This article considers the new players in development financing, namely Brazil, Russia, India and China (BRIC). Unlike external funding (aid) from traditional Western funders, BRIC financing (excluding Russia) focuses on mutual benefits without attachment of policy conditionality. Despite the clear advantage for low-income countries (LICs) that are receiving this funding, the authors caution that governments of these LICs will still need to ensure they get high returns for BRIC-financed projects through sound public investment management. While the scaling up of public investment associated with most BRIC financing is likely to have large positive growth effects, it is critical that LICs align BRIC-financed projects with national development priorities. To help ensure transparency and governance, improvements in data are needed regarding the size and terms of financing flows, the structure and conditions of packaged deals, as well as the rights of concessions for natural resources. Safeguarding debt sustainability will also be key, the authors argue. The final challenge will be to deepen project links to the local economy. LICs and BRICs could work together to build incentives, as part of a total package for development financing, to encourage local employment, foster skills development and improve technology transfer.
Resource allocation and health financing
According to this article, Africa needs to innovatively diversify the way in which it raises finances for development, arguing that diaspora bonds are one way of doing this. World Bank and International Monetary Fund figures have put remittances from Africans abroad to the continent at between US$25 billion and US$34 billion a year. Unrecorded informal flows of remittances were most probably at least a third of this amount. The authors recommend that Africa should leverage this African diaspora money more aggressively and innovatively for development. The idea of issuing diaspora bonds should be considered as a viable alternative to raise finance for Africa’s development. Some of these remittances from Africans abroad could be channeled into buying such diaspora bonds, which can be specifically used to finance Africa’s development in terms of infrastructure or health. Diaspora bonds are long-term sources of finance and therefore less volatile and they may also allow Africa to circumvent the conditionalities that accompany development and investment finance from both old industrial and new emerging powers. However, poor governance and lack of democracy in some African governments could mean potential African diaspora investors may be wary. The article considers India and Israel, two countries where diaspora bonds have been used successfully as model examples of how Africa could proceed.
This study measured out-of-pocket costs for caesarean section and neonatal care at an urban tertiary public hospital in Madagascar, assessed affordability in relation to household expenditure and investigated where families found the money to cover these costs. Data were collected for 103 women and 73 newborns at the Centre Hospitalier Universitaire de Mahajanga in the Boeny region of Madagascar between September 2007 and January 2008. Out-of-pocket costs for caesarean section were catastrophic for middle and lower socio-economic households, and treatment for neonatal complications also created a big financial burden, with geographical and other financial barriers further limiting access to hospital care. This study identified 12 possible cases where the mother required an emergency caesarean section and her newborn required emergency care, placing a double burden on the household. In an effort to make emergency obstetric and neonatal care affordable and available to all, well-designed financial risk protection mechanisms and a strong commitment by the government to mobilise resources to finance the country's health system are necessary, the authors conclude.
Many national hospitals in the Democratic Republic of Congo (DRC) are no longer accepting new HIV-positive patients for antiretroviral treatment (ART), largely due to lack of capacity and funding shortfalls. According to Medicins Sans Frontiers, urban areas are poorly covered by ART (30% for Kinshasa), but rural areas are much more severely underserved. Funding remains uncertain. A major World Bank project recently closed after six years, while UNITAID, which provides funding for paediatric and second-line antiretrovirals, will end its funding to the DRC in December 2012. The cancellation of Round 11 funding by the Global Fund to fight AIDS, Tuberculosis and Malaria is likely to worsen the situation. Réseau National d'Organisations Assises Communautaire (RNOAC), a national network of community-based organisations, has called on government to supply funding for HIV programmes instead of relying exclusively on external funding.
The Global Fund to fight AIDS, Tuberculosis (TB) and Malaria has announced an increase in US$1.6 billion in funding to invest between 2012 and 2014. The new funds are a result of strategic decisions made by the Board, freeing up funds that can be invested in countries where there is the most pressing demand, according to this statement. Organisational changes have brought improved financial supervision and overall efficiency’: for instance, the Fund has cut its staff by 7.4%. In addition, it has received new donations recently, including $750 million from the Bill and Melinda Gates Foundation and $340 million from Japan. Poor funding in 2011 forced the Fund to make an unprecedented decision to cancel its 11th round of funding, raising fears that gains made in the fight HIV would be lost. Some $616 million in grant requests is now being considered by the Technical Review Panel. UNAIDS said the money would allow countries and communities to take the lead in determining their priorities to meet the targets of the 2011 UN Political Declaration on AIDS.
