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SELECTED PAPERS

VIEWS: 107 PAGES: 192

									 SELECTED PAPERS    
         2003–2005
AUTHORS AND ACKNOWLEDGEMENTS




Contributing Authors                                                    Acknowledgements
Kathy Cahill                                                            This publication was jointly produced by WHO and
Bill & Melinda Gates Foundation, United States of                       the World Bank, with financial support provided
America                                                                 by Ministère des Affaires étrangères, France and
Karen Caines                                                            the Bill & Melinda Gates Foundation. The Depart-
Independent consultant to the High Level Forum                          ment for International Development of the United
                                                                        Kingdom and the Department of Foreign Affairs
Andrew Cassels                                                          of Ireland funded some of the papers featured.
World Health Organization, Geneva                                       Penelope Andrea (consultant) managed the prepa-
Lincoln Chen                                                            ration of the volume.
Special Envoy, World Health Organization
                                                                        Design and layout: Richard Jones, Exile: Design &
Michael Conway                                                          Editorial Services.
McKinsey & Company, United States of America
Leo Devillé
Health Research for Action, Belgium
Tim Evans
World Health Organization, Geneva
David Fleming
Bill & Melinda Gates Foundation, United States of
America
Mick Foster
Mick Foster Economics Ltd, United Kingdom
Srishti Gupta
McKinsey & Company, United States of America
Roger Hay
Oxford Policy Institute, United Kingdom
Sigrun Møgedal
Ministry of Foreign Affairs, Norway
Hussein Mwinyi
Ministry of Health, Republic of Tanzania
Francis Omaswa
World Health Organization, Geneva
Enrico Pavignani
Independent consultant to the High Level Forum
Peter Sandiford
Independent consultant to the High Level Forum
Gareth Williams
The Policy Practice, United Kingdom

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
CONTENTS




Preface ............................................................................................................................................................................................................................................................................................................. 5

Introduction to the Papers ................................................................................................................................................................................................................................................. 7

Section 1: Scaling Up Aid for Health
1. Resources, Aid Effectiveness and Harmonization
Andrew Cassels, Geneva, January 2004 ................................................................................................................................................................................................................... 12

2. Harmonization and MDGs:
A Perspective from Tanzania and Uganda
Leo Devillé, Geneva, January 2004 .................................................................................................................................................................................................................................. 19

3. MDG-Oriented Sector and Poverty Reduction Strategies:
Lessons from Experience in Health
Mick Foster, Abuja, December 2004 ................................................................................................................................................................................................................................ 28

Section 2: Fiscal Space and Financial Sustainability
4. Fiscal Space and Sustainability from the
Perspective of the Health Sector
Roger Hay and Gareth Williams, Paris, December 2005 ......................................................................................................................................................................... 44

5. Fiscal Space and Sustainability:
Towards a Solution for the Health Sector
Mick Foster, Paris, November 2005 .................................................................................................................................................................................................................................. 67

Section 3: Global Health Partnerships
6. Global Health Partnerships:
Assessing Country Consequences
Kathy Cahill, David Fleming, Michael Conway
and Srishti Gupta, Paris, November 2005 ............................................................................................................................................................................................................... 92

7. Best Practice Principles for Global Health
Partnership Activities at Country Level
Karen Caines, Paris, November 2005 .......................................................................................................................................................................................................................... 104

Section 4: Health Systems
8. Monitoring the Health MDGs
Health Metrics Network, Geneva, January 2004 .......................................................................................................................................................................................... 124

9. Tracking Resources for Global Health:
Progress Toward a Policy Responsive System
Global Health Resource Tracking Working Group, Abuja, December 2004 .................................................................................................................... 132

                                                                                                                                                                                                                                                                                            Contents                
10. Following the Money:
Recommendations for Global Health Resource Tracking
Global Health Resource Tracking Working Group, Paris, November 2005 ....................................................................................................................... 136
11. Improving Health Workforce Performance
Peter Sandiford Geneva, January 2004 ..................................................................................................................................................................................................................... 141
12. Working Together to Tackle the Crisis
in Human Resources for Health
Lincoln Chen, Tim Evans, Sigrun Møgedal
and Francis Omaswa, Paris, November 2005 .................................................................................................................................................................................................... 147

Section 5: Health in Fragile States
13. Health in Fragile States:
An Overview Note
Andrew Cassels, Paris, November 2005 .................................................................................................................................................................................................................... 158
14. Health Service Delivery in Post-Conflict States
Enrico Pavignani, Paris, November 2005 ............................................................................................................................................................................................................... 165




  High Level Forum on the Health Millennium Development Goals                                                        Selected Papers 2003–2005
PREFACE




The Millennium Development Goals represent an           further two meetings of the Forum were held, in
unprecedented commitment to tackle the most             Abuja in December 2004 and a year later in Paris in
basic forms of injustice and inequality in our world:   November 2005.
poverty, illiteracy and ill-health. However, so far         The Forum was designed as an opportunity for
progress towards the health MDGs has been worry-        senior officials to increase their understanding of
ingly slow, lagging behind other areas such as edu-     global health issues and to build a consensus on ways
cation and poverty reduction. Less than one-in-five     to accelerate progress. To encourage open discussion,
poor countries is on track to reach the under-five      the Forum was deliberately designed to be informal,
mortality goal of a two-thirds reduction between        limited in size, flexible, off-the-record and temporary.
1990 and 2015. More than 500,000 women die each         Over time, six principal themes emerged:
year due to complications during pregnancy and,
of the over 10 million deaths each year among chil-     •   Scaling up resources for health
dren under five, about half are due to preventable      •   Increasing the effectiveness of aid for health,
and treatable diseases. The HIV/AIDS pandemic               improving harmonization and alignment across
continues to represent a huge burden, and is by far         different initiatives including global health
the leading cause of premature mortality in sub-            partnerships
Saharan Africa.                                         •   Increasing fiscal space for health and managing
    Concerned with the lack of progress, represen-          the macroeconomic effects of scaling up health
tatives from several development agencies, including        spending
the World Health Organization and the World Bank,       •   Improving national and global capacities to
met in Ottawa in May 2003 to discuss what can be            measure and monitor progress towards the
done to improve health outcomes in developing               MDG targets to evaluate the impact of increased
countries. They recognized that challenges were             flows of resources on health outcomes.
matched with opportunities: the potential for an        •   Addressing the crisis in human resources for
extraordinary expansion of international funding            health in low-income countries
for health, the emergence of new actors, such as        •   The special circumstances surrounding health
global health partnerships, and greater political           delivery systems in ‘fragile states’.
attention to certain aspects of health, in particular       To accompany the discussions at the Forum,
communicable diseases.                                  background research was commissioned by the
    Participants at Ottawa agreed an unconventional     Secretariat in each of these areas.
approach to address challenges and harness oppor-           This publication brings together a selection of
tunities – a series of informal meetings of high-       papers and as such represents an overview of the
level representatives from development agencies         analysis and work undertaken throughout the life
and governments, acting on their own behalf and         of the High Level Forum. For further reading, addi-
limited in number to promote candid and focused         tional supporting papers and presentations made
discussion of constraints to progress on the health     to the High Level Forum are available on the HLF
MDGs and possible ways forward.                         website www.hlfhealthmdgs.org
    The first meeting of the High Level Forum on            In early 2006 independent evaluators undertook
the Health MDGs (HLF) took place in January             a review of the High Level Forum and identified
2004 and brought together ministers of health and       its key outcomes to date.
finance from developing countries, bilateral and
multi-lateral agencies, private foundations, regional   •   The HLF provided a mechanism to translate
organizations and global health partnerships. A             the intentions of the Paris Declaration on Aid

                                                                                                       Preface   
    Effectiveness into tangible guidance for global                         major role in raising awareness of the issue.
    health partnerships, resulting in a set of ‘best                        Both developing countries and bilateral agencies
    practices for global health partnerships’. These                        now recognize the need to develop new strate-
    principles have now been adopted by the boards                          gies and increase resources to address this crisis.
    of Global Alliance for Vaccines and Immuniza-                           Following on from the momentum created by
    tion (GAVI), the Health Metrics Network and                             HLF discussions, the Global Health Workforce
    the Stop TB Partnership, and are currently being                        Alliance has now been launched with the strong
    considered by others.                                                   support of bilateral partners.
•   Gave exposure and support to the fledgling
                                                                            The series of three meetings of the High Level
    Health Metrics Network. As a result, the impor-
    tance of strengthening health information systems                   Forum has been completed but work in each of
    is now widely recognized by key actors.                             the key policy areas continues, and initiatives are
•   Expanded debates on fiscal space to include the                     now underway to translate the achievements of the
    special needs of the health sector, and created                     HLF into action at the country level. In particular
    an opportunity for dialogue between health                          the World Health Organization and the World Bank
    ministers, finance ministers and the IMF.                           continue to collaborate in seeking new mechanisms
•   Deepened understanding of how donors can                            to: influence the policy and practice of health
    support the health sector in “fragile states”. HLF                  development partners; improve technical support
    papers have fed into work at the OECD/DAC                           provided to countries to integrate health into pov-
    in this area.                                                       erty reduction strategies and accompanying budgets;
•   Finally, the continued focus by the HLF on the                      and, explore new financing instruments for countries
    crisis in human resources for health played a                       receiving limited donor support.




  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
INTRODUCTION TO THE PAPERS




This publication brings together a selection of papers   draws on research in a wide range of countries
that were commissioned by and presented to the           across several continents and raises key questions
High Level Forum. It represents an overview of           surrounding the development of macro-fiscal frame-
the analysis and work undertaken throughout the          works and absorptive capacity.
life of the High Level Forum on the key policy areas
of concern to the health sector.
                                                         Fiscal Space and Financial Sustainability
                                                         The lack of predictability in aid flows was high-
Scaling up Aid for Health                                lighted as a key problem for developing countries
Three papers are concerned with the overall ques-        that are aid-dependent. Aid flows are estimated to
tions surrounding the scaling up of aid and efforts      be up to seven times more volatile than domestic
to increase its effectiveness. The first, “Resources,    fiscal revenue. New mechanism are urgently needed
Aid Effectiveness and Harmonization” which was           that can promote predictability while increasing
prepared for the first meeting of the HLF outlines       support to the national budget for the health sector
the key issues, challenges and prospects for scaling     within the context of overall development priori-
up aid to health and how best the various initiatives    ties, poverty reduction strategies and medium-term
and efforts can be harmonized to enhance their           expenditure frameworks. Two papers deal specifi-
effectiveness. It grapples with the on-going debate      cally with the question of the fiscal space available
surrounding how much additional aid is needed and        to national governments and how this impacts
the potential role of Poverty Reduction Strategy         upon their long-term policy decisions. Both papers
Papers in this context. The paper also touches on        were prepared for the final meeting of the HLF.
the new actors and instruments emerging in the           The first paper in this series, “Fiscal Space and Sus-
health field and the impact of increasing aid flows      tainability from the Perspective of the Health Sector”
on economic stability.                                   provides a definition of fiscal space and examines
                                                         what sustainability implies. Various scenarios of
    The second paper on this subject “Harmonization
                                                         changes in donor and government policies are
and MDGs: A Perspective from Tanzania and Uganda”
                                                         explored and developed together with projects of
looks specifically at the increased harmonization
                                                         their impact on health spending. The paper con-
efforts at the national level. The paper was also
                                                         siders in depth trends in both donor and recipient
prepared for the first meeting of the HLF and it
                                                         government behaviour as well as the likely macro-
presents a detailed analysis of the way in which
                                                         economic effects of scaling up.
health indicators in Tanzania and Uganda have been
                                                             The second paper in this series “Fiscal Space and
affected by shifting aid policies and practices, both    Sustainability: Towards a Solution for the Health
by the national government and by donor behav-           Sector” seeks to identify the key budget management
iour. The paper looks closely at the impact upon         issues that need to be addressed in order to plan and
the national economies and asks what bottlenecks         implement a scaling up of the health sector financed
remain that can impede the achievement of the            by additional aid. It maps out the parameters of
health MDGs in these countries.                          possible solutions and discusses various initiatives
    The third paper in this area, “MDG-Oriented          currently being debated.
Sector and Poverty Reduction Strategies: Lessons
from Experience in Health” was prepared for the
second meeting of the HLF and is concerned speci-        Global Health Partnerships
fically with the role of Poverty Reduction Strategies    A key outcome of the work of the High Level Forum
in helping countries to meet their health MDGs. It       on harmonization was the development of a series

                                                                                        Introduction to the Papers   
of best practice principles for guiding the behaviour                   ment of the HMN and offer its advice and guidance
of Global Health Partnerships (GHPs) at the coun-                       from the perspective of high level policy makers.
try level. Building on early work of the HLF on                         The paper included in this volume, “Monitoring the
donor harmonization, this area of work looked                           Health MDGs” was presented to the HLF by the
specifically at activities at the country level of GHPs,                HMN and outlines the need for health information,
such as the Global Fund to fight Aids TB and Malaria                    the existing gaps and the possible strategies to
and the Global Alliance for Vaccines and Immuni-                        address these. Since the paper was written the work
zation (GAVI) amongst others. It was informed by                        of the HMN has moved on significantly. An update
an assessment undertaken by the Bill & Melinda                          on its activities is included in an annex to the origi-
Gates Foundation and McKinsey & Company which                           nal paper.
looked at what GHPs could do to reduce the bur-                             Alongside the need to monitor health informa-
dens they place on countries and so serve countries                     tion is the parallel need to track the resources
more effectively. The assessment, “Global Health                        flowing to the health sector on both a global and
Partnerships: Assessing Country Consequences” was                       national level. At the first meeting of the HLF mem-
finalized in November 2005 and presented to the                         bers of the Forum recognized the shortcomings in
third High Level Forum in Paris; it is included in                      the international community’s ability to track finan-
this volume. It highlighted problems of poor coor-                      cial flows and requested that further work be under-
dination and duplication, the high transaction costs                    taken to ascertain the feasibility of improving this
to both donors and recipients, the variable degrees                     capacity specifically in the health sector. The Global
of country ownership and the lack of alignment                          Health Policy Research Network, a programme of
with national health systems and priorities.                            the Center for Global Development was already
    The Gates-McKinsey report was a key contribu-                       engaged in this research and presented a paper to
tion to second report presented to the HLF “Best                        the second HLF. “Tracking Resources for Global
Practice Principles for Global Health Partnership                       Health: Progress Toward a Policy Responsive System”
Activities at the Country Level”, which provided a                      identifies key links between resource tracking and
synthesis of research into the impact of Global                         making progress towards meeting the health Millen-
Health Partnerships at country level and, based on                      nium Development Goals (MDGs), lays out the
this, suggested a set of best practice principles for                   specific ways in which information on resource
GHP engagement. These principles attempt to                             flows, including data on both commitments and
apply the Paris Declaration on Aid Effectiveness                        disbursements, can inform policymaking, and indi-
agreed under the auspices of the OECD/DAC to                            cates the type of information required to each policy
the activities of GHPs. Several GHPs are now in                         use. The paper also highlights major sources of data
the process of debating and in some cases adopting                      on resource flows that are currently available, and
“Best Practice Principles for Engagement of Global Health               identifies major gaps relative to policy needs. It also
Partnerships at Country Level”.                                         provides a brief summary of the major gaps in the
                                                                        available data, relative to policy needs and identifies
                                                                        a set of key issues that need to be addressed to
Health Systems                                                          develop an appropriate strategy to fill these gaps.
Another significant focus for the HLF was the need                      At the third and final meeting of the HLF in Novem-
to improve national and global capacity to measure                      ber 2005 an update on progress in this area was
and monitor health information. In order to do                          provided. The paper entitled “Following the Money
this, health information systems need to be strength-                   in Global Health” outlines where further gaps in
ened, better coordinated and more oriented towards                      country and global level reporting and accounting
country priorities and needs. First and foremost,                       exist and the response so far to address these. It
information systems must provide data for policy-                       contains a series of four detailed and specific recom-
making at national level, but they also need to                         mendations of ways in which donors and technical
respond to global demands to monitor progress                           agencies can support national governments.
towards the MDGs. The Health Metrics Network                                The crisis in human resources within the health
was being developed in parallel to the work of the                      sector in low-income countries is well documented
HLF and has been welcomed as an important initia-                       but its magnitude has only recently been recognized
tive in this area. Rather than replicate this innovative                as requiring urgent attention. It emerged as a signi-
work, the HLF chose instead to follow the develop-                      ficant and consistent area of concern for the HLF.

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
A series of papers were presented to each of the          well as those with poor governance structures
meetings of the HLF, two of which are included in         presents additional problems of harmonization
this volume. The first, “Improving Health Workforce       and alignment among humanitarian, transition
Performance” outlines the extent and nature of the        and development actors. The HLF believed that
crisis. It explains how the crisis has been exacerbated   the particular context of these ‘fragile states’ war-
by a reluctance among donors to fund recurrent            ranted closer examination. Two papers are included
costs such as salaries and incentives to work in rural    in this volume that deal specifically with the chal-
areas, deteriorating working conditions within            lenges of scaling up health interventions in fragile
health delivery systems and the on-going migration        states. The first, “Health in Fragile States: An Overview
of health workers from developing countries to            Note” outlines the extent of the health challenges
the industrialized world. Furthermore, the HIV/           in fragile states and the complexity of the operating
AIDS pandemic has also had a devastating impact           environment for both humanitarian and develop-
upon the health workers themselves.                       ment partners. The paper draws on the Principles
    The second paper “Working Together to Tackle          for good international engagement in fragile states
the Crisis in Human Resources for Health”, presented      developed by the OECD/DAC in April 2005.
at the last meeting of the HLF outlines the various           The second paper “Health Service Delivery in
initiatives and activities underway at global and         Post-Conflict States” takes a more detailed look at
national levels that are seeking to turn the crisis       the post-conflict environment and the array of
around.                                                   dilemmas facing decision-makers seeking to deliver
                                                          effective health services in such a context. It out-
                                                          lines the difficulties as well as the opportunities
Health in Fragile States                                  that frequently emerge in post-conflict situations
The challenges of reaching the health MDGs are            and the likely nature of the recovering health sectors.
particularly acute in countries that are either unable    The paper includes some recommendations for
or unwilling to deliver health services to their pop-     best practice and highlights some common mistakes
ulations. Indicators suggest that the populations of      to be avoided.
these ‘fragile states’ bear a disproportionate burden         For further reading, additional supporting papers
of disease and mortality. Operating in countries          and presentations made to the High Level Forum are
emerging from conflict and political instability as       available on the HLF website www.hlfhealthmdgs.org




                                                                                           Introduction to the Papers   
10  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
SCALING UP AID FOR HEALTH




                     1
                   Contents   11
                                                                                                                           1
RESOURCES, AID EFFECTIVENESS
AND HARMONIZATION
By Andrew Cassels, Geneva, January 2004




1. Introduction                                                         etary allocations suggests a positive answer. But
Achieving the health MDGs represents one of the                         others argue strongly that keeping health and AIDS
greatest challenges in international development.                       separate from the disciplines imposed by national
Not least because they include the goal of reversing                    budgetary systems is not in the long-term interests
the global epidemic of HIV/AIDS. To this we have                        of the sector.
to add the steep declines required in child and                             There is no doubt that global health initiatives
maternal mortality, where progress lags far behind                      will continue to coexist with nationally-led multi-
aspirations in many parts of the world. Improving                       sectoral processes such as Poverty Reduction Strategy
health outcomes will not be possible without major                      Papers (PRSPs). Similarly, donor-financed projects
improvements in health delivery systems, which in                       will continue to coexist with budget and sector-wide
turn depend on changes in public sector manage-                         support. Dealing with the complexity that this en-
ment, new forms of engagement with the private                          tails is a reality. The challenge therefore is to define
sector, as well as interventions well beyond the                        a strategy that recognizes the need for immediate
health sector itself. Moreover, improvements in                         and urgent action, features progressive institutional
health are essential if progress is to be made with                     capacity development, identifies good examples of
the other MDGs, including the reduction of abso-                        harmonization in practice, and looks towards long-
lute poverty.                                                           term financial sustainability.
    This paper briefly outlines some issues in rela-
tion to development assistance for the achievement
                                                                        . Issues, challenges and prospects
of the health MDGs: how can it be made more
                                                                        Achieving the health-related MDGs presents special
effective, how much more is needed, and what has
                                                                        challenges in relation to increasing the effectiveness
been the effect of trying to harmonize the efforts
                                                                        of development assistance and harmonization. These
of different actors?
                                                                        are presented here in summary form to give a sense
    Increases in the quantum of aid are necessary
                                                                        of the range of issues that have to be addressed.
but not sufficient in isolation: progress will depend
                                                                        Selected points are then explored in more detail in
equally on policy and institutional change on the
                                                                        the subsequent sections.
part of both donors and governments. Furthermore,
the role of development assistance has to be set in                     •   Even allowing for greater efficiency in resource
the context of changes in national fiscal policies,                         use, there remains a significant gap in resource
the domestic policies of donor governments, the                             availability if the health MDGs are to be achieved.
management of international debt, and trade policy                          But how resource needs should be quantified
reforms to increase access to developed country                             remains a matter of debate.
markets.                                                                •   In the absence of concomitant policy and insti-
    Beyond the areas of broad consensus, however,                           tutional change, both within and beyond the
lies a critical debate. In essence: should health, and                      health sector, increases in development assistance
particularly the HIV/AIDS epidemic in some coun-                            alone are unlikely to be sufficient. Developing a
tries – given their potential impact on social and                          consensus on what constitutes effective policy
economic development, the magnitude of their                                and institutional change across the full range of
financial needs, and the urgent need to prevent a                           health MDGs will be a key component of a vision
catastrophic situation getting worse – be treated                           of how they can be achieved.
differently from other sectors?                                         •   Countries that implement reforms – the good
    The growing support for global initiatives that                         performers – are likely to attract additional re-
aim to provide funding additional to national budg-                         sources. At the same time, a vision for achieving

1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    the health MDGs has to make provision for the                •    It is widely accepted that there is a role for differ-
    many millions of people that live in countries                    ent types of aid delivery instruments. While many
    with poor policy environments, or where states                    donors are moving towards providing assistance
    in crisis – for whatever reason – are unable to                   as budget and sector-wide support, a significant
    fulfill basic functions.                                          amount of external assistance in health still comes
•   Health spending – even spending on primary care                   in the form of project funding. If projects have
    – does not automatically benefit poor people, and                 a clear purpose and are aligned with national
    the measures used to assess progress against the                  strategies, they can fulfill an important role in
    MDG targets are based on national aggregates.                     terms of innovation, capacity-building and policy
    A further element of the vision is therefore to                   experimentation. However, when the proportion
    ensure that health policies, health systems and the               of off-budget finance increases, the risks also
    aid instruments that support them are designed                    increase. In part, this is due to transaction costs
    both to maximize the impact of better health in                   – particularly as a result of separate reporting
    poverty reduction, and to address the needs of                    requirements – but more fundamentally it ex-
    poor people.                                                      empts a large part of in-country spending from
•   There is growing support for aligning external                    democratic scrutiny.
    assistance around national poverty reduction                 •    Only by working to scale can the health MDGs
    strategies. The preparation of PRSPs may draw                     be achieved. The challenge facing national author-
    on sectoral strategies where they exist. The                      ities is to deliver on priority outcomes, while
    greater challenge is to ensure that the poverty                   building effective systems capable of addressing
    analysis which informs the PRSP also influences                   multiple health conditions. This is particularly
    the orientation and focus of work in the health                   difficult when agencies compete for scarce human
    sector. In addition, there is a need to be clearer                resources to fund specific programmes.
    about how national AIDS strategies – which are               •    Both development agencies and governments
    themselves multisectoral – can most productively                  recognize the importance of increasing the pre-
    relate to the PRSP process.                                       dictability of aid, but at the same time there is a
•   The focus of much of the drive towards harmoni-                   growing trend to link disbursements to improved
    zation is primarily on how donors can better                      performance, particularly in the period between
    support public policies. In many low income                       the tranches of assistance. Intermediate indica-
    countries, however, a large share of health finan-                tors must necessarily be clearly linked to health
    cing and provision originates in the private sector.              impact and outcome, and there must be consen-
    This creates further challenges for achieving                     sus on the benchmarks which will be used to
    harmonization, and highlights the need to                         demonstrate progress or lack thereof.
    broaden the agenda so that it includes ways in
                                                                     From this list of issues it is evident that improving
    which governments can build networks with
                                                                 effectiveness and increasing harmonization has many
    civil society, NGO groups and private business.
                                                                 dimensions – affecting all stages of the programme
    The search for new resources, and the need to                cycle, from analysis, through implementation to
attract new donors, has led to the creation of new aid           monitoring and evaluation. However, while the list
instruments, such as The Global Fund to Fight AIDS,              of challenges is long, there are a growing number
Tuberculosis and Malaria, the International Finance              of examples, cited in the text which follows where
Facility and the Millennium Challenge Account. The               development assistance has been made more effec-
key challenge is to attract funds that are genuinely             tive and there have been positive benefits as a result
additional, and to ensure accountability that will               of greater harmonization1. Even if existing instru-
satisfy new financiers, without creating greater                 ments are imperfect, improvements are clearly
demands on thinly stretched administrative systems.              possible.
    The availability of additional, earmarked grant                  While the focus of this paper is primarily on what
funds for health – from mechanisms such as the                   happens in relation to harmonization at country
Global Fund – can and has led to tensions between                level, this can be enhanced by enabling actions at a
financial ceilings set by ministries of finance aiming           global level such as through agreements affecting
to maintain macroeconomic stability on the one                   access to life-saving drugs through the interpreta-
hand, and the need to expand the resource envelope               tion of TRIPS in the Doha Declaration on Public
in the health sector on the other.                               Health.

