources, including the private health sector. In recent years, the private sector

generally and its health segment specifically have grown rapidly, especially in urban areas. To date, the

USAID, GRM and other actors have not fully tapped into the private sector to complement existing efforts

to deliver health care to the Mozambican population.

To assist the GRM, USAID, the private sector and other stakeholders in exploring this option, USAID

contracted Mozambique Monitoring and Evaluation Mechanism Services (MMEMS) to facilitate a

preliminary public/private workshop on engaging the private sector in health care provision. To provide a

conceptual foundation for that event, MMEMS was also asked to conduct a rapid assessment of the

landscape of private health sector actors and gather preliminary information on the private actors in the

drug supply chain, an area of specific interest to the Mozambican Ministry of Health (MISAU). The analysis

was conducted in the months before the December 10 workshop.

Historically, the government has appeared to take a cautious approach to market development, perhaps

because health care in Mozambique has been considered a basic right that many believe should be free.

The hope is that information and dialogue will help private and public stakeholders identify opportunities

to engage so they can address health system challenges and improve health outcomes in Mozambique.

REPORT OBJECTIVES

The primary purpose of this report is to provide an overview of the private health sector, some of the

challenges it faces and situations when the private health sector has a comparative advantage to help

MISAU address some of its most longstanding and pressing health issues. The report also identifies

opportunities to improve dialogue between public and private health actors and their partners. The

information is intended to ensure that USAID, MISAU and other actors can have informed and productive

discussions on the engagement of the private sector in the health system.

The information and insights presented are drawn from interviews of key stakeholders, focus group

discussions, review of documentation and survey data and the MMEMS workshop on December 10, 2018.

The report presents a landscaping of the health system as it relates to the private sector, including issues

related to public-private dialogue. It then focuses on the service delivery market and, to a greater extent,

the drug supply chain markets.

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METHODOLOGY AND LIMITATIONS

METHODOLOGY

The team employed a mixed-methods approach to collect information on the Mozambican health sector,

using both quantitative and qualitative approaches. The team used two complementary platforms to

organize and analyze the data collected:

An adaptation of USAID’s Assessment to Action (A2A) approach3 to assess the private health

sector. This approach describes how to conduct a comprehensive private sector assessment (PSA).

The market-based Managing Markets for Health4 approach developed by the World Bank in

partnership with GFF.

The qualitative information was collected only from actors from the supply chain, while the quantitative

information was collected for all private actors.

ASSESSMENT TO ACTION (A2A)

USAID’s Strengthening Health Outcomes through the Private Sector (SHOPS) project developed the

Assessment to Action Guide to gauge the private health sector’s potential in a given health system. The

handbook describes how to carry out a comprehensive PSA and suggests strategies to encourage greater

buy-in for the PSA’s recommendations to engage relevant stakeholders. By providing key data on the size,

scope and activities of the private sector, the PSA assists local stakeholders and development partners to

devise strategies, make decisions and design programs to maximize private sector contributions to health.

Figure 1 shows the five steps of a comprehensive PSA process; the handbook asserts that this process

requires approximately one year to engage health system stakeholders. A wide-ranging PSA often entails

original data collection and analysis of existing population-based data sets. As this was only the first step

in a much longer process, the team reduced the scope of the PSA process to fit the planned timeframe.

FIGURE 1: ASSESSMENT TO ACTION STEPS

To plan the rapid assessment, the team identified data sources and selected public and private

stakeholders to be interviewed.

To learn about the private health sector, the team reviewed the literature and conducted stakeholder

interviews. The team met with a diverse range of public and private sector individuals, mostly from Maputo.

The team used semi-structured interview guides in focus groups or one-on-one settings, interviewing a total

of 27 stakeholders. Annex III lists the sources of information, data collected and stakeholders interviewed.

3 https://assessment-action.net4 https://m4h.sps.ed.ac.uk/

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MARKET-BASED ANALYTICAL FRAMEWORK

To analyze the information on the public and private sectors in Mozambique and present main findings,

the team used a market-based analytical framework, synthesized in Figure 2.

FIGURE 2: MARKET-BASED ANALYTICAL FRAMEWORK

The report gathers preliminary barriers of the three sub-markets of drug supply chain: production, wholesale

and retail, though the majority of the information is on the wholesale market. Specifically, this approach:

Frames situation analysis in a market (e.g., buyers and sellers interacting).

Draws attention to the range of actors influencing market operation.

Compels a search for underlying (potential) root causes of performance problems associated with

market operation.

Emphasizes the multiplicity of causes and interventions.

Boils down key factors influencing market operation, including supporting functions and regulation.

Following the market-based analytical framework, the team was able to define the health market, the range

of market actors involved and their interactions, and to examine the systems—policies, market conditions,

institutional arrangements—that influence a market’s operations. The general factors above are categories

that were examined within the specific Mozambique context to better understand opportunities and

constraints to private sector engagement in the country’s health sector. A more detailed discussion of the

main factors examined when analyzing market systems and market dynamics is in Annex I.

DATA COLLECTION

The team used secondary sources to map private sector entities operating in the health sector and

compiled an extensive database registering stakeholders’ names, locations and activities, clustered into

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activity categories. It was an extensive two-month effort to access the information and triangulate when

possible. Annex II lists the categories of stakeholders reviewed under the mapping exercise, information

collected and main sources of information. The team also reviewed current regulation and strategic

documents, as well as national statistics and surveys.

After assessing the policy context and mapping and clustering private actors, the team conducted separate

focus groups with importers, transporters and private companies engaged in the health sector. The focus

groups helped the team understand an important dimension of opportunities and barriers for inclusion of

the private sector in health. Additionally, the team conducted semi-guided interviews with 10 individuals

from the public and private sectors. The list of persons interviewed is in Annex III.

To analyze the information, the team triangulated data from the literature review, the data set on private

actors and stakeholder interviews, using a market systems lens.

The preliminary analysis informed the keystone dialogue, a workshop with key stakeholders operating

in the public and private health care supply chain. The workshop included a total of 39 participants,

including government, importers, transporters, private health care service providers, MISAU, development

partners supporting the supply chain both technically and financially, the banking sector and private not-

for-profit (PNFP) organizations (see Annex III). Challenges emerging from the landscape analysis were

presented, and participants were invited to further discuss them in groups and provide their insights on

bottlenecks and key recommendations that could boost the private sector role in the supply chain in the

short term. The composition of each working group was designed to gather representatives from the

supply chain stages, with the objective of providing a comprehensive and integrated overview. Challenges

and recommendations identified during group discussions for both the private and public supply chains are

integrated across the analysis provided in this report.

LIMITATIONS

DATA QUALITY: The rapid assessment highlighted large gaps and low data quality related to the private

health sector. Since MISAU does not have a standard definition for the private health sector, inconsistencies

exist in how data on non-state actors are collected and reported. Moreover, MISAU regulations classifying

health facilities are out of date and do not entirely capture private sector activities. MISAU does not regularly

receive information, nor does it consistently report on the private sector, leaving information gaps. The main

source of data on the private sector—facility and pharmacy registration—is incomplete; it is not updated

regularly and does not provide an accurate picture of all players who are active in the private health sector.

To fill gaps, the team used Whitepages, websites and stakeholder inquires.

ACCESS TO MISAU REPRESENTATIVES: The team experienced some limitations in accessing key

stakeholders for interviews or focus group discussions. The team interviewed representatives from

CMAM, DNF and DPC, but MISAU required the Permanent Secretary’s approval for the team to meet

with other MISAU officials, which they did not receive in time. As a result, the team was unable to

interview some key public officials, such as the heads of the MISAU Reform Unit and the National

Directorate for Medical Care (DNAM). Limited responsiveness from the public sector was also reflected

in the workshop participation, which included only one MISAU representative.

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HEALTH SYSTEM CHALLENGES AND OPPORTUNITIES FOR THE PRIVATE SECTOR

Reviewing health challenges and system gaps helps identify opportunities for the private sector (broadly

defined) to contribute. As stated in USAID’s Private Sector Engagement Strategy:5

From improving health outcomes to providing access to commodities in complex emergencies, private-sector

entities have a vital role in achieving development and humanitarian outcomes as a direct or indirect

byproduct of their businesses and investments.

Therefore, it is useful to first delineate some ways the private sector can contribute to health system

goals and performance:

Growth of the private economy generates jobs that lift families out of poverty and generates tax

revenue that the government can allocate to the health sector.6

Private employers can pay for private health insurance for employees and their dependents and/or

pay taxes for social health insurance.

Private health providers can be contracted and paid by private or public payers (such as a private

insurance company or the government) to deliver health services.

Private companies supply private or public health facilities with support services (supply chain,

security, laundry).

Private companies and their investors can launch financially viable health-related products and

services targeting low-income markets; examples include BIMA7 for insurance, Living Goods for

community health workers,8 JEEON9 for drug sellers and PSI for health products.

The private sector can drive innovation and the adoption of new technologies that improve

productivity and even social inclusion (e.g., Vodafone and M-Pesa).

Private businesses can adopt the “triple bottom line” and pursue social and environmental as well

as financial goals. This includes companies that directly donate resources as a form of corporate

social responsibility.

The challenges confronting the Mozambican health system are well documented in various assessment and

policy documents produced by MISAU and development partners.10 Despite progress, the Mozambican

health sector is still struggling to respond to its population’s needs. Looking ahead, the threat of declining

foreign assistance and rising population growth risks erosion of its gains to date.

5 https://www.usaid.gov/work-usaid/private-sector-engagement/policy6 Reeves, A. et al. Financing Universal Health Coverage—Effects of Alternative Tax Structures on Public Health Systems: Cross-National Modeling in 89 Low-Income and Middle-Income Countries. Lancet 386, 274–280 (2015) 7 http://www.bimamobile.com/about-bima/about-us-new/8 https://livinggoods.org/9 https://www.jeeon.co/10 PESS 2014-2019; PELF 2014; World Bank 2014.

