The burden of aid: how do we improve aid effectiveness to improve health outcomes?

| August 20, 2014 | 0 Comments

By Aparna Kamath

Master of Science Candidate, Department of Global Health and Population, Harvard School of Public Health

Donor influence reaches beyond those sectors to which the agency directly provides aid

Since the establishment of international development assistance through agencies such as the UN and IBRD, the global health landscape has evolved into a complex system of actors – from multilateral and bilateral agencies to NGOs, private foundations, and the private sector. This proliferation of actors has contributed to the explosion of global development assistance for health (DAH) from $5.66 billion in 1990 to $27.73 billion in 20111. Funding from donors forms a large part of health expenditure in several developing countries; external funding constitutes 82% and 66% of the national health budgets of the Solomon Islands and Mozambique respectively2. Research also shows that the increase in donor assistance is associated with a decrease in government health spending. In 2010, Lu et al estimated that for every $1 of development assistance for health from donors to developing countries, government health expenditures from domestic resources reduced by $0·43 to $1·143. This increases the dependence of countries ondonor agencies. Even in countries where DAH makes up only a small part of health sector spending, donors often have a disproportionate share of the say on national health policy and programs, because of their extensive resources, aid to other sectors, or trade and political ties4.

Aid dependency impedes countries’ ability to chart their own development, by reducing developing countries’ policy autonomy and making it harder for them to plan developmentprograms due to aid unpredictability5. In order to ensure that donor engagement does not strain government health sector capacity, it is important that donors provide transparent aid eligibility criteria unconfounded by political and economic agendas; that donors and recipient governments together streamline implementation approaches; that parallel donor programs be integrated where possible to increase efficiency; and that sustainability be the end goal of any program, regardless of the engagement period.

To begin with, donor agencies must follow transparent priorities and spending strategies. This builds public trust, allows tracking and efficient allocation of funds, and promotes coordination among donors. Ensuring transparency is simple – the US government provides detailed information on the recipients of aid online or in print6. More aid agencies are following suit, in compliance with the 2005 Paris Declaration on Aid Effectiveness7. Between 1990 and 2008, the percentage of development assistance for health from donors that was ‘unspecified’ (information unavailable about the primary recipient) decreased from 65% to 1%6. However, the specific eligibility and allocation criteria used to distribute aid among the various countries and programs are still largely unavailable to the public.

The large number of donors operating in many developing countries, as well as poor donor- recipient communication, complicates donor harmonization, makes it harder for recipients to navigate where their aid should come from, and leaves the roles of each vague and undefined, leading to friction8,9. Additionally, government agencies such as USAID or JICA (Japan International Cooperation Agency), allocate DAH to countries with whom they share political or economic ties, diverting aid from countries that require it most9,10. Only 3 of the 30 countries that receive the greatest funding for malaria are located in hardest-hit sub-Saharan Africa6. The formation of global health partnerships, such as the GAVI Alliance or The Global Fund to fight AIDS, Tuberculosis and Malaria (GFATM), addresses this issue. While the majority of the income of these partnerships comes from donor governments, they ensure that power to allocate aid does not lie directly with donor governments, which largely depoliticizes the development assistance.

In the same vein, separating donor and implementing agencies can streamline implementation approaches and ease coordination between multiple donors for recipient governments. When donors provide DAH to governments or NGOs, they enforce their own ideologies on where and how the money should be spent, with limited knowledge of the cultural and social milieu11. By introducing international implementation agencies such as the WHO or UNAIDS within the donor- recipient channel, they may judge the best use of the money (within the scope of the donor’s main interests) by working directly with recipient governments and communities.

Donor funding for the MDGs over the last decade has produced a number of parallel programs in countries, which is neither sustainable nor an efficient use of local resources. To this end, GAVI, GFATM, and the World Bank have established the Health Systems Funding Platform, which aligns the priorities of funding agencies and national governments to prepare one joint assessment of the national health strategy, one comprehensive plan, and one budget towards achieving MDGs 4 and 5. The International Health Partnership works in a similar way, in accordance with the Paris Declaration on Aid Effectiveness, mobilizing “national governments, development agencies, civil society and others to support a single, country-led national health strategy in a well-coordinated way”12. This ensures an efficient use of available resources by streamlining parallel programs, and prioritizes country ownership of these programs.

The next step is to allow initiative for funding to come from recipient countries rather than donors. Donors often have specific agendas, such as addressing the health MDGs, regardless of the capacity of the country’s health system to support such programs long-term without continued assistance13. To receive DAH, national governments must then align their priorities with the donors’13. Instead, in order to ensure sustainability, governments should begin by setting their own health agendas, taking into account both immediate and long-term needs, and then approach the relevant aid agencies to build upon this plan together. Decisions must be made about the true effectiveness of allocation; for example, a recipient government could believe in the “build hospitals and they will come” approach to improving health, where the donor could argue that they will be ineffective given the health worker shortages in the country. Nevertheless, this model of accepting country applications for funding is applied by the GFATM, which pools finances from multiple donors to allocate resources through inclusive governance that connects governments, civil society, and private sector14. This promotes country ownership of donor programs from the beginning, which has been shown to improve long-term program outcomes13,15.