                                               Section 1: Scaling Up Aid for Health   Resources, Aid Effectiveness and Harmonization   1
. Analysis and strategy development:                                       them, to meet the various MDG targets. This
estimating costs and mobilizing resources                                   approach, which results in higher estimates, is
Current levels of health spending in most low-income                        based on two important assumptions. First, that
countries are insufficient for the achievement of                           the additional funds can be readily absorbed
the health MDGs. The question is raised, however,                           and efficiently utilized (and therefore that the
as to how much is needed. This section argues that                          poorest countries need, and can use, the most
estimates of resource needs should focus on the                             resources), and secondly, that the various inter-
country level, but recognizes that there are differ-                        ventions act relatively independently from each
ences in opinion as to how these should be calculated.                      other, and from the feedback effect of economic
    The Commission on Macroeconomics and Health                             growth. This approach does not preclude address-
(CMH) suggested that countries could increase the                           ing some systemic constraints such as salary
allocation of domestic budget resources for health                          increases.
by an additional 1% of GNP by 2007. Evidence                            •   An alternative approach starts from current
suggests that while there is some upward movement                           resource availability, and is predicated on the
in health spending, it is rarely of this magnitude.                         interplay between improved policies, systems,
    Even if countries were able to act on the CMH                           governance and increments in aid.
recommendations, there would still be a substantial
                                                                            Where the first approach looks at the 2015 targets
shortfall that would have to be met primarily from
                                                                        and works back to the money that is needed now, the
increases in development assistance.
                                                                        latter starts with an analysis of current constraints
    In order to achieve the MDGs as a whole, it has
                                                                        and looks at how to progressively relax them, thereby
been suggested (for example in the Monterrey Con-
                                                                        increasing the quantum and effectiveness of spend-
sensus) that an additional US$ 50 billion of develop-
                                                                        ing. This approach attempts to avoid the problem
ment assistance is needed each year. If commitments
                                                                        of two competing scenarios by allowing govern-
made by G8 members are realized, aid to Africa
                                                                        ments to manage current realities while aspiring to
would double by 2010 resulting in significant new
                                                                        better performance and increased income.
resources for the health sector and to date, develop-
ment assistance to the health sector has seen some
modest progress. As well as an overall increase in                      . Analysis and strategy development:
the percentage of total aid over the last decade,                       health and PRSPs
annual commitments have increased from US$ 6.4                          The debate about how to estimate resource needs
billion on average between 1997-1999 to US$ 8.1                         raises questions about the purpose of PRSPs. In
billion in 2002 – with much of the increase attribu-                    effect, those that would encourage countries not
table to commitments to the Global Fund, and to                         to shy away from ambition and base their strategies
HIV/AIDS more generally. However, the CMH                               on “real” costs would use the PRSP as an advocacy
report recommends that annual assistance to the                         tool. The alternative approach based on a different
health sector should be increased to US$ 27 billion                     interpretation of “realism” encourages countries to
by 2007 and to US$ 38 billion by 2015.                                  focus on more immediate projections of resource
    Nevertheless, the question remains as to whether
                                                                        availability. The middle way is to encourage coun-
more accurate estimates of need will actually help
                                                                        tries – as part of the PRSP process – to prepare a set
turn commitments into action. While there may
                                                                        of alternative medium-term scenarios with different
be a case for costing what will be needed to achieve
                                                                        patterns of aid, systems development and policy
very specific targets, it is questionable whether there
                                                                        reform. The PRSP in Rwanda, for example, takes
is much political mileage to be gained by estimating,
                                                                        this form.
and publicizing, another global headline figure for
                                                                            While it is tempting to focus exclusively on the
the health MDGs.
                                                                        financial impact of PRSPs, it is equally important
    Efforts might be better directed towards looking
                                                                        to examine their influence in other ways. To what
at resource needs in individual countries. Here,
                                                                        extent do PRSPs fulfill their potential as a way of
however, differences in approach have emerged
                                                                        improving health policies, governance and institu-
with important policy implications.
                                                                        tions? This in turn will affect how health is treated
    Oversimplifying for the sake of brevity:
                                                                        in Medium Term Expenditure Frameworks (MTEFs)
•   One view is based on the costs of scaling-up                        and national budgets – and thus resource allocation
    interventions, and the systems needed to deliver                    and the effectiveness of spending in the sector.

1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    Potentially, PRSPs are important instruments                . Implementation challenges:
for the health sector:                                          new actors, new instruments
                                                                A wide range of strategies have been proposed for
•   As responsibility for the overall PRSP is based
                                                                raising additional resources for the achievement of
    in either the ministry of planning or finance,
                                                                the MDGs. Most current strategies have two targets
    the PRSP process can help illustrate the impor-
                                                                in common: non-traditional donors, particularly
    tance of health to poverty reduction, and thus
                                                                from the private sector; and those OECD countries
    strengthen the case for increased investment.
                                                                that are furthest from providing 0.7% of GNP as
•   By bringing a poverty reduction lens to the
                                                                development assistance.
    health sector, PRSPs can catalyse a more pro-
                                                                    While there is no question that new resources
    poor analysis of health challenges, and prompt
                                                                are needed, the means by which they are managed
    an examination of why existing polices fail to
                                                                and disbursed are equally important. Inevitably,
    reach vulnerable groups.
                                                                there is a need to manage tensions that emerge
•   The process thus offers an opportunity to reori-
                                                                between the desire to reduce transaction costs and
    entate national health plans and strategies to
                                                                support national policies on the one hand, and some
    those health actions most likely to impact on
                                                                of the demands of new actors and new systems on
    poverty and the needs of the poor.                          the other.
    The real potential of PRSPs is becoming evident
in some countries. In Uganda, the process helped
                                                                •    Private foundations – such as the Bill and Melinda
                                                                     Gates Foundation – have become major finan-
ensure a reorientation of the health policy towards                  ciers of health and development on a par in terms
the needs of the poor. In Mauritania, the PRSP pro-                  of volume of aid with both the larger bilateral
foundly changed the approach to delivering services                  donors and development banks while at the same
for poor people – and was in addition successful in                  time seeking a more distinct identity in terms
dramatically raising health spending.                                of approach.
    However, analysis suggests that these are the               •    The corporate sector, despite its increasing
exceptions rather than the rule and too often PRSPs                  involvement, has yet to find a fully settled role
do not fully deliver on their potential to influence                 outside of its own sphere of operations. Part of
change. For the most part, PRSPs appear to draw                      the thinking behind mechanisms like the Global
on existing national health strategies, without exam-                Fund was to provide a corporate-like environ-
ining their effectiveness or their ability to reach the              ment for tackling priority health problems that
poor. In addition, while paying lip service to links                 provided a common and secure channel for
with the MDGs, few PRSPs capitalize on the oppor-                    investors lacking a country presence. However
tunity presented by a cross-sectoral planning process                corporate involvement in the fund, as a signifi-
to promote the achievement of health and human                       cant donor, has been limited. Inevitably, this
development outcomes through non-human devel-                        raises questions about whether common fund-
opment inputs such as transport, fiscal policy (e.g.                 ing channels such as the Global Fund provide
tobacco taxes) and household energy. Instead, PRSPs                  companies with sufficient visibility, or whether
tend to rely on the delivery of traditional health                   the corporate sector’s role lies more in individual
services, providing few pointers to the most essen-                  companies providing support through the pro-
tial areas of policy and institutional reform needed                 vision of goods and services in kind.
to achieve the MDGs.                                            •    The International Finance Facility (IFF) currently
    In conclusion, PRSPs are an important entry                      being piloted in immunization, involves the pri-
point for tackling poverty/health challenges in low-                 vate sector in a completely different way. Long-
income countries. However, PRSPs alone are not                       term commitments from traditional governmental
sufficient as a means of creating capacity or com-                   donors will be used to leverage immediate and
mitment to poverty issues in ministries of health.                   additional resources for aid by issuing bonds in
Greater support from health and development                          the international capital markets, thereby ena-
partners, links with other processes, defining key                   bling the front-loading of aid. While the IFF sets
policy and institutional changes to increase effective-              its sights clearly on increasing aid before 2015,
ness, and continuing advocacy with higher levels of                  one can anticipate that needs will continue after
government, remain essential to achieve this end.                    this date.

                                              Section 1: Scaling Up Aid for Health   Resources, Aid Effectiveness and Harmonization   1
•   Although the United States Government has                           . Implementation challenges: increasing
    been a strong supporter of common mechanisms                        resources and economic health
    such as the Global Fund, a larger proportion of                     One of the many effects of the establishment of the
    its development assistance is managed through                       Global Fund is an increase in the overall quantum
    new and existing bilateral mechanisms such as                       of grant resources available to health. In several
    the Millennium Challenge Account and the                            countries, this has given a new edge to the long-
    President’s Emergency Plan for AIDS Relief.                         standing debate about the impact – real or potential
    Three features of these mechanisms stand out:                       – of increases in aid on macroeconomic stability.
    a highly selective focus on countries with speci-                   In considering this matter it is useful to separate
    fied policy environments; strict accountability                     arguments over sovereignty from those of economics.
    requirements; and a refusal to support organiza-                        The economic argument centres on what con-
    tions that pursue activities contrary to domestic                   stitutes financial sustainability. Some have made the
    political positions (such as support for abortion).                 case that increases in aid, depending on what it is
    Although these requirements make it difficult                       used for, can influence exchange rates and export
    for the US to join in common financing arrange-                     competitiveness and thereby, economic growth.
    ments at national or sector level, the level of                     Individual economists disagree on the seriousness
    resources and political support that has been                       of these issues in different contexts, and the extent
    brought to bear against diseases such as HIV/                       to which they should act as a brake on external
    AIDS and now malaria is nevertheless, of major                      assistance.
    significance.                                                           However, in countries faced with a serious disease
•   In the space of three years, the Global Fund to                     burden, failing to address major causes of ill-health
    Fight AIDS, Tuberculosis and Malaria grew from                      will hit economies considerably harder and poten-
    an idea to an organization that has received                        tially for a longer period of time. For these countries,
    pledges totaling over US$ 8.8 billion. During                       fiscal policy should therefore be considered and
    this time, the Board and Secretariat have had to                    defined within a context in which the death of
    negotiate many of the tensions inherent in pro-                     teachers, police and health workers is occurring at
    viding aid for health. They include, among many                     a rate faster than the state can replace them.
    others: providing support for national strategies                       The sovereignty issue is perhaps more difficult.
    versus targeted projects; eligibility for all coun-                 Ministries of finance have to balance competing
    tries or only the poorest; working through gov-                     demands and to make judgements about the relative
    ernments versus giving more prominence to                           contribution of many sectors to poverty reduction.
    non-state actors; building national capacity to                     They are accountable for achieving economic
    monitor versus the establishment of parallel                        growth targets and, in a resource scarce environment,
    systems; supporting locally-owned strategies                        are obliged to set spending limits. The question is
    while trying to shift national priorities towards                   therefore: who should have the final say when a
    the three diseases; earmarking funds for priority                   donor – such as the Global Fund – insists that their
    purposes or regions versus allowing a demand-                       earmarked funds be additional to previously agreed
    led system; and so forth.                                           spending limits?
    Four conclusions emerge: (a) that the experience                        The issue of fiscal discipline, manifest in the
of the Global Fund and the Global Alliance for                          form of resource ceilings, raises its head in other
Vaccines and Immunization (GAVI) shows that                             ways – particularly in relation to public sector
raising new resources from non-traditional donors                       employment. A significant increase in development
such as the private sector is possible but that gov-                    assistance for, say, AIDS treatment or child health,
ernments still provide the bulk of resources raised;                    will have limited impact if there are insufficient
(b) that other new approaches such as the IFF and                       health workers available for health centres and
airline tax could bring significant additional resources;               clinics. At the same time, there is no doubt that
(c) that plurality of channels and systems would                        many countries have wrestled for years with the
seem to be an inevitable consequence of such ini-                       inefficiencies that occur when staff salaries squeeze
tiatives in the short term; and (d) that there is a                     out all other forms of operating expenditure. Staff
tendency for the new philanthropic donors to focus                      take time to train, and there is thus a lead time before
on specific diseases and health conditions and to shy                   national authorities can respond to new financial
away from systems strengthening per se.                                 circumstances. Most will want to be reassured that

1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
these new levels of assistance will be sustained to             should take – as noted in the section on PRSPs –
allow for the long term employment of newly trained             requires further exploration. Some argue that if
workers.                                                        development assistance operates increasingly at an
                                                                overall budget level sectoral support will not be
                                                                necessary. An alternative approach is to seek a closer
. Implementation challenges:                                   match between the needs of particular countries
defining a role for project spending                            and the balance of aid instruments used.
A growing number of donors provide an increasing
proportion of their assistance as budget support. If
the PRSP and MTEF are agreed by all concerned,                  . Implementation challenges:
then financing directly through the national treasury           managing multiple partners
is an obvious next step.                                        At the heart of the harmonization agenda is the way
     At the same time, evidence indicates that in the           that development partners interact with national
health sector, one can expect that a significant pro-           authorities. Several aspects of this relationship –
portion of aid will still come in the form of projects.         particularly alignment around national priorities
It is also the case that relatively few countries are           as reflected in the PRSP and MTEF – have been
running SWAps that genuinely cover all forms of                 touched on. There are, however, several other
sectoral spending. Many of the reasons for this are             practical aspects of harmonization: the ‘nuts and
related to the requirements of different donors and             bolts’ issues that make all the difference in reducing
have been touched on in previous sections. In addi-             transaction costs.
tion, several governments regard some aspects of                    They include: shared analytic and sector work;
health spending as not being up for negotiation or              joint review missions; common financial manage-
scrutiny by outside agencies. The question to ask               ment standards; pooled procurement arrangements;
then is does this matter, and are there any reasons             common policies in relation to project management,
that actually argue in favour of projects?                      contracting and payment of technical assistance;
     Many argue strongly that the achievement of                and training and staff development. While the focus
health goals requires working through civil society             at country level is often on pooling resources – basket
and grass-roots organizations. Groups at risk of                funding – progress can also be made on some of
HIV or TB that live on the margins of society are               these other issues between a wider group of donors.
often best reached by other groups that also operate                While the Rome Declaration focused on harmon-
outside society’s mainstream. Channeling funds to               izing donors’ efforts across a broad front, coordi-
such groups through governments can be proble-                  nation of national and donor responses is equally
matic, particularly while trying to work to scale and           important when it comes to issues such as HIV/
maintain consistent quality standards – even if these           AIDS. Recent work in this area has identified three
groups have the capacity to absorb more resources.              principles: one agreed action framework; one national
     Health sector plans and budgets often perpetuate           AIDS authority; one country-level monitoring and
historical patterns of spending. They rarely contain            evaluation system (“three ones” in the jargon).
adequate provision for systems building or innova-              Although a move in this direction is a logical response
tion. How many national budgets in Africa or Asia,              to competing structures, coordination mechanisms
for instance, made provision for spending on AIDS,              and systems, the challenge is to link AIDS-specific
let alone AIDS treatment? While the Global Fund is              coordination to mainstream harmonization in a
keen to be seen as a supporter of PRSPs and SWAps,              way which is mutually reinforcing.
it also has a major role as a source of innovation
and capacity-building.
     Clearly there is a role for project spending –             . Monitoring and evaluation:
particularly in policy experimentation. Problems                performance and predictability
arise when off-budget spending increases excessively            Both governments and development agencies are
in volume, when it is used to divert genuine national           aware of the need to increase the predictability of
priorities, when it generates disproportionate costs            aid. In the absence of greater certainty about aid
in terms of management time, and – most critically              flows, governments find it hard to plan, budget and
– when it is used in the absence of some overall                recruit adequate numbers of staff. If AIDS treat-
sectoral strategy that has been subject to some form            ment, the continuation of which is essential over a
of democratic process. The form that such a strategy            lifetime, becomes dependent on major increases in

                                              Section 1: Scaling Up Aid for Health   Resources, Aid Effectiveness and Harmonization   1
development funding, the issue will become even                            Issues related to assessing progress towards
more acute. At the same time, there is a growing                        achieving the health MDGs has been addressed in
tendency to link disbursement with performance                          one stream of work of the High Level Forum. The
and results in order to sustain political support for                   challenges around this area of work include reaching
aid. The experience of GAVI, which relates funding                      agreements on precisely what is going to be moni-
to measures of performance, but also engages in                         tored, what constitutes satisfactory achievement,
financial sustainability planning, is particularly                      and how roles and responsibilities of governments
important in this respect.                                              and agencies are to be coordinated.




1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
                                                                                                                                                    2
HARMONIZATION AND MDGs:
A PERSPECTIVE FROM TANZANIA AND UGANDA
By Leo Devillé, with the contribution of Francis Omaswa and Hussein Mwinyi, Geneva, January 2004




1. Introduction                                                        increased from 7.3% to 9.6% from 2000 to 2003
This paper presents findings from research on the                      resulting in general and earmarked budget support
rate and impact of harmonization at the national                       for health amounting to US$ 4.1 per capita. Over a
level. It focuses on two country case studies; Tan-                    similar period, project aid shrank from about 60%
zania and Uganda. The paper looks specifically at                      to 36% of total resources for health. The Govern-
the effect of increased harmonization in these                         ment abolished user fees in its health units in March
countries and whether it has led to any tangible                       2001. Health units run by nongovernmental organi-
improvements. It compares the different preferred                      zations (NGOs), however, continue to charge fees
modes for the delivery of donor aid and considers                      and this accounts for 7% of the resource envelope.
what information on health outcomes is currently                       The shift from project aid to budget support and
available to measure performance. The paper also                       the concurrent abolition of user fees is illustrated
considers the suitability of various tools available                   in the graph below.
for setting national sector targets. The question of
resources needed to reach the health MDGs is also                      Resources available to fund Uganda’s Health
raised including costing, availability and the tensions                Sector Strategic Plan at 2001/2002 prices
between scaling up resources and macroeconomic
                                                                       350 Billions of Shillings
stability. Finally, the paper outlines what bottlenecks
                                                                       300
currently exist to achieve the health MDGs in the
                                                                       250
countries studied. By way of illustration, the author
                                                                       200
has included quotations and opinions expressed by
                                                                       150
those interviewed throughout the course of the
                                                                       100
research. For reasons of confidentiality these quo-
tations are un-attributed.                                             50
                                                                       0
                                                                            97/98     98/99        99/00       00/01    01/02    02/03      03/04    04/05

. What has been the effect of increased                                    NGOs       User Fees           Govt Total   Donor Project    Resource Envelope

harmonization?                                                         Source: Ministry of Health, Health Sector Performance Report, October 2003.

In Uganda and Tanzania, efforts towards greater
harmonization through the Sector-Wide Approach                             The increase in the health budget for the period
(SWAp) as well as a stronger focus on budget support                   under review has been modest: in absolute terms,
has increased the resources available to the health                    only US$ 1.4 per capita. The Ugandan Government’s
sector over the past five years. This in turn has led                  budget comes from two sources: domestic tax rev-
to improved health sector outputs in both countries,                   enues and external aid (both general and earmarked).
but not yet to measurable outcomes in all health                       Because tax collection performance is poor, growth
millennium development goals (MDGs)1.                                  in domestic tax revenues has not kept pace with
                                                                       economic growth. It is increases in donor support,
Uganda                                                                 therefore, that have largely funded the increase in
While the total resources available for the health                     the health budget, with a recent trend for some
sector have increased by only 15% in real terms over                   major donors to move away from projects to budget
the past five years, the government budget for health,                 support.
including budget support, has more than doubled                            There is also evidence that the increased budget
in shilling terms. The allocation to the health sector                 resources have been allocated more efficiently. For
as a percentage of the total government spending                       example, funding for primary health care (PHC)

                                Section 1: Scaling Up Aid for Health   Harmonization and MDGs: A Perspective from Tanzania and Uganda                  1
Table 1 Some stagnating health indicators in the 1990s in Uganda
 Indicator                                                         1995         2000   PEAP target (2005)      MDG target (2015)
 Infant mor tality rate (deaths < 1 year per 1000 live bir ths)    81           88     68                      41

 Maternal mor tality rate (deaths per 100 000 live bir ths)        527          505    345                     131




and district level services has increased from 32% to                    inequalities by improving its resource allocation
54% of the overall budget, while the central hospi-                      formula providing poorer districts with 51% per
tal budget decreased from 22% to 12%. They have                          capita more than Kampala for their PHC budget.
also been used more efficiently, especially in supply-                      Sector performance provides a mixed picture.
ing an improved mix of inputs such as staff, drugs                       From 1995 to 2000, infant and maternal mortality
and logistics2. And they are being allocated more                        figures stagnated, whereas HIV prevalence rates
equitably through a resource allocation formula                          improved. These statistics differ significantly from
introduced in 2003 that includes poverty in its calcu-                   those required to achieve the country’s own Poverty
lations. In addition, the decision to abolish user fees                  Eradication Action Plan (PEAP)5 and MDG targets.
(which has resulted in a sustained increase in out-                         However, since 2000 health sector outputs have
patient attendance of 72%) has increased access to                       improved significantly, reflecting better access to
health services for the poor.                                            and use of the Minimum Health Care Package by
    Uganda has sought additional resources for health                    the Ugandan population. A number of PEAP indi-
through the Global Fund to Fight AIDS, Tuberculosis                      cators, including the HIV/AIDS MDG and proxy
and Malaria (GFATM), which has pledged US$ 213                           indicators for child mortality MDGs, selected to
million of which nearly US$ 80 million has already                       assess performance of the health sector, have shown
been disbursed.                                                          marked improvement (see Table 2 below). However,
    The benefits of recent economic growth have                          the performance of the indicator for maternal health
been concentrated in certain groups, resulting in                        services remains disappointing.
rising inequality. The richest 10% of the population
have experienced a 20% increase in real consump-                         Tanzania
tion since 1997, and the poorest only 8%3. The                           Tanzania presents a somewhat similar picture. The
Economic Commission on Africa comments:                                  health sector’s share of the national budget increased
“There remain vast regional disparities in the inci-                     from 7.5% in 2000/01 to 8.7% in 2002/03. This is
dence of poverty [in Uganda], with a clear spatial                       equivalent to a rise from US$ 3.4 per capita in 1998/99
pattern. The more affluent central crescent around                       (US$ 2.4 from domestic resources plus US$ 1.0 in
Lake Victoria has made great strides in economic                         donor aid), to US$ 5.9 spent per capita in 2000/01,
development, while the drier, more disadvantaged                         to US$ 6.6 per capita budgeted for 2002/03 (US$ 3.6
northern part of the country has fallen even further                     from domestic resources plus US$ 3.0 in donor aid
behind. Inequalities in socioeconomic development                        per capita). Within the SWAp, support for the health
tend to be linked to inequalities in health4.” How-                      sector budget is channelled partly through the
ever, the MOH is trying to redress some of those                         President’s Office, Regional Administration and


Table 2 Some improving PEAP indicators
 No. PEAP performance indicator                                           Baseline value      2000/01   2001/02        2002/03
                                                                          (99/00)
 1      Out-Patient Depar tment utilization                               0.4                 0.43      0.60           0.72
        (Total Government of Uganda and PNFP)

 2      DPT 3 vaccine coverage (< 1 year)                                 41%                 48%       63%            84%

 3      Proportion of approved posts filled with trained health staff     33%                 40%       42%            53%

 4      Deliveries in health units                                        25.2%               22.6%     19%            20.3%

 5      Urban/rural HIV seroprevalence (national average)                 6.8%                6.1%      6.2%           6.2%



0  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
Local Government for district support, and partly                    . Has increased harmonization led to
through the MOH central basket. The UK Depart-                       any tangible improvements?
ment for International Development (DFID), a                         Different ways of doing business together by govern-
long-term partner to the SWAp basket, has now                        ments and their development partners have resulted
moved to general budget support. Although general                    in many positive changes, but this depends very much
and earmarked budget support has increased over                      on local leadership. This perception is very much the
the past years, off-budget funds (project aid) have                  same in Tanzania and Uganda, among government
remained important. They still contribute 40% of                     and other stakeholders.
external resources but this is falling.                                  Tangible improvements in output have been
    Overall allocations to the health sector have been               documented (see section 2). Improvements in out-
increasing in real terms and have become more                        come (as measured by the MDG targets) need more
efficient, with the largest rise being for PHC and                   time to materialize and may need focused cross-
preventive services. This signifies a movement in                    sectoral interventions (to address, for example,
recurrent expenditure away from secondary and
                                                                     maternal mortality, child mortality, malaria preva-
tertiary hospitals towards district health services
                                                                     lence) as well as broader socioeconomic development
(from 50% to 60% over the period under review)
                                                                     (to address child mortality, for example). SWAp and
and away from regional administration to local gov-
                                                                     other harmonization efforts have improved efficiency
ernment. It also signifies a reduction in the share
                                                                     and equity in resource allocation, as illustrated in
of salary costs from 65% to 50%, while increasing
                                                                     section 2. It is unlikely that the increase in outpatient
the share of “Other Charges”6, which is considered
                                                                     attendance in Uganda that resulted from abolishing
a priority in the Poverty Reduction Strategy Paper
                                                                     fees would have been sustained if the supply side
(PRSP). Both domestic and donor resources have
increased7, but the main source of extra funds was                   had not injected more resources (increased drug
the Tanzanian Government’s grants to district                        supplies; ring fencing of district drug budgets;
councils. Foreign aid was 53% and 56% of the total                   employment of 2700 additional health workers, etc.).
health sector budget respectively in 1999/2000 and                   This was made possible by increased budget support
2001/02. The recently adopted resource allocation                    (both general and earmarked). New approaches to
formula, which includes poverty and under-five mor-                  resource allocation between districts, based on
tality criteria, has allowed resources to be allocated               poverty criteria, are another concrete example of
more equitably since 2003/04.                                        governments and partners working together in
    Additional resources are sought through different                Tanzania and Uganda. Sector plans have improved.
channels. The Global Fund has pledged US$ 206                        The resources available and the way they are allo-
million over the full budget lifetime of which US$                   cated to sector priorities are more widely understood.
82 million has already been disbursed8.                              Ministries of health have become more vocal and
    In terms of health sector performance, outpatient                knowledgeable in defending their sector budget to
attendance has been maintained at 0.9 visits per                     ministries of finance, through prioritized sector
capita a year. Coverage of the diphtheria-pertussi-
stetanus vaccine DPT3 has increased to 83% and the
                                                                     Government funding and outputs: improving
proportion of fully immunized children below the
                                                                     performance in the Ugandan health sector
age of two has increased from 74% to 79%. The
                                                                     20 Total out-patient attendences (millions)
proportion of births attended by trained personnel                                                                                    2002/03
                                                                     18
increased from 50% to 80%. The Integrated Manage-
                                                                     16
ment of Childhood Illness and Roll Back Malaria
                                                                     14
strategies have been introduced and coverage pro-                                                                              2001/02
                                                                     12
gressively extended9. Health-financing strategies                                                   1999/00
                                                                     10                   1997/98
such as the Social Insurance and Community Health                                                 1998/99
                                                                                                              2000/01
                                                                     8
Funds have been rolled out further and policies on
                                                                     6
user charges have been maintained. According to
                                                                     4
the MOH, the introduction of financing strategies
                                                                     2
has improved the accessibility of quality services,
                                                                                     50                100              150              200
because drugs are now available at all times. There
                                                                               Government of Uganda budget (billions of shillings, 2003/04 prices)
is no recent evidence on whether progress towards                    Source: MoH, Three Years of Implementation of the Uganda Health Sector
the health MDGs is “on track”.                                       Strategic Plan, Flyer 2003.