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Mozambique’s health sector is still challenged by the burden of communicable diseases and malaria, as well

as poor maternal and child health outcomes. HIV prevalence is one of the highest in the region, and

Mozambique is among the 20 highest TB burden countries globally (WHO 2017). At the same time,

noncommunicable diseases are on the rise, such as a 4.6 percent prevalence of diabetes.

MISAU’s National Strategic Plan 2014-19 outlines the critical system gaps as well as the strengths,

weaknesses, opportunities and threats (SWOT) of the Mozambican health system.11 Table 1 lists several

challenges from the National Plan and poses possible points of entry for the private sector to contribute.

The ideas are drawn from the MMEMS key stakeholder interviews, focus group discussions, the December

workshop and regional experiences.

TABLE 1: PRIORITY SYSTEM CHALLENGES AND OPPORTUNITIES WITH POSSIBLE PRIVATE SECTOR ROLE

Challenges Possible private sector contribution

Low investment in urban health facilities

Can private health facilities in urban areas be leveraged to address MISAU investment constraints? Can government prioritize public investments to focus on the poorer segments of the population while incentivizing wealthier segments to seek care with a private provider?12

Noncompliance of quality standards in both public and private health facilities

Can MISAU bring together private provider groups to agree on simple quality tools to establish minimum standards and a process for adherence?

High costs for management and administration of public health facilities and program

Can the private sector share its expertise in efficient management process and cost-reduction strategies? Can MISAU outsource nonmedical activities to the private sector to reduce cost and improve efficiency?

Low productivity of public health staff and inefficient delivery of primary health care (PHC)

Can MISAU contract private providers to deliver cost-efficient PHC services? Can the private sector share its expertise with MISAU to deliver more efficient PHC services?

Limited access to health facilities, particularly in rural areas

Can private sector providers deliver PHC closer to underserved population groups?

Poor quality data produced for policy and planning

Can private sector actors report data more frequently to MISAU? Can MISAU share not only data on the public sector but also data on the private sector with the private sector? Is there a role for an entity outside of MISAU to consolidate and analyze data to inform public and private actors?

Capacity to train health professionals

Can government open up MISAU and/or donor-sponsored clinical training13

to private providers to improve quality of care in the private sector?

11 Health Strategic Plan: 2014-2019. Mozambique Ministry of Health 12 World Bank data show that public health systems disproportionately benefit middle- and upper-income groups compared to the poorest income quintiles. In response, many countries are prioritizing public health spending to benefit the poorest of the poor, leaving wealthier segments of the population to seek care in the private system. 13 Donors invest heavily in training public health staff in a variety of clinical and health delivery areas (both pre-service and in-service trainings). As a first step to improve quality in the private sector, several ministries of health in East Africa have opened donor training to include private providers working in the same catchment areas as public providers being trained. These ministries allocate a number of slots for private providers who meet certain eligibility criteria (e.g., reaching underserved population, expanding key health services like family planning, HIV/AIDS, etc.).

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Challenges Possible private sector contribution

Capacity in planning and in monitoring and evaluation

Can government encourage the private sector to organize into private sector representative groups? Can MISAU systematically include private sector representatives in health policy and planning to strengthen regulation and oversight of all health actors?

Conducive context for favorable partnerships

Can private sector representative groups work with the government to identify partnerships that will help address health challenges and system gaps?

Many important challenges cited in the National Strategic Plan would not be considered appropriate for

private sector attention. For example, the private sector may not be willing or able to deliver health services

in rural areas or to populations with little or no ability to pay, unless the government paid the private sector

to serve such populations, making it financially feasible. The government also typically performs key public

health functions, such as disease surveillance and public health campaigns, as a public good.

With these challenges and possible entry points in mind for the private sector, the next section presents

the landscape of key health sector actors in Mozambique.

LANDSCAPE OF HEALTH SECTOR ACTORS IN MOZAMBIQUE

Traditionally, when people speak of “the Mozambican health system,” they’re referring to the National

Health System, and most health policies and strategies focus on government organizations. While the

public sector clearly predominates, like almost every health system in the world, Mozambique has a mix

of public and private actors, and the role of external donors is significant. MMEMS did a landscaping of

health system actors working in or related to the Mozambican health sector, based on information

gathered during the stakeholder interviews and data from MISAU. This landscape was presented and

validated at the December workshop. As Figure 3 shows, private health sector actors include private not-

for-profit organizations (faith-based and community-based), private for-profit organizations, and informal

providers such as traditional healers. Each group of actors is described below. However, for the purposes

of this MMEMS exercise, the focus is on for-profit organizations to reflect USAID’s Private Sector

Engagement Strategy.

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FIGURE 3: MOZAMBICAN HEALTH SECTOR LANDSCAPE

PUBLIC SECTOR ACTORS

Public sector actors are grouped and discussed in terms of their role related to the private sector.

STEWARDSHIP AND REGULATION: MISAU is the steward of the Mozambican health sector and

oversees all public and private health facilities in the country. Decree 9/1992 regulates the private health

sector, including the private facilities. Despite passage of the more recent Law No. 24/2009, no updated

decree regulates private sector practice, so Decree 9/1992 is still in use. Ministerial Decree No. 98/94

(July 27) establishes the fees that private providers must pay to the State to maintain their license to

practice. The fees constitute state revenue and are reimbursed to the Ministry of Health to cover the

costs associated with regulating the private health sector, such as printing documents and facility inspection

(transportation and fuel). It remains to be validated if the fee revenue is indeed transferred from the

national treasury account to MISAU’s account.

The following MISAU bodies are responsible for regulating the private health sector:

The National Directorate for Medical Care

(DNAM) sets the standards and licensing

requirements for private health facilities at the

national level. The Private Medical Unit

oversees collection of information for licensing

of private health care facilities and private

professional practices and presents them to the

ministry for final approval.

The Provincial Health Directorates (DPS) and

the District Services for Health, Women and Social Action (SDSMAS) are the decentralized

agencies that license private facilities and health professionals, respectively.

PUBLIC SECTOR PRIVATE HEALTH SECTOR

President Office Prime Minister

Ministry of Economy and Finance (MEF)

Ministry of Health (MISAU)Minister & Permanent Secretary

DPC, DAF, DNAM, QI&H, PNSP, Teaching

Hospitals

Central and Regional warehouses (CMAM)National Directorate of Pharmacies

Local GovernmentProvincial and District Health Office (DPS &

SDSMAS)

Donor Basquet Fund Prosaude (Ireland, Switzerland, Denmark,

Belgium, Italy, Spain, UNICEF, UNFPA GFF (World Bank, DFID, Netherlands)

Private not-for-profit sector

Private for-profit sector

FBOs / CBOs/ CSOs / International NGOs

Professional Health AssociationsDoctors (AMM, OrMM), Nurses (ANEMO), Midwifes, Paediatricians,

Gynaecologists, Pharmacies (ANAFP), Private health care providers (APROSAP), manufacturers and importers (AIPROMEM)

Pharmacies & Laboratories

Supply Chain ActorsLocal Manufacturers,

Importers/Distributors/ Wholesalers, Transporters

Health FacilitiesHealth posts, Clinics,

Medical centers & rooms, Hospitals

Health Financing Health Plan,

Private Insurers, Banks, MFIs

Private Training Institutes

Traditional M

edicin

eA

lternative m

edicin

e (A

MET

RO

)

Info

rmal Se

ctor

(No

n-lice

nsed, un

trained

pro

viders-q

uacks)

CabinetPPP Unit

Development Partners in Health PEPFAR, USAID, CDC, Global Fund, GAVI, DFID, EU, World Bank, UN Agencies, Irish

AID, Italian Cooperation, SDC

Private Companies(IT, Technologies, etc)

Health ConsumersCivil Society Organizations (CSOs) representing health, gender, equity and poverty issues, PLASOC-M

Ministry of Science and Technology, Higher and Technical Vocational

EducationMedical Universities

OBSERVATIONS FROM KEY

INFORMANTS

The unit in charge of overseeing private facilities

is small and marginalized, lacking independence.

Key informants report that the capacity of the

unit is too limited to ensure strategic use of

information and proper oversight of the sector.

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The National Directorate for Pharmacies (DNF) is responsible for approving new medicines,

ensuring the quality of existing drugs circulating in the health system, licensing all actors in the

supply chain and ensuring compliance with quality standards.

The Ministry of Science and Technology, Higher and Technical Vocational Education (MCTESTP)

licenses and supervises public and private medical training institutions.

PUBLIC HEALTH FINANCING: The Ministry of Finance (MEF) allocates funds to MISAU. International

donors subsidize government funds to MISAU through direct budget or vertical funding. With ongoing

decentralization of services, MEF directly allocates funds to provincial and district health offices to manage

PHC facilities, as well as district and provincial hospitals.

GOVERNANCE: A public-private partnership (PPP) unit within the MEF is responsible for enacting the PPP

Law, which currently does not include health care services. However, as highlighted by interviewed

stakeholders, upcoming revisions to the law could enable inclusion of health care. Parliament does not have

a committee or commission dedicated to health sector issues or to drafting health policy and legislation.

DEVELOPMENT PARTNERS

Donor funds account for 49 percent of the health budget, with government contributing 46 percent.14

Two basket funds provide direct, on-budget funding to support improvement in maternal child health:

ProSaude (including Belgium, Denmark, Ireland, Italy, Spain, Switzerland, UNICEF and the United Nations

Population Fund) and the Global Finance Facility (GFF), funded by the World Bank, the Netherlands and

the U.K.’s Department for International Development. U.S. Government funding is through bilateral

agreements. The United States’ PEPFAR program is the major health financer in the country, providing

approximately $300 million annually to eradicate HIV/AIDS.

