According to AFRODAD, tax revenues are, on average, lower in developing countries than in rich countries; the average revenue in African countries was approximately 15% of GDP in 2008. Hence the argument that if developing countries were able to collect sufficient tax revenues, they might be able to increase their independence, the provision of social protection, infrastructure and basic services such as education and health care which are crucial for development. The two reports on Mozambique and Zimbabwe reveal that mobilising domestic resources as a means to financing development has become an important development issue, a shift from the past emphasis on financing development from aid and external borrowing. For a long time mobilising domestic revenue has been neglected, despite being a better long-term option, AFRODAD argues. The reasons for this included the inherent pessimism about raising revenue, a prevalent ‘small-state’ ideology and a preference for foreign aid-led solutions. AFRODAD proposes that progressive taxation should play an important role in shaping the distribution of benefits from higher-income citizens to those most in need in a country. The reports also examine the various complexities surrounding taxation as a development finance mechanism in the two country cases including the current tax framework, the amount and extent of tax evasion and more specifically tax incentives and governance in various sectors of the economy. They conclude with policy and institutional recommendations to the governments of Mozambique and Zimbabwe – and civil society – to refine their tax systems.
Resource allocation and health financing
In this study, researchers analysed Global Fund grant data from 122 recipient countries as an initial exploration into how well these grants are performing in fragile states as compared to other countries. Since 2002, the Global Fund has invested nearly US$ 5 billion in 41 fragile states, and most grants have been assessed as performing well, the researchers found. Nonetheless, statistically significant differences in performance exist between fragile states and other countries, which were further pronounced in states with humanitarian crises. This indicates that further investigation of this issue is warranted: variations in performance may be unavoidable given the complexities of health governance in fragile states, but may also have implications for how the Global Fund and others provide aid. For example, faster aid disbursements might allow for a better response to rapidly changing contexts, and there may need to be more of a focus on building capacity and strengthening health governance in these countries.
South Africa’s provincial health departments have dramatically improved their financial management, according to Treasury officials. The nine departments collectively under-spent by US$380 m. in 2010, reversing the trend which saw them run into the red to the tune of $350 m. in the fiscal year 2009-10. The provinces had a combined health budget of $14.7 bn in 2010. This reduction reduces pressure on the Treasury to bail out cash-strapped provinces, a measure it has been loathe to consider for fear of sending the wrong message to provinces that have failed to manage their resources. However, these improvements can mask overspending on some areas at the expense of under- spending on others. The Treasury’s figures show provincial health departments collectively overspent on personnel budgets, but under-spent on capital assets and goods and services in 2010. This created the risk that staff costs might be crowding out expenditure in other critical areas, says the Treasury. It is calling on the government to look carefully at the reasons for underspending in each province, and ensuring that departments are aiming for savings such as negotiating cheaper medicines or more competitively priced tenders.
The authors of this paper reviewed aid to health and borrowing from the International Monetary Fund (IMF) between 1996 and 2006. They found that, on average, for each US$1 of development assistance for health, only about $0.37 is added to the health system. In their comparison of IMF-borrowing versus non-IMF-borrowing countries, non-borrowers add about $0.45 whereas borrowers add less than $0.01 to the health system. Health system spending grew at about half the speed when countries were exposed to the IMF than when they were not.
Held in Istanbul, Turkey on 9-13 May 2011, a United Nations summit to assist least-developed countries (LDCs) ended with new pledges, but the results were disappointing, according to this article. The Istanbul Programme of Action, adopted by the Conference, merely states that those countries already providing more than 0.20% of their gross national product (GNP) as aid to LDCs will continue to do so; those which have met the 0.15% target will undertake to reach 0.20%; and others which have committed themselves to the 0.15% target will either achieve the target by 2015 or try their best to do so. This weak statement with its loopholes was rebuked by the civil society groups attending the Conference. The author of this article notes that the Programme of Action seems to contain more commitments by LDCs to take their own actions than commitments by rich countries to assist them, which is a reversal from previous LDC conferences.