                              Section 1: Scaling Up Aid for Health   Harmonization and MDGs: A Perspective from Tanzania and Uganda                  1
plans, Medium-Term Expenditure Frameworks,                              budget support (e.g. Danida, DFID) also want to
Public Expenditure Reports and PRSPs. This new                          continue financing specific technical or strategic
way of doing business together is much appreciated                      support through earmarked funding. The partner-
by both governments and development partners.                           ship fund in Uganda has been used for this. Danida
   While most people agree that significant improve-                    in Tanzania, in addition to supporting the health
ments have been made, major stakeholders say that                       sector budget, provides earmarked support to, for
policy dialogue should be more cross-sectoral and                       example, the Health Sector Reform Secretariat. Pro-
more oriented towards results.                                          jectized support to selected central-level activities
                                                                        or units may also help build the capacity to support
                                                                        district services.
. What is the preferred mode for                                           Uganda has a Poverty Action Fund (PAF) tool, in
donor aid?                                                              place across all priority sectors, which defines the
Governments (ministries of health, ministries of                        priority budget lines that fall under the PAF in each
finance) in both Uganda and Tanzania strongly                           sector. For health, these are district PHC, district
prefer budget support to project aid because it makes                   hospitals, NGO hospitals and selected central budget
critical resources more available for the nationally                    items coordinated by National Service Delivery,
defined priorities in poverty reduction. Moreover,                      such as drugs. This tool helps to prioritize poverty
budget support is more flexible, more equitable and                     alleviation and MDG goals within the budget and
can be decentralized to the level where the needs                       ensures that aid is channelled to those priorities. In
are greatest and the action must be taken. UN organi-                   Tanzania, the MOH remains somewhat reluctant to
zations and most development partners (e.g. DFID,                       move from sector budget to general budget support,
the Danish International Development Agency                             because it fears that its budget may be reduced if
(Danida), World Bank) agree that budget support                         the Ministry of Finance (MOF) does not give it
has added value. However, some bilateral donors,                        sufficient priority. The MOH in Uganda, which
while they support overall national policy directions,                  favours general budget support, is concerned that
maintain project support for other reasons. For                         negotiations with the Ministry of Finance, Planning
example, in 2003 USAID provided just under US$ 42                       and Economic Development (MFPED) are failing
million to Uganda for health-related activities, financed               to deliver the appropriate budget shares intended
entirely as project support. All projects are said to                   by the donors.
follow the principles and priorities of the PEAP and                        While most observers agree that increased
the Health Sector Strategic Plan (HSSP). USAID has                      budget support has improved some outputs, national
stringent internal reporting requirements which                         policy dialogue and the implementation of reforms
make it difficult for the agency to provide basket                      should be more oriented towards results. In Tanzania,
funding, but staff also expressed the view that budget                  the SWAp has focused mainly on systems building,
support is “inefficient” and lacks transparency.                        policy development and process. As the MOH in
    The methods of budget support differ between                        Tanzania put it: “We have to move from a reform
Uganda (mainly general budget support) and Tan-                         phase to a service implementation phase.” In Uganda,
zania (mainly sector-specific budget support, but                       the SWAp is the coordinating mechanism for deliv-
now also partly general budget support). However,                       ering the minimum health care package and is seen
health sector budgets have increased significantly                      as part of wider health systems reforms. In general,
in both countries. Most stakeholders who favour                         both countries state that health system development
budget support propose that about 80-90% of donor                       is needed but insufficient. A targeted, prioritized
aid should be channelled in this way. The remainder                     and multisectoral approach is required to achieve
should be “projectized” with the specific aim of sus-                   specific results.
taining and guiding the implementation of national                          Other forms of aid relate to global initiatives.
health sector plans: developing sector strategies,                      Both Tanzania and Uganda (ministries of health,
ensuring that resources are used in the most cost-                      ministries of finance and main stakeholders) strongly
effective way, testing innovative strategies, covering                  prefer Global Fund money to be allocated through
specific expertise, supporting change. UN organi-                       budget support and to use existing systems, rather
zations (UNICEF, WHO and UNDP) see it as their                          than to set up parallel management, accounting and
specific mandate to provide this projectized support,                   procurement systems. Both countries have effective
given their technical know-how and expertise. Some                      systems in place. They are trusted and used by major
bilateral agencies that contribute to SWAps and                         development partners, so it is hoped that over time

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
GFATM money will be channelled through them.                          . What is the best tool for setting
In the case of Uganda, where sector policy is coher-                  national sector targets such as MDGs?
ent, the MOH argues that budget support facilitates                   There is a general consensus among both govern-
policy coherence. However, the Global Fund remains                    ment and development partners that health MDGs
off budget and several donors continue project sup-                   should not be addressed in isolation from the overall
port. This suggests that not all development partners                 MDGs, or outside of the national macroeconomic
and global initiatives accept budget support as the                   planning framework. The main reference for target-
main and most effective financing mode. Project aid                   ing and achieving MDGs, including health MDGs,
also remains a major mode of financing the health                     is the PRSP in Tanzania and the PEAP in Uganda.
sector in Tanzania.                                                   It is generally understood that PRSPs drive the
    Both Uganda and Tanzania agree that managing                      agenda more than the MDGs, but that MDGs are
all the different flows of funds and a large number                   part of, or “mainstreamed” in, the PRSP and the
of uncoordinated projects remains problematic,                        sector plans.
but recent trends have been positive. Basket mech-
anisms and budget support have increased, and                           “MDGs should be mainstreamed in
projects are better aligned in support of national                       PRSPs and national sector strategic
sector plans10.
                                                                         plans, but local ownership is essential
                                                                         and country plans should be supported
. Is reliable information on health
outcomes available to measure                                            rather than global agendas. In other
performance?                                                             words, how can we support national
Both Uganda and Tanzania use specific indicators
to measure sector performance. Tanzanian Health
                                                                         plans in order to achieve the MDGs and
Sector Performance Indicators explicitly include all                     not the other way round?”
health MDGs, which are also part of the PRSP.
                                                                          In Tanzania, the PRSP gives the MOF the final
District performance is assessed annually by an
                                                                      say on allocation of resources between sectors.
independent body11. However, the reliability of
                                                                      Development partners claim that harmonization
systemic data provided through health manage-
                                                                      efforts have done little to increase domestic resources
ment information systems (HMIS) is a major prob-
                                                                      for the health sector and that, although develop-
lem. While HMIS can provide facility-based proxy
                                                                      ment partners participate in the discussions, their
indicators, population-based indicators such as
                                                                      influence on resource allocation between sectors is
child mortality rate, maternal mortality rate and
                                                                      limited. On the other hand, the MOF would not like
nutrition can be addressed only through demo-                         development partners to become too influential.
graphic health surveys or a representative sample of                      In Uganda, the PEAP (using the PAF) is an effec-
sentinel survey sites.                                                tive mechanism for allocating budget resources to
    In Uganda, with the exception of malaria and                      priorities across sectors. It suits the MFPED because
other diseases (TB), all health MDGs are reflected                    it gives the ministry the final word, but it also pro-
in the PEAP, at least as proxy indicators12. Quanti-                  vides the MOH with a powerful allocation mecha-
tative targets are set nationally and, according to the               nism. For example, of the budget increase in 2003/04,
MFPED, there is a need to scale down quantitative                     90% was required to be allocated to the agreed
targets to more “achievable” levels. The Annual                       health PAF lines. The PAF tool in Uganda could be
Health Sector Performance report presents infor-                      an example for other countries embarking on budget
mation on all health MDGs. District performance                       support.
is monitored annually through District League                             According to the MFPED in Uganda, the presence
Tables, which include management and service                          of different PEAP and MDG goals has led to differ-
indicators, including some proxy indicators for                       ent interpretations of their overall purpose among
selected MDGs (EPI, deliveries, sanitation). Quar-                    various stakeholders. While goals overlap (e.g. child
terly supervisory visits support district performance.                mortality), some quantitative targets of MDGs
Uganda produces a high quality and comprehensive                      (such as reduction of child mortality by two-thirds
annual sector performance report which could serve                    in 2015) are more ambitious than those set out in
as an example for other countries.                                    the PEAP, and vice versa. The time horizon is also

                               Section 1: Scaling Up Aid for Health   Harmonization and MDGs: A Perspective from Tanzania and Uganda   
different for the two sets of goals. However, MDGs                      health MDGs. Uganda has calculated that it needs
can play a useful role. They have already been em-                      about US$ 28 per capita a year to implement the
braced by certain sectors such as health, can enrich                    priority strategies of the HSSP13. The increase in
the list of poverty monitoring indicators and allow                     resources should be progressive and comprehensive,
international comparisons. The challenge for the                        i.e. it should cover all essential system inputs such
next PEAP and HSSP revision is therefore to com-                        as financial and human resources, capacity and
bine them and make them compatible with all MDGs.                       skills, and logistics.
                                                                            As a first step, Tanzania requires US$ 9.0 per
  “Most MDGs are more a political than a                                capita (compared to US$ 6.6 per capita in 2003/04) to
                                                                        implement the first phase of its new strategic health
   technical responsibility. We are just con­                           plan. No local cost estimates exist yet for a longer
   sidering these high levels of mortality                              time horizon, but the finances needed in the medium
                                                                        term are likely to be close to those in Uganda.
   as something normal. Change will only                                    Both government and development partners
   occur if national political leaders start to                         agree that scope remains to improve the efficiency of
                                                                        resource use. But most state that increased efficiency
   take mortality seriously and are willing
                                                                        may result in only marginal benefits (increased out-
   to do something about it. Uganda has                                 puts of 10-20%) and not in the significant changes
                                                                        required to reduce maternal and child mortality
   shown that this is possible in the HIV/
                                                                        substantially. To achieve the MDGs, resources must
   AIDS crisis.”                                                        be significantly increased, but this will not be suffi-
                                                                        cient if it results only in “doing more of what we
                                                                        do now”. To achieve some of the targets, “we have
. The costs of reaching the health MDGs                                to do things differently and better”. This will involve
While it may be useful to know that achieving health                    building health systems, scaling up interventions that
MDGs in Uganda or Tanzania may cost between                             have been proved to work, and avoiding the mistakes
US$ 30 and US$ 40 per capita a year, any detailed                       of the past. To reduce maternal mortality rates,
costing of MDGs should take into account local                          there is a clear need to improve access to emergency
constraints and opportunities and is best done at                       obstetric services delivered by technically compe-
country level. Costing of health MDGs is complex                        tent staff. Reducing child and maternal mortality
because it should also take into account the effects                    requires well-targeted multisectoral interventions.
of other sector interventions, cross-sectoral impact
of HIV/AIDS, etc. Many query the need for detailed                      Closing the financing gap for the Ugandan
disease-specific costing exercises, because they carry                  Health Sector Strategic Plan
the risk of promoting attempts to reach health                          1,600 Billions of Shillings
MDGs in isolation from overall development MDGs.                        1,400
    In Uganda, the MOH estimates that it will need                      1,200
to capture 15% of the national budget if it is to achieve               1,000
the goals set in Vision 2017. The MOH recosted the                      800                                  The Financing Gap
HSSP and estimated that it would take US$ 28 per                        600                                                         Total resources is the sum of
                                                                                                                                    budget plus donor projects
capita to fund the plan by 2010/11. There is no explicit                400                                                         other contributions
link between this figure and the MDGs, because the                      200
HSSP is more geared towards the PEAP goals (where
                                                                         01/02     02/03     03/04       04/05      05/06   06/07    07/08     08/09   09/10   10/11
proxy indicators for the MDGs are integrated). How-                        Total resources            Total costs       GoU budget           Donor projects
ever, the estimated US$ 28 per capita is close to the                      Other contributions
first rough estimates by the Millennium Project for
reaching the health MDGs in Uganda.
                                                                        . How should resources be scaled up if
                                                                        concerns about macroeconomic stability
. Can the health MDGs be achieved                                      are deemed more important than socio­
with the resources currently available?                                 economic development?
All partners agree that more funds are needed to                        Better health leads to better socioeconomic develop-
achieve the goals of sector reform strategies and                       ment but surprisingly, high rates of maternal and

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
child mortality are now being accepted almost as                      tradables sector. Second, sustained efforts to achieve
“normal” at national and global levels. HIV/AIDS                      costly sector goals may have macroeconomic and
and maternal and child mortality are more a political                 budgetary consequences that make it more difficult
than a health sector responsibility. Politicians should               to attain other goals, notably a reduction in the
take them seriously and attempt to address them.                      number of poor people. According to the authors,
More resources should be allocated to deal with                       the main focus should therefore be on increasing
them. Moreover, communities should be empowered                       efficiency and effectiveness of current government
to hold their leaders to account. Uganda is a great                   spending. This viewpoint often prioritizes economic
example of how HIV/AIDS prevalence has tumbled                        growth above attaining the MDGs or even dismisses
down, among other reasons because of political                        the relevance of the MDGs. For example, health
support at the highest level and well-targeted actions.               officials in Uganda report different World Bank
But how can resources be scaled up significantly if                   economists as saying: “developing countries like
macroeconomic stability is thought to be incompat-                    Uganda cannot achieve the MDGs”, and “MDGs
ible with a larger health budget? According to the                    are the aspirations of UN agencies which cannot
MOH of Uganda, this is the single most important                      be achieved.”
issue that has to be solved if there is a serious in-                     Not all macroeconomists (including the IMF)
tention to achieve significant progress towards the                   agree that this view should prevail. According to
MDGs.                                                                 an IMF source, “Uganda does not have to refuse
    In Uganda, the MFPED has publicly stated that                     aid for health or any other poverty-eradication
from 2003/04, budget ceilings will be calculated                      programmes in order to adhere to IMF-imposed
taking all project aid into account. Although the                     guidelines. . . . Indeed, IMF staff have suggested
MFPED has always stated that, for example, Global                     restructuring public spending so as to accommo-
Fund money would be additional, additionality may                     date higher expenditures for important social and
be hard to prove. In other words, if the sector accepts               economic sectors. The amounts of aid and increases
more “earmarked” project aid, it will lose out on                     in health spending currently under discussion in
more flexible budget resources. While the total                       Uganda would have minimal macroeconomic
available to the health sector may remain stable,                     impact”14. There is also a strong argument that
resources would be earmarked for specific projects                    increasing expenditure on imported commodities
which may not be in line with poverty reduction or                    does not harm the macroeconomy.
MDG goals.                                                                The same IMF source states: “In the specific case
    The MFPED and some World Bank and Inter-                          of Uganda, given that the aid flows in question are
national Monetary Fund (IMF) macroeconomists                          to be used for top priority spending such as imports
stress that increasing aid can distort exchange rates,                of life-saving drugs and other essential medical
undermining export competitiveness and thus, also,                    supplies, we do not see any adverse effects on the
economic growth. This is argued in the MFPED’s                        macroeconomy. Moreover, even if these aid flows
report on “Uganda’s progress in attaining the PEAP                    placed pressure on the exchange rate and the com-
targets in the context of MDGs, May 2003”. The                        petitiveness of the economy, these effects could be
report states that there are three major constraints                  minimized through monetary and exchange rate
– resource constraint, absorptive capacity and crowd-                 policies.”
ing out of private sector activities. The presence of                     As the MOH and many development partners
multiple constraints, it says, implies two trade-offs:                state: “How many more deaths can we just accept
between development and macroeconomic objec-                          for the sake of private sector development or the
tives, and between the MDG goals themselves. Full                     value of local currency?” and “Is there no way to
implementation of the PEAP would require an                           handle the trade-off between macroeconomic and
increase of 63% in government spending, while                         social objectives in a more flexible way, by allowing
achieving the MDGs would be far more expensive.                       progressively more short- to medium-term invest-
The report acknowledges that social sector inter-                     ment in social sectors, while dealing with the macro-
ventions boost human resource capabilities through                    economic objectives in a longer-term perspective?”
improved health and educational attainment; but
it takes time to develop human capital. According                       “Increasing resources for reaching MDGs
to the authors, long-term development objectives
may be at odds with short-term macroeconomic
                                                                         should focus on increasing local resource
objectives, mainly because they crowd out the                            availability by reducing or rescheduling

                               Section 1: Scaling Up Aid for Health   Harmonization and MDGs: A Perspective from Tanzania and Uganda   
    debt payments, and by reviewing barriers                                (HR) management (e.g. District Councils becom-
                                                                            ing more responsible for HR matters in the near
    to fair trade, rather than by only increas­                             future and defending their case with the Civil
    ing grants and loans.”                                                  Service Department). This seems more effective
                                                                            than the centralized and rather inflexible approach
                                                                            to HR management in Uganda, where all power
10. What are the main bottlenecks in                                        lies with the Ministry of Public Service (MOPS).
achieving the health MDGs?                                                  For example, Uganda’s MOH cannot introduce
a. For the MOHs of both Uganda and Tanzania,                                allowances for midwives in disadvantaged dis-
   the most important issue is the lack of appro-                           tricts without the agreement of the MOPS. Also
   priate levels of financial resources, affecting                          in Uganda, the Ministry of Education (MOE) is
   the capacity of the supply side to scale up needed                       responsible for training schools, but does not
   interventions. This affects both the public and                          consider them to be a priority. Both Tanzania
   private sectors: in Uganda, for example, about                           and Uganda stress the need for more investment
   30 to 35% of health services are provided by                             in pre-service training, which has been chronically
   faith-based NGOs. This means a need for more                             underfunded18. In Uganda, because pre-service
   resources over a longer time. The unpredict-                             training of medical staff remains under the
   ability of the resources available over the medium                       MOE, it is not reflected in the PRSP priorities,
   term will inhibit governments from introducing                           although long-term sustainability cannot be
   any fundamental changes that they cannot sus-                            achieved without appropriate output and quality
   tain (e.g. pay reforms; training and attracting                          of pre-service training. Surprisingly, the Tanza-
   significantly more skilled staff; contracting                            nian and Ugandan PRSPs do not address HRD
   private sector providers; etc.). Ensuring predict-                       in any systematic way, although both countries
   ability means a “Memorandum of Agreement                                 agree that HRD is the second most important
   for a period of 15 years” and “independent                               issue in scaling up service output.
   monitoring systems”. The experience of the
   Global Alliance for Vaccines and Immunization                          “If the international community is
   (GAVI) shows how scaling up may be unsustain-
   able if financial support cannot be maintained.                         committed to supporting developing
   Countries may be unable to afford the costly                            countries in making progress towards
   vaccines introduced and paid for under GAVI,
   after GAVI stops its support15.                                         reaching the MDGs, it should invest in
         For Uganda in particular, the capping of the                      human resources development (including
   health sector budget, with project aid included,
                                                                           largely underfunded pre­service training)
   in the projected Medium-Term Expenditure
   Framework is a major constraint to scaling up                           and be willing to pay part of the human
   activities. Project aid in Tanzania continues to be                     resource cost.”
   perceived as additional to the budget (including
   budget support and basket funds), but the MOH                        c. Third, efficiency gains can be made when imple-
   faces a similar constraint in convincing the MOF                        menting the reforms at district level. In Tanzania,
   to allocate more budgetary resources to health.                         it is claimed that the slow process of implement-
b. Second (and directly linked with the limited                            ing decentralization through the Ministry of
   resources) is the problem of human resources                            Regional and Local Government has limited
   (both quantitative and qualitative). This is related                    improvements in the quality of service delivery.
   to issues such as low pay levels, difficulties in                       In Uganda, some partners consider the Ministry
   retaining staff in public service, brain drain16,                       of Local Government to be a rather weak imple-
   staff motivation and rewards for performance,                           mentor of the reforms and insufficiently pro-
   pre-service and in-service training 17, and the                         active in the health debate. Decentralization, both
   impact of HIV/AIDS. Human resource develop-                             in Uganda and Tanzania, has yet to achieve more
   ment (HRD) is closely linked with the broader                           effective service delivery, with participation from
   civil service reforms, which tend to lag behind.                        local communities and “space” for the voices of
   Tanzania has adopted a more flexible and increas-                       the poor to play a part in reducing poverty and
   ingly decentralized approach to human resource                          attaining MDGs. Effective decentralization

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
   requires the appropriate mechanisms and local                          of funding in the next PEAP review, given the
   capacity for accountability and for monitoring                         ceilings set by the MFPED.
   both change as well as the performance of pub-
   lic and private providers.                                           “Take a holistic view to development and
d. Lastly, a significant weakness in planning for
   health MDGs in both Uganda and Tanzania is
                                                                         poverty rather than focusing on health
   the lack of a holistic cross-sectoral view on                         only. Do not limit health to health
   priority interventions that improve health.
                                                                         sector strategies. Build institutional
   PRSPs remain a juxtaposition of sector priorities
   and strategies, viewed through individual sector                      capacity in multisectoral analysis and
   spectacles; they do not take a holistic approach                      implementation.”
   combining, for example, health, education and
   human resource issues. Health is seen too much                         In Uganda, some macroeconomists state that
   as solely a health sector responsibility, and health-              the health sector has no more capacity to scale up,
   related issues that should primarily be addressed                  as all systems (public service and NGOs) are stretched
   by other sectors remain generally underfunded.                     to maximum capacity. Increased funding, they say,
   Competence in multisectoral approaches seems                       will lead mainly to increased unit costs, not increased
   limited, but Uganda provides an interesting                        output. This view is not shared by the MOH, which
   example of “best practice”. Following the dis-                     argues that the existing human resources and infra-
   appointing child and maternal mortality figures                    structure have the capacity to dispense more drugs
   in the 2000 Demographic Health Survey, the                         and supplies immediately. Moreover, there is strong
   MFPED in Uganda set up a task force on infant                      justification for investment in additional capacity
   and maternal mortality which produced its rec-                     to increase coverage to previously underserved
   ommendations in 2003. It confirms that activities                  populations. This will result in further increases in
   geared towards reducing mortality should be                        output without driving up unit costs.
   essentially multisectoral; that inadequate policy                      Most development partners agree that substan-
   implementation, rather than inadequate policies,                   tially more financial resources are needed for health.
   is an issue; and that mortality reduction will                     They need to be introduced progressively and
   require substantial investment of resources in                     must take into account local absorptive capacity,
   the social sectors. The task force has identified                  but their use should be well focused and targeted
   critical actions to be taken by several sectors. It                to cost-effective interventions. However, the need
   remains to be seen whether these recommen-                         for additional resources must be addressed across
   dations will be supported by appropriate levels                    sectors, and not for health alone.