PRIVATE SECTOR ACTORS

PRIVATE FOR-PROFIT actors in service delivery include private health professionals and

facilities. Private for-profit actors in the commodity supply chain include manufacturers,

importers/wholesalers, transportation/logistics companies and retail pharmacies. In training and

education, 15 private medical training institutions are available to various cadres of health workers.

Many private companies provide functions that are relevant to the health sector, such as insurance,

information technology, security, laundry and other nonclinical services. Private health insurance

is still limited in Mozambique, with only 3 percent of adults insured. No mechanisms exist for

government to contract private facilities.15

NONPROFIT ACTORS include the many local nongovernmental organizations (NGOs) and

international nongovernmental organizations (INGOs) active in health. The above-referenced Law

24/2009 stipulates that the government will prioritize licensing of not-for-profit providers and

providers serving rural areas. However, this rapid assessment found almost no nonprofit actors

directly involved in service delivery. NGOs focus mainly on technical assistance to the public

health sector and communities.

14 Health Financing Profile: Mozambique (2016) 15 CENFRI, Making Access Possible Report (2014)

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PROFESSIONAL ASSOCIATIONS exist for each health care profession (e.g., doctors, nurses,

midwives, gynecologists) and nascent associations representing private health facilities such as the

National Association of Private Healthcare Providers (APROSAP) and the National Association

of Private Pharmacies (ANAFP). Currently, no single organization or association represents these

professional associations to unite the private sector’s perspective on health policy and planning.

However, a broad and relevant association is the CTA, which represents private business

associations across all sectors. The CTA is the official partner of dialogue with the government.

INFORMAL HEALTH PROVIDERS include traditional healers and the Traditional and

Alternative Medicine Practitioners association (AMETRAMO).

CIVIL SOCIETY engagement in health and representation of patients/consumers are limited in

Mozambique.16 Civil society organizations involved in health care are represented in the Platform

of Civil Society for Health (PLASOC-M), which aims to ensure civil society participation in

planning, operationalization and monitoring and evaluation of health care activities. PLASOC-M is

not affiliated with any professional or business associations (e.g., CTA). The Center for Public

Integrity has done work on tracking stock-outs in public health facilities.

PUBLIC-PRIVATE DIALOGUE: STATUS AND OPPORTUNITIES

As part of the landscaping exercise, MMEMS includes information about the current state of collaboration

and dialogue between public and private sector actors.

Despite the call to develop a public-private engagement framework in the current PESS, MISAU

has not yet defined its strategy to engage with the private sector. There is still no clear

definition of the private sector in Mozambique, nor a platform for dialogue. However, the head of

the National Directorate for Planning and Cooperation (DPC) expressed an interest in better

understanding the private sector to support its objectives and the PESS strategy and to engage

senior leadership from various departments (Permanent Secretary, Public Health and the National

Directorate for Medical Care, as well as DPC).

MISAU collects limited information on private practices, mainly restricted to licensing. It

does not conduct strategic analysis of the private sector provision of services, prices or growth,

16 Health Sector Strategic Plan 2014-2017

THE PRIVATE SECTOR IN THE PESS 2014-2019

“The importance of the private sector may grow in the future, both in the form of public-private partnerships

(PPPs) and in the impact of large private investment projects on the sustainability of the public health sector”

(PESS 2014-2019).

The National Health Sector strategy identifies the “poor coordination between the public and private sectors”

as a barrier to better engagement, acknowledges that “existing coordination mechanisms do not take into

account the diversity of the private sector and calls for the development of a PPP frame under the health sector

reform agenda” (PESS 2014-2019).

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leaving room for the private sector to develop without public sector engagement. CTA and

professional membership associations are seen as ways to efficiently engage and consult the sector.

Even when MISAU consults the private sector for decision-making, it does so in a non-structured

way. A more inclusive process is perceived as essential by private sector actors, especially for the

design of decrees and diplomas aimed at implementing the new law.

Initial dialogue during the December workshop across private actors within the supply chains

catalyzed interest in improved communication and structuring of the sector, and

development partners are looking into ways to provide further support.

Several ideas emerged from the workshop and interviews for opportunities to improve public-private

collaboration and dialogue:

Establish a private health sector platform for coordination, dialogue, and data sharing

between the private sector and the government. A possible convener is the Confederation of

Economic Associations (CTA). The platform should ensure adequate representation of all private

actor groups and enhance communication and data collection, including business opportunities for

private companies, market information on sub-sectors, and consultation regarding new policies

and regulations.

Develop an annual ministerial plan on supply chain operations to allow private actors to

better prepare for demand.

Engage the private sector in policymaking processes to design flexible tools and regulations

that better match the market needs (e.g., special registration processes for innovative or

specialized pharmaceutical products, regional registration system with neighbor countries).

Share findings and recommendations from the December workshop with government

representatives.

The discussion above indicates that private actors are active in all areas of the health system, from service

provision to human resource training, to production and distribution of drugs. They also provide key

support functions, such as insurance, information technology and other nonclinical services. The next two

sections of this rapid assessment present more detailed data on two of these areas: service delivery and

supply chain.

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PUBLIC-PRIVATE HEALTH SERVICE DELIVERY

This section presents data on the distribution of public and private health facilities by level and province

based on MISAU data, and patterns of service use of public and private providers based on two

household surveys.

PUBLIC-PRIVATE DISTRIBUTION OF HEALTH FACILITIES

Law No. 24/2009 regulates private health care provision.

Among other regulatory issues, Decree 9/199217 outlines the

categories and definitions for different private facilities (see

Annex I). Although MISAU health facility data are imperfect,

they provide a sense of the scale of the private health sector

and the scope of its activities. As Table 2 shows, the National

Health System (MISAU) continues to be the largest provider

of health services. Considering health facilities at all four levels,

private health care businesses own and operate only 224 out

of 1,852 facilities (12 percent); see the last row of Table 2. The

public sector manages most health facilities across all facility

levels (1 through IV). However, the private health sector manages a significant percentage (37 percent) of

Level II facilities, which include gynecology and general medicine (14 clinics), general surgery (13 clinics)

and pediatrics (13 clinics).

In absolute numbers, private health facilities are mainly concentrated in Level I (194 medical rooms and

medical centers). However, with 25 clinics and five hospitals, the private health sector covers 37 percent

of Level II facilities.18

High barriers to market entry, such as capital costs and more rigorous regulatory requirements to open

a hospital, may explain why the private sector invests in lower-level facilities.

TABLE 2: HEALTH FACILITY OWNERSHIP BY LEVEL

Facility Type Public Private Subtotal % Private

Level I 1,563 194 1,757 11.0%

Level II 51 30 81 37.0%

Level III 7 0 7 --

Level IV 7 0 7 --

Total 1,628 224 1,852 12.1%

17 Decree 9/92, May 26: Regulation of service provision by private entities including registration of facilities and professionals, conditions to open a private practice, complementarity with the public system (SNS), technical standards for private facilities.18 MISAU facility categories only apply to public facilities. No similar classification exists for private facilities. The team matched similar private facilities to the levels for comparison.

HEALTH FACILITY DEFINITIONS

Level I: Urban and rural health centers; health posts

Level II: General, rural, and district hospitals

Level III: Provincial hospitals

Level IV: Central, military, and specialized hospitals

Source: Ministry of Health, Decree 9/1992

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Figure 4 shows the distribution of public and private health facilities by province. Maputo City has the

highest total (public and private) number of health facilities (179), followed by Niassa (177), Gaza (147)

and Tete (145). Maputo Province (129), Cabo Delgado (129) and Manica (122) have the lowest number

of health facilities.

Although private health care providers operate in every province, most are in Maputo City (63 percent).

FIGURE 4: DISTRIBUTION OF HEALTH FACILITIES BY OWNERSHIP AND LEVEL

USE OF HEALTH SERVICES

USE OF PRIVATE HEALTH SERVICES IN MOZAMBIQUE IS LOW. The Mozambican government

conducted a survey on household expenditures in 2014/15 (Inquérito ao Orçamento Familiar—IOF) that

included utilization of health care services. As Figure 5 illustrates, more than 90 percent of the Mozambican

population seeking care visited a public health facility. The next most utilized source of care is traditional

healers (5.2 percent). MISAU and health partners have made efforts to engage traditional healers since the

1990s. In 2016, their professional association AMETRAMO asked for better regulation.19 A use rate of

5.2 percent is lower than the rates of traditional practitioner use found throughout sub-Saharan Africa, as

reported in the literature (12 percent to 29 percent).20 Still, it is higher than use of all types of formal

professional private services by Mozambicans (4 percent). Of these types of private services, 1.6 percent

19 https://clubofmozambique.com/news/africa-natural-medicine-day-mozambican-traditional-healing-seeks-regulation/20 James PB, Wardle J, Steel A, et al. Traditional, complementary and alternative medicine use in sub-Saharan Africa: a systematic review BMJ Global Health 2018;3:e000895. https://gh.bmj.com/content/3/5/e000895

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visited a private health professional (including a doctor, nurse, or health worker), followed by private clinic

(0.9 percent), private hospital (0.7 percent) and private pharmacies (0.7 percent).

FIGURE 5: PERCENT DISTRIBUTION OF POPULATION WHO CONSULTED A HEALTH FACILITY, BY FACILITY TYPE, 2014/2015 (IOF 2014/2015)

USE OF THE PRIVATE HEALTH SECTOR IS HIGHER IN URBAN AREAS compared to rural in

Mozambique is attributed to several factors: (1) higher concentration of private providers in urban centers,

(2) a more educated population demanding and seeking health services in general and (3) greater ability

to pay for private healthcare. Figure 6 shows the distribution of health consumers seeking care in the

private health sector. Behind the national figure (4 percent of the total population surveyed visited a

private provider), huge geographical disparities can be observed. The provinces with greater use of private

providers are Maputo City (12 percent) and Maputo Province (11.3 percent), followed by Cabo Delgado

(8.0 percent). Rural populations go to a private health facility at much lower rates, ranging from

5.6 percent in Inhambane to 0.3 percent in Niassa. When examining the type of private health provider

visited, health consumers seek care primarily at private hospitals and clinics.