This review examines the role and impact of co-payments in the context of a National Health Insurance system. The application of co-payments, which is a demand-side mechanism, attempts to play a dual role in health care: they primarily serve as a mechanism to avert moral hazard and secondly they add a small amount to the pool of health care funding. Available evidence shows that co-payments are applied in a large variety of health care settings. Across all settings and in different health care and country contexts, co-payments reduce utilisation, disproportionately so for those who are more vulnerable and more disadvantaged. They thereby increase the likelihood of higher health care costs in the long term, as necessary health care is deferred and increasing hospitalisation and more complications arise accordingly. There is, however, no clear evidence to suggest that co-payments address moral hazard and neither is there evidence of any substantial cost savings. A co-payment does, however, shift the burden of cost from health care funders onto users. The review also examines alternate supply-side mechanisms that can contribute to decreased health care costs and address potential over-utilisation, one being gate-keeping. The author concludes that, before co-payments are introduced, other mechanisms should be explored as alternative cost- and utilisation-control interventions.
Every year the Ugandan government spends at least Shs377 billion (about US$150 million) on medical procedures for mostly top government officials abroad, according to the Ugandan newspaper, Sunday Monitor. This amount is similar to the total amount of foreign funding flowing into the country’s health sector. Ministry of Health permanent secretary Asuman Lukwago agreed that the amount should be reduced and that the money would be better spent on ongoing efforts to rejuvenate health facilities, including upgrading all referral hospitals. The secretary added that Uganda had the capacity to perform most procedures, arguing that there was minimal need for government officials to travel abroad to get treatment.
European civil society organisations have expressed dismay at new Organisation for Economic Co-operation and Development data revealing the cuts made to almost all European countries’ aid programmes in 2011. Twelve European countries slashed their aid budgets in 2011 – with the biggest cuts seen in Greece (-39.3%), Spain (-32.7%), and Austria (-14.3%) – and only three European countries increased their aid spending: Italy (33%), Sweden (10.5%) and Germany (5.9%). Publish What You Fund urges the development community to focus on maximising the impact of aid by ensuring external funders provide more accessible, timely, and comparable information about the aid they give. All European funders should implement the commitments they made in the EU Transparency Guarantee by publishing their aid information to the International Aid Transparency Initiative (IATI), so that other European countries and funders around the world can co-ordinate their aid spending more effectively. It is also crucial that information on European Union (EU) aid is made available through the common standard so that recipient countries can see what is coming to them and plan their own spending in relation to this.
The National Health Insurance Fund (NHIF)’s new partnership with the Kenya National Union of Teachers – one of the largest unions in Kenya – has meant that NHIF will be able to provide an affordable and comprehensive package of in and out-patient benefits to more than 1,300,000 teachers and their family members. In addition, NHIF is offering unlimited out and in-patient benefits for approximately 1,100,000 civil servants and their family members beginning on 1 January 2012. The NHIF is also seeking to extend the unlimited in and out-patient care benefits to the informal sector in a phased-out manner. In this interview with Richard Kerich, CEO of Kenya's NHIF, he identifies a number of obstacles to expanding coverage in Kenya, such as weak and outdated policies, a low ratio of health workers to the population, a lack of modern equipment and political interference. Kerich has advice for other countries wishing to achieve universal health care (UHC): their governments must draw up strong governing documents and the population must be compelled in some way to contribute, and all systems must be made to support the introduction of UHC, including facilities, human resources, roads and information technology. He calls on Kenya’s policymakers to develop new policies that will serve the best interests of Kenya’s citizens.
The authors of this paper argue that a classification of countries according to their aid receipts could contribute to a more effective aid agenda and help external funders (donors) and aid recipients monitor changes. High aid levels do not equal aid dependence, which is more complex, they argue, but can be a critical factor in aid dependence. They offer the ratio of recipient aid to Gross National Income (GNI) as a relevant measure complementing the traditional focus on aid as a proportion of donor GNI, symbolised by the 0.7% target. Recipient economies may be classified in four categories: high aid countries (HACs), middle aid countries (MACs), low aid countries (LACs) and very low aid countries (VLACs), on the basis of their net aid to GNI ratio above 10%, between 2% and 10%, between 1% and 2%, and below 1%, respectively. While much effort is made to follow trends in aid levels as a proportion of donor GNI, the analysis presented here underlines the importance of looking at aid from the recipient point of view. While external funders aim to reach the 0.7% target, recipients could also aim to reduce their aid to GNI ratio to become LACs or VLACs. This raises the debate on what is sustainable and fair in relation to aid levels.