                               Section 1: Scaling Up Aid for Health   Harmonization and MDGs: A Perspective from Tanzania and Uganda   
                                                                                                                        3
MDG­ORIENTED SECTOR AND POVERTY REDUCTION
STRATEGIES: LESSONS FROM EXPERIENCE IN HEALTH
By Mick Foster, Abuja, December 2004




1. Introduction                                                         setting a lower target for MMR (Ethiopia having
This paper summarizes a forthcoming study to                            revised down a previous more challenging target),
examine how the Millennium Development Goals                            and half of our sample countries setting lower child
(MDGs) related to health are being taken forward                        mortality targets. Conversely, all countries except
at country level, based on a literature review plus                     Ethiopia (which starts from a very low base) have
14 country case studies of varying depth1. The                          adopted more ambitious water targets, and those
country cases were chosen to include all countries                      few with nutrition targets have also aimed beyond
with completed Poverty Reduction Strategy Papers                        the MDG.
(PRSPs) that were being supported with both an                              All address communicable diseases although few
IMF Poverty Reduction and Growth Facility (PRGF)                        PRSPs include disease specific targets. There is a
and a World Bank Poverty Reduction Support Credit                       wider choice of targets with indicators that reflect
(PRSC). The paper is organised in eight sections,                       local data availability which are not necessarily in
each with brief ‘Summary Points’ at the end to high-                    line with the MDGs. All except Nicaragua and
light the main conclusions and recommendations.                         Tajikistan address HIV/AIDS. Nutrition is univer-
The paper first discusses how the health MDGs are                       sally mentioned, but few countries have specific
reflected in national goals (section 2 and 3), and the                  targets, and the indicators used again depend on
content (section 4) and costs (section 5) of the                        local data availability and in some cases differ from
strategies designed to achieve the national health                      the MDGs.
goals. The paper goes on to discuss the resources                           The MDGs do not capture all of the goals to
available for implementing the national strategy,                       which countries are committed, and are not equally
with a focus on the macroeconomic constraints on                        relevant everywhere, with some countries prioritis-
increasing expenditure (section 6). Implementation                      ing peace and stability or overall economic growth
issues are discussed in relation to the coordination                    over an exclusive focus on poverty. The specific
of health plans with the national budget process                        health related MDGs also need to be adapted to
(section 7), and a discussion of absorptive capacity                    the circumstances of individual countries: countries
problems and what might be done to manage them                          may have already achieved one or more of the goals,
(section 8). The final section, (section 9), discusses                  and may wish to set a more challenging target, as
how effectively development assistance is support-                      with HIV/AIDS in Uganda or access to clean water
ing progress towards the MDGs, and what more                            in Albania;
could be done.
                                                                        •   The target reductions from a 1990 baseline may
                                                                            be too challenging to be achievable, especially
. MDGs and National Targets                                                in circumstances where e.g. child and maternal
All of our country cases make significant reference                         mortality have stagnated or increased in the 1990s,
to the MDGs in setting their own national goals                             requiring an even faster rate of reduction to
and targets, and many of them set national targets                          reach the 2015 targets.
that are consistent with the MDGs. All of them                          •   The MDG targets may also be inappropriate as
have targets and indicators linked to the MDGs for                          well as too challenging for middle-income coun-
child or infant mortality, maternal mortality, and                          tries like Albania where, for example, maternal
improved access to safe drinking water (excepting                           mortality levels are already relatively low. The
Albania where near universal access exists and the                          MDG target of a three-quarters reduction would
target relates to household connections). The child                         imply achieving levels similar to far wealthier
and maternal mortality MDGs are clearly regarded                            countries, and would involve prioritising this
as the most challenging, with 9 of our 14 countries                         specific MDG over other health goals (e.g. reduce

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    chronic illness) that may be more important                             . Framing health strategies to achieve
    nationally.                                                             the targets
•   The MDGs exclude some health issues that are                            Most PRSP health strategies are dominated by
    important in specific countries. For example,                           health services which aim to deliver a package of
    smoking in Vietnam, cervical cancer in Nicara-                          essential interventions derived from an international
    gua. A health policy exclusively focused on the                         consensus on ‘what works.’ There is a focus on
    MDGs would have significant gaps and inappro-                           promotive and preventive interventions and on
    priate priorities.                                                      primary health care delivery. The strategies priori-
•   The MDGs may require disaggregation to address                          tise the areas most closely linked to the MDGs,
    inequality by setting more challenging sub-targets                      with reproductive and child health and the control
    for those population groups and regions with                            of the major communicable diseases given high
    particularly poor health outcomes, as in Vietnam.                       priority. PRSPs include the costs of expanding edu-
                                                                            cation, roads, water and sanitation, and although
    Summary Points
                                                                            their contribution to achieving health targets is
    • MDGs need to be adapted to national circumstances
                                                                            often recognised, it is seldom quantified3.
      and priorities
                                                                                State funded health systems in many countries are
                                                                            grappling with similar problems: staff availability,
. Should strategies be ‘Needs Based’,                                      pay and motivation, and the difficulty of managing
‘Resource Constrained’ – or both?                                           a complex and geographically dispersed service with
Although there is no formal link with the MDGs,                             inadequate financial resources and institutional
the PRSP has in practice become the main national                           capacity relative to expectations of what can be
planning instrument for articulating the strategy                           delivered. Service coverage is presently low, espe-
for achieving national goals related to the MDGs.                           cially in rural areas, and nearly all PRSPs envisage
The Millennium Project argues that national pov-                            substantial provision for reducing geographical
erty reduction strategies should be ‘needs based’,                          barriers to access, building new primary facilities,
setting out strategies that are consistent with                             increasing operating budgets, and providing incen-
reaching the MDGs, and challenging the donor                                tives for staff to work in previously underserved
community to fill the financing gap left after reason-                      areas. However, trends in actual health expenditure
able national efforts at resource mobilization. Others                      are mixed, with no strong evidence as yet of the
stress that, if the PRSP is to be useful as a guide to                      increases in spending that would be required in
action, it needs to be linked to the national budget                        order to implement these plans (Table 1).
process, setting out clear priorities that are used to                          Decentralisation is a nearly universal theme. It
guide the preparation of public expenditure plans                           encompasses institutional approaches ranging from
and budgets based on a realistic assessment of the                          ceding responsibility for health services to a lower
resources available.                                                        tier of Government, through contractual arrange-
    By developing multiple scenarios, some countries                        ments with public and/or private entities to provide
(Rwanda, Senegal, Niger) have shown how the PRSP                            agreed levels of service, through to more limited
can be used both to guide the allocation of the                             changes to increase the responsibility of lower level
resources they expect to have, and as a bid for addi-                       units under health ministry authority. This often
tional support: a ‘high’ scenario is used to attract                        takes the form of increased authority to manage
additional finance by showing what could be achieved                        their own budgets, while holding them more account-
with it, while realistic or low case scenarios set out                      able for results, often as part of a wider move to
how expenditure plans should be prioritised in the                          introduce ‘performance based budgeting’ (e.g.
event that fewer resources are available2. The World                        Benin, Ghana, Tanzania). The desire to hold those
Bank and IMF have supported those countries                                 delivering services accountable has not always been
wishing to adopt this approach, but a strong case                           accompanied by an equal willingness of finance
can be made for more active encouragement of all                            ministries, health ministries, or donors to relinquish
countries to do so.                                                         control over expenditure decisions, staffing, and
                                                                            procurement. Reasons of lack of capacity and prob-
    Summary Points                                                          lems of accountability are cited, but the effect is that
    • Reconcile ‘needs based’ and ‘resource based’ approaches               good managers may be frustrated in their efforts
      by developing more than one scenario for PRSPs.
                                                                            to achieve improved results (Box 1).

              Section 1: Scaling Up Aid for Health   MDG-Oriented Sector and Pover ty Reduction Strategies: Lessons from Experience in Health   
Table 1 Trends in Public Expenditures on Health
 Albania                 Increased health spend as share of budget and GDP since 2001, narrowing gap with Europe with rapid
                         growth performance.

 Benin                   Committed to increase health budget, but failure to disburse budgeted funds led to a reduced budget
                         share more in line with absorptive capacity. The 2003 and 2004 budgets of roughly 2% of GDP represent
                         90% of the amounts envisaged in the PRSP, but actual disbursement in 2003 was only 1.5% of GDP-
                         about two thirds of plan.

 Burkina Faso            The PRSP envisaged increasing the health budget share from 9.8% in 2000 to 11.5% in 2003, raising per
                         capita health spend from $7.7 to $9.5. The MTEF envisaged a health sector share of 7.5% in 2004,
                         increased to 8.5% in the budget due to HIPC funds. Actual spending was just $5.90 in 2003, 6.3% of
                         budget, due to low HIPC spending. Far from increasing as envisaged, health spending has fallen as a share
                         of budget, GDP, and in real per capita terms.

 Cambodia                Government health expenditure doubled from 0.57% of GDP in 1999 to 1.20% of GDP in 2003. Public
                         health spending per capita increased by more than 40% between 2001 and 2003, albeit from a very low
                         base (around $3 per capita). However, domestic public expenditures represent an estimated 9% of total
                         health sector expenditures.

 Ethiopia                Spending fluctuated at around 5% of Government spending since 1992/93, shor t of the 8.2% targeted in
                         the PRSP for 2004/5. Spending of $1.50 per capita ranks as possibly the lowest in world. Regional subsidies
                         are forecast to be flat, limiting scope for increase.

 Ghana                   There has been a 30% real increase in public health spending (Government and donors) since 2001 with
                         the Government spending exceeding 11% target share of recurrent budget. But increases have been domi-
                         nated by salaries and investment while non-salary recurrent budgets (& productivity indicators) have fallen

 Nicaragua               In the period 2001-2003, GDP share increased from 2.2% to 2.95% and the per capita spend increased
                         from $17 to $22. Current GDP share is sufficient to meet NDP cost estimates to achieve the goals.

 Tajikistan              In the period 2001-2003, spending fell from 1.17% of GDP to 1.01% andfrom 6.3% to just 5.3% of
                         Government spending – both very low levels.

 Tanzania                Health spending increased 75% in real terms in 3 years up to 2004. The budget share of 9.7% is below
                         the Abuja 15% target, spending including donors is only $7.26, and budget share dropped in 2003-2004
                         budget. Some increase have occurred in share of primary & preventive.

 Uganda                  Health share of non-interest budget increased from 2.5% in 1987/88 to 9% in 1998/8 and 12.2% in
                         2002/3, with improved targeting as the share of the Mother and Child Health Programme (MCHP) has
                         been increased. The target share for 2007/8 is 15% and it is anticipated that current per capita spend of
                         $8-9 will reach $11 by 2015 with15% share. Implementation rate has been over 95%, but fell to 90% in
                         2003 due to recruitment problems.

 Viet Nam                The available data has been limited and par tial. However, although trends are unclear, substantial
                         increases in funding of services for the poor do seem to have occurred.




    Where decentralisation has been to local Gov-                           Efforts to help communities hold service provid-
ernment bodies (Uganda, Tanzania, potentially                           ers accountable are increasingly common, including
Nepal), it has in practice been accompanied by                          community management of primary health facili-
earmarking of funds to ensure that national priori-                     ties (Benin, Burkina Faso, Rwanda, Nepal). An
ties are respected, often accompanied by higher                         increased community voice is often linked to com-
level review of plans and budgets, with incentives                      munity financing schemes. Pre-payment schemes
and sanctions linked to aspects of performance.                         increase utilisation by those who are covered, but
Imposition of sanctions is problematic given that                       inability to pay usually excludes the poor from par-
the worst performers are commonly the poorest                           ticipation (Rwanda coverage ranges from 10-50% of
districts where it is hardest to obtain staff, and hence                population, Ghana similar). Protecting the poor’s
performance budgeting needs careful design to avoid                     access to services by exempting them from payment
either reinforcing existing inequalities, or lacking                    has proved difficult to implement4. Several case study
credibility because funds cannot be withheld when                       countries are piloting approaches to reduce or
performance is poor.                                                    eliminate cost barriers to the poor.

0  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
Box 1 Is there a need to delegate more authority to those responsible for achieving results?
 Benin: 1995 policy envisaged decentralisation to health facilities and districts, public-private partnerships and performance con-
 tracts. However, over-centralised budget management has frustrated the policy and prevented planned increases in health
 expenditure. This is now being addressed with PRSC suppor t.

 Burkina Faso: Complex multi-level planning, but over-centralised and complex procedures contribute to low budget execu-
 tion (below 80% including HIPC) and very late release of funds, especially at the periphery. Key MDG priorities are heavily
 dependent on HIPC funds and donor projects, funds for both of which experience large shor tfalls. PRSC is suppor ting limited
 introduction of more decentralised access to funds at district level.

 Ethiopia: Health sector suppor t is inconsistent with block-grant funding of regions. Health SWAP is mainly project financed,
 but donor projects achieve lower and more variable disbursement than Government funds5. Government is pressing for more
 budget suppor t.

 Ghana: MOH performance contract with the Ghana Health Service but MOH has retained responsibilities for procurement,
 staffing and training. There are 23 administrative steps for districts to access GOG funds.

 Nepal: Reviews in late 1990s concluded ver tical projects were inefficient and unsustainable and called for decentralisation and
 an enhanced community role6. Detailed budget programming and late donor confirmation of suppor t results in late releases.
 But decentralisation is proceeding: sub-health posts are being handed to communities but limited powers at present (eg. no
 control over hiring staff), but there are plans for local bodies to have powers to vary compensation, plans to devolve drug and
 medical supply purchase to districts and public-private par tnerships are being expanded.

 Tanzania: District health plans require formal approval by a basket funding committee. This delayed fund release in 2003.

 Source: Country Case Studies, WB repor ts.




     Re-allocating budgets, both within and be-                                . Estimating the costs of achieving
tween sectors, is difficult to achieve. Based on the                           the targets
material in our case studies, PRSPs say remarkably                             Health is just one among many sectors competing
little about how non-priority expenditures can be                              for scarce funds in order to achieve faster progress
reduced in order to fund expanded services for the                             towards national goals and the global MDGs. It is
poor, with Nicaragua one of the few making ex-                                 important to be explicit about the assumptions
plicit reference to increased reliance on the private                          linking public expenditure costs to expected health
sector to fund services for the better off. Stated                             outcomes because the argument for additional
priorities risk being squeezed by growth of other                              resources may otherwise be lost by default, both
expenditures (e.g. Ghana district services and non-                            with the Ministry of Finance, and with the donors.
salary recurrent spending have been squeezed by                                Estimates of the expected costs and impact on
big increases in spending on salaries, on investment,                          outcomes of specific expenditure programmes are
and on central spending; primary health share of                               also helpful for prioritisation of the budget in the
total health budget has fallen in Burkina Faso,                                light of available resources, and provide a quantified
whereas policy is to increase it).                                             framework for subsequent monitoring and evalua-
                                                                               tion and for setting realistic targets for managing
    Summary Points                                                             performance.
   •   Stronger inter-departmental coordination is needed                          Although some countries have set targets that
       to move from ‘health services strategy’ to ‘health                      are less ambitious than the MDGs, all of them have
       strategy.’
                                                                               set targets that imply an acceleration of progress
    •  Plans for expanding support to high priority inter-
                                                                               relative to the historic trend. Achieving those targets
       ventions (on which there is broad agreement) need
       to be balanced by plans for how funding can be                          will require increased budgets to fund more chal-
       withdrawn from lower priority services.                                 lenging expenditure programmes. However, more
    •  In most countries, achieving national targets                           than half of the case-study countries are spending
                                                                               less than $10 per capita on health, with Ethiopia
       requires institutional reforms to strengthen perfor-
       mance incentives, but with accountability for                           spending only $1.50, Cambodia just $3. The health
       results matched to more reliable access to the                          sector budget share is in all cases below the 15%
       necessary resources.
                                                                               target agreed by African countries at Abuja, and in

                 Section 1: Scaling Up Aid for Health   MDG-Oriented Sector and Pover ty Reduction Strategies: Lessons from Experience in Health   1
many the share is both low and not increasing                               For costing national strategies and relating them
(Ethiopia, Benin, Burkina Faso, Tajikistan, and                         to outputs, however, an approach is needed that can
Tanzania). The resources that are available are in                      handle the costs and impact of actions that have
most cases far short of the resources required to                       wider effects than individual interventions or groups
achieve the Government goals in the health sector.                      of interventions. In particular, it is necessary to con-
This risks undermining faith in Government and                          sider the cost and impact of measures to address
the motivation of health workers who cannot                             institutional and incentives problems, and to prepare
achieve what is asked of them. Although it does not                     cost estimates that can be ‘mapped’ to the way
require sophisticated costing exercises to demon-                       that budgets are actually allocated. One approach
strate that there is a shortfall, costing the targets                   that is being piloted aims to do this by packaging
can help to make the case for what could be                             interventions in terms of how they are delivered
achieved with increased funding. In Mauritania,                         (facility based, outreach, community-based) and
for example, the 40% increase in the health budget                      focuses on bottlenecks constraining coverage and
in 2002 was reportedly influenced by analysis sug-                      effectiveness (physical accessibility, human resources,
gesting that a targeted increase could achieve a 30%                    logistics and supply, cost and other barriers to demand
reduction in child mortality and a 40% reduction                        and utilisation, gaps in technical and organisational
in maternal mortality within five years 7.                              quality, and steering and management costs)9. The
    Although the shortfall in resources has been                        approach aims to identify those areas where there
highlighted in global estimates, it is often obscured                   is most scope for significant impact on health out-
at national level by relatively weak analysis. Most                     comes at modest cost. In Ethiopia, for example, it
poverty reduction strategies do not attempt to                          has been suggested that a 42% reduction in under-
estimate the public expenditure cost of achieving                       5 mortality could be achieved for less than half of
their targets8. Although most of the health strate-                     the cost required to meet the target reduction of
gies we looked at have been costed, few of them                         66%. Although useful as a conceptual approach,
articulate clearly (and provide evidence for) the                       the realism of the analysis has yet to be assessed in
assumed chain of causality linking the resources                        terms of actual results.
required to the activities to be undertaken, the
outputs to be produced, and the expected impact                             Summary Points
on outcomes. Many countries still produce their                             •  Strategies should include explicit analysis of
                                                                               expected linkages between costs-outputs-outcomes.
health budgets on an incremental basis not linked
to objectives or even activities (e.g. Tajikistan).                         •  Cost estimates should address institutional constraints
                                                                               and be prepared in a format that can be mapped
Others have moved towards activity-based budgeting                             to budgets and support resource bids.
in which objectives are stated, but have produced
detailed programme budgets in which it is difficult                         •  Priorities should be identified to permit adjustments
                                                                               in the light of resource availability.
to link the many activities to overall strategic pri-
orities (Ghana, Tanzania). In most cases, the goals
are determined with reference to the MDGs and                           . Are macro­economic frameworks
to the expectations of the donors, the plans reflect                    too restrictive?
national constraints and priorities and available                       The level at which public expenditure can be con-
resources, but the links between the two are not                        sistent with reasonable macroeconomic stability
specified.                                                              has been an area of some controversy, and will be
    A number of different approaches to costing                         discussed in some detail because it is central to the
have been developed and are in use for different                        prospects for achieving the MDGs.
purposes. There are well established methodologies                          A macro-economic framework should contain
(supported by good international evidence) for                          assumptions on the future growth path of the
estimating the cost-effectiveness of different health                   economy and some justification for the assumed
interventions. These provide a sound basis for pri-                     growth rate, informed by past experience and the
oritising the health sector interventions that will                     expected impact of future changes in the economic
be included in essential services packages. Global                      and policy environment. It should contain a discus-
estimates of the costs of achieving the MDGs have                       sion of the future desired level of public expenditure
largely been based on estimates of the cost of scal-                    in relation to GDP, and of how it can be financed.
ing up the coverage of cost-effective interventions                     The public expenditure projections might start from
of known efficacy.                                                      a ‘needs’ basis, presenting the costs of achieving

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
the MDGs or national targets, but may need to                             in any economy, there will come a point beyond
modify the level of spending and the national targets                     which additional public expenditure on local costs
in light of the resources expected to be available                        should not be undertaken, even if financed with
and the implications for private sector growth and                        grants. The argument is not on whether such limits
for macro-economic management. The considera-                             are needed, but concerns the judgment on where
tion of resources should include a discussion of                          they should be set.
taxation policy and the expected future share of                              Other concerns may also lead countries (and
domestic revenue in GDP. It should consider the                           the IMF) to take a cautious line on the extent of
past and expected future levels of external grants                        dependence on aid. The main requirement for
and loans available to the economy, the terms on                          additional spending is to finance incremental salaries
which that finance is likely to be available, and the                     and other operating costs of a recurrent nature. Aid
implications for Government debt service. Finally,                        is a volatile source of finance. Aid commitments
it should consider the scope for net domestic financ-                     are conditional and short-term whereas the spend-
ing of Government expenditure and develop Gov-                            ing obligations are long term and difficult to exit
ernment expenditure and financing assumptions                             from quickly without provoking political problems.
that are consistent with a growth in total domestic                       For poor countries such as Tanzania and Ethiopia,
demand that allows for healthy private sector growth,                     simple analysis can demonstrate that sustaining per
moderate inflation, sustainable debt burden, and                          capita expenditure increases financed by a doubling
prudent build-up of foreign exchange reserves.                            of aid flows would require the higher level of aid
    The macro-economic framework may require                              to be maintained for 20 years or more, representing
ceilings to be placed on total Government spending,                       a substantial risk to the Government12.
even if proposed increases in spending are financed                           These issues are not discussed in most PRSPs.
by external grants. The problem arises when aid is                        The IEO evaluation of PRSPs and the PRGF found
used to pay for local costs, rather than financing                        that only 4 countries from a sample of 10 presented
additional foreign exchange costs. In the health                          a realistic macro-economic framework, two of them
sector, local costs are typically 70-75% of total                         by explicitly adopting the pre-existing IMF PRGF
spending10. An intuitive way of thinking about the                        framework, while events conspired to make 4 of
problem is that if donor aid is converted to local                        the macro-economic frameworks unrealistic by the
currency and used to buy locally produced goods                           time of Board discussion13. Part of the reason for
and services, it does nothing in the short term to                        not developing a robust macro framework within
increase the supply of those goods and services. If                       the PRSP may be the recognition that in practice,
there is no spare capacity, the aid-financed increase                     the macro-economic framework that is actually
in Government demand for local staff, construction                        implemented has to be negotiated with the IMF,
materials, housing etc will push up their prices and                      since the existence of an on-track IMF programme
squeeze out private sector demand11. This need not                        remains a pre-requisite for accessing significant
matter if the additional outputs produced by the                          external aid or HIPC debt relief.
public sector are more socially valuable than the                             The key criticism frequently leveled against the
private sector outputs they displace. That may well                       IMF is that fiscal and macro frameworks have been
be the case with cost-effective health expenditures,                      too pessimistic regarding the resources potentially
especially when the positive impact of improved                           available, resulting in countries implementing un-
health on productivity is taken into account along-                       necessarily modest public expenditure plans that
side the social benefits. However, if we assume that                      do not permit rapid enough progress towards the
the public sector expenditures with the highest                           MDGs. At first sight, the empirical evidence appears
benefit: cost ratios are undertaken first, while the                      to suggest that the bias is in the other direction, with
least profitable private sector activities are displaced                  IMF programmes over-estimating foreign aid, over
first, there will come a point at which diminishing                       estimating GDP growth, and consequently over-esti-
marginal benefits of additional public expenditure                        mating both domestic and foreign resources available
fall below the rising marginal costs of displacing                        to finance public expenditure14. IMF policy statements
private sector activity. This argument does not                           are also supportive of increased aid, stating that addi-
depend on assuming that increased donor flows are                         tional aid inflows should be accommodated by appro-
inflating the real exchange rate and causing loss of                      priate adjustments of the programme’s fiscal and
competitiveness among producers of traded goods                           financing targets, “if they can be effectively absorbed
(‘Dutch disease.’) Irrespective of ‘Dutch disease’,                       and utilised without endangering macro stability”15.