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FIGURE 6: PERCENT DISTRIBUTION OF POPULATION WHO CONSULTED A PRIVATE HEALTH FACILITY, BY FACILITY TYPE AND PROVINCE: 2014/2015

(IOF 2014/2015)

USE OF PRIVATE SERVICES FOR PRIORITY HEALTH AREAS IS LOW. In preparing for the Global

Financing Facility, the World Bank conducted a secondary analysis of the Mozambican Demographic Health

Survey (DHS) in 2011 to examine the public-private mix of the priority health area of maternal and child

health (MCH). The authors state that patterns of health service-seeking behavior for the treatment of

childhood illnesses is a proxy for health service-seeking behavior for other illnesses.21

As Figure 7 illustrates, overall use of the private health sector for MCH services is low, particularly

compared to other East and Southern African countries such as Kenya, Malawi, Tanzania and Uganda.22

Only 1 percent of women visited a private health care provider for an antenatal care (ANC) check-up,

and an even lower percentage (0.2 percent) delivered their children in a private health facility. Only

3 percent of women who sought treatment for a child with diarrhea visited a private provider. This is a

lower rate of private sector use compared to neighboring countries: Tanzania (29 percent), Malawi

(10 percent), Zimbabwe (36 percent) and Swaziland (32 percent). Only 2 percent of mothers with a child

with fever visited a private health provider, much lower than other countries: Malawi (10 percent),

Tanzania (28 percent), and Zimbabwe (39 percent). Finally, 10 percent of women of reproductive age

obtained a modern family planning method through the private sector.

21 Dominique Montague (2011) 22 Source: private sectors analyses www.shops.org

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FIGURE 7: PERCENT OF WOMEN WHO USED A PRIVATE HEALTH FACILITY, BY SERVICE TYPE, 2006-2011 (DHS 2011)

USE OF PRIVATE SERVICES IS GREATER IN HIGH-INCOME GROUPS, BUT IS STILL VERY LOW.

The World Bank’s secondary analysis of the DHS further examines the use of MCH services by income

groups. The pattern is consistent across key MCH services such as delivery and treatment of cough and

fever. As Figure 8 shows, most women across all income groups seek care for these high-priority MCH

services in a public facility. As expected, a larger percentage of higher-income groups (Q4 and Q5) visited

a private health facility to treat a fever and cough (less than 5 percent), compared to no women in the

lower-income groups (Q1, Q2 and Q3). This pattern changes for treatment of diarrhea. A small

percentage (less than 5 percent) of all income groups use a private provider to treat their children for

diarrhea. An even smaller percentage (less than 3 percent) of women in the higher-income group (Q5)

delivered a baby in a private facility.

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FIGURE 8: USE OF PRIVATE HEALTH FACILITY, BY SERVICE TYPE AND INCOME GROUPS, 2011 (DHS 2011)

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The service delivery market analysis (Figure 9) summarizes preliminary information on the actors and

potential bottlenecks. Unlike the next section on supply chain, the rapid assessment of this market did not

benefit from a stakeholder workshop.

FIGURE 9: SERVICE DELIVERY MARKET

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MARKET SYSTEM ANALYSIS OF THE MOZAMBICAN SUPPLY CHAIN

This section is a preliminary analysis of the public-private mix of the Mozambican supply chain using a market

system lens to understand the dynamics and relationships between public, private, and donor-driven supply

chains. First, this section analyzes the Mozambican public-private mix (PPM) supply chain, looking at the three

interconnected submarkets of production, wholesale and retail. The primary focus is on the wholesale

market. Bottlenecks for each market have been identified through focus group discussions with transporters

and importers, and further refined during the multi-stakeholder workshop in December 2018.

PUBLIC-PRIVATE MIX IN MOZAMBICAN SUPPLY CHAIN

As in many low-income countries, Mozambique has two distinct public and private supply chains, which

function in parallel with little interaction. Market actors in the private supply chain serve private service

delivery points (private hospitals, pharmacies and clinics), while the public supply chain aims to serve all

public health facilities with essential medicines, consumables and medical equipment.

The private supply chain is a simple, flexible model and is structured like a supply chain found in an

Organization for Economic Cooperation and Development (OECD) country. International and domestic

pharmaceutical manufacturers provide medicines to Mozambican importers and wholesalers, who

distribute health products to their customers, private facilities and retail pharmacies. In the case of

Mozambique, several private companies combine and perform multiple supply chain functions:

importation, wholesale and distribution, including warehouses. Respondents representing importers and

wholesalers say a majority of them contract private transportation companies to distribute their products,

especially for remote places. The parastatal Medimoc purchases its products from the same sources as

other private importers.

As Figure 10 illustrates, the public supply chain is a more complex, multi-tiered system. The Central Medical

Store (CMAM) is responsible for the procurement of almost all essential drugs. Like the private supply chain,

CMAM procures many of its drugs, including generics, from international pharmaceutical manufacturers.

However, CMAM also receives many drugs and health products from international development agencies

to supply MISAU’s health programs. For example, USAID Global Health Supply Chain Procurement and

Supply Management program purchases bed nets, insecticides, HIV/AIDS drugs and other products. GAVI

supplies vaccines to MISAU.

The public supply chain, however, is fragmented from procurement to distribution. Several MISAU

departments are responsible for procuring and distributing the drugs related to their health programs.

For example, the Expanded Program on Immunization (EPI) is responsible for all vaccines related to

MISAU’s immunization program. EPI manages its own warehouse and distribution network to deliver these

vaccines. Similarly, the malaria control program stores and distributes bed nets and insecticides. In parallel

with program-specific supply chains, CMAM is responsible for procuring and distributing all other

commodities (including HIV/AIDS pharmaceuticals), but only to the provincial level. As part of

decentralization, authority switches to the provincial health offices, which are responsible for the “last

mile” in the public supply system. At all levels of the public supply chain, CMAM and provincial authorities

use a patchwork of their own transport and contracted private transport companies to deliver

government-purchased commodities to public health facilities.

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FIGURE 10: OVERVIEW OF MOZAMBICAN SUPPLY CHAINS

The fragmentation in the public supply chain resulting from this multi-tiered system, along with other

challenges, contribute to stock-outs in public facilities and inefficiencies. MISAU and CMAM are aware of

this problem and have proposed in the new Pharmaceutical Logistics Strategic Plan (PELF) to streamline

the public supply chain by reducing the number of tiers and creating intermediate warehouses to directly

serve health facilities. Already, five intermediary warehouses are under construction in Zambezia,

Villanculos and Tete.

Figure 10 also illustrates the limited formal interactions between actors from the public and private supply

chain. The public-private interactions mainly occur when a public entity contracts a private transport

company. Informal interaction—where public facilities buy commodities at private outlets to address stock-

outs—may occur, but the rapid assessment did not capture data on these potential informal transactions.

MARKET ACTORS

The public sector regulates both the public and private supply chains (see Figure 11). In 2017, Law

No. 12 established the National Medicines Regulatory Authority (ANARME) as the public institution with

administrative, financial and government autonomy, responsible for the regulation, supervision, inspection

and sanctioning for all aspects of the pharmaceutical sector (see text box).

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LAW NO. 12/2017 OBJECTIVES

• Regulate manufacturing, distribution and commercialization of medicinal products, vaccines and other products of biological origin for human use.

• Establish a national system to guarantee the quality of medicinal products.

• Establish a system of pharmacovigilance.

• Guarantee alignment of local production to international recommendations.

• Simplify the drug registration system.

• Frame the system of pricing.

• Create a juridical framework of sanctions related to fraud, counterfeiting and smuggling.

• Align current regulations to World Health Organization recommendations.

Interviews with stakeholders and discussion during the workshop indicate that the new law is aligned with

international recommendations and current practices. The National Directorate for Pharmacies

(DNF) is still responsible for many functions outlined in the 12/2107 until the National Medicines

Regulatory Authority is fully operational.

FIGURE 11: MARKET ACTORS IN THE MOZAMBICAN SUPPLY CHAIN

The DNF is responsible for licensing pharmaceutical-related health professionals and facilities

(pharmacies). Updated decrees and diplomas are still under discussion, as the law has recently been passed

and previous decrees are still in use. The law allows non-pharmacy professionals to own a retail pharmacy;

however, each pharmacy requires a full-time, licensed pharmacist as technical director. Private entities

that own pharmacies are not allowed to own health facilities.

S DProviders

Civil Society§Center for Public

Integrity (CIP)

Pharmaceutical Regulatory Authority§National Directorate of Pharmacies

Membership Orgs§Importers association (AIPROMEM)§Pharmacy association (ANAFP)§Clinics Association (APROSAP)

Private supply chain actors§Pharma manufacturers§Importers / Wholesalers§Transporters§Retail pharmacies / clinics

Consumers

Gov’t Supply Chain Actors§CMAM§DPS / SDSMAS§EPI, Malaria

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Since the 1977 break-up of the government-owned Medimoc, the end of the monopoly for importation

and distribution of drugs has created space for the private sector to grow. Currently:

Two registered private companies manufacture drugs and health products for the local market.

183 Mozambican private importers represent or buy directly from international manufacturers

and serve both the public and private markets.

Of 87 existing private transport companies, some distribute drugs and other commodities in public

and private supply chains.

More than 845 retail pharmacies located throughout Mozambique complement pharmacies in the

public health system (see Figure 17).