Donor agencies are creating pathways for greater accountability to tax-paying citizens and aid recipients alike

Finally, if donor funding declines or stops, several programs in developing countries will be greatly impacted. DAH is often a substitute for, rather than an addition to, government health spending16. To build health sector capacity, donors and governments must incorporate sustainability measures into any program they implement, regardless of the donor engagement period, remembering that cost-effectiveness alone does not mean affordability13. Complementary domestic financing of health is important for the long-term sustainability of the health sector, and also means that countries have to answer to donors less.

In detailing the above processes I don’t deny that the realistic counterfactual to donors providing DAH that is conditional on economic ties, governance criteria or a variety of other factors, may in fact be a complete absence of aid assistance. National or institutional interest is a reasonably sound criterion on which to determine aid allocation to many sectors receiving donor support in developing countries. What I propose, however, is separating development assistance for health from general ODA (official development assistance), requiring special allocation considerations and unique channels of implementation if we are to improve health outcomes around the world.

For now, many DAH allocation processes still create a negative impact on program ownership, fiscal sustainability, and institutional development, impeding the government’s ability to autonomously operate its health system. It is important for donors to begin freeing the reins on resource allocation and program implementation within the countries in which they operate, allowing governments to chart their own health development paths.

 

1 Leach-Kemon K, D.P. Chou, M.T. Schneider, A. Tardif, J.L. Dieleman, B.P.C. Brooks, M. Hanlon, and C.J.L. Murray. (2012). “The Global Financial Crisis has Led to a Slowdown in Growth of Funding to Improve Health in Many Developing Countries” Health Affairs. 31(1): 228-235

2 Sridhar, Devi. (2010). “Seven Challenges in International Development Assistance for Health and Ways Forward.” Journal of Law, Medicine & Ethics Fall: 2-12.

3 Lu, C., Schneider, M.T., Gubbins, P., Leach-Kemon, K., Jamison, D., & Murray, C.J.L. 2010. Public Financing of Health in Developing Countries: A cross-national systematic analysis. The Lancet, 375(9723): 1375-1387.

4 Radelet, S. (2006). “A Primer on Foreign Aid.” Center for Global Development Working Paper no. 92. Washington, DC: Center for Global Development.

5 Real Aid: Ending Aid Dependency. Published by ActionAid. Accessed April 2013 from:

http://www.actionaid.org.uk/doc_lib/real_aid_3.pdf

6 Despite economic slump, donors give generously to global health, though at a slower rate. Institute for Health Metrics and Evaluation. Accessed April 2013 from: http://www.healthmetricsandevaluation.org/news- events/news- release/despite-economic-slump-donors-give-generously-global-health-though-slower-r

7 The Paris Declaration on Aid Effectiveness and the Accra Agenda for Action. Accessed April 2013 from:

http://www.oecd.org/dac/aideffectiveness/34428351.pdf

8 Dodd, R. et al. (2007). “Aid Effectiveness and Health”. Making Health Systems Work Working Paper No. 9. Geneva: WHO.

9 William Easterly. 2006. ‘The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good’. Penguin Group: New York.

10 Nunnenkamp P., Ohler, H., & Theile, R. 2011. Donor Coordination and Specialization: Did the Paris Declaration Make a Difference? Kiel Institute for the World Economy. Kiel Working Papers, No. 1748.

11 Dreher, A., P. Nunnenkamp, and R. Thiele. (2011). “Are ‘New’ Donors Different? Comparing the Allocation of Bilateral Aid Between non-DAC and DAC Donor Countries.” World Development. 39 (11): 1950-68.

12 International Health Partnership+. Accessed April 2013 from: http://www.internationalhealthpartnership.net/en/

13 Waddington, C. 2004. Does earmarked donor funding make it more or less likely that developing countries will allocate their resources towards programmes that yield the greatest health benefits? Bulletin of the World Health Organization, 82: 703-708.

14 Atun, R., Knaul, F.M., Akachi, Y. & Frenk, J. 2012. Innovative Financing for Health: What is truly innovative? The Lancet, Early Online Publication, 24 October 2012. Accessed April 2013 from: http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(12)61460-3/fulltext

15 Xavier, F., and Smith, J.W. 2007. Ethiopia: Aid, Ownership, and Sovereignty. University College, Oxford. Global Economic Governance Working Paper 2007/28.

16 Farag, M., Nandakumar, A.K., Wallack, S.S., Gaumer, G., & Hodgkin, D. 2009. Does Funding From Donors Displace Government Spending For Health In Developing Countries? Health Affairs, 28(no. 4): 1045-1055.

Category: Student Submissions

About the Author ()

Leave a Reply