            Section 1: Scaling Up Aid for Health   MDG-Oriented Sector and Pover ty Reduction Strategies: Lessons from Experience in Health   
    Despite the evidence of over-optimism on aid                        aid and in mobilising domestic resources, without
disbursements, it could still be argued that the IMF                    damaging growth and stability. It would also be
may unintentionally restrain future aid commitments                     reasonable to expect that, other things being equal,
by producing fiscal frameworks that assume only                         public expenditure levels would be higher in coun-
modest growth in aid levels. Countries may not                          tries like Uganda and Burkina Faso, where almost
push for additional aid flows, nor will donors offer                    all aid flows are recorded in the IMF public expen-
such aid, if the macroeconomic projections on                           diture tables, than in countries like Benin, where
which the expenditure programme is based do not                         more than half of aid is not included18. The lack of
show a clear need for additional aid. Table 2 shows                     explicit rationale for the assumptions, together with
the assumptions for our sample countries, and                           the absence of the expected degree of difference in
does appear to suggest a conservative bias in the                       projected spending between countries, call for a more
projections, all but one of which converge towards                      open debate on the macro framework. Although
a level where public expenditure as a percentage of                     some aspects of IMF discussions are commercially
GDP is around 25%. Only two countries assume                            sensitive (e.g. future exchange and interest rates),
more than a 2% increase in GDP share of public                          there need be no objection to a more open discus-
expenditure within the projection period, both of                       sion regarding the appropriate fiscal stance, though
them being countries starting from a low base of                        such discussion is only likely to be fruitful if supported
public expenditure of less than 20% of GDP. With                        by high quality technical analysis. Uganda and
per capita economic growth typically forecast at 3-                     Tanzania both provide striking examples of where
4% per annum, the projections imply per capita                          the Government has been able to persuade the IMF
public expenditure increasing by about 50% by 2015.                     to accommodate higher expenditure by procuring
This may sound a lot, but might imply raising Gov-                      independent macroeconomic analysis that com-
ernment health expenditure from $8 per capita to                        manded the respect of IMF staff.
$12 which is still far short of estimates of the cost                       A more fundamental problem is that aid com-
of delivering the essential health package to all, and                  mitments are short-term and unreliable, whereas
for Ethiopia would leave health spending at little                      the additional public expenditure that is needed is
more than $2 per capita. In a 3 to 7 year projection                    mainly for recurring costs that will need to be sus-
period, less than half of our sample countries                          tained and to grow into the indefinite future. Even
project any increase in net external financing as a                     with a rapid increase in domestic revenues, the low-
share of GDP. Even relatively well performing and                       income aid dependent countries that are furthest
low income countries are projecting aid increases                       from the MDGs could only sustain the significant
for themselves that are well below the commitments                      increases in per capita public expenditure required
made at Monterrey.                                                      to help them get there if aid donors were able to
    It is difficult to assess the fiscal frameworks in                  maintain increased spending levels for 20 years or
IMF programmes, because the Fund provides no                            more. Countries face significant risks if they estab-
clear justification for its assumptions on the level                    lish health systems that cannot be maintained in
and financing of public expenditure, for which it has                   the event of a change in donor preferences.
been criticized by the IEO16. The convergence of                            A range of alternative approaches could be taken
spending to roughly 25% of GDP is not a result of                       to manage this problem: the International Financing
IMF policy. It may be coincidence, or it may reflect                    Facility as a way to ensure growing aid at least at
a tendency for IMF country staff to encourage coun-                     global level; increased reliance on multilateral
tries to move towards a level of expenditure that                       channels less subject to political pressures; longer
Board and senior management have found accept-                          term commitments to specific expenditure pro-
able in other cases. Whatever the explanation, the                      grammes, with guarantees that they will continue
lack of variation between countries in public expen-                    so long as the programme-specific conditions are
diture assumptions is surprising. Countries differ in                   met; further debt relief as a form of irrevocable
their public expenditure needs: low income countries                    long-term commitment; increased use of aid for
with poor infrastructure and low education and                          reserve build-up to help in managing aid fluctua-
health levels could make a strong case for a higher                     tions. Each of these requires political will on the
public expenditure share in order to create the                         part of the donors to commit their money on a
conditions for faster economic growth and poverty                       longer term basis and in ways that are less at risk
reduction17. Equally, countries differ in their ability                 of interruption in the face of events outside the
to finance expenditure, both in attracting external                     objectives of the programme itself.

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
Table 2 IMF Macro-economic frameworks in case study countries
 Country               GDP Growth p.a.                  Domestic Revenue                Net External Finance            Public Expenditure
                       (geom. average)                  % GDP                           (incl. grants) of Public        % GDP
                                                                                        Expenditure % GDP
                       Historical       Projected       Base (year)     Projected       Base (year)     Projected       Base (Year)     Projected
                       (years)          (years)                         (year)                          (year)                          (year)
 Albania               6.39%            6.5%            22%             22.4%           1.7%            1.9%            26.5%           26.6%
                       (1999-           (2003-          (2003)          (2007)          (2003)          (2007)          (2003)          (2007)
                       2003)            2007)

 Benin                 5.55%            6.6%            16.8%           17.0%           4.8%            3.5%            21%             22%
                       (1999-           (2003-          (2003)          (2006)          (2003)          (2006)          (2003)          (2006)
                       2003)            2006)

 Burkina Faso          6.59%            5.4%            12.4%           14.6%           8.7%            5.7%            21.6%           23.4%
                       (1999-           (2003-          (2003)          (2006)          (2003)          (2006)          (2003)          (2006)
                       2003)            2006)

 Cambodia              5.83%            4.65%           10.4%           14%             6%              23.4%           17.4%           18.4%
                       (1999-           (2003-          (2003)          (2009)          (2003)          (2005)          (2003)          (2009)
                       2003)            2009)                                                           21.1%
                                                                                                        (2009)

 Ethiopia              3.72%            6.83%           19.6%           20.4%           14.8%           8.6%            29.1%           29.5%
                                                                                                                                 19
                       (1999-           (2003-          (2003)          (2006)          (2003)          (2006)          (2001)          (2006)
                       2003)            2006)

 Ghana                 4.66%            5.03%           20.8%           22.4%           8.0%            5.1%            29%             24.3%
                       (1999-           (2003-          (2003)          (2008)          (2003)          (2008)          (2003)          (2008)20
                       2003)            2008)

 Nepal                 2.18%            4.5%            12.3%           13.45%          2.9%            4.2%            16.3%           18.2%
                       (2000-           (2003-          (2003)          (2006)          (2003)          (2006)          (2003)          (2006)
                       2003)            2006)

 Nicaragua             2.58%            4.2%            21.9%           22.1%           10.45%          8.7%            30.3%           28.7%
                       (1999-           (2003-          (2003)21        (2008)          (2003)          (2004)22        (2003)          (2004)
                       2003)            2008)                                                                                           26.8%
                                                                                                                                        (2008)23

 Rwanda                5.61%            5.33%           13.5%           13.6%           10.5%           17.1%           24.1%           28.3%
                       (2000-           (2003-          (2003)          (2006)          (2003)          (2004)          (2003)          (2004)
                       2003)            2006)                                                           13.9%                           25.1%
                                                                                                        (2006)                          (2006)

 Tajikistan            9.47%            5.85%           16.8%           19.1%           2.8%            1.2%            19.0%           22.1%
                                                                                                 24
                       (1999-           (2003-          (2003)          (2010)          (2003)          (2010)          (2003)          (2010)
                       2003)            2010)

 Tanzania              7.58%            6.06%           11.4%           14.0%           7.7%            10.7%           18.6%           25.4%
                       (1999-           (2003-          (2003)          (2007)          (2003)          (2007)          (2003)          (2007)
                       2003)            2006)

 Uganda                5.63%            5.84%           12.3%           13.4%           11.5%           8.5%            23.7%           22.9%
                       (2000-           (2003-          (2003)          (2005)          (2003)          (2005)          (2003)          (2005)
                       2003)            2008)

 Viet Nam              5.43%            6.8%            22.5%           22.2%           1.4%            1.6%            24.8%           25.1%
                                                                                                                 25
                       1999-            (2002-          (2002)          (2007)          (2002)          (2004)          (2002)          (2007)
                       2002)            2007)

Source: Calculated from data reported in IMF PRGF documents. Nepal, Rwanda and Vietnam numbers are based on 2003 PRGF program. The other countries are
based on latest 2004 reported programs.



                Section 1: Scaling Up Aid for Health   MDG-Oriented Sector and Pover ty Reduction Strategies: Lessons from Experience in Health     
   The plans set out in the PRSP can only be im-                            for sector plans and allocations are prepared by
plemented if they are consistent with the macro                             line ministries, scrutinised by the centre, and
framework negotiated with the IMF. The PRSP                                 adjusted in the light of national priorities.
discussions may therefore provide an appropriate                        •   The PRSP sets out clear priorities and criteria,
forum for the wider debate on the level and financing                       and those priorities are reflected in the guide-
of public expenditure. Both Ministry of Finance                             lines and ceilings sent to line ministries to guide
and IMF views need to be reflected in the PRSP.                             budget preparation.
Good practice in this regard includes:                                  •   The MTEF that is approved is the same as the
                                                                            annual budget for the first year, and the chart
•   Ensuring that the relevant staff of the Ministry
                                                                            of accounts is structured in such a way that
    responsible for preparing the macro-economic
                                                                            spending priorities of particular importance for
    framework for the budget are fully involved
                                                                            achieving the goals can be identified.
    from the earliest stages in developing the PRSP
    until the finalisation of the fiscal ‘envelope’ set                 •   There is an annual process for reviewing sector-
                                                                            level progress, and the domestic and foreign
    out in the approved version;
                                                                            finance requirements for the coming period,
•   The IMF should also be continuously involved
                                                                            timed to feed in to the Government budget
    through the resident representative, given the
                                                                            preparation cycle.
    requirement for PRGF countries to agree the
    macro-budget framework with the IMF;                                •   There is a central ‘challenge’ function as part of
                                                                            the budget process, providing credible incentives
•   PRSP priorities and proposed expenditure ceil-
                                                                            for line ministries to review their performance,
    ings should influence and feed in to the prepara-
                                                                            construct well-designed budgets that shift resources
    tion of the budget and of any MTEF or medium
                                                                            towards national goals, and to present them in
    term expenditure plan;
                                                                            ways that make the strategic shifts transparent.
•   The PRSP needs to be a ‘living document’ that
                                                                        •   The Ministry of Finance and Cabinet establish
    is elaborated as necessary and adapted in the
    light of events. The institutional details vary,                        and maintain the credibility of the process by
    but a number of countries have established sys-                         ensuring that carefully prepared budgets that are
    tems in which the poverty reduction strategy is                         in line with nationally important goals receive
    annually reviewed, and the results of that review                       favourable treatment in the budget that is finally
    feed in to adjustments to the targets, the macro-                       approved, and in the timely and full release of
    economic framework, and the expenditure                                 funds.
    priorities and budget ceilings.                                     •   The Ministry of Finance provides credible
                                                                            medium-term assurances of sectoral budget
    Summary Points                                                          levels or shares, to encourage line ministries to
                                                                            re-allocate resources from lower priority areas
    • Involve MOF/IMF in preparing PRSP macro-fiscal
                                                                            without fearing that their budget will suffer as a
      frameworks to ensure consistency with the budget,
      but with explicit rationale and more open debate.                     result. Credibility can be built via a medium-term
    • Coordinate annual PRSP progress review with budget                    track record in which it is shown by example
      cycle including revision of macro-fiscal framework                    that the MTEF guides resources, with year one
      and budget ceilings and priorities.                                   of each year’s budget preparation taking year 2
    • Reduce risks of aid dependence by longer term                         of the previous MTEF as the starting baseline.
      commitments less prone to interruption and more                       Agreements with external partners on the share
      reliable timing of disbursements.
                                                                            of spending to be devoted to health are also
                                                                            sometimes used, and can be helpful in reinforc-
                                                                            ing the confidence of line ministries in their
. Coordinating health plans with the
                                                                            likely future budget share.
MTEF and the Budget
The expenditure implications of the national goals                      •   Donor support needs to be fully taken into
                                                                            account in setting expenditure priorities. This
and strategies of the PRSP need to be implemented
                                                                            requires donor commitments early enough in
via the national budget. Examples of good practice
                                                                            the budget preparation process, and committed
include:
                                                                            to activities that identified from the national strat-
•   The sectoral priorities of the PRSP and the allo-                       egy. To minimise transactions costs, aid should
    cations eventually agreed in the budget are the                         increasingly be provided using Government
    outcome of an iterative process in which proposals                      channels to plan, disburse, and account for it.

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    Many of these good-practice features are present                     cern of the policy dialogue associated with general
in Albania, Benin, Rwanda, Tanzania and Uganda,                          budget support. In all cases, the PRSC policy matrix
although the identification of priority expenditure                      addresses issues of public expenditure management,
programmes is in some cases limited to the aggre-                        and provides a vehicle for monitoring progress. In
gate level (e.g. sector or sub-sector shares, such as                    Benin, for example, the PRSC is supporting meas-
primary health), and only Uganda has a strong                            ures to overcome problems of low rates of budget
central budget ‘challenge’ function. In countries                        execution that have prevented planned increases in
with decentralised budget responsibility, such as                        health budgets.
Vietnam and Ethiopia, it may be impossible for the
Government to establish centrally a medium term                              Summary Points
framework to determine public expenditure shares.                            • Minimum standards of public expenditure management
The goal of achieving similar shifts in priority is                            need to be attained before any health strategy can
                                                                               be effective.
being addressed through increased resources for
targeted national programmes, such as the province-                          • In good practice cases, PRSP identifies spending
                                                                               priorities in consultation with sectors, MTEF/budget
level poverty health funds in Vietnam.                                         process shifts resources towards them, review and
    Not all MTEFs have focused sufficiently on                                 adjust each year in light of performance.
achieving a strategic shift in expenditures towards
national priorities. The MTEFs in Cambodia and
Ghana, and to some extent in Tanzania, are based                         . Absorptive capacity
on detailed bottom-up activity costing, resulting in                     It is sometimes argued that the speed of any increase
bulky documents where it is difficult or impossible                      in donor flows needs to be constrained to the absorp-
to see how the changes in the budget allocations                         tive capacity of the countries. Very large increases in
relate to higher-level goals and targets.                                funding over a very short period of time, as envis-
    Where budget preparation and public expendi-                         aged in some estimates of the cost of reaching the
ture management is particularly weak, there may be                       MDGs, might well lead to difficulties in making
no effective means to ensure that health strategies                      good use of the money. However, the situation in
are implemented. The effort devoted to preparing                         most of the case study countries appears to be one
a health strategy and a sector MTEF is largely wasted                    of grossly inadequate funding that is increasing at
if the annual budget is not implemented in practice                      a rate that could be easily absorbed and effectively
and the medium-term priorities are not respected.                        used, provided that it is appropriately prioritised
Several of the countries in our sample still lack any                    and managed without excessive bureaucracy. For
credible mechanism for linking policy priorities to                      many countries, existing capacity is underused
expenditure allocations, with budgets still prepared                     because low operating budgets mean that drugs
on an incremental basis, via fragmented parallel                         and other consumables are unavailable or have to
processes, and with actual budget execution not                          be paid for, while staff lack the travel budget to
reflecting the approved budgets. In Tajikistan, for                      expand outreach activities. Increased aid for non-
example, the budget is prepared incrementally on                         salary recurrent costs and for financing free basic
a line item basis. Actual expenditure bears little                       health services would enable existing capacity to
relation to approved budgets, making it impossible                       be used: reducing user fees will increase utilisation
to relate health outputs to budgets either for plan-                     of services, but only if quality does not decline,
ning or reporting purposes. Cambodia is an extreme                       which requires the lost revenue from fees to be
example, with health centres receiving less than                         replaced by increased budget funding26. Increased
10% of their budgets, but several other countries                        funding would also help to overcome the more
need to establish credibility.                                           fundamental capacity problems caused by staff
    Improvements in public expenditure manage-                           vacancies and by low output from underpaid staff
ment require action by central economic ministries,                      who need to devote time to alternative occupations
though implementation may also require reform                            or private practice. These problems are capable of
and capacity building at sector and local Govern-                        being relieved with additional funding for new
ment level. External support to the health sector                        recruitment and for salary increases, though the
may need to be complemented by, or preceded by,                          increase would need to be sustainable and should
support to cross-cutting reforms. Improved public                        preferably be sequenced as part of an approach to
expenditure management is always a central con-                          performance management that links increased pay

           Section 1: Scaling Up Aid for Health   MDG-Oriented Sector and Pover ty Reduction Strategies: Lessons from Experience in Health   
to improved performance. Given time, contractual
                                                                            Summary Points
arrangements with non-government agents could
be put in place to expand services and/or support                           • On present trends, the binding constraint is lack of
                                                                              finance, not lack of capacity.
capacity development. A balanced increase in
funding that addresses the critical constraints in a                        • Capacity problems can be managed if health
                                                                              strategies tackle bottlenecks in a logical sequence,
logical sequence could be well used in most of the                            and avoid large ‘earmarked’ commitments that
countries considered. However, very large disease-                            distort health sector priorities.
specific programmes (such as proposed HIV/AIDS
treatment programmes in Guyana and Tanzania
                                                                            • Where Government is committed to improving
                                                                              financial management, external partners should use
that envisage spending sums equal to half of the                              Government systems while supporting coordinated
existing health budget) may well experience and                               action to strengthen them as necessary.
cause capacity problems by drawing disproportion-
ately on available staffing and other resources.
    Concerns about absorptive capacity frequently                       . Reforming development assistance
reflect concerns about Governance and accounta-                         The ways in which development assistance is
bility rather than technical limits on spending, and                    committed and disbursed are major constraints on
the disbursement problems are the consequence of                        implementing public expenditure strategies. Com-
procedural requirements intended to address those                       mitments are too short term to be the basis for
concerns. There are cases where Governance and                          long-term strategies, disbursements are often a long
expenditure management constraints are so perva-                        way short of commitments, are unpredictable and
sive that major reforms need to precede or accom-                       subject to interruption for reasons outside the pro-
pany increased funding (Tajikistan, Cambodia). In                       gramme itself. Furthermore, the majority of devel-
other cases, Government procedures are over-cen-                        opment assistance continues to be committed
tralised and bureaucratic and need to be reformed                       through parallel arrangements that may be imper-
to permit available funding to be spent (Benin,                         fectly coordinated with the Government strategy.
Burkina Faso). Action to address public expenditure                     There are problems with the data, but Box 2 presents
management or civil service reforms requires action                     some rough estimates of the significance of aid to
by central authorities as well as the health ministry,                  the budget. Budget support is increasing as a share
requiring coordinated action by Government that                         of donor support, but even in the most highly aid
is mirrored by coordination between donor agency                        dependent countries it represents little more than
support to macro-level and sector level reforms.                        half of the support for public expenditure, and less
Donor project or pooled funding procedures are                          than one third of total aid flows. On average, less
usually part of the problem (Box 1). Donor proce-                       than 20% of donor disbursement is provided as
dures not only cause low disbursement, they also                        budget support. This is a major problem in aid
divert capacity away from service delivery towards                      dependent countries where substantially more than
servicing the donor demand for meetings, field trips,                   half of health spending is often donor funded, and
reports, accounts, audits etc. By absorbing the capa-                   where the numbers of donors involved continue to
city of financial management staff, they also get in                    increase. The priorities for increased spending are
the way of effective Government action to address                       dominated by recurrent costs, spent at local level
the systemic weaknesses that make parallel proce-                       via geographically scattered cost centres, and remain
dures necessary.                                                        difficult for donors to fund via project support


Box 2 Where does all the aid go?
  On average, for every $1 disbursed by donors to our 14 case study countries, we estimate: -
  •    Direct donor spending (TA and direct payments) not recorded in balance of payments                        US$0.30
  •    Recorded in Balance of Payments, but not repor ted as par t of Government spending                        US$0.20
  •    Aid earmarked to specific projects                                                                        US$0.30
  •    Provided as Budget Suppor t                                                                               US$0.20
  Some of the budget suppor t is itself earmarked to specific sectors or budget lines.
Source: Foster, Mick, Full Report 2004 Tables 3.12-3.14



  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
without incurring very high costs. If the case for                             Several of the country case studies suggest that
an increase in health spending to progress towards                        large commitments from the global funds are dis-
the MDGs is accepted, it seems inescapable that                           torting priorities in a number of countries by com-
the bulk of the increase will need to be provided                         mitting an unsustainable share of the budget to
as budget support27.                                                      HAART for AIDS sufferers and sucking staff and
   Meanwhile, countries continue to face the problem                      resources into vertical programmes with costs that
of coordinating large numbers of donors providing                         are neither replicable nor sustainable without longer-
their assistance via multiple routes. Good practice                       term commitments than the donors have yet pro-
approaches from our sample countries include:                             vided (Tanzania, Guyana, Ethiopia). The Global Fund
                                                                          has in some countries set up separate coordination
•   Joint Government-donor reviews of sector per-
                                                                          arrangements specific to the funds it is providing.
    formance that are coordinated with the MTEF
                                                                          Several countries are uncomfortable with the
    and national budget process which will feed in to
                                                                          approach of some of these new actors. In August
    a national PRS progress report or into a national
                                                                          2004, the Ministry of Finance in Uganda was re-
    public expenditure review process. There are a
                                                                          ported as having decided to cap new project aid
    number of country examples where arrange-
                                                                          commitments that are outside the national health
    ments along these lines are in place, notably
                                                                          strategy. There is a strong case to argue that all
    Uganda and Tanzania, where external partners
                                                                          external partners in the health sector should work
    work closely with Government in sector work-
                                                                          entirely within existing health sector coordination
    ing groups, and where the sector dialogue is
                                                                          arrangements and should provide their assistance
    coordinated around the annual budget cycle.
                                                                          in support of the PRSP strategy, focusing first on
•   Indications of future donor funding should be
                                                                          filling the financing gaps for implementing the
    made early enough in the year to be taken into
                                                                          PRSP.
    account in setting ceilings for budget prepara-
    tion, and should be confirmed as the budget is                            Summary Points
    being finalised.
•   Donor policy dialogue at different levels needs
                                                                              • Progress towards the MDGs requires a further shift
                                                                                towards budget support as the main aid modality
    to be coordinated. The PRSC and general budget                              in aid dependent countries.
    support groups are the appropriate vehicles for                           • All donors should participate in sector coordination,
    addressing issues that are crosscutting or are                              and should ensure that information is provided to
    the concern of the central economic ministries.                             Government to enable their commitments and disburse-
    Of direct relevance to health, this includes the                            ments to be fully captured in the macro-economic
                                                                                framework and reflected in public expenditure plans.
    overall macro-economic framework, budget
    allocation, public finance management, civil                              • Where Government has a sound sector strategy, the
                                                                                first call on donor funds should be to ensure that
    service reform, and decentralisation. Where                                 it is fully funded.
    there is an established sector dialogue, the                              • Donors should try to commit early enough to inform
    health content of the PRSC should rely upon                                 the budget preparation.
    the sector reviews to set and assess the achieve-                         • Where a strong sector level policy dialogue is in
    ment of sector level actions, as is the case in                             place, the PRSC should rely on sector reviews to
    Uganda, avoiding overloading the budget support                             agree sector level actions and to assess their
    policy matrix with sector level detail.                                     achievement.