The private supply chain actors are organizing themselves in membership groups: the Association of

Importers and Manufacturers of Medical Products (AIPROMEM), the National Association of Private

Pharmacies (ANAFP) and the National Association of Private Healthcare Providers (APROSAP). These

associations are members of the Confederation of Economic Associations (CTA), which includes 79

members from sectoral federations, trade chambers and business associations throughout the country

across a variety of economic sectors. CTA is the official partner of dialogue with the government in private

sector representation and works toward a better business environment in Mozambique through

promotion of economic and regulatory reforms.

Few civil society and patient rights groups exist in Mozambique. The Center for Public Integrity (CIP)

is well represented in various health forums and has conducted modest work on tracking stock-outs at

the public health facilities level.

PPM OF SUPPLY CHAIN

Table 3 illustrates the public-private mix of the supply chain in Mozambique. There is one parastatal

manufacturing drugs and health commodities and one private manufacturer. CMAM and the parastatal

Medimoc are the primary purchasers and importers for the public supply chain, while there is a growing

number of private importers/wholesalers. As noted earlier, at times CMAM procures from these private

channels. Finally, the private sector owns and operates the majority (94 percent) of the retail pharmacy

market, with an increasing number of public patients spending out-of-pocket at private pharmacies.

TABLE 3: PUBLIC-PRIVATE MIX IN THE SUPPLY CHAIN, BY LEVEL

Supply Chain Level Public Private % Private Subtotal

Manufacturers 1 1 50% 2

Importers/ Wholesalers 2 183 98% 184

Transport -- 87 100% 87

Retail pharmacy 49* 845 94% 894

*The number does not included pharmacies located in public health facilities.

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MARKET SYSTEM ANALYSIS OF MOZAMBICAN DRUG SUPPLY CHAIN

Several supply chains are relevant to the health system, including equipment, drugs and consumables. This

market analysis focuses on the drug supply chain market. It was conducted through research and intensive

consultations with actors of both the public and the private sectors. Although most see bottlenecks in the

supply chain as a function of demand or supply, the root cause may lie in policies shaping markets.

INTERCONNECTED MARKETS

Figure 12 presents the supply chain as a series of interconnected markets. In a demand-driven market, the

process starts with demand from health care providers issuing prescriptions and from consumers seeking

health products that do not require a prescription (also known as over-the-counter products). The patient

fills the prescription (or buys the product) at a retail or health facility pharmacy. These pharmacies are

supplied by distributors/wholesalers, which replenish stock according to demand. The distributors and

wholesalers are supplied by either domestic or international manufacturers, which then refill stock according

to demand from the distributors/wholesalers. In the kind of supply-driven system often found in public health,

procurement may begin with health program planning based on projected needs (e.g., immunization coverage

targets), and commodities are distributed to the final destination based on the plan.

FIGURE 12: RELATIONSHIP BETWEEN INTERCONNECTED MARKETS IN A HEALTH SUPPLY CHAIN

Interconnected markets underscore two important characteristics to consider when applying market

system analysis to a supply chain. First, the “buyers” and “sellers” differ in each market. Second, it is

important to examine the relationships between interconnected markets because it may be necessary to

act in one market to generate desired change in another.23

PRODUCTION MARKET

Figure 13 illustrates the production market in Mozambique, described in detail in this report.

23 Pradav, MMRH presentation. To address stock-outs of bed nets, the Tanzanian government entered into a PPP to manufacture nets for the Tanzanian and East African market. Within a few years, the private company was up and running and producing bed nets; however, stock-outs persisted. The Tanzanian government realized it had to also intervene in the distributor/wholesaler markets to effect desired changes in the retailer-consumer market.

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OVERSIGHT OF THE DRUG MARKET: As outlined in Law No. 12/2017, DNF is responsible for several

oversight functions related to international importation and domestic manufacturing. Key among them are

(1) elaborating and updating the National Drug Formulary, (2) approving international importers who can

sell in the Mozambican market, (3) licensing domestic manufacturing companies, (4) ensuring alignment of

local production to international standards and (5) simplifying the drug registration system. Per

consultation with DNF, as well as private actors, there is consensus that the current capacity of DNF is

limited to fulfilling all those roles, with restricted budget and human resources.

FIGURE 13: OVERVIEW OF THE DRUG PRODUCTION MARKET

Suppliers:

International manufacturers, represented by importers, are the primary source for brand and

generic drugs as well as other health commodities. Mozambique’s manufacturing capacity for

pharmaceutical products is limited. Despite a growing need for drugs, currently only two relevant

manufacturers operate in-country; one is a parastatal and the other a private-for-profit (PFP).

In July 2018, the Mozambican government officially launched the Sociedade Mocambicana de

Medicamentos, SA (SMM) as a parastatal, located in Matola. After a 15-year start-up, SMM produces

eight stock-keeping units (SKUs) of antiretrovirals (ARVs) and such essential medicines as

amoxicillin. A Brazilian company, Instituto de Tecnologia em Fármacos (Farmanguinhos/Fiocruz),

supports this state-owed entity through technology transfer. The Brazilian mining conglomerate,

Vale, present in Mozambique in the coal sector, provided 80 percent of the financing through its

corporate social responsibility program, Fundação Vale.

The second pharmaceutical manufacturer, Strides Pharma Mozambique, SA, is a subsidiary of the

Indian Strides Company, a for-profit international entity.

Buyers:

The government, through CMAM, is the largest purchaser of drugs in Mozambique. CMAM

purchases directly from international and domestic manufacturers. The GRMs’ central budget

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funds MISAU, which, procures drugs and health commodities. International development partners

also donate large quantities of drugs and supplies.

The parastatal Medimoc and private sector importers also purchase drugs and health

commodities from both international and local manufacturers. Private importers supply the private

market but also play an important role in supplying the public market (see next section). Private

importers can bring in drugs that are not on DNF’s essential drug list (EDL). The private importer

is responsible for submitting the application to DNF to register a new product. Per the regulation,

if it successfully registers a new product, the importer has an exclusive license to import it. The

DNF, however, has limited capacity to register new drugs and technologies; DNF is understaffed

and the registration process is still manual, taking up to a year to register a new drug. Under-capacity

and exclusivity have resulted in limited access to new technologies and drugs in the private market.

BOTTLENECKS: The bottlenecks listed below were reported by importers during focus group discussions and are considered to exist mainly in the public production market. The team did not capture specific information on the barriers for domestic manufacturing growth, as no manufacturers were included in the focus group discussion or workshop participation.

Delays in government payments in public contracts limit the number of companies

able to bid on public tenders. All respondents said the recurrent delays in government payments

put their businesses at risk. Despite the contractual obligation to pay 25 percent in advance (Decree

15/2010), the clause is almost never enforced. Instead, the government reportedly pays 100 percent

after delivery. Payments are delayed, and only importers with a large and diverse client base are able

to bear the risk of delayed payment associated with government contracts.

High interest rates in the banking sector are a major barrier for companies to invest

and expand their businesses. High interest rates also compound the risk of delayed payment

because they raise the cost of financing accounts receivable. Banks also typically require a financial

guarantee to extend credit.

Sales contracts are made in the local currency, while importers must pay manufacturers in hard

currency. Consequently, importers bear the risk of currency fluctuation. For example, the

exchange rate against the U.S. dollar was especially volatile from 2016 to 2017 but was more

stable in 2018.

Participants reported a lack of transparency in the selection process, which limits the

motivation of new players to participate. Additionally, there is a perception that the selection is

mainly driven by low prices, limiting the entry of smaller companies trying to compete on quality

or other factors.

MISAU needs to build its capacity to develop efficient and effective tenders. Some said

that the technical requirements do not match purchasers’ needs (e.g., purchase of medical

equipment does not fit the client’s space or maintenance capacity). The process is perceived as

cumbersome, with importers reporting that they had to resend information and documents that

were misplaced.

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WHOLESALE MARKET

As noted, among the three sub-markets of production, wholesale and retail, MMEMS was able to focus

more on the wholesale market.

FIGURE 14: OVERVIEW OF WHOLESALE DRUG MARKET

OVERSIGHT OF WHOLESALE MARKET: DNF is responsible for government oversight of the

wholesale market. Law No. 12/2017 authorizes DNF, soon to be ANARME, to register drugs, set pricing

and enforce sanctions related to fraud, counterfeiting and smuggling. DNF licenses wholesalers to ensure

compliance with sound importation practices, storage, conservation, safety and distribution. The law also

establishes a simplified registering procedure, to be authorized by the MISAU, for importing

pharmaceuticals in case of emergencies, stock-outs or need for specialized products that, due to low

profitability, are not usually available in the country. However, no current decree specifies how the

simplified procedure will be operationalized.

WORKSHOP PARTICIPANTS’ IDEAS TO IMPROVE THE PUBLIC TENDER PROCESS

Establish external audit procedures to verify the compliance of public entities (e.g., CMAM) with public procurement regulations.

Encourage joint action among private sector actors to reduce payment times and government compliance with contractual terms.

Engage the private sector in tender design through a bid conference to improve the procurement process and develop an updated catalogue of equipment, medicines and other supplies.

Enhance capacity within MISAU to design tenders to correctly reflect what is intended and the precise requirements of the end user.

Conduct market assessments prior to writing the terms of reference for tenders, to identify potential responders and prices and align requirements to capacity to respond.

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SUPPLIERS: The wholesale market in Mozambique is dominated by private companies who

provide various functions such as importation, warehousing, and distribution (transportation). In 2009,

approximately 30 companies were registered in Mozambique. Currently, DNF has registered 184, of which

90 percent have head offices in Maputo or Matola. Nonetheless, not all 184 importers are active, and DNF

does not keep updated information on importers’ activity post-registration.

Private importers supply both the public and private sectors, but the core of their business is with the

public sector. According to stakeholder interviews, only 20 to 30 of the 184 importers serve the private

market, which includes private retail pharmacies and private clinics.

CMAM and subnational-level MISAU share responsibility for public warehousing and distribution.

Both CMAM and MISAU provinces operate warehouses at every level of the public health system.