The United Nations Children's Fund has publicly listed for the first time the price it pays for vaccines. The decision - which immediately revealed wide disparities in what vaccine makers charge - could lead to drastic cuts in prices for vaccines that save millions of children's lives. UNICEF paid US$747 million for vaccines in 2010, buying over two billion doses for 58% of the world's children. Shanelle Hall, director of UNICEF's supply division and the driving force behind the new transparency policy, said she hoped to extend it to other goods that the organisation buys, including mosquito nets, diagnostic kits, essential medicines and ready-to-eat foods for starving children. Newer procurement agencies like the Global Fund to Fight AIDS, Tuberculosis and Malaria routinely reveal what they pay for drugs. But vaccines have been largely exempt because UNICEF has avoided confrontation with its suppliers, posting only the average prices it pays; and external funders had not demanded more details. Doctors Without Borders have commented that when external funders see the differentials they will insist on procurement at better prices.
Health insurance cover is gradually increasing among the Tanzanian population since its introduction over a decade ago, according to this policy brief. However, wealthier groups working in the formal sector are more likely to benefit from this development than poorer groups. The diversity of schemes, in terms of contribution rates and benefits offered, means that the effect of insurance is inconsistent, both in terms of the amount and nature of services received by members. What is clear is that insurance is generally increasing the intensity of outpatient care use and also influencing where people go for such care, diverting people from informal drug shops to formal care. CHF members are more likely to use public primary care, than their non‐insured rural counterparts, consistent with their benefit package. Despite equal contributions, NHIF members in urban areas use a much wider range of outpatient care than those in rural areas. SHIELD makes three recommendations for health policy: addressing the lack of publicly available data on use of health services, increasing the availability of affordable insurance options for poorer groups and ensuring greater consistency in benefits offered, and taking into account the inequity in service availability between urban and rural areas when setting premiums for schemes.
Financial protection against the cost of unforeseen ill health has become a global concern as expressed in the 2005 World Health Assembly resolution (WHA58.33), which urges its member states to "plan the transition to universal coverage of their citizens". An important element of financial risk protection is to distribute health care financing fairly in relation to ability to pay. The distribution of health care financing burden across socio-economic groups has been estimated for European countries, the USA and Asia. Until recently there was no such analysis in Africa and this paper seeks to contribute to filling this gap. It presents the first comprehensive analysis of the distribution of health care financing in relation to ability to pay in Ghana.
BetterAid, a coalition of over 1,000 civil society organisations, is calling on G8 leaders to commit to improving the effectiveness and impact of development aid by sending a strong political message to the Fourth High-Level Forum on Aid Effectiveness, which will take place from 29 November to 1 December 2011. In the run up to the summit, the G8 has been accused of deliberately hiding shortfalls in meeting aid commitments made by world leaders in 2005 in Gleneagles by failing to take into account the impact of inflation on their figures. Yet official development assistance plays an integral and complementary role to the broader concerns of the G8 agenda like fighting poverty, mitigating climate change, promoting decent work and stopping corruption. BetterAid highlights four areas where the G8 should push aid effectiveness forward. First, the G8 should ensure democratic ownership and full transparency in development co-operation in line with previous commitments. Second it should commit to a human rights-based approach to development and development cooperation with gender equality, decent work and environmental sustainability at the centre. Third, it should agree to minimum standards to support the work of civil society organisations as development actors in their own right. Fourth, it should initiate fundamental reforms of aid governance at the crucial High-Level Forum on Aid Effectiveness.
IRIN News has compiled this summary of aid successes and shortfalls among major external funders (donors) in 2010. European Union (EU) member states made pledges to provide 0.56% of gross national income (GNI) as official development aid by 2010, with a view to increasing to 0.7% by 2015. Together, they missed this target by US$21 billion; delivering just under four fifths of the commitment. The UK met the 0.56% goal, putting US$8.5 billion towards development aid in 2010; Germany gave 0.38% at $7.8 billion; and the US $18.5 billion - or 0.21% of GNI. The worst EU aid performers in terms of the proportion of GNI are Italy, Greece, Portugal, Austria and Germany. Best-performing are Sweden, Denmark, Luxembourg, Netherlands and Belgium. G8 and EU aid to sub-Saharan Africa was the highest on record in 2010 at US$18.2 billion; but lower than commitments pledged by G8 leaders in 2005. Assistance to sub-Saharan Africa has increased to $19.6 billion since 2000 - $15.6 billion of it coming from G7 countries (France, Germany, Italy, Japan, UK, USA and Canada). The G7 delivered 60% of the increase they promised to sub-Saharan Africa in 2005 - largely because the USA, Japan and Canada surpassed their targets, and the UK delivered 86% of its commitment, with an increase of $2.55 billion. Italy, Germany and France are mainly responsible for the shortfall. Italy's aid to sub-Saharan Africa has declined by $78million since 2004.