            Section 1: Scaling Up Aid for Health   MDG-Oriented Sector and Pover ty Reduction Strategies: Lessons from Experience in Health   
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Conway, Tim, Karin Christiansen and Dan Lui, what                       September 12 2003.
are the implications of the MDGs for the welfare                        Independent Evaluation office, IMF (2004), Evalua-
of the poorest, ODI report for DFID’s ‘reaching                         tion report on PRSPs and the PRGF, July 7
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                                                                        Jones G, Steketee RW, Black RE, Bhutta ZA, Morris
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Based Approaches, Enhancing implementation                              Marginal Budgeting for Bottlenecks: A tool or per-
effectiveness of Programme-Based Approaches                             formance-based planning of health and nutrition
through programme and stakeholder alignment,                            services for achieving the MDGs.
17 to 19 November 2003, Berlin
                                                                        Millennium project, (2004), Summary of a global
Foster, Mick, 2004. MDG-Oriented Sector and Pov-                        plan to achieve the MDGs. Draft report for discus-
erty Reduction Strategies: Lessons from Experience                      sion at the OECD-DAC high level consultation on
in Health: Main Report. Final Draft, December                           the UN Millennium Project, 8-9 July 2004.
2004. Washington DC, World Bank.
                                                                        Millennium project, MDG country case studies:
Foster, Mick Patrick Chaussepied and J Shivakumar,                      methodology and very preliminary results, October
2004, Evaluation of the Public Expenditure and                          2003
Financial Accountability programme, June.
                                                                        Millennium Project (undated), MDG Needs
Foster Mick, The Case for Increased Aid, Final                          Assessment
Report to the Department for International devel-
                                                                        Mills, Anne (2004), Achieving the Health MDGs,
opment, December 2003.
                                                                        Presentation to DFID economist’s retreat, July.
Makiko Harrison, Jenny Klugman and Eric Swanson                         New Vision, Uganda, 20th August 2004
(2004), Are PRS’s undercutting the MDGs? An em-
pirical review, April.                                                  Nkusu, Mwanza (2004), IMF Africa Dept Working
                                                                        paper, Aid and the Dutch disease in low-income
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minants of health sector utilisation in Africa: A                       noses. March.
review of formal and informal health sectors. Swiss
Development Cooperation and Swiss Tropical Insti-                       Operations Evaluation Department, World Bank,
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                                                                        process
IMF, September 2004, External grants and IMF
                                                                        Sachs, Jeffrey D, Mobilisation of Domestic and
Policies.
                                                                        Donor resources for health: a viewpoint, increasing
IMF survey, June 28 2004, IMF book forum, are IMF-                      investments in health outcomes for the poor, second
prescribed fiscal targets too tight?                                    consultation on macroeconomics and health,
IMF Public Information Note, March 11 2004, follow                      October 2003.
up on the recommendations s of the Independent                          Agnes Soucat, Wim Van Leberghe, Francois Diop,
Evaluation office report on fiscal adjustment in                        Son nam Nguyen, Rudolf Knippenberg, marginal
IMF supported programmes, report of Executive                           budgeting for bottlenecks: a new costing and resource
Board discussion.                                                       allocation practice to buy health results. Draft ver-
IMF, Feb 9 2004, follow up on the recommendations                       sion November 2002, not for quotation.
of the independent evaluation office report on                          Adam Wagstaff and Mariam Claesson, The millen-
fiscal adjustment in IMF-supported programmes,                          nium development goals for health, rising to the
policy development and review and fiscal affairs                        challenges, 2004.
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IMF, Aligning the PRGF and the PRSP Approach:                           and Indicators for MDGs and PRSPs: What Coun-
Issues and Options, April 25 2003.                                      tries Have Chosen to Monitor

0  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
World Bank (2004), World Development Report,                             World Bank (undated), Interim Guidelines for
Health chapter                                                           PRSCs
World Bank, Chief Economist’s Office, Africa                             WHO, PRSPs, their significance for health, second
Region (2004), The PRSP Process, NEPAD and the                           synthesis report, 2004.
Millennium Development Goals, April                                      WHO, Macroeconomics and Health, An update,
World Bank, Sept 12 2003, supporting sound policies                      Increasing investments in health outcomes for the
with adequate and appropriate financing, implement-                      poor, second consultation on macroeconomics
ing the Monterrey consensus at the country level                         and health, October 2003




           Section 1: Scaling Up Aid for Health   MDG-Oriented Sector and Pover ty Reduction Strategies: Lessons from Experience in Health   1
  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
FISCAL SPACE AND FINANCIAL SUSTAINABILITY




                                  2Contents   
                                                                                                                       4
FISCAL SPACE AND SUSTAINABILITY FROM THE
PERSPECTIVE OF THE HEALTH SECTOR
By Roger Hay and Gareth Williams, Paris, December 2005




Executive Summary                                                       can be created and sustained depends crucially on
This paper was commissioned by the Secretariat                          the way both aid suppliers and its recipients manage
of the High Level Forum on the Health MDGs in                           additional aid flows. Combinations of donor and
response to a request from the second meeting of the                    recipient behavior will determine how effectively
High Level Forum in Abuja to clarify the meaning                        and durably additional aid will expand fiscal space.
of the terms fiscal space and fiscal sustainability. Its                Some of these are summarized in the table below.
purpose is to define the concepts of fiscal space and                   The best combinations suggest that fiscal space can
fiscal sustainability from the perspective of the health                be expanded quickly and reliably (Green Zone’); the
sector, and to demonstrate their usefulness in under-                   worst that great caution should be exercised until
standing the fiscal and macroeconomic issues that                       reforms have shown signs of success (`Red Zone’)
will arise from an increase in aid flows. The paper
addresses the following questions:                                      More specifically, the main priorities identified for
                                                                        aid donors include:
•   What is the meaning of the terms fiscal space
    and fiscal sustainability from the perspective of                   Ensuring longer term predictability of aid flows
    the health sector?                                                  Donors have signaled their intention to increase aid
•   In the light of likely scenarios for increased donor                flows substantially, but recipient governments are
    funding how much room is there to increase                          faced with a great deal of uncertainty about the
    public health expenditures in a sustained way?                      level of support that they can expect in the future.
•   How does the way aid is managed affect fiscal                       On the basis of past experience, recipient govern-
    space and fiscal sustainability from the perspec-                   ments may be reluctant to increase health expendi-
    tive of the health sector?                                          tures, especially where new spending implies long
•   What are the challenges for aid recipients to                       term recurrent expenditure commitments. Unless
    ensure the effective use of increased aid resources                 donors can provide longer term commitments and
    in the health sector?                                               more predictable aid flows, additional aid may not
•   What are the macroeconomic effects of increased                     generate much additional fiscal space for health
    health spending and how might this influence                        spending.
    fiscal space and sustainability in the long term?
                                                                        Reducing short term aid volatility
    The paper includes projections on future levels                     This paper highlights the extent of aid volatility and
of public expenditure on health in low income                           demonstrates that this is associated with significant
countries under alternative scenarios for changes in                    instabilities in public expenditures on health. These,
future aid flows, budgetary reallocation, domestic                      in turn, distort resource allocation and have nega-
revenues and growth. Under the more optimistic                          tive consequences for service delivery and health
scenarios many countries will achieve levels of ex-                     outcomes. The risks of short term volatility may
penditure that would potentially allow them to be                       provide an additional reason for governments to be
in a position to achieve the MDGs. This indicates                       wary of budgeting on the basis of additional aid
that there is significant potential to create fiscal                    resources. Donors need to address the risk that
space for health spending in low income countries,                      scaling up aid will generate even greater volatility
in particular where an increase in aid is accompanied                   and more disruptive effects.
by budgetary reallocation in favour of health, faster
growth and a stronger revenue effort.                                   Coordination, harmonization and alignment
    However, the general conclusion of the paper                        Uncoordinated, off-budget and projectised aid con-
is that the extent to which additional fiscal space                     tributes little to durable fiscal space. Aid effectiveness

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
Conditions for the sustainable expansion of fiscal space
                                    Donor policies                           Recipient policies
 Green Zone                         Donors are able to make                  Governments have affordable long term investment and
 Far reaching changes in            long term commitments to                 expenditure plans
 donor and government               scale up aid
 behaviour allow fiscal space
 to be expanded rapidly and         Donor aid flows are predict-             Increase in aid is accompanied by a stronger tax effor t
 sustainably                        able and stable
                                                                             Governments are able to finance any residual cash-flow variations

                                    Donors are able to coordi-               Governments are able to take responsibility for the manage-
                                    nate and harmonize aid, and              ment of donor aid, and bring it on budget
                                    thereby reduce recipients’
                                    transactions costs                       Where justified, governments reallocate budgets in favour of
                                                                             the health sector

                                                                             Government health systems are efficient, effective and equitable

 Amber Zone                         Some progress in increasing              Governments may take on new spending commitments that
 Par tial reforms in donor and      the long term predictability             cannot be sustained
 government behaviour allow         of aid and reducing shor t
 some increase in fiscal space,     term volatility
 but problems of fiscal
 sustainability remain              Some initiatives to improve              Governments do not improve their revenue effor t
                                    donor coordination and
                                    harmonization, but limited               Governments are unable to fully finance cash-flow instabilities.
                                    use of budget suppor t                   Public expenditure management systems are not yet robust
                                                                             enough to account for aid expenditure on budget

 Red Zone                           Donors are unable to make                Very weak public expenditure management
 Great caution should be            long term commitments or
 exercised in raising health        reduce aid flow volatility               Donor spending remains largely off-budget
 expenditure until reforms in                                                Governments do not improve their revenue effor t
 donor and government
 policies show success              Aid remains highly fragmented            Health care providers are not well motivated or managed
                                    and projectized.
                                                                             The poor do not benefit from public health expenditure




would be increased if aid coordination was improved,                          commitments that prove to be unaffordable and
and the alignment of donor funding with national                              unsustainable in the long term. On the other hand
priorities were strengthened. Where conditions                                concerns about the unpredictability and unreliabil-
allow, the greater use of budget support would be                             ity of aid flows may cause some governments to be
desirable. There are encouraging signs of improved                            overly cautious about using additional aid to aug-
donor practice, including the recent Paris Declara-                           ment health expenditures financed from domestic
tion on Aid Effectiveness. However, there are con-                            resources. The key to ensuring fiscal sustainability
tradictory tendencies in the health sector, where an                          is for recipient governments to take a long term
increasing share of aid is provided through global                            view of expenditure commitments, growth and
health initiatives that tend to operate through                               mobilizing domestic revenues.
parallel structures outside government budgets
and management systems.                                                       Using aid productively
                                                                              In the long term the main source of additional fis-
The main priorities identified for recipients include:                        cal space will be economic growth. It is therefore
                                                                              crucial that recipient governments use aid in pro-
Ensuring fiscal sustainability                                                ductive ways. Careful judgements will need to be
Ensuring the fiscal sustainability of health expendi-                         made on the allocation of public expenditure
tures will be a major challenge for recipient govern-                         between and within sectors taking into account
ments, particularly low income countries facing                               the best available evidence of the impact of public
`windfall aid incomes’. There is a risk that some                             expenditure on human development and economic
governments will make capital investments that                                growth. The central challenge will be to improve
they cannot fully maintain, take on too many staff                            the efficiency of health systems to ensure that
to pay properly, or take on other new spending                                higher spending will generate improved health

                   Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability from the Perspective of the Health Sector   
outcomes. In many cases reallocating resources                              This paper was commissioned by the Secretariat
within the health sector towards primary health care                    of the High Level Forum on the Health MDGs in
would improve efficiency and equity.                                    response to a request from the 2nd HLF in Abuja to
                                                                        clarify the meaning of the terms fiscal space and
Addressing absorptive capacity constraints                              fiscal sustainability1. Its purpose is to define the
Important capacity constraints arise from organi-
                                                                        concepts of fiscal space and fiscal sustainability from
zational, managerial and governance weaknesses,
                                                                        the perspective of the health sector, and to demon-
which may reduce the returns to additional aid and
                                                                        strate their usefulness in understanding the fiscal
public expenditure substantially. In these conditions
                                                                        and macroeconomic issues that will arise from an
it will be important to scale up aid at a measured
                                                                        increase in aid flows. The paper is structured
pace, and to accompany this with institutional and
                                                                        around the following questions:
governance reforms to create conditions where aid
can be used effectively.                                                •   What is the meaning of the terms fiscal space
                                                                            and fiscal sustainability from the perspective
Taking account of the macroeconomic effects of                              of the health sector?
higher aid inflows
There are macroeconomic risks associated with
                                                                        •   In the light of likely scenarios for increased donor
                                                                            funding how much room is there to increase
scaling up aid, in particular real exchange rate                            public health expenditures in a sustained way?
appreciation and the crowding out of private sector
investment. Development aid for health is no differ-
                                                                        •   How does the way aid is managed affect fiscal
                                                                            space and fiscal sustainability from the perspec-
ent to other types of aid in this respect. In many                          tive of the health sector?
cases increases in donor support to the health sec-
tor will still be warranted, in particular where this
                                                                        •   What are the challenges for aid recipients to
                                                                            ensure the effective use of increased aid resources
supports expenditure that provides the public goods                         in the health sector?
and generates the human capital that will be required
to enable private sector-led growth in future.
                                                                        •   What are the macroeconomic effects of increased
                                                                            health spending and how might this influence
However, the impact on private sector investment                            fiscal space and sustainability in the long term?
and consumption should always be considered. At a
certain level of public spending the marginal costs                         The paper will provide a broad overview of these
of additional expenditure will exceed its marginal                      issues, but it must be acknowledged from the outset
benefits. This constitutes an upper limit to fiscal                     that it is often difficult to reach firm conclusions
space that no government should exceed irrespec-                        because the evidence base is rather limited.
tive of the amount of aid on offer. It is difficult to                      Although the issues it raises are relevant to all
establish where this limit lies. However, most would                    countries, the focus of the paper is on low income
argue that the poorest countries are some way from                      countries. This is because fiscal space and sustain-
reaching this limit. With careful economic manage-                      ability are particularly serious constraints in low
ment to ensure that scaled-up aid supports both                         income countries, and are one of the main obsta-
improved service delivery and growth, fiscal space                      cles to achieving the MDGs. The arguments about
can still be expanded.                                                  scaling-up aid are also most relevant to low income
                                                                        countries, in particular those countries (notably in
                                                                        Sub-Saharan Africa) where donor aid amounts to a
1. Introduction                                                         substantial proportion of public spending.
It is widely recognized that current levels of public
expenditure for health in low income countries are
too low to achieve the MDGs. The prospect of                            . Defining fiscal space and fiscal
substantial increases in aid may allow higher levels                    sustainability
of health spending in low income countries. How-                        a. Fiscal space
ever, there is a great deal of discussion about the                     Fiscal space refers to the ability of governments to
extent to which these additional resources can be                       make budgetary resources available for desired pur-
used effectively to raise expenditure on health to a                    poses. However, the term has been used in different
higher level. In other words, to what extent can                        ways, and its precise definition remains somewhat
fiscal space for health spending be expanded in a                       unclear. More restrictive interpretations of fiscal
sustainable way?                                                        space emphasize hard budget constraints and expen-

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
diture ceilings that are designed to ensure macro-                           i) Increase discretionary expenditure from debt
economic stability and the availability of credit to                         reduction
the private sector. Advocates of a more flexible                             In a number of cases the amount of fiscal space
approach argue that it should be possible to support                         available in low income countries for spending on
higher levels of public expenditure on meritorious                           public services, including health, is constrained by
goods and services that are crucial for poverty reduc-                       their obligations to debt servicing. In a few cases,
tion, growth and achieving the MDGs.                                         these obligations may amount to around 50 % of
   The following definition of fiscal space taken                            total public spending. Hence the significance of
from a recent IMF paper has been adopted here                                recent initiatives to reduce low income country
because it is sufficiently broad to encompass all of                         public debt.
the key issues that influence judgements on the
appropriate level of public expenditure.                                     ii) Reallocation between sectors
                                                                             Health sector spending can be increased by reallo-
  “Fiscal space can be defined as the availa­                                cating expenditure from other sectors. As part of
                                                                             HIPC and PRSP processes some governments in
   bility of budgetary room that allows a                                    low income countries have increased the share of
   government to provide resources for a                                     the budget allocated to the health sector, and some
                                                                             are committed to further increases. However, the
   desired purpose without any prejudice                                     demands of other sectors will inevitably impose a
   to the sustainability of a government’s                                   limit on the share of expenditure that can be allo-
                                                                             cated to health. This issue is discussed further in
   financial position.” (Heller, 2005)                                       section 5.1.
    This paper is specifically concerned with issues                         iii) Mobilisation of domestic revenues
surrounding public expenditure in the health sector.                         Governments can raise additional revenues by in-
However, it is not possible to restrict the view of                          creasing tax rates, creating new taxes and levies and
fiscal space to one particular sector. The budgetary                         strengthening tax collection. The low tax effort in
resources made available to the health sector depend                         many low income countries (usually less than 15%
on the government’s overall fiscal policies, the                             of GDP) indicates that there is scope to mobilise
demands of competing sectors, and spill-over effects                         additional domestic revenues. However, experience
from one sector to another. In any event, the size of                        suggests that it will be difficult to achieve a rapid
the health budget is the result of a set of political                        improvement in revenue ratios. The Commission
decisions on the allocation of public resources                              for Macroeconomics and Health forecasts that low
between competing priorities.                                                income countries would probably only be able to
    Although fiscal space is a broad concept that                            increase their revenue ratios by 2% of GDP by 2015
applies to public expenditure as a whole, there are                          (CMH, 2001). The Millennium Project suggests that
valid reasons for considering the problem from the                           a 4% increase in the revenue ratio may be feasible
perspective of the health sector. Considerations                             (Millennium Project, 2005). While increases in the
about the potential to increase public expenditure                           tax effort may generate modest increases in fiscal
on health need to be placed within the context of                            space, the most important challenge will be to accel-
the government’s fiscal position. Spending decisions                         erate economic growth, which will be essential to
in the health sector also have an important influence                        generate the sustained increases in domestic revenues
on the government’s fiscal position. For example, a                          required to finance improved health services.
decision to hire large numbers of additional health
workers would generate upward pressure on civil                              iv) Increase borrowing
service salaries and the overall public sector wage                          Governments can also finance higher levels of
bill. Health sector policy and expenditure decisions                         public spending by borrowing from domestic and
will therefore influence fiscal space and vice versa.                        foreign creditors. However, there are costs in terms
    In principle, there are several ways to create fiscal                    of future debt service obligations and the potential
space for additional health spending that reflect the                        crowding out of private sector borrowing. A sound
government’s budget arithmetic. Each offers oppor-                           fiscal principle is that over the economic cycle govern-
tunities, but all also have their limitations. Well                          ments should borrow only to invest rather than to
managed fiscal policy assesses the costs and benefits                        finance recurrent expenditure. While health expendi-
of each, as well as their political implications.                            tures are generally treated as recurrent expenditure,

                  Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability from the Perspective of the Health Sector   
many have argued that they should be viewed as                          purpose for its planned duration, and to meet the
an investment in human capital that will generate                       cost of borrowing without compromising the gov-
taxable returns in the long run. If this view is accepted               ernment’s financial position. There are three condi-
then it would be justified to finance a higher level                    tions that need to be met in order to achieve fiscal
of public expenditure on health through borrowing                       sustainability in a strict sense:
so long as the expected returns exceed the costs of
servicing the debt.                                                     •   For expenditures funded by loans. The financial
                                                                            returns generated by the additional expenditure
v) Increase aid                                                             should cover the costs of borrowing.
The fiscal space that is generated by aid depends on                    •   For recurrent expenditures funded by donor grants.
the level, duration and predictability of donor fund-                       Governments must be able to raise alternative
ing, as well as on the type of aid. As discussed later                      sources of revenue to replace donor funding
aid will generate more fiscal space where donors                            when it is phased out, if it is intended to continue
can make long term financial commitments and can                            these expenditures beyond the planned period
disburse aid in a predictable manner. The effect of                         of donor funding
aid on fiscal space will also depend on whether it is                   •   For all investments. Governments must be able
provided as grants or loans, whether or not it enters                       to cover the recurrent costs of any new capital
the government’s budget, whether it is earmarked                            investment, for example the operation and
for a particular use or sector, and the extent to which                     maintenance costs of the construction of a new
it is fungible. These issues are discussed further in                       health facility, as well as the costs of capital.
section 4.
                                                                            Health sector spending presents particular chal-
vi) Seignorage                                                          lenges in relation to all three of these conditions.
Governments can finance additional expenditure by                       With respect to the first, it is usually impossible to
printing money, but the opportunities to generate                       assess whether or not it is justified on economic
seignorage revenues without causing inflation are                       grounds to borrow in order to finance health spend-
very limited.                                                           ing. This is because there is considerable uncertainty
    An important aspect of health financing in low                      about the economic impact of health programmes
income countries is the high proportion of health                       and the level and timing of any financial return.
expenditures that are privately financed, usually out                   However, it is generally considered reasonable to
of pocket. The relationship between public and pri-                     allow a certain level of borrowing on concessional
vate expenditure on health, and the implications                        terms to finance health programmes in low income
for fiscal space are complex. An increase in public                     countries so long as the government’s overall finan-
expenditure on health may substitute or comple-                         cial position provides sufficient capacity to service
ment private spending. Where substitution occurs                        the consequent debt.
the net provision of services may not increase.                             In relation to the second, the planned duration
However, shifting health financing from private to                      of health programmes usually far exceeds the dura-
public sources may improve economic efficiency                          tion of donor commitments, which typically only
where this improves the cost effectiveness of service                   cover a few years. It is therefore essential that gov-
delivery or frees up private resources to be used                       ernments consider how such programmes could be
more productively elsewhere. In the long run such                       financed if donor funding were unavailable in the
efficiency gains would have a positive effect on                        future. This highlights the importance of strength-
growth and government revenues, and thereby                             ening the tax effort and developing non-tax sources
generate fiscal space. Public spending on health may                    of health financing.
also be preferable on equity grounds, in particular                         On the third point, public spending in the sector
because it partially insures the poor against cata-                     is mainly in the form of salaries for staff and drug
strophic medical costs. However, it must be empha-                      purchases: both are long-term, recurrent cost com-
sised that all of these effects are poorly understood                   mitments that governments must be in a position
and subject to considerable uncertainty.                                to finance. Cutting these expenditures will impose
                                                                        high political costs, and would have damaging med-
b. Fiscal sustainability                                                ical consequences. There are relatively few one-off
The concept of fiscal sustainability refers to the abil-                activities that can be undertaken to improve public
ity of government to sustain spending on a desired                      health.

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    Fiscal sustainability is a particularly important                             the duration of higher aid flows. The third scenario
issue in the context of scaling up aid because it is                              represents the most pessimistic case where recipient
not certain how long the increase in aid volumes                                  governments reduce their tax effort in response to
will last. At some point in the future governments                                higher aid flows. Following the decline in aid, fiscal
will need to mobilise additional domestic revenues                                space will be more limited than it is at present.
in order to offset a decline in aid flows. However, it                                While these scenarios affect government spend-
is difficult to predict how government revenues will                              ing overall, there are particular implications for the
develop under conditions of higher aid. Where aid                                 health sector. Because health expenditures usually
is successful in generating growth there may be a                                 entail long term recurrent spending commitments
positive effect on domestic revenues. However,                                    there are particular risks for governments under
there is also a risk of moral hazard: governments                                 scenarios two and three. In these two cases increased
may relax their fiscal effort when aid is easily avail-                           health spending will not be fiscally sustainable. Fis-
able. The empirical evidence of these issues is                                   cally prudent governments may decide not to spend
rather inconclusive. Most studies find that there is                              additional donor resources on health, and may in-
no general relationship between aid and domestic                                  stead increase spending in other sectors, which do
revenues, and that the fiscal response varies in dif-                             not generate such long term obligations. An addi-
ferent country contexts (McGillivray and Morrisey,                                tional problem that is discussed more fully in section
2001; Fagernäs and Roberts, 2004). Gupta et al. (2005)                            4 is that aid is unpredictable and governments can-
find that there is a difference in the fiscal response                            not accurately forecast future levels of aid. This is
to grants and concessional loans: aid provided as                                 another reason why governments will tend to be
grants tends to result in reduced domestic revenues,                              cautious in raising health expenditures.
especially in countries with weak institutions, where-
as aid provided as loans results in a slight increase
in domestic revenues.                                                             . How much room is there to increase
    In view of these uncertainties it is helpful to                               health expenditures?
consider various alternative country scenarios for                                A key question is how much additional fiscal space
the future evolution of domestic revenues. Figure                                 can be created under plausible scenarios for increased
1 presents three scenarios that have different impli-                             aid, domestic revenues and economic growth. This
cations for fiscal sustainability. The first scenario                             section addresses this question by first outlining
presents the most optimistic case where aid recipi-                               trends in public expenditure on health and foreign
ents’ benefit from a permanent increase in fiscal                                 aid in low income countries, and then simulating the
space. When aid begins to decline the effect is off-                              effect of changes in key public finance variables on
set by increasing domestic revenues resulting from                                health spending under several alternative scenarios.
growth or a stronger tax effort. In the second scenario,
the increase in fiscal space is temporary because                                 a. Recent patterns of public health spending in
when aid begins to decline it is not compensated                                  low income countries
by an increase in domestic revenues. In this case                                 Figure 2 compares public expenditure on health in
additional expenditures cannot be sustained beyond                                55 low income countries in 2002 measured in per



Figure 1 Fiscal space and sustainability under alternative scenarios for aid and domestic revenues
               Scenario 1                                             Scenario                                             Scenario 


                                           G

                                                                                                  G
Quantity




                                                   Quantity




                                                                                                          Quantity




                                           T

                                                                                                                                                        G
                                           A                                                      A                                                     A
                                                                                                  T
                                                                                                                                                        T

                   Time                                                    Time                                                 Time
A = Aid volume T = Domestic revenues    G = Fiscal space for government spending



                    Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability from the Perspective of the Health Sector   
                                                     Burundi                                         Figure 2 Public expenditure on
                                                 Dem. Rep. Congo                                    health in low income countries
                                                    Tajikistan                                                   Source: World Health Report (2005)
                                                    Ethiopia
                                                     Liberia
                                                  Sierra Leone
                                                   Bangladesh
                                                   Madagascar
                                                      Nepal
                                                      Togo
                                                     Guinea
                                                      Niger
                                                     Nigeria
                                                  Guinea-Bissau
                                                  Cent. Afr. Rep
                                                      Laos
                                                      Sudan
                                                     Eritrea
                                                     Uganda
                                                  Burkina Faso
                                                     Yemen
                                                    Pakistan
                                                    Cambodia
                                                      India
                                                      Chad
                                                     Rwanda
                                                     Vietnam
                                                      Mali
                                                     Ghana
                                                     Malawi
                                                   Kyrgyzstan
                                                    Comoros
                                                    Tanzania
                                                    Cameroon
                                                   Mozambique
                                                      Kenya
                                                      Benin
                                                   The Gambia
                                                   Uzbekistan
                                                  Côte d’Ivoire
                                                   Mauritania
                                                     Zambia
                                                     Senegal
                                                      Haiti
                                                  Congo Brazza.
                                                    Moldova
                                                   P.N. Guinea
                                                    Mongolia
                                                     Lesotho
                                                 Solomon Islands
                                                  Timor - Leste
                                                    Nicaragua
                                                     Bhutan
                                                 S. Tome & Prin.
                                                    Zimbabwe

