The notable increases in funding from various donors for health over the past several years have made examining the effectiveness of aid all the more important. This study examines the extent to which donor funding for health substitutes for – rather than complements – health financing by recipient governments. It found evidence of a strong substitution effect. In fact, the proportionate decrease in government spending associated with an increase in donor funding is largest in low-income countries. The results suggest that aid needs to be structured in a way that better aligns donors’ and recipient governments’ incentives, using innovative approaches such as performance-based aid financing.
Resource allocation and health financing
Does funding from donors displace government spending for health in developing countries?
Farag M, Nandakumar AK, Wallack SS, Gaumer G and Hodgkin D: Health Affairs 28(4): 1045–1055, 2009
European Commission's humanitarian aid department releases annual report
ECHO: 1 July 2009
According to the European Commission’s annual report, overall spending in 2008 was 937 million euros (about US$1.302 billion) across 60 countries. Of that, about three-quarters went to the top 25 recipient non-profit agencies and an aviation contractor. United Nations (UN) agencies took 46% of the overall spend, while 44% went to non-governmental organisations (NGOs). NGOs from the UK, France and Germany account for over half of NGO funding. More than half was spent in Africa. The top five countries and territories receiving the most funding, including food aid, were (in millions of euros) Sudan (161.3), Occupied Palestinian Territories (75.1), Democratic Republic of Congo (53.9), Ethiopia (48.5) and Kenya (36.7). The top five organisational recipients were (in millions of euros) the UN World Food Programme (228), the International Committee of the Red Cross (78.9), the UN Refugee Agency (53.5), the UN Relief and Works Agency (38) and the UN Children’s Fund, UNICEF (32.6).
Global crisis forces African governments to turn to IMF
Wroughton L: Reuters, I June 2009
Years after graduating from dependence on the International Monetary Fund (IMF), many African countries are having to call upon the fund for assistance to cope with a global economic crisis that is not their fault. African economies are struggling against collapsing demand for their products, volatile commodity prices and falling foreign investment. Among countries seeking IMF aid are Kenya and Tanzania – two of Africa's biggest economic reformers. The IMF on Friday approved a total of US$545 million in emergency funding for the pair of East African countries. Meanwhile, Ghana and Mozambique are in talks with the fund to secure financing support. Other countries that have sought fresh help from the IMF in recent months include Ivory Coast, Ethiopia, Sao Tome and Principe and Zambia.
Is the G8 fit for purpose?
Editorial: Eldis Development Reporter, 16 July 2009
To compound the apparent inadequacy of the G8, the meeting in Italy got off to an inauspicious start. The Italian hosts were not only under fire for not preparing a constructive agenda, preferring the US to take the lead, but were threatened with expulsion from the G8 for unabashedly reneging on aid pledges to double aid to Africa made at the Gleneagles summit in 2005. According to ActionAid, Italy is US$1.037bn behind in aid arrears, France is further in arrears with US$1.249bn, Germany US$497m, the United States US$263m, Canada US$186m and Japan US$138m. Only Britain is on course to hit its target. This lack of spending is having a devastating effect on Africa’s ability to reach its Millennium Development Goals’ (MDGs) targets. As the new UN MDGs 2009 report states ‘for many developing countries, lower levels of aid would not only impede further progress, but could reverse some of the gains already made.’ Indeed, the proportion of undernourished per population is rising again in sub-Saharan Africa after concrete advances had been made.
No money, no services in Malawi
PlusNews 1 July 2009
An inability to access adequate funding is crippling efforts by community-based organisations (CBOs) to help some of Malawi's most vulnerable children. For example, Monkey Bay, 125km east of the capital, Lilongwe, has some of the highest poverty and HIV-prevalence rates in the country, according to the government's National Statistics Office. Yet a recent report by the Regional Network for Equity in Health in East and Southern Africa (EQUINET), ‘Promoting and protecting health of orphans and vulnerable children in Monkey Bay, Malawi’, said many community-based organisations (CBOs) in the area could not access government funding to support interventions targeted at orphaned and vulnerable children. Donald Makwakwa, programme officer for the Malawi Network of AIDS Service Organisations (MANASO), which provides technical support to CBOs, explained that many grassroots bodies could access technical assistance, but faced periodic funding shortages due to late allotments by the National Aids Council.
Proposed new NHI system in South Africa: Trust is key for success
Gilson L: Health-e News, 21 June 2009
The South African government has proposed a national health insurance (NHI) system, but it will face three key challenges as it seeks to re-build trust in the health system. First, discussions so far about NHI have been highly technical and held behind closed doors, will little civil contribution except for interest groups. Second, many public health workers are tired of frequent workplace changes and may view having to adapt to NHI systems as simply making their work more difficult, especially when employees note that their employees often fail to deliver on promises made: ‘I don’t trust them,’ said one nurse. Third, implementing an NHI remains a complex exercise and cannot be achieved with just legislation. The steps of policy implementation must be laid out so that initial actions build the basis for success in subsequent actions. For NHI to succeed, we must strengthen the public health system by increased investment, despite the current global economic downturn.
Taskforce report calls on G8 to support its recommendations on innovative financing
Taskforce on Innovative International Financing for Health Systems: 2009
The Taskforce's proposals aim to meet a US$10 billion funding gap through a number of means including the expansion of a mandatory solidarity levy on airline tickets, the increased use of the International Financing Facility for Immunisation and the strengthening in capacity of government in their health sector. Following the success of a series of meetings and consultations in Doha, London, Johannesburg, Abuja and Paris over the past seven months the Taskforce has finalised its recommendations on innovative international financing for health systems, which it calls on the participants of the G8 summit to support. The intention is spur world leaders on to strengthen the urgency for a combined effort to tackle the issue of providing adequate health systems for developing countries and increase vital aid flows. Strong political backing for each of the initiatives recommended is critically important. Successful implementation of these recommendations requires purposeful engagement with civil society, both in donor countries and recipient countries.
Taskforce Working Group 1 Technical Report: Constraints to scaling up and costs
Taskforce on Innovative International Financing for Health Systems, 5 June 2009
This report calculates that, if financial commitments are met, there is on average, across all countries, no financing gap in 2015. However, donors and recipient governments are currently far from delivering on agreed targets, and the economic recession is making this more difficult. If current relationships of health spending to GDP remain unchanged, the financing gap is will be US$28–37 billion in 2015. If commitments are met, for sub-Saharan Africa (SSA), there will be a funding gap of US$3–5 billion. In the no-change scenario, the funding gap for SSA is predicted by 2015 is US$26–24 billion. Financing arrangements must ensure sustainable and equitable domestic financing structures, predictable external finance, improved risk pooling over time, and effective purchasing of priority services. Service delivery arrangements should reflect the most cost-effective ways of providing services that are accessible, responsive to users, and equitable, taking advantage of both public and private providers where appropriate.
Taskforce Working Group 2 Technical Report: Raising and channeling funds
Taskforce on Innovative International Financing for Health Systems, 3 June 2009
Depending on decisions taken by politicians and parliamentarians, a large part of the additional US$36–45 billion needed in 2015 could be available in an entirely predictable and sustained manner. Most of the gap will need to be filled by domestic resources contributed by national governments and citizens. But even if governments in low-income countries give more priority to health, they will still be unable to meet the required costs of scaling up health systems and providing free essential health services. If low-income countries are to reach the health millennium development goals, international funding will have to complement domestic health resources. Development partners are strongly urged to fulfil the commitments they have already made. Innovative development finance is the way forward, with non-traditional applications of official development assistance (ODA), joint public-private (or private) mechanisms and flows that support fund-raising, engage partners as stakeholders and deliver financial solutions to development problems on the ground.
Time to start doing more with less money
PlusNews: 21 July 2009
While the worldwide AIDS community bemoans the global economic crisis and its impact on funding streams for the HIV and AIDS response, several speakers at the Fifth International AIDS Society (IAS) Conference on HIV Pathogenesis, Treatment and Prevention, which took place in Cape Town, South Africa, from 19–22 July, called on implementers to start doing more with less. Dr Stefano Bertozzi of the National Institute for Public Health in Mexico said choosing interventions more strategically would help, he said, citing abstinence programmes as one example of an approach that lacked evidence to support it. Focused, well-managed programmes targeted at populations with the greatest need were the most cost-effective, as were programmes integrated with services for related health issues, such as tuberculosis. Programmes that worked towards long-term goals, such as training new doctors and nurses, empowering women, and changing social norms, were more efficient than those with short-term targets, which looked good on annual reports but did little to change the course of the epidemic.