Distribution from warehouses to point of care in the public system, however, is highly fragmented between

different public and private entities. CMAM contracts private transporters to deliver commodities to

public health facilities in Maputo, Beira and Nampula. CMAM for essential medicines and USAID’s Global

Health Supply Chain Program-Procurement and Supply Management project (GHSC-PSM) for HIV/AIDS-

related products are responsible for storage and distribution of these commodities to the provincial levels.

However, both GHSC-PSM and CMAM contract private transport companies to deliver these

commodities from central/regional warehouses to provincial ones.

Once commodities are stored in provincial warehouses, DPS and SDSMAS are responsible for distribution

to facilities and public pharmacies. Some provinces (Zambézia and Tête) also contract private transport

companies to deliver products from the provincial warehouse (e.g., for Vaccines in Tête, all products in

Zambézia under the Last-Mile Supply Chain program) to health facilities.

This mixed and fragmented delivery system has evolved due to challenges associated with delivering

products to points of service for patients, known as the “last mile.” Stakeholders referred to multiple

studies that indicate MISAU lacks the resources to buy and maintain trucks to efficiently deliver

commodities throughout the public health system. As a short-term solution, all PEPFAR’s implementing

partners (EGPAF, CCS, FGH, FHI 360 and ICAP) provide financial and in-kind support to provinces to

distribute essential medicines and HIV/AIDS-related commodities to most Mozambican provinces.

Although the public supply chain has been exclusively a public function, CMAM’s recent experience of

contracting private transporters is changing the government’s approach. Recently, CMAM stopped

transporting commodities and instead contracted private transport firms for this purpose, using the

authority granted under the national procurement process (Decree 54/20015). Recently, CMAM moved

from a single transporter to several: Frigo Expresso Lda, FOSELEV Moçambique, NTS Transportes e

Serviços Lda and Transcrane Logistics. By contracting with multiple companies, CMAM seeks to create

competition and pressure to improve quality. CMAM is also actively considering different contracting

modalities. For example, CMAM and its partner GHSC-PSM have recently used delivery duty contracts

(DDCs) to distribute reagents. GHSC-PSM uses indefinite quantity contracts (IQCs) with private

transport companies to deliver its commodities.

As a result, the distribution of pharmaceutical commodities by private transport companies has evolved

rapidly, but with little regulation and oversight. MMEMS identified 87 private transportation companies

across the country, 10 of which having branches in multiple locations according to the map in Figure 15.

Although concentrated in Maputo City and Maputo Province, the private transport companies have

nationwide reach.

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FIGURE 15: DISTRIBUTION OF PRIVATE TRANSPORT COMPANIES

More information is needed about private transportation companies to adequately assess the private

transport sector. It is unknown how many companies are active in the health sector. Workshop

participants noted that despite growing interest in using private transport services, regulation and

oversight of companies transporting pharmaceutical products is weak. Moreover, there are no data on

the capacity of these companies to handle pharmaceutical transport (cold chain availabilities, security

measures, insurance) and comply with other requirements. In some cases, responsibilities are split across

more than one transportation company. Buyers may be expected to absorb the cost of any problems

related to mishandling of products.

BUYERS: Both public and private buyers operate at the wholesale level. Public buyers are the full range

of MISAU health facilities at the national, provincial and district levels. They do not literally buy from the

wholesalers, but instead provide inventory data to get new supplies or simply take receipt of commodities

allocated to them according to a health program plan. In some cases, public and private providers refer

their patients to a private facility or pharmacy with a more stable supply of drugs and other health

commodities. These patients pay out of pocket to purchase medicines at full market price.

Private buyers are retail pharmacies and private facilities. The private retail market is small and concentrated

in urban areas, likely due to the smaller number using private facilities and retail pharmacies but also because

the regulation of pharmacies requires a certificate of need stating that a pharmacy can only be licensed if at

least 7,000 people live in the catchment area. The small number of retail pharmacies and private facilities

outside of urban centers discourages investment by private wholesalers and transportation companies to

reach remote areas. As a result, private retailers must arrange transportation themselves. Private pharmacies

use their own vehicles or group with other pharmacies to contract a private transport company to obtain

supplies from a central location (e.g., provincial or district capitals).

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Recently, the fixed-percentage mark-ups previously regulated by a 1990 decree were updated by the

Diploma 21/2017. Government-updated regulations on cost have created further tensions between

private importers and private retailers. Government-regulated margins increased from 13.5 percent to

23.5 percent of cost of insurance and freight (CIF) for importers and decreased from 76.3 percent to

66.3 percent for retailers.

TABLE 4: DISTRIBUTION OF DRUG MARK-UPS AND INCIDENCE ON FINAL PRICE TO CONSUMER

Stage of distribution Statutory mark-up

Free on board (FOB) Value at the port of origin

Insurance and freight (CIF) Value at the port of shipment

Warehousing costs 9% on CIF

Importer profit 23.5% on CIF

Internal distribution 5% on CIF

Retailer profit 66.3% on CIF

BOTTLENECKS: Private sector actors participating in the wholesale market identified several

bottlenecks, many of which also affect the production and retail markets.

Related to decentralization, authority over the distribution/transport of commodities is split

between the central level and provincial levels; they can make some independent decisions without

coordination with the other level, such as the decision to contract with a private transportation

company. This fragmentation may limit opportunities to analyze the supply chain holistically to

identify and roll out initiatives to increase efficiency and economies of scale and better serve demand.

In comparison to the private supply chain, the public distribution system is seen as more rigid and

not allowing for a quick response to changes in demand.

Government regulations on mark-ups work as a disincentive for importers to distribute in rural

areas because those regulations do not account for the variable cost of transport to remote

locations. Moreover, the pricing structure creates tensions among different supply chain

actors (e.g., wholesaler and private retailers).

Insufficient information about and regulation of the private transport companies

(including cost of services and lists of transport companies and their capabilities, such as cold chain

logistics) hampers the ability of public and private buyers to evaluate and manage suppliers.

Quality enforcement along the value chain is challenging, due to poor regulation,

fragmented logistics and uneven capacity across logistic actors to handle pharmaceutical

distribution.

The small size of the private retail pharmacy market discourages investment by private

wholesalers and transportation companies to expand to remote areas.

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RETAIL PHARMACY MARKET

Figure 16 illustrates the dynamics in the retail pharmacy market.

FIGURE 15: OVERVIEW OF THE RETAIL DRUG MARKET

OVERSIGHT OF RETAIL PHARMACY MARKET: The government agency DNF is the lead regulatory

authority overseeing this market. Decree 21/1999 sets standards governing private pharmacies. It is being

revised to address many of the shortcomings in the current regulations. DNF issues facility licenses and

conducts facility inspections and supervisory visits to ensure that private pharmacies comply with

regulations. Only one level of retail facility license exists, irrespective of size, location or scope. A

certificate-of-need requirement states that a pharmacy can be licensed only if at least 7,000 people live in

the catchment area and no other pharmacy operates within a 400-meter radius. Additional regulations

WORKSHOP PARTICIPANTS’ IDEAS TO STRENGTHEN THE TRANSPORTATION MARKET

1. Build the capacity of public buyers to use their purchasing power to improve the quality of pharmaceutical transportation and logistics. This strategy should include building the technical skills of the procurement team at MISAU to ensure that bids are adequately designed to reflect the needs of beneficiaries and demand.

2. Build the capacity of private transporters, logistics and customs companies on special requirements of pharmaceutical logistics to ensure protocols are followed (cold chain, security, insurance).

3. Improve access and transparency of information about suppliers of transport and logistics services by developing a registry of companies and their capacities (e.g. cold chain, storage).

4. Given late payments by the government, work with the banking sector on options to facilitate lines of credit, account receivables financing, trade insurance, and other financial products to enable companies to cope with late payments.

5. Support DNF to develop policies and regulation to regulate the transportation marketfor health.

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limit pharmacy staff to conducting simple tests, such as blood pressure or glucose and cholesterol testing.

Finally, DNF also regulates the mark-ups and has set the maximum percentage mark-up for all drugs at

66.3 percent of the CIF price.

DNF is also in charge of issuing professional licenses to pharmacists, but the government is considering

transferring this function to a professional pharmacists association. By law, pharmacies must have a

pharmacist present in the outlet, but this is not happening in practice, and licensed pharmacists work in

various pharmacies. Access to qualified staff is even more difficult in rural areas. With a limited number of

qualified staff, DNF is reluctant to expand the scope of services pharmacies may provide to customers.

SUPPLIERS: Private pharmacies are a fast-growing business in Mozambique. Between 2015 and 2018,

the number of licensed pharmacies grew at an annual growth rate of 19 percent, increasing from 540 (INE

2015) to 845 (MISAU 2016). Most private pharmacies are individually owned; no pharmacy retail chains

operate in Mozambique. Stakeholders are confident that the pharmacy retail market is set to grow,

especially in provincial capital cities. Growth in rural areas is still uncertain.

Figure 17 shows the geographic distribution of registered private pharmacies in Mozambique. As it

illustrates, private pharmacies are present in all provinces. However, most are concentrated in Maputo

City and Maputo Province. Stakeholder interviews revealed that the retail pharmacy market is saturated

in these areas, prompting private pharmacists to expand to other provincial capitals with strong growth,

such as Cabo Delgado and Tete. Expansion of private pharmacies to rural areas remains a challenge.