10      8       6           4   2       0                            0          10             20         30            40           50          60
                    % GDP                                                                            US$ per capita



0  High Level Forum on the Health Millennium Development Goals    Selected Papers 2003–2005
capita terms and as a percentage of GDP2. Average                                                               In order to analyse the scope for increasing
expenditure was $6.17 per capita per annum or 2.53%                                                         health expenditures it is important to examine two
of GDP 3. There are significant variations between                                                          key ratios: (i) the share of health spending in total
countries, but very few countries spend more than                                                           public spending, and (ii) government spending as a
5% of GDP.                                                                                                  percentage of GDP 5. Figure 3 groups low income
    Over the past few years there has been a gradual                                                        countries according to the first ratio. It indicates
trend towards higher public expenditure on health                                                           that the majority of low income countries allocate
in low income countries. Average public expendi-                                                            less than 10% of the government budget to health.
ture per capita on health, in low income countries,                                                         Very few countries spend more than 15% of their
rose by 12% from $5.49 in 1998 to $6.17 in 2002.                                                            budget on health, in spite of the 2001 declaration
Expressed as a percentage of GDP, public expendi-                                                           by African leaders in Abuja to increase spending to
ture on health rose from 2.26% to 2.53% over the                                                            this level. There appears to be an effective ceiling on
same period.                                                                                                health spending at around 15% of the government
    In spite of recent modest increases, public expen-                                                      budget. This reflects the competing demands of
diture on health in low income countries is still far                                                       other sectors and the political constraints to reallo-
below the minimum levels required to achieve the                                                            cating resources in favour of health.
health MDGs. The recently published Millennium                                                                  The second chart shows public expenditure as a
Project report provides costings for the MDGs in 5                                                          percentage of GDP in a sample of 28 low income
low income countries, and suggests that in these                                                            countries for which adequate data is available. The
countries present levels of expenditure on health                                                           mean value is around 22% of GDP. There is much
would need to increase by $30-48 by 2015 in order                                                           variation between countries, but there are few cases
to achieve the health MDGs (Millennium Project,                                                             where government expenditure exceeds 30% of GDP6.
2005). The Commission for Macroeconomics and                                                                    These figures are significant because they suggest
Health calculated that a minimum total health                                                               that there is an upper limit on health spending in
expenditure of $34 per capita in 2007 (rising to $38 in                                                     low income countries. Since very few allocate more
2015) would be required to provide a basic package                                                          than 15% of government spending to health, and
of essential health interventions (Commission for                                                           public expenditure is generally less than 30% of
Macroeconomic and Health, 2001). Public health                                                              GDP, fiscal space for health spending will usually
spending in the low income countries shown in                                                               be limited to 5% of GDP (this is confirmed in figure
figure 2 is below this level in all but two cases4.                                                         2). Because public expenditure on health accounts

Figure 3 Key spending ratios in low income countries


                      14
                                                                                                                                  10

                      12

                                                                                                                                  8
                      10
Number of countries




                                                                                                            Number of countries




                      8                                                                                                           6



                      6
                                                                                                                                  4

                      4

                                                                                                                                  2
                      2
                                                                                                 >20%




                      0                                                                                                           0
                           0   2.5      5        7.5      10      12.5       15      17.5   20                                         0   10   15          20       25        30   35   40
                                 Share of health spending in total public expenditure %                                                              Public expenditure as % GDP
Sources: World Health Report (2005), IMF (GFS)



                                            Section 2: Fiscal Space and Financial Sustainability        Fiscal Space and Sustainability from the Perspective of the Health Sector             1
for an average of 2.5% of GDP in low income coun-                       Figure 4 Aid commitments to low income countries
tries, there will often be scope to increase health                     since 1990
spending by one or both of the two fiscal adjust-                       45 Constant $ 2002 billions
ments7. However, the resources that can be generated                    40
in these ways will be relatively modest. In a typical                   35                        • Total aid • Development aid for health
low income country with a GDP per capita of $400,                       30
an increase in health expenditures from 2.5% to 5%                      25
of GDP would amount to additional spending of                           20
                                                                        15
just $10 per capita per annum. Although this would
                                                                        10
double the public resources available for health,
                                                                        5
which would be helpful, it falls well short of the                      0
resources estimated by the Commission for Macro-                             1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
economics and Health to be required to finance a                        Sources: OECD DAC Creditor Reporting System
basic package of health services. The only way to
create additional fiscal space beyond this limit is to
increase GDP per capita through economic growth.                        in 2003 amounts to only $2.56 per capita in all low
                                                                        income countries. Although this amounts to 42%
b. Trends in development aid for health                                 of public expenditure on health, it is a modest con-
Many low income countries, particularly in Sub-                         tribution in relation to needs.
Saharan Africa, are dependent on foreign aid for a                          Development aid for health appears more signi-
substantial proportion of their revenues and public                     ficant if the analysis is restricted to low income
expenditure. The creation of additional fiscal space                    countries in sub-Saharan Africa. In 2003 development
for increased health expenditure will therefore                         aid for health totalled $3.8bn in these countries, or
depend greatly on future increases in foreign aid.                      $6.08 per head. This figure is equivalent to average
In order to develop probable scenarios for scaling                      public spending per capita on health in sub-Saharan
up aid it is useful to review trends in aid flows to                    Africa, and indicates the extreme aid dependence
low income countries.                                                   of these countries.
    Data on aid flows is provided in terms of com-                          Data on aid disbursements indicate a similar
mitments, which refer to pledges made by donors                         upward trend. However, they are not available on
in a certain year, and disbursements, which refer                       a sectoral level. Public statements made by donors
to the money that is actually transferred to the                        following the Monterrey conference and the G8
recipient. From the perspective of fiscal space,                        summit in Gleneagles indicate that net aid disburse-
disbursements are the more relevant measure.                            ments to all developing countries are likely to increase
However, information on the sectoral composition                        from around $80 billion now to $130 billion in 2010.
of aid is only available in terms of commitments.                       Net disbursements to Africa are projected to double
Figure 4 shows total aid commitments to low                             between now and 2010 (OECD DAC estimates).
income countries for the period 1990 to 2003 and
the share of aid committed for health. This indicates                   c. Projections of fiscal space for health spending
that development aid commitments for health in                          under alternative scenarios
low income countries increased from around $1.7bn                       It should be clear from the above discussion that
in 1990 to $5.6bn in 20038. Over this period its share                  the maximum expansion of fiscal space for health
of total aid commitments increased from 9% to 17%.                      spending depends on a combination of measures:
Much of this increase has been driven by increased                      increases in the share of public expenditure allocated
funding commitments for HIV/AIDS, the bulk of                           to health; increases in domestic revenues and, in
which has been mobilised through the Global Fund                        the right conditions, increases in aid. None of these
(GFATM) and the US President’s Emergency Plan                           measures is likely to be sufficient on its own, and
For AIDS Relief (PEPFAR). Global bilateral and                          the mix of measures adopted by an individual
multilateral commitments for HIV/AIDS increased                         country will depend on what the potential yield
from $1.2bn in 2000 to $3.4bn in 2004 (Lewis, 2005).                    from each measure is likely to be, taking into account
    While these figures indicate a substantial level of                 costs, risks, institutional strengths and economic
donor funding for the health sector, it is important                    prospects. This section presents some simple pro-
to put them in perspective. The $5.6bn committed                        jections on the future level of public expenditure

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
per capita on health in individual low income                                     Simulations of public expenditure on health
countries under alternative scenarios when the                                under the five scenarios were conducted for 30 low
measures above are combined in different ways:                                income countries for which adequate data were
                                                                              available. Table 2 shows how many of these coun-
•   Aid. The projections are based on the assump-
                                                                              tries will reach different levels of public expenditure
    tion that the aid/GDP ratio doubles between
                                                                              on health in 2015 under the five scenarios.
    now and 2015. In order to take account of the
                                                                                  The simulations make a number of important
    effect of volatility, the present level of aid is taken
                                                                              assumptions. First, the projections are based on
    to be the average level of net disbursements
                                                                              the assumption that government spending is equiv-
    over the three most recent years for which data
                                                                              alent to the sum of domestic revenues and net aid
    is available.
                                                                              disbursements, and that there is no fiscal deficit.
•   Proportion of the government budget spent on health.
                                                                              Second, aid is assumed to be on-budget and fungible
    It is assumed under most scenarios that govern-
                                                                              between sectors. Third, it is assumed that popula-
    ments continue to spend the same share of their
                                                                              tion continues to increase at present growth rates.
    budget on health in 2015 as they do presently.
                                                                                  Countries spending more than $30 per capita are
    Under some scenarios it is assumed that govern-
                                                                              shown within the grey zone on the table. Following
    ments increase the share of the government
                                                                              the analysis of the Commission on Macroeconomics
    budget spent on health to 15% in line with the
                                                                              and Health this is considered to be the minimum
    2001 Abuja Declaration9.
                                                                              level of public expenditure required to provide a
•   Growth. Under most scenarios it is assumed
                                                                              minimum package of essential health services10.
    that economic growth continues at the average
                                                                                  The table indicates that the doubling of aid alone
    rate for the past ten years. Certain scenarios
                                                                              (scenario 2) makes a relatively modest contribution
    simulate the effect of increasing the growth rate
                                                                              to fiscal space. The average increase in public expen-
    to 2% above the long term average.
                                                                              diture above the base case is around $4 per capita,
•   Domestic revenues. Under most scenarios it is
                                                                              and only 3 countries out of thirty achieve public
    assumed that the ratio of domestic revenues to
                                                                              expenditure on health greater than $30 per capita
    GDP remains constant. The final scenario simu-
                                                                              (compared to 2 countries in the base case), and
    lates the effect of increasing this ratio by 4% of
                                                                              these were already spending most.
    GDP by 2015 (in line with the projections of the
                                                                                  Combining increased aid with a reallocation of
    Millennium Project).
                                                                              public expenditure in favour of health would allow
   The five alternative scenarios are described in                            a more substantial increase in health spending. This
table 1 below:                                                                is modelled under scenario 3, which assumes that


Table 1 Alternative scenarios for aid, public finance and macroeconomic variables
 Scenario              Scenario 1                 Scenario 2                 Scenario 3               Scenario 4                Scenario 5
 description           Base case                  Higher aid                 Budgetary                Faster growth             Higher revenue
                                                                             reallocation                                       ratio
 Aid/GDP ratio         Aid/GDP ratio              Aid/GDP ratio              Aid/GDP ratio            Aid/GDP ratio             Aid/GDP ratio
                       remains at current         doubles by 2015            doubles by 2015          doubles by 2015           doubles by 2015
                       level

 Propor tion of        Health share of            Health share of            Health share of          Health share of           Health share of
 the government        budget held                budget held                budget increases         budget increases          budget increases
 budget spent on       constant                   constant                   to 15%                   to 15%                    to 15%
 health

 Growth rate           Growth continues           Growth continues           Growth continues         Growth increases          Growth increases
 2005-2015             at its long term           at its long term           at its long term         to 2% above its           to 2% above its
                       average rate               average rate               average rate             long term average         long term average
                                                                                                      rate                      rate

 Domestic              Present ratio of           Present ratio of           Present ratio of         Present ratio of          Ratio of domestic
 revenues/GDP          domestic revenues          domestic revenues          domestic revenues        domestic revenues         revenues to GDP
                       to GDP is                  to GDP is                  to GDP is                to GDP is                 increases by 4%
                       maintained                 maintained                 maintained               maintained                by 2015



                   Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability from the Perspective of the Health Sector   
Table 2 Projections of per capita public expenditure on health in 2015
 Projected public          Numbers of countries falling into each expenditure class for each scenario
 expenditure per
 capita on health          Scenario 1               Scenario 2                Scenario 3               Scenario 4                Scenario 5
 in 2015                   Base case                Higher aid                Budgetary                Faster growth             Higher revenue
                                                                              reallocation                                       ratio
 $0-5                      6                        5                         0                        0                         0

 $ 5 - 10                  12                       5                         4                        1                         1

 $ 10 - 15                 6                        11                        5                        4                         3

 $ 15 - 20                 3                        3                         6                        6                         3

 $ 20 - 25                 0                        2                         3                        4                         6

 $ 25 - 30                 1                        1                         4                        2                         2

 $ 30 - 40                 1                        1                         3                        6                         5

 $ 40 - 50                 1                        0                         3                        1                         3

 $ 50 - 60                 0                        1                         0                        4                         4

 $ 60 - 80                 0                        1                         2                        0                         1

 $ 80 - 100                0                        0                         0                        2                         1

 $ 100 +                   0                        0                         0                        0                         1

 Average per               $11.63                   $15.52                    $24.94                   $31.97                    $35.73
 capita public
 expenditure on
 health for all 30
 countries

Data sources: Revenue data (IMF GFS), health spending (WHO World Health Report), aid (OECD DAC database), other variables (World Bank, World Development
Indicators).


15% of the budget is spent on health. The projections                                 Scenario 5 describes the best of all cases where
indicate that under this scenario average public expen-                           additional fiscal space is created by a stronger revenue
diture on health would increase to nearly $25 per                                 effort, in addition to faster growth, budgetary reallo-
capita by 2015, and spending in 8 countries would                                 cation and increased aid.
exceed $30 per capita.                                                                The Millennium Project has provided detailed
    The effect on fiscal space is even more pronounced                            costings of the additional resources required to
where increased aid and budgetary reallocation is                                 meet the MDGs in five low income countries. For
accompanied by faster growth. Scenario 4 describes                                three of these countries adequate data was available
cases where growth accelerates to 2% above the                                    to simulate whether health spending would reach
long term average. In this case average public expen-                             these targets under the five scenarios. The results
diture per capita on health exceeds to $30 by 2015,                               are presented in table 3. It is notable that none of
although spending in slightly more than half of the                               the three countries would achieve the required
countries remains below this level.                                               additional health spending under scenarios one to

Table 3 Projections of fiscal space compared with MDG spending targets
                 Additional per capita spending            Additional per capita public expenditure on health in 2015 projected
                 in 2015 required to meet                  under alternative scenarios / US$
                 health MDGs/ 2003 US$
                                                           Scenario 1         Scenario 2         Scenario 3         Scenario 4         Scenario 5
                                                           Base case
 Cambodia        32.00                                     5.01               10.59              20.70              28.06              32.25

 Tanzania        48.00                                     2.75               8.05               12.62              18.22              21.14

 Uganda          44.00                                     3.15               7.39               16.90              22.85              25.84



  High Level Forum on the Health Millennium Development Goals         Selected Papers 2003–2005
four. Only Cambodia would reach the target under                            Figure 5 Response of public expenditure on
scenario five11.                                                            health to changes in aid




                                                                            Change in public expenditure on health 1998–2002/% GDP
d. Interpreting the results of the projections                                                                                                     3

The above simulations indicate that there is signifi-                                                                                              2
cant scope to create fiscal space for health spending
                                                                                                                                                   1
in low income countries, in particular where an
increase in aid is accompanied by budgetary reallo-
cation in favour of health, faster growth and a                                                                                      -10                          10            20           30
stronger revenue effort. Under the more optimistic                                                                                                 -1
scenarios many countries will achieve levels of ex-                                                                                               -2
                                                                                                                                                                   Best fit line: Y = 0.181 + 0.036 X
                                                                                                                                                                   r2 = 0.147
penditure that would potentially allow them to be
                                                                                                                                                                   p = 0.035
in a position to achieve the MDGs, but probably not                                                                                                -3
                                                                                                                                           Change in net aid disbursements 1998–2002/% GDP
by 2015 as any effects of increased spending would
be lagged. Although many countries do not reach                             Sources: OECD DAC database on aid disbursements, WHO World Health
                                                                            Report 2005
this level of spending under any scenario, there
                                                                            NB: Values for net aid disbursements and public expenditure over the period
would still be a substantial increase in health expen-                      1998-2002 were adjusted using a Hodrick-Prescott filter. The effect of the filter
ditures that could make a significant difference to                         is to indicate the trend in values over the five year period and to strip out the
                                                                            effect of volatility from one year to the next.
service delivery and health outcomes.
    The above projections provide a useful indication
of the additional fiscal space that may potentially
become available under alternative scenarios. How-                          that the fiscal response to aid varies greatly between
ever, the scenarios are generally rather optimistic,                        countries.
and the projected expenditures should be regarded                               Figure 5 plots changes in net aid disbursements
as being at the top end of what may be feasible.                            over the period 1998 to 2002 against changes in
There are several reasons for caution:                                      public expenditure on health over the same period
                                                                            in 56 low income countries. Although there is a
•   It is probably too optimistic to assume that gov-                       wide variation in the fiscal behaviour of different
    ernments will allocate 15% of public expenditure                        countries, there is a statistically significant correla-
    to the health sector. Very few low income coun-                         tion between changes in aid volumes and changes
    tries have achieved this (see figure 3).                                in public expenditure on health. The slope of the
•   Aid recipients may be inclined to allocate a rela-                      best fit line shows that the effect of additional aid
    tively small share of additional aid to the health                      on health expenditures has been quite small: an
    sector because of the unpredictability of aid and                       increase in aid of 10% of GDP has been associated
    the long term recurrent spending commitments                            with an increase in public expenditure on health
    that are generated by health expenditures.                              of 0.36% of GDP. This would imply that only 3.6%
•   The assumption that additional aid will be pro-                         of aid is used to finance health expenditures.
    vided on-budget is not realistic given present                              Given that low income countries typically spend
    patterns of aid delivery (see 4.2).                                     around 2.5% of GDP on public health expenditure,
•   An average increase in the revenue/GDP ratio                            this implies that aid stimulates health spending to
    of 4% by 2015 would represent a very strong tax                         a slightly greater degree than domestic revenues.
    effort that would only be achieved by the best                          However, there is significant fungibility in the use
    performing countries.                                                   of aid. Although donors earmark 17% of their
                                                                            commitments (see section 3.2), the increase in
e. Empirical evidence on the relationship between                           health spending generated by an increase in aid is
aid and public spending on health                                           far less than this. The explanation is that govern-
In order to assess how public expenditure on health                         ments have responded to increases in aid for the
would respond to increases in aid it is instructive to                      health sector by shifting their own resources out
examine aid recipients’ past behaviour in utilising                         of the health sector.
additional aid flows. Theory suggests that govern-                              This finding indicates that if governments main-
ments will shift their own resources away from                              tain their present fiscal behaviour, future increases
sectors that benefit from international aid (fungi-                         in aid will only generate relatively modest increases
bility). The empirical evidence on this point suggests                      in public expenditure on health. Much will depend

                 Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability from the Perspective of the Health Sector                                                       
on whether governments’ fiscal behaviour will                           Hamann, 2005). There is evidence that the gap
change in the future, most importantly by reallo-                       between commitments and disbursements is widen-
cating donor and domestic resources in favour of                        ing. The ratio of disbursements to commitments
health.                                                                 for all recipient countries fell from 82% to 66%
                                                                        between 1990 and 2001 (Bulir and Hamann, 2005).
                                                                            Volatility in disbursements creates particularly
. How does donor behaviour affect                                      difficult problems for recipient countries because
fiscal space and sustainability?                                        when expected aid resources do not arrive govern-
This paper has so far considered the potential effects                  ments are unable to execute budgets as planned.
of changes in the aggregate level of aid volumes                        Recent empirical studies indicate that there is sub-
on the recipient’s fiscal space. However, there are                     stantial volatility in aid disbursements. Bulir and
other aspects of donor behaviour that have an im-                       Hamann (2005) demonstrate that aid volatility is
portant effect on fiscal space and sustainability. This                 around 40 times greater than the volatility in
section considers two important problems: (i) the                       domestic revenues when expressed as a percentage
volatility and unpredictability of aid, and (ii) its lack               of GDP. Furthermore, in spite of donor initiatives
of coordination, harmonisation and alignment. It                        to ensure more stable levels of aid, volatility appears
will be argued that the maximum additional fiscal                       to have become more severe over the 1990s. More-
space will not be created unless these problems are                     over, aid flows have tended to be procyclical, and
addressed.                                                              have thereby exacerbated the effects of volatility in
                                                                        domestic revenues. Aid flows have generally increased
a. Aid volatility and unpredictability                                  when domestic revenues are strong and fallen back
Aid commitments and disbursements fluctuate                             when domestic revenues are weak.
considerably over time. There are various types of                          Given the magnitude of aid volatility and unpre-
instability caused by different aspects of donor                        dictability it would be expected that there would
behaviour:                                                              be an impact on public expenditure. The evidence
                                                                        on the instability of public spending on health sug-
•   Short term volatility from one year to the next. This
                                                                        gests that this is probably the case. Figure 6 shows
    is often the result of project management and
                                                                        public expenditure on health over the period 1998-
    disbursement delays, exchange rate fluctuations,
    non-compliance with agreed conditionality, and
    political problems in recipient countries.                          Figure 6 Volatility in public spending on health
•   Commitment–disbursement gaps. Donors often can-                     in selected African countries
    cel their commitments or delay disbursements                        Public expenditure on health/% GDP
    by several years.                                                   4
•   Longer term unpredictability of aid. Donors are
    usually unable to make long-term aid commit-                        3.5
                                                                                                                              Malawi

    ments because the length of donor programming
    cycles is typically only a few years. In addition,                  3
    bilateral aid commitments are typically depend-                                                                           Zambia
    ent on the donor country’s political cycle: a                       2.5
                                                                                                                              Ethiopia
    change in government can make a great differ-
    ence to a donor country’s aid policies.                             2                                                     Benin

   The instability of aid can be measured both in                       1.5
terms of aid commitments and disbursements. Aid
commitments are by nature very unstable because                                                                               Togo
                                                                        1
they reflect periodic announcements by donors of
new projects and programmes covering several years.                     0.5
They also provide an uncertain basis for governments                                                                          Burundi

to plan expenditures over the medium term. On                           0
average donors disburse only around two thirds of                       1998               1999              2000              2001             2002
the aid they have committed, and in low income                          Source: World Health Report (2005). Public expenditure includes aid financed
countries this ratio is only about 50% (Bulir and                       expenditures



  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
2002 for six African countries. These examples are                                                                      likely explanation is that many low income coun-
broadly representative of the patterns observed in                                                                      tries are bound by conservative budgetary rules that
low income countries. The chart shows that there                                                                        force them to cut back expenditures if aid does not
are significant differences between countries. For                                                                      arrive. Many countries operate cash budgets that
example, Burundi and Ethiopia have managed to                                                                           restrict borrowing and make it impossible to spend
maintain fairly stable health budgets. However,                                                                         resources that have not yet been received. A common
volatility has been substantial in Benin, Malawi, Togo                                                                  practice is to issue a hastily prepared supplemen-
and Zambia, where variations in health expenditure                                                                      tary budget after aid monies have arrived. Volatility
from one year to the next have often exceeded 0.5%                                                                      will therefore have an immediate effect on fiscal
of GDP.                                                                                                                 space, and the level of public expenditure is likely
    An association between volatility in aid and                                                                        to respond rapidly to fluctuations in aid receipts.
volatility in public expenditure on health can be                                                                           Volatility in health expenditures is likely to have
demonstrated, although this does not prove cau-                                                                         a negative effect on service delivery. When govern-
sality. The results of a bivariate regression analysis                                                                  ments experience sudden budgetary shortfalls diffi-
are shown in figure 7, which plots volatility in net                                                                    cult decisions must be taken on which expenditures
aid disbursements against volatility in public expen-                                                                   to cut. The burden of adjustment tends to fall on
diture on health for 56 low income countries for the                                                                    more discretionary types of expenditure, such as
period 1998-200212.                                                                                                     drug purchases and new investment, rather than
    The results demonstrate a positive and statisti-                                                                    non-discretionary expenditures, such as salaries. This
cally significant relationship between aid volatility                                                                   has been a common problem across the developing
and volatility in public expenditure in health. The                                                                     world where health workers are often unable to
R-square value indicates that 20% of the volatility                                                                     deliver services because of the lack of operating
in public expenditure is explained by volatility in                                                                     and maintenance spending 13.
aid. In addition, figure 8 shows that the volatility                                                                        Another effect of aid volatility may be to influ-
of public expenditures on health tends to be greater                                                                    ence the allocation of resources between levels of
in more aid dependent countries.                                                                                        health care. There is some evidence that there is
    These findings provide some interesting insights                                                                    greater volatility in expenditures on primary health
into the effects of aid volatility and unpredictability                                                                 care than at secondary and tertiary levels because
on fiscal behaviour and fiscal space. In principle,                                                                     primary health care tends to be more dependent
governments can cushion the effects of short term                                                                       on donor funding (World Bank, 2005). In addition,
volatility by temporarily drawing on reserves or by                                                                     aid volatility is likely to result in the funding short-
borrowing. However, the above observations suggest                                                                      falls for primary health care. If donors fund primary
that governments have not been able or willing to                                                                       health care then governments are likely to reallo-
cushion fully the effects of aid volatility. The most                                                                   cate their own resources to other uses, including


Figure 7 – Volatility in public health spending is                                                                      Figure 8 – and is greater in more aid dependent
correlated with volatility in aid                                                                                       countries
                                                                        0                                                                                            0



                                                                        -2                                                                                           -2
Volatility of health spending (log scale)




                                                                                                                         Volatility of health spending (log scale)




                                                                                                                                                                     -4


                                                                                                                                                                     -6
                                                                        -6

                                                                                        Best fit line:                                                                                                      Best fit line:
                                                                                        Y = -4.102 + 0.366 X                                                         -8                                     Y = -4.518 + 0.051 X
                                                                        -8
                                                                                        r2 = 0.147                                                                                                          r2 = 0.129
                                                                                        p = 0.035                                                                                                           p = 0.0065
                                                                      -10                                                                                            -10
                                            -10    -5                        0                 5               10                                                          0   20                40                60              80
                                                        Volatility of aid (log scale)                                                                                          Aid dependence net ODA/GDP
Sources: World Health Report (2005), OECD DAC database, World Development Indicators (2005)



                                                  Section 2: Fiscal Space and Financial Sustainability              Fiscal Space and Sustainability from the Perspective of the Health Sector                                      
higher level health care. When there is a shortfall                     b. Aid coordination, harmonisation and alignment
or delay in donor funding, governments find it diffi-                   Aid should not be viewed as a single category, but
cult to shift their own resources back into primary                     rather as a diverse and fragmented set of resource
health care14.                                                          flows. In most low income countries there is a pro-
    Aid volatility and unpredictability may also have                   liferation of donors using many different types of
longer term effects on fiscal space and public expen-                   instruments to manage their funds. Proliferation is
diture. If governments cannot be confident that                         perhaps most extreme in the health sector. Foster
committed donor funds will arrive or that existing                      states that: “The health sector has more active donors
donor funded programmes will continue for more                          involved in more individual activities than any other
than a few years, they may understandably be reluc-                     sector, and the problems are getting worse, with
tant to increase expenditures on areas that generate                    the recent addition of significant new sources of
long term recurrent spending obligations. Where aid                     funding.” (Foster, 2004, p 68).
is volatile and unpredictable an increase in aid may                        The fragmentation of aid should be viewed as
not generate a proportional increase in sustained                       a constraint on fiscal space for two main reasons.
health expenditures.                                                    The first is that donor aid is only partly integrated
     These arguments assume special importance in                       into recipient government budgets. Around half
the context of a substantial scaling up of aid. There                   of donor aid is provided off-budget, and is used to
is a risk that the problems of volatility and unpre-                    provide technical assistance or to fund NGO projects.
dictability may become even more severe when aid                        These resources will only create fiscal space where
is scaled up. In addition, it may be difficult to per-                  there is scope for fungibility. However, the extent
suade recipient governments to make ambitious                           to which off-budget donor spending will free up
plans for the expansion of heath services unless                        government resources to be used elsewhere is quite
donors can instil greater confidence that increased                     limited. Even where aid is accounted for in govern-
aid will materialise and that higher aid volumes will                   ment budgets, the majority is provided for donor
be sustained over the medium to long term. In the                       managed projects. Again, there may be scope for
light of past experience fiscally prudent governments                   fungibility, but the increase in fiscal space will be
would have good reason to discount donor promises                       less than if the government could exercise full dis-
to scale up aid. They may be particularly reluctant                     cretion over the use of donor funds. The only cat-
to use risky aid funds to finance long term recurrent                   egory of aid that is on-budget and under the full
health expenditures. The case of anti-retroviral                        control of recipient governments is general budget
therapy is a well known example of the dilemma                          support. However, only a small part of aid is pro-
facing aid recipients. While many governments are                       vided in this form. A recent analysis of aid relation-
under great pressure to expand these programmes,                        ships in 14 developing countries revealed that only
current forms of aid may be too unpredictable and                       20% of donor aid was provided as general budget
unstable to finance the required lifelong treatment                     support (Foster, 2004).
programmes. The consequences of budgetary cuts                              The second reason why the fragmentation of
in these programmes would be catastrophic because                       aid constrains fiscal space is that the proliferation
interruptions in anti-retroviral therapy reduce the                     of projects imposes major efficiency costs. There
benefits of treatment to individuals, and may lead                      is a substantial waste of resources resulting from
to the emergence of more resistant strains of the                       management duplication, weak coordination and
virus that would reduce the effectiveness of treat-                     the establishment of parallel planning and manage-
ment for everyone.                                                      ment structures. Projects are often not well integrated
    It is difficult to generalise about how recipient                   into national health systems, and in the worst cases
governments will respond to these problems.                             may undermine these systems by depriving them
Some governments may react to increases in aid in                       of staff and resources. Project aid tends to result in
a fiscally prudent manner, and increases in health                      unbalanced patterns of spending, and makes it very
expenditure will be relatively restrained. Other                        difficult for governments to prioritise spending in
governments, taking a short term view, may be                           pursuit of a coherent strategy. Recipient countries
inclined to spend unpredictable, lumpy aid receipts                     also face a significant administrative burden man-
on projects that have unaffordable recurrent cost                       aging multiple relationships with donors. All of these
implications. Either way the outcomes will be sub-                      inefficiencies waste public resources and thereby
optimal.                                                                deprive governments of fiscal space.

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
     The above arguments suggest that providing a                           problems of aid coordination, harmonisation and
greater share of donor resources in the form of                             alignment. Discussions are currently underway to
budget support would have a positive effect on                              set targets for improvements in several aspects of
fiscal space, and would improve aid effectiveness                           aid management and delivery, including reporting
more generally. In the context of scaling up aid, this                      aid on budget, increasing the proportion of aid
may be the only viable option to increase funding                           provided as budget support, improving aid predict-
without overstraining domestic administrative capa-                         ability, untying aid procurement rules, avoiding the
city. However, the shift towards budget support may                         use of parallel systems and deploying joint country
not necessarily result in increased public expendi-                         missions. All of these objectives, if implemented,
ture on health. Although the evidence on this point                         should help to maximise the fiscal space created by
is limited, one recent study of Tanzania indicates                          additional aid flows.
that following the start of budget support in 2001                              The major exception to the general trend towards
there has been an increase in public expenditure on                         improved aid coordination, harmonization and
health in per capita terms, but the share of health                         alignment has been the growth of global health
spending in the budget has remained unchanged                               initiatives, for example GFATM, PEPFAR, GAVI
(Lawson et al., 2005). This example indicates that                          and philanthropic foundations funding health pro-
there is no reason to expect that budget support will                       grammes. There has been a particularly dramatic
result in changes in public expenditure allocation.                         increase in funding for HIV/AIDS, most of which
     In general budget support will only generate                           has been provided through global initiatives, rather
higher public expenditures on health where govern-                          than from the traditional sources of bilateral and
ments and donors share a common preference for                              multilateral aid. In several countries external fund-
higher health spending. There is no guarantee that                          ing for HIV/AIDS is already equivalent to or greater
this will be the case. Donors typically earmark                             than the public health budget16. The majority of
budget support for use in certain sectors, but such                         funds distributed by the global initiatives has been
conditions may not be respected where govern-                               provided off-budget, and has been channelled
ments have different spending priorities. In some                           through parallel structures, often to projects imple-
countries budget support will not be an appropriate                         mented by NGOs or private contractors. This
aid instrument; in particular where donor and gov-                          strategy reflects the urgency of responding to glo-
ernment priorities are very different, and where                            bal health emergencies, and the weaknesses in the
there are poor standards of public financial manage-                        capacity and governance of national health systems.
ment and accountability. Under these conditions                             However, there are concerns that stand-alone HIV/
there may be a case for providing off-budget project                        AIDS programmes may undermine the ability of
aid or channelling support to non-state actors.                             governments to develop well functioning, integrated
However, this approach will not prevent fungibility,                        and sustainable health systems. The large scale
and may not result in higher health spending than                           funding available for HIV/AIDS will inevitably draw
if aid had been provided on budget.                                         human and financial resources out of national health
     There is a risk that the inefficiencies caused by                      systems, weakening their capacity to respond to
the fragmentation of aid delivery will get worse as                         other health priorities (Lewis, 2005). There are also
aid flows increase. However, recent trends indicate                         more general concerns that insufficient attention has
a gradual shift away from project aid towards budget                        been given to the long term financial sustainability
support (DFID, 2002). This has been associated with                         of HIV/AIDS programmes as discussed above.
the provision of debt relief and Poverty Reduction
Support Credits in the context of PRSPs. In the
health sector the Sector Wide Approach (SWAP)                               . How does recipient behaviour affect
has become an important form of aid delivery that                           fiscal space and sustainability?
has provided a basis for improved donor coordina-                           While donor behaviour has an important influence
tion and the alignment of donor funding in support                          on fiscal space, recipient government policies deter-
of a government-owned policy and expenditure                                mine the key variables that establish fiscal space:
framework15. However, this approach has so far been                         growth, revenue effort and the allocation of public
limited to a relatively small number of countries.                          expenditures. This section discusses two important
     The Paris Declaration on aid effectiveness is an                       challenges that need to be addressed by aid recipients
important signal of donor commitment to address                             in order to create fiscal space for health spending,

                 Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability from the Perspective of the Health Sector   
and to utilise it effectively. These are concerned                      living standards, better education and delayed age
with: (i) allocating resources to their most produc-                    of first pregnancy. Moreover, growth is essential to
tive uses, (ii) strengthening absorptive capacity.                      generate the domestic resources that will be required
                                                                        to finance future improvements in health services.
                                                                        However, this should not imply that governments
a. Ensuring productive use of expenditures                              should invest all of their resources in fostering
In the long term the main source of additional fiscal
                                                                        growth rather than improving health services.
space will be economic growth. There is no other
                                                                        Important health problems can and do persist even
way to achieve the sustained increase in domestic
                                                                        in rapidly growing economies, for example high
revenues that will be required to fully finance MDG
                                                                        maternal mortality. In addition, the relationship is
goals in low income countries. It is therefore very
                                                                        two way: improvements in health indicators will
important that public expenditure is spent in pro-
                                                                        also stimulate growth. While the evidence base is
ductive ways that, first, improve health status, and,
                                                                        incomplete, there are a number of studies that
as a result, generate accelerated economic growth.
                                                                        purport to establish a causal link between better
From the perspective of this paper there are two
                                                                        health, greater productivity and economic growth.
crucial issues: (i) the allocation of spending between
                                                                        All of these arguments suggest that neither growth
the health sector and other sectors, and (ii) the pat-
                                                                        nor public spending alone will be sufficient to
tern of spending within the health sector.
                                                                        improve health outcomes. Improving health in low
    In principle, decisions on the sectoral composi-
                                                                        income countries will depend on both of these
tion of public spending should be guided by evidence
                                                                        factors.
on social returns. Unfortunately, there is great un-
                                                                            It is not the purpose of this paper to enter into
certainty about the rate of return on spending in
                                                                        the complexity of the debate about the health
different sectors, in particular in the health sector.
                                                                        impacts of public expenditure. However, from the
There is considerable debate about whether higher
                                                                        perspective of fiscal space a number of observations
public expenditure on health results in improved
                                                                        can be made that may help to guide decision making
health outcomes in low income countries. While
                                                                        on the share of public expenditure allocated to the
some econometric studies find a positive relation-
                                                                        health sector.
ship between public expenditure and health, others
find no statistically significant relationship (see                     •   There will always be a great deal of uncertainty
Roberts, 2003 for a review of these studies). More                          about economic returns to health spending, in
recent studies have found stronger evidence of a link                       particular the financial and taxable returns.
between public expenditure and health indicators,                           Furthermore, there is likely to be a significant
in particular in relation to the benefits of immuni-                        time lag between public investments in health
sation which seems to be particularly sensitive to                          and the timing of economic benefits. In view
differences in government health expenditure. For                           of these uncertainties, which are not unique to
example, Rajkumar and Swaroop (2002) find that                              the health sector, the usefulness of evidence on
higher public expenditure on health lowers infant                           rates of economic or social return in guiding
mortality rates in countries with good governance.                          spending decisions is questionable. However,
Bokhari et al. (2005) find a statistically significant                      further research may help to strengthen the
relationship between public expenditure on health                           evidence base.
and the under-five and maternal mortality rates.                        •   Rates of return to health spending will vary
However, all of these studies show that the effect                          between countries. Much depends on the quality
on health of higher public health spending is rela-                         of governance and the effectiveness of health
tively small.                                                               systems in delivering basic services. In countries
    Despite important exceptions17, most studies find                       with better functioning health systems higher
that health outcomes are more strongly determined                           public expenditures will result in greater improve-
by variations in income levels than variations in                           ments in health indicators. In countries with
public spending on health. Roberts (2003) reports                           poorly functioning health systems, the returns on
that around 75-80% of the variations in health out-                         higher spending may be close to zero. In these
comes between countries are explained by differences                        countries the immediate focus should be on
in GDP per capita (Roberts, 2003). Higher levels of                         reforms to improve service delivery efficiencies
income provide many types of social benefit that                            and equity. Improving providers’ incentives, par-
result in improved health, for example improving                            ticularly to care for poor people, and removing

0  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    incentive distortions are at the heart of improving                     costs of secondary and tertiary care for poor people.
    the returns to additional public expenditure on                         The empirical evidence for the appropriate balance
    health. This will include improving governance,                         is limited. In many low income countries, for reasons
    building capacity and strengthening management,                         discussed above, neither primary nor higher level
    as well as exploiting the comparative advantage                         care is properly financed.
    of different types of provider. Radical rethink-                             Although improvements in the allocation of pub-
    ing may be required on the public role in health                        lic expenditure may be desirable, political pressures
    and the structure of the government health                              often prevent reform. Political elites and non-poor
    workforce.                                                              urban groups, who have a stronger political voice,
•   At the level of individual countries it is possible                     tend to focus their demands on subsidies for secon-
    to make informed judgements about the cost                              dary and tertiary health care. Medical staff often
    of expanding access to essential health services.                       form an influential lobby group, who tend to call
    Such information provides a more practical basis                        for the expansion in the provision of higher level
    for health budgeting than cross country evidence                        health care because of the greater incentives that
    on rates of return to health spending.                                  this provides in terms of salaries, career advance-
•   It is important to ensure that resources are                            ment and the official and unofficial fees paid by
    available for complementary investments in                              patients. There are few organised interest groups
    other sectors that contribute to improved health                        advocating greater provision of preventive and
    outcomes. For example, investments in trans-                            primary health care because the benefits tend to
    port infrastructure may be required to improve                          be more dispersed. This makes a just and efficient
    access to health services.                                              allocation of the government health budget between
•   The opportunity costs of increased public expen-                        levels of service all the more difficult to achieve.
    diture on health need to be considered. It would                             In the context of scaling up aid there is a parti-
    not be desirable to crowd out expenditures in                           cular risk that the additional resources will be mis-
    other sectors that may have a stronger and more                         allocated or used wastefully. When resources are
    immediate impact on growth than health spending.                        more abundant, it is harder for governments to
•   It must also be recognised that the benefits of                         withstand pressures from unions and special interest
    public spending on health should not be viewed                          groups. More generally, it may become more diffi-
    solely in terms of economic returns. As high-                           cult to maintain discipline in spending decisions
    lighted by the Millennium Development Goals                             and to deny funds for bad projects. This underlines
    improvements in health indicators are a benefit                         the importance of strengthening systems of public
    in their own right. Furthermore, public spend-                          expenditure planning and management, budget
    ing on health can provide an important safety net                       monitoring and public accountability as an essential
    for the poor, partially protecting them from the                        condition for scaling up aid.
    risk of incurring catastrophic medical costs.
    The common wisdom is that in many low income                            b. Absorptive capacity
countries public expenditure is misallocated within                         The debate about scaling up aid has also highlighted
the health sector. The bulk of health budgets in                            the question of whether recipient countries have the
low income countries has tended to be directed at                           capacity to absorb large increases in aid flows. The
secondary and tertiary health facilities offering cura-                     term absorptive capacity is not precisely defined,
tive services that mainly provide private benefits to                       but is commonly used to refer to the policy and
small numbers of people. Primary healthcare has                             institutional constraints that prevent additional
tended to be a lower priority, and there has been a                         funds from being used effectively. These include
particular tendency to under-fund promotional,                              the weakness of budgeting systems, failures in
preventative (such as the control of communicable                           public administration, shortages and mismanage-
diseases) and environmental services that generate                          ment of human resources and skills, and broader
public goods, such as a safer health environment,                           governance failures, including corruption.
that benefit everyone, but that individuals are un-                             There is some debate about whether absorptive
willing to pay for. A reallocation of public expendi-                       capacity is a constraint on fiscal space (Heller, 2004).
ture towards primary health care may be justified                           In a strict sense fiscal space is determined by resource
both on equity and on efficiency grounds provided                           availability rather than by absorptive capacity. How-
there is also a way of funding the catastrophic                             ever, absorptive capacity constraints may mean that

                 Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability from the Perspective of the Health Sector   1
governments cannot effectively utilise additional                       Cambodia) governance and expenditure manage-
fiscal space. In the context of scaling up aid, absorp-                 ment constraints were judged to be so pervasive
tion constraints may generate increasing inefficien-                    that major reforms would be needed to precede or
cies and waste. Where aid resources are not invested                    accompany increased funding. In another two cases
productively opportunities to generate fiscal space                     (Benin, Burkina Faso) government procedures were
through economic growth will be missed.                                 found to be over-centralised and bureaucratic, and
    It is difficult to generalise about absorptive capa-                in need of reform in order to permit available fund-
city constraints because the problems vary among                        ing to be spent (Foster, 2004).
countries and between different types of expendi-
ture. Some types of expenditure are amenable to
rapid scaling up, for example the purchasing of                         . Macroeconomic effects of scaling up
drugs and the extension of free service provision.                      It is increasingly recognised that aid inflows have
Funding can also be used to address certain capacity                    significant macroeconomic effects, particularly in
constraints. For example, low public sector wage                        low income, aid dependent countries. There is a
rates and low government sector productivity                            concern that large increases in aid could result in
characterise many health systems in low income                          appreciation of the real exchange rate (Dutch dis-
countries. Additional funding for staff recruitment                     ease) and tighter monetary conditions that would
and salary increases might address these human                          hurt the private sector and, in particular, producers
resource constraints and problems of low levels of                      of tradable goods. These risks may impose limits
motivation among health workers that undermine                          on fiscal space and the extent to which higher aid
the performance of public health services. However,                     flows can be spent without undermining growth.
there is a risk that this would lead to demands for                     This section discusses the macroeconomic effects
wage increases across the public sector, generating                     of aid in general, as well as specific arguments that
broader pressures on fiscal space. Moreover, increased                  apply to the health sector.
pay alone is unlikely to generate productivity gains.                        There are essentially two macroeconomic risks
Fundamental employment, pay and management                              associated with scaling up: (i) real exchange rate
reforms are almost certainly required to ensure                         appreciation, and (ii) crowding out of the private
that enhanced fiscal space is translated into better                    sector. The first risk arises because higher expendi-
quality health services.                                                tures financed by aid may increase demand for non-
    The most difficult absorption problems usually                      tradable and tradable goods. Where the demand
relate to concerns about governance, public account-                    for non-tradable goods cannot be met from spare
ability and the risk of corruption. There are often                     capacity the price of non-tradables relative to trad-
very serious weaknesses in planning and management                      able goods will increase, and the real exchange rate
capacities that prevent resources being delivered                       will therefore appreciate. The second risk occurs
‘on the ground’, where they are needed. Public                          where governments try to avoid these inflationary
institutions often fail to provide incentives to use                    effects by restraining demand, usually by tighten-
resources efficiently and to respond to user demands.                   ing monetary policy. Higher interest rates reduce
Where oversight and financial controls are lacking                      private sector borrowing and thereby constrain
there is a serious risk of corruption18. To a certain                   private sector demand. In this case aid creates fiscal
extent technical assistance funded by donors can                        space for government spending, but only by taking
help to improve systems of public sector manage-                        space away from the private sector. The extent of
ment. However, in most cases there is a need for                        crowding out depends a great deal on whether or
broad ranging public sector reform, which will                          not there is spare capacity in the economy.
depend more on high level political commitment                               Both of these effects have been observed in low
than on donor aid.                                                      income, aid dependent countries. Real Exchange
    A recent study of health financing in 14 countries                  Rate appreciation has been observed in Uganda
found that many types of absorption constraint                          (Adam and Bevan, 2003) and Tanzania (Kweka et al.,
could be addressed through well targeted funding                        2005) during the late 1990s at a time of increasing
and technical assistance. However, the weakness                         aid inflows. No such effect has yet been observed
of governance and public sector management was                          in Ethiopia, but macroeconomic modelling of the
found to be a serious absorption constraint in                          effects of scaling up suggest that Dutch disease
several countries. In two countries (Tajikistan and                     could occur in future under conditions of higher

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
aid flows (Andrews et al., 2005). In Tanzania there                         for health, inasmuch as it is spent on government-
is evidence of a sharp reduction in private sector                          provided, rather than privately-provided services,
credit since the mid 1990s coinciding with a period                         will shift demand from the private to the public
of higher aid inflows (Kweka et al., 2005).                                 sector. In many cases such increases in spending
    There are two main ways that aid can be used                            may be justified, especially where this produces
in order to avoid these macroeconomic risks. First,                         public goods and generates the human capital that
aid can be used to improve economic productivity                            will be required to enable stronger private sector-led
and thereby relieve capacity constraints. Second,                           growth in future, albeit after some time. However,
aid can be used to finance imports, in which case                           the impact on private sector investment and con-
there is no effect on domestic demand. There are                            sumption should always be considered. At a certain
reasons to believe that both of these effects might be                      level of public spending the marginal costs of addi-
observed in the use of development aid for health,                          tional expenditure will exceed its marginal benefits.
in which case the macroeconomic risks would be                              This constitutes an upper limit to fiscal space that
limited.                                                                    no government should exceed irrespective of the
    The productivity effects of health spending                             amount of aid on offer. It is difficult to establish
have been discussed in section 4.1. Although the                            where this limit lies. However, most would argue
evidence on the economic returns to health spend-                           that the poorest countries are some way from reach-
ing is unclear, there is potential for aid financed                         ing this limit. With careful economic management
public expenditures on health to raise labour pro-                          to ensure that scaled-up aid supports improved
ductivity and thereby create additional capacity in                         service delivery as well as growth, fiscal space can
the economy. However, these benefits would not be                           still be expanded.
immediate. In the short term higher public expen-
ditures may create demand pressures before the
additional capacity can be created.                                         . Conclusions
    It has been suggested that a large proportion of                        The general conclusion of this paper is that the
development aid for health would be spent on im-                            potential to use aid to generate sustainable fiscal
ports. The Commission for Macroeconomics and                                space for substantial increases in health expendi-
Health estimates that the import content of required                        tures in low income countries depends crucially
additional expenditures could be as high as 50%                             on the way aid suppliers and its recipients manage
(Commission for Macroeconomics and Health, 2001).                           additional aid flows. Combinations of donor and
However, the Millennium Project has estimated that                          recipient behavior will determine how effectively
the local cost content of additional expenditures                           and durably additional aid will expand fiscal space.
required to achieve the health MDGs would be                                Some of these are summarized in the table 3 below.
around 70-75% (Millennium Project, 2005). Much                              The best combinations suggest that fiscal space can
depends on which additional goods and services will                         be expanded quickly and reliably (Green Zone’); the
be provided. For example, the large scale expansion                         worst that great caution should be exercised until
of ARV treatment programmes would require low                               reforms have shown signs of success (`Red Zone’)
income countries to import substantial quantities
of drugs 19. However, there are good reasons to ex-                         Main priorities for aid donors
pect that the majority of additional health expend-                         Ensuring longer term predictability of aid flows
iture would be spent domestically. Health workers’                          Donors have signaled their intention to increase
salaries are likely to absorb a substantial share of                        aid flows substantially, but recipient governments
additional spending. Furthermore, the type of inter-                        are faced with a great deal of uncertainty about
ventions that would be required to reduce child                             the level of support that they can expect in future.
and maternal mortality would appear to be local                             On the basis of past experience, recipient govern-
cost intensive because they mainly require simple                           ments may be reluctant to increase health expendi-
technologies combined with significant human                                tures, especially where new spending implies long
resource inputs.                                                            term recurrent expenditure commitments. Unless
    These arguments suggest that there is nothing                           donors can provide longer term commitments and
special about public expenditure on health that                             more predictable aid flows, additional aid may not
will reduce the macroeconomic risks of higher aid                           generate much additional fiscal space for health
flows. Substantial increases in public expenditