According to this policy brief, European aid donors are taking steps to meet promises to deliver a higher share of development aid directly to governments in the form of budget support. The brief points to positive and negative consequences of budget support. While budget support is argued to enhance local accountability, it may not succeed unless government recipients are accountable to their populations for how the funds are used. A more self-serving reason is argued for donors to turn to budget support – it enables the donor to increase aid delivery, thus meeting disbursement rates, without requiring an enlargement of their own administrative operations, thereby keeping costs down. This motivation has more to do with donors’ institutional dynamics than with poverty reduction. The brief calls for a more nuanced political analysis to ensure that budget support enhances rather than undermines democratic accountability in developing countries.
Resource allocation and health financing
The WRR Council notes that it is significant that three quarters of Dutch development aid is spent on healthcare and education, and less than a quarter on infrastructure, agriculture and economic activity. Although it is important to provide social care from a humanitarian perspective, the Council adds that it does not automatically lead to the fundamental changes which promote growth and development, and which gradually make countries and peoples self-sufficient. It is important to start approaching development from a far broader perspective. Stability and security, trade conditions that facilitate development, combating tax evasion, a fair tax system which does not entice companies to pay taxes in the Netherlands instead of in developing countries, less stringent intellectual property rights for poor countries, a more productive policy on knowledge exchange, and a more properly thought-out migration policy can all be of greater significance to the development of countries than classical aid provided in situ. The development perspective will have to be better incorporated into policy in these areas, and that calls for more policy coherence for development. Furthermore, attention to global public goods such as financial stability, climate policy and the eradication of contagious diseases will become increasingly important.
This document outlines Greenpeace’s assessment of the decisions taken at the Copenhagen Summit on Climate Change held in Denmark in December 2009. In this, Greenpeace calls for a financial mechanism for dealing with climate change that is transparent and inclusive. At Copenhagen, Governments agreed to establish a Copenhagen Climate Fund, which Greenpeace believes is one step to ensuring that investments take place where they are most needed, noting that developing country action on climate change must have technological and financial support from industrialised countries.
South Africa is reported to be facing large cuts in external funding, such as in falling US funding, for its HIV and AIDS programme over the next five years, despite needing an extra R2-billion a year to reach all those who need antiretroviral treatment. Almost a million South Africans will soon be on lifelong antiretroviral treatment and this number will triple in the next decade if government keeps to its implementation plan. Scenario planning by Treasury indicates that the demand for treatment and care will peak in 2021, when the country would need close to South African Rands 30-billion (about 4.3 billion US dollars).
This information sheet presents evidence on the distribution of benefit of health services in South Africa. Within the public sector, the poor benefit relatively more than the rich from outpatient services at lower levels of care. The rich benefit considerably more than the poor from regional and central hospital services (both outpatient and inpatient services) and also benefit more from public sector inpatient services overall. The rich benefit far more from private sector services than the poor; the richest 40% of the population receive about 70% of the benefits of private outpatient services (from general practitioners, specialists, dentists and retail pharmacies) and nearly 80% of the benefits of inpatient care in private hospitals. Overall, health care benefits in South Africa are very ‘pro-rich’, with the richest 20% of the population receiving more than a third of total benefits while the poorest 20% receive less than 13% of the benefits, despite poor people bearing a much greater share of the burden of ill-health than rich people.
The South African Budget and Expenditure Monitoring Forum meeting in February 2010 was reported to raise a number of issues relevant to antiretroviral (ARV) tenders to ensure adequate supplies of appropriate medicines at the lowest possible prices. The meeting noted the need for co-operation between treasury and health departments to achieve a scale of procurement to use the leverage of the world’s largest ARV treatment programme to get the best possible deals from drug companies.
In this paper, the authors state that the micro-macro paradox has been revived. Despite broadly positive evaluations at the micro and meso-levels, they note that recent literature has turned decidedly pessimistic with respect to the ability of foreign aid to foster economic growth. Policy implications, such as the complete cessation of aid to Africa, are being drawn on the basis of fragile evidence. This paper first assesses the aid-growth literature with a focus on recent contributions. The aid-growth literature is then framed, for the first time, in terms of the Rubin Causal Model, applied at the macroeconomic level. Its results show that aid has a positive and statistically significant causal effect on growth over the long run with point estimates at levels suggested by growth theory. It concludes that aid remains an important tool for enhancing the development prospects of poor nations.
This paper sets out and explores the link between donor aid and recipient country budgets, and the role greater transparency about aid can play in improving budget transparency, the quality of budgetary decisions, and accountability systems. The paper goes on to explore how current initiatives to improve aid transparency can best support better budgets and accountability in aid dependent countries. These efforts provide an important opportunity to enhance the effectiveness of both the recipient governments’ own spending and the aid they receive from donors. It concludes that publishing better information on aid requires compatibility with recipients’ budgeting and planning systems. The research findings suggest that recipient budgets bear many similarities, but this is not reflected in current formats for reporting aid. Finally, it concludes that the poorest countries will lose out if donors do not publish aid information that is easy to link with recipient government budget systems.
Having considered a wide range of options, the Expert Working Group put forward the following fundraising proposals based on the likelihood they can generate new funds for health research and development in a sustainable way: a new indirect tax (a consumer-based tax); voluntary business and consumer contributions; new donor funds for health research and development; and a new indirect tax. The High-Level Taskforce on Innovative International Financing for Health Systems estimates that additional funding for health might grow to some US$7.4 billion per annum by 2015 from traditional donors (under optimistic assumptions and if donors meet their commitments to aid) and that developing country contributions might be in the range of US$9.5–12.1 billion per annum. However, there would be a gap in available additional funds until then, as additional resources rise from US$2.8 billion in 2009 to US$7.4 billion in 2015. The following five proposals should provide funding allocation across most research and development stages and developers in a manner that is best designed to maximise public health returns in the developing world: funding via product development partnerships; direct grants to small and medium-sized enterprises and grants for developing country trials; milestone prizes; end-prizes (cash); and purchase or procurement agreements.
According to the authors of this study, the global economy is passing through a period of profound change. They identify three global crises. The immediate concern is with the financial crisis, originating in the North. The South is affected via reduced demand and lower prices for their exports, reduced private financial flows and falling remittances. This is the first crisis. Simultaneously, climate change remains unchecked, with the growth in greenhouse gas emissions exceeding previous estimates. This is the second crisis. Finally, malnutrition and hunger are on the rise, propelled by the recent inflation in global food prices. This constitutes the third crisis. These three crises interact to undermine the prosperity of present and future generations. Each has implications for international aid and underlines the need for concerted action.