FIGURE 17: DISTRIBUTION OF PRIVATE PHARMACIES

On the public side, pharmacies operate within MISAU hospitals and health centers. In addition, a few

pharmacies (49) belong to the parastatal enterprise Farmac, whose drug prices are partially subsidized by

the government. By law, all public facilities are required to provide commodities for almost free (between

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USD $0.016 and $0.081) for all citizens without consideration of income level. Public pharmacies face

regular stock-outs of drugs and equipment. Stock management at the facility level is poor and in numerous

cases, drugs have been diverted from the public sector to private practices.24

BUYERS: Buyers are consumers who buy over-the-counter products and fill prescriptions. As mentioned,

the 2015 IOF report showed the population’s continued low usage of private pharmacies (only

0.7 percent). Outside Maputo City and Maputo Province, the market for sales is limited, as consumers

have limited capacity to pay. Another factor that key informants stressed is the perception that health

care must be free. For decades, services have been free for all citizens in the public health system, and

patients are reluctant to pay for health services from private outlets. Moreover, no demand-financing

mechanism (such as vouchers) is in place to stimulate demand for private pharmacy services.

BOTTLENECKS: As the market analysis shows, many of the bottlenecks in the production and wholesale

markets contribute to problems in the retail pharmacy market.

Private pharmacies face difficulties in accessing capital from the banking sector.

Factors limiting access to capital include (1) a lack of understanding of the sector by commercial

banks, (2) high interest rates and (3) demanding loan terms.

Several factors constrain the growth of retail pharmacies in the rural sector. The

regulation requiring at least 7,000 people in the catchment area applies to urban and rural areas.

A limited number of licensed pharmacists operate even in urban areas. The government gives no

support for catalyzing rural business development.

Public sector supply of almost-free drugs and commodities to all consumers

regardless of income may crowd out private sector actors.

Capacity to pay for private services is limited, as the poverty rate is 48 percent of the

population.25

The DNF has limited capacity to enforce its current regulation and effectively control

prices and quality. With limited resources and staff, all actors agree that DNF is not able to

conduct necessary supervision of the pharmacy sector.

24 Assessment of The HIV Rapid Test Kits’ Supply Chain in Zambezia and Maputo Provinces, ThinkWell, 2017 25 https://www.worldbank.org/pt/country/mozambique/publication/mozambique-economic-update-less-poverty-but-more-inequality

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WAY FORWARD

From this rapid assessment, key stakeholders and MMEMS generated ideas in four areas to strengthen the

integration of the private sector in the Mozambican health system. The ideas described for improving

dialogue and strategic information are relevant to multiple markets (service delivery, supply chain,

education). A mix of general and supply chain-specific ideas fall under public procurement. Finally, the

transportation sector ideas are specific to that sector. They illustrate the range of areas where USAID,

government, businesses and other partners can take action to harness the private sectors in Mozambique

to improve health system performance and health outcomes.

CATALYZE PUBLIC-PRIVATE DIALOGUE

Moving forward on any ideas will require dialogue and coordination. Progress on this issue is useful to

multiple markets (service delivery, supply chain, education). The time appears right to take advantage of

the interest expressed by MISAU, USAID, business representatives and other partners to facilitate a

meaningful dialogue between the public and private sectors on sector-wide issues (e.g., consultation on

policies and regulations) and potential partnerships.

1. Support the private sector to continue to organize itself into membership organizationsthat represent key segments and markets, such as private hospitals, wholesalers, pharmaceutical transporters and retail pharmacies.

2. Establish an umbrella organization that brings together the different segments of the private sector so

they can coordinate and speak with one voice in dialogue with the public sector (e.g., a health market

group in the CTA).

3. Create greater awareness and understanding among MISAU leadership on the size and

scope of the private sector and foster internal discussions on MISAU’s vision of and approach to

private sector engagement. Once awareness is raised, facilitate the creation of a cross-department task

force to build government capacity to engage with the private sector. Members of the task force should

include the National Directorate for Planning and Cooperation (DPC), the reform department and the

National Directorate for Administration and Finance (DAF). Sharing the findings from this report and

the outcomes of the private sector workshop could be a first opportunity to kickstart this initiative.

4. Form a technical advisory group, including public and private stakeholders, to define and steer

further research and dialogue on public-private partnerships for health. The technical advisory group

could set the strategic direction of further private sector assessment, validate its findings and co-

develop recommendations.

STRENGTHEN THE COLLECTION, ACCESS AND USE OF STRATEGIC INFORMATION

The rapid assessment uncovered several gaps in data that could be addressed with targeted data collection

and analysis and improved information systems, such as registries of businesses in a specific market. Better

data would benefit all markets. Businesses want more and higher-quality data about their own markets,

public procurements and policies and regulations that could affect them. Government agencies and private

associations need data to exercise stewardship functions such as quality assurance, policy, planning and

regulation. Accurate data on both the public and private sectors, insightful analysis and easy access will

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inform dialogue and coordination (see above), as well as some of the following ideas in the next section

for the drug supply chain market.

1. Support market actors to collect and share market information among themselves. As

discussed during the private stakeholder workshop, there is a strong interest in and need to better

understand the transportation market, and a first task force could be created to improve information

about this sector.

2. Facilitate a two-way discussion between public and private sectors to improve data

sharing:

a. Identify constraints to private sector reporting and collaborate on strategies to make it easier for

businesses to share data.

b. Support the MISAU to analyze and present data on the private health sector and to share the data

with not only the senior ministry of health leadership but also private sector groups to foster

greater understanding of the private sector and to discuss their possible contribution to national

health priorities.

c. Support government units to better communicate with the markets they most affect. For example,

it was suggested that MISAU/CMAM develop a ministerial annual plan on supply chain operations

to allow private actors to better prepare to meet public sector demands.

d. Conduct analysis on market scope, size, concentration, trends and the constraints to growth and

performance to generate information valued by companies, associations and the public sector.

3. Conduct a deeper market analysis of the drug supply chain to build on this rapid assessment and

the momentum of the MMEMS workshop.

PROFESSIONALIZE PUBLIC PROCUREMENT

Stakeholders engaged in the drug production and wholesale markets all expressed challenges in responding

to government procurement of drugs and related supply chain services (transport and logistics). The list

of ideas below is also relevant to the procurement of equipment and consumables, and potentially to other

markets outside the supply chain. The ideas would warrant further analysis to take forward.

1. Set up joint actions among private sector actors to reduce payment times and government compliance with contractual terms.

2. Given late payments by the government, work with the banking sector on options to facilitate lines of credit, account receivables financing, trade insurance and other financial products to enable companies to cope with late payments.

3. Engage the private sector in tender design through a bid conference to improve the quality of tenders’ specifications and to ensure the bids are adequately designed to reflect the needs of beneficiaries and demand.

4. Engage the private sector to update the catalogue of equipment, medicines and other supplies.

5. Enhance capacity within MISAU to design tenders to reflect what is intended and the precise requirements of the end user.

6. Conduct market assessments prior to writing the terms of Reference for tenders, to identify potential responders and prices and align requirements to capacity to respond.

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7. Establish external audit procedures to verify the compliance of public entities (e.g., CMAM) with public procurement regulations.

STRENGTHEN THE TRANSPORT MARKET

1. Build the capacity of private transporters, logistics and customs companies on special requirements of pharmaceutical logistics to ensure protocols are followed (cold chain, security, insurance).

2. Improve access and transparency of information about suppliers of transport and logistics services by developing a registry of companies and their capacities (e.g., cold chain, storage).

3. Support DNF to develop policies and balanced approaches to regulate the transportation market for health.

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ANNEX 1: MARKET-BASED ANALYTICAL FRAMEWORK

Supply and demand: Market systems provide a space for consumers and suppliers to come together

to carry out transactions, referred to as market operations. As the text box illustrates, there are different

“buyers” and “sellers” depending on the specific health market.

EXAMPLES OF HEALTH MARKETS

The easiest type of health market to understand is the interaction between a health care

provider and a health consumer. However, there are other health markets in a health system.

Market actors—buyers and suppliers—vary according to the specific market. For example, in the

case of local production of health products and drugs, the multiple manufacturing companies are

the suppliers, and local/regional MOH units, as well as local wholesalers, are the buyers. A

market system analysis begins by defining the market its actors.

A market system includes multiple actors (private sector, government agencies, representative

organizations and civil society) who carry out numerous functions and use different policy levers (both

formal and informal) to shape market operations. The market-based analytical framework defines a specific

health market and its corresponding market actors, and examines policies, market conditions and

institutional arrangements that influence that market’s operations.

Market actors: In a market system approach, the main categories of health actors are government, the

private sector and its representative bodies, and civil society representing consumer and marginal

populations.

Policy levers: Governments play a critical role in ensuring access, affordability and quality of health

services for their citizens. A ministry of health has several policy tools and instruments at its disposal to

achieve these sector goals. A key tool among these is financing. Some dimensions of financing and subsidies

should be considered in a landscape analysis, such as the following:

Direct free provision of health goods and services, cash grants, and subsidies are all common

financing tools used in the health sector. These demand-side financing tools can stimulate

demand in a specific health market, for example, vouchers for maternity services.

In recent years, international donors have promoted social health insurance and service contracts

to deliver specific health services or specialty care, and to perform nonclinical (e.g., waste

management, catering, security) functions. These supply-side financing tools help “crowd in”

market actors that may not have supplied services in this space before. Others include loans and

grants.

Several international agencies have pumped large amounts of money and resources (including

commodities, equipment, and staff) into specific health markets driven by their priorities (e.g.,

HIV/AIDS, malaria, child health). When applied with little regard for the market dynamics, this

form of financing and subsidies—also known as supply-side financing—can distort the market

and “crowd” out the commercial sector.

Information is another important factor to examine. Information asymmetry often contributes to a

health market’s underperformance or failure. Some ministries of health in developing countries are

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reluctant to share information with the private sector, particularly the PFP sector. Mistrust between the

public and private sectors, as well as suspicion and misunderstanding of the profit motive, still linger among

policymakers and ministries of health officials in some countries.26 Limited access to information on

government health priorities, epidemiological trends, and socioeconomic profiles of underserved

population groups restricts the PFP and PNFP sectors’ ability to gauge market potential and may impede

their efforts to align their activities to public health goals. Private health sector actors can also be

distrustful. They can be reluctant to share information with government for fear that they will be subject

to more taxes and fees or possibly be closed down due to noncompliance.

Other important factors to examine in a market system are the regulations governing who can deliver

what service and which products, under what conditions. These social regulations (facility licensing and

accreditation, professional certification and continuing medical education and relicensing) can improve

quality, but they also influence supply and demand in a health market. Compliance with these rules requires

a level of advanced training (medical/health-related), raising the barrier to entry into a health market.

Typically, the PFP health sector remains mostly unregulated, allowing for the growth of a sizeable informal,

illegal health sector that creates strong competition with the formal private sector.

Several economic regulations influence market operations. These include pricing policies, tax policy,

land access and so on. Ministries of health often “cap” or limit mark-up, profit margins and consultation

fees, with the goal of making health care services more affordable to the consumer, but these regulations

may instead crowd providers and suppliers out of the marketplace. Similarly, governments provide tax

relief for key economic sectors (e.g., technology, extractive) to encourage growth, but often overlook

similar tax strategies to grow the private health sector. Reducing import taxes on materials and inputs, as

well as drugs and medical devices, is an effective lever to stimulate new entrants into manufacturing and

imports.

26 Hozumi, 2008

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ANNEX 1I: CATEGORIZATION OF HEALTH FACILITIES

Category Description

General Hospitals

Health facilities providing inpatient and outpatient medical and pharmaceutical assistance for sick people, and for pregnant and parturient women. General hospitals are situated in urban areas, serving a minimum population of 200,000 inhabitants through a range of 120 to 270 hospital beds, and are required to provide, among other things, emergency services, an operating room, a laboratory, a pharmacy, and patient transport service.

Specialty Hospitals

Health facilities providing medical assistance focused on one medical or surgical specialty through a minimum of 30 hospital beds and at least 5 nurses. Specialty hospitals are required to have, among other services, a specialist per 20 hospital beds, an operating room (if surgical), a laboratory, a pharmaceutical warehouse, an X-ray department, and patient transport service. Specialty hospitals are allowed to provide medicines only to its own patients.

Clinics Health facilities providing inpatient and outpatient services to sick people, and to pregnant and parturient women. By law, clinics are required to have resources comparable to speciality hospitals.

Medical Centers

Health facilities providing primary health care services, equipped with a maximum of 24 maternity beds and 4 observation beds for urban centers, and 30 hospital beds plus 12 maternity beds for rural centers. Each medical center is required to have a laboratory and a pharmacy and is allowed to provide medicines only to its own patients.

Medical Rooms Health facilities providing outpatient general or specialty services, according to the specialty of their professionals.

Residential Area Health Posts

Health facilities providing medical assistance, preventive care, and health promotion services (vaccination programs, maternal and child health care, family planning). Health posts are allowed to have a maximum of four hospital beds for deliveries and two for medical observation.

Rehabilitation Centers

Health facilities providing outpatient care aimed to restore patient’s functions, including use of prosthetic implants.

Workplace Health Posts

Health facilities built by companies providing occupational health services to their workforce.

Nursing Centers Health establishments exclusively dedicated to outpatient nursing care.

Laboratories Health establishments dedicated to carry out medical tests, radiological examinations, or other diagnostic tests.

Health Promotion Centers

Health establishments aimed at encouraging healthy behaviors.

Health Training Institutes

Health establishments providing education for health-related human resources.

Patient and pregnant women transport services

Private services by land, air, maritime, river, and rail transport exclusively dedicated to patients and pregnant women.

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ANNEX 1II: DATABASE INFORMATION

Category Source and Date Information Collected

Medical Training Institutes and Universities

Ministry of Science and Technology, Higher and Technical Vocational Education, 2017/2018

Name of entity, Province, District, Courses offered

Private Health Care Providers DNAM, Ministry of Health, 2014-2016 Name of entity, Type, Province, District, Specialties offered

Pharmacies DNAM, Ministry of Health, 2014-2016 Name of entity, Province, District, Address

Laboratories Ministry of Health, 2014-2016 Name of entity, Type, Province, District, Specialties offered

Patient Transport Providers Ministry of Health, 2014-2016 Name of entity, Type, Province, District

Drugs and serums manufacturers

Ministry of Health Name of entity, Province, District, Address

Customs Brokers Camara dos Despachantes, 2018 Name of entity, Province, District

Logistic and Warehousing Whitepages, 2018 Name of entity, Province, District, Address, Activity

Freight Forwarders Whitepages, 2018 Name of entity, Province, District, Address

Transport firms (cargo) Whitepages and Cargo Terminal, 2018 Name of entity, Province, District, Address, Activity

Importers/Distributors/ Retailers

DNF, Ministry of Health Name of entity, Province, District, Address

Insurance Providers Whitepages and ISSM, 2018 Name of entity, Province, District, Address, Authorized branch

Health Plan Providers Websites and inquiries, 2018 Name of entity, Province, District, Address,

CSOs, CBOs and FBOs Ministry of Health, 2018 Name of entity, Province

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ANNEX IV: PERSONS INTERVIEWED

INDIVIDUAL INTERVIEWS

Name Designation Organization

Alberto Fanequiço Lissane Treasurer ANAFP

Dimitri Peffer Chief of Party Chemonics (GHSC-PSM)

Gilberto Pedro Manuel Head of division DNF

Juma Marde Technician at Private Medicine Department

MISAU

Luís Matsinhe Director at PPP Unit MEF

Marcia Technician DNF

Marina Karagianis National Director DPC

Dra. Pasqua Medimoc

Santana Afonso Director General Ortomédica

Sérgio Seny National Director CMAM

FOCUS GROUPS

Name Organization

Betuel Romão L Duarte dos Santos

Natalino Magaia Medimoc

Santana Afonso Ortomédica

Edson Neves Sidat Medical Solution

Mustaque Sidat Sidat Medical Solution

Alexandre Fernandes Separation Scientific

Paulo Bastos Manica Freight Services Moçambique

Nordino Ubisse Manica Freight Services Moçambique

Amina Mohomede DHL

Moisés Júnior ARNAUD

Assemane Aboobacar VELOGIC

Eurico Gonçalves Bolloré Transport & Logisyics Moçambique S.A.

Graviere Pierre Bolloré Transport & Logisyics Moçambique S.A.

Leonor Magaia Transportes e Logística

Dimsson Chambal Expresso Cargo & Serviços

Fernando Ernesto INTELLICA

Graciete Carilho STV

Miguel Cossa HCB – Hidroeléctrica de Cahora Bassa

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ANNEX V: WORKSHOP ATTENDANCE LIST

Name Designation Organization

Clesia Mabunda Planning officer MISAU

Hortencia Laice DAF

Nilton dos Santos Head of support & institutional development CTA

Kinsy Hood Supply Systems Strengthening Specialist USAID

Peter Cloutier Health office chief USAID

Eddie Kariisa Team Leader, Health Systems Health Systems and Commodity Security Division

USAID

Stephen Guelz Private sector officer USAID

Valdir Jethá Director Moza

Zulmira Rosaura da Silva Technical Director -IMAP Chemonics (GHSC-PSM)

Dimitri Peffer Chief of party (GHSC-PSM) Chemonics (GHSC-PSM)

Ryan Kelley Country representative PSI

Ruth Bechtel Country director VillageReach

Cecília Bilale Executive director Associação Moçambicana para o Desenvolvimento da Família

Abby Buwalda Head of resource mobilization N´weti

Joao Simbine Executive director FUNDASO

Santana Afonso Director general Ortomédica

Alexandre Fernandes Director general Separation Scientific

Ricardo Santos President of the Executive Commission Medis Farmaceutica, Lda

Miguel Sousa Brand Manager Medis Farmaceutica, Lda

Melanie Isaac Patient services Lenmed Privado

Lalutha Chellan Credit controller Lenmed Privado

Aldo Lafieri Credit controller Lenmed Privado

Irene Chin Administrator ICOR

Maria Beatriz Ferreira Director ICOR

Jessy Sitoe Executive director Expresso Cargo & Servicos

Dimsson Chambal Marketing and Commerce director Expresso Cargo & Servicos

Amina Mohomede Sales manager DHL

Sonia Freire Program manager Vamos Ler!

Paulo Bastos Public relations officer Manica Freight Services Moçambique

Flavio Transit agent

Helio Banze Social investor coordinator Anadarko

Tabita Macabur Community Health focal person MRV (Eni, ExxonMobil and CNPC)

Annegret da Silva M&E officer MMEMS

Eduarda Cipriano Deputy COP & senior collaboration advisor MMEMS

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Name Designation Organization

Luís Reves Technical deputy COP & acting COP MMEMS

Federica Fabozzi Analyst ThinkWell

Caroline Phily Program manager ThinkWell

Mauro Cuna Analyst ThinkWell

Yara Cumbi Analyst ThinkWell

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ANNEX VI: BIBLIOGRAPHY

Decree n. 21/1999. Boletim da Republica; Publicacao Oficial da Republica de Mocambique; 2 Suplemento; Imprensa Nacional de Mocambique; I serie- Numero 17; 4 May 1999.

Decree n. 9/1992. Boletim da Republica; Publicacao Oficial da Republica de Mocambique; 2 Suplemento; Imprensa Nacional de Mocambique; I serie- Numero 21; 26 May 1992.

Diploma 21/2017. Boletim da Republica; Publicacao Oficial da Republica de Mocambique; Imprensa Nacional de Mocambique; I serie- Numero 40; 13 March 2017.

Diploma n. 29/2003. Boletim da Republica; Publicacao Oficial da Republica de Mocambique; 2 Suplemento; Imprensa Nacional de Mocambique; I serie- Numero 14; 2 April 2003.

Harding A and Montagu D. Public Policy toward the Private Health Sector. Introduction and Course Analytical Framework. Lecture, 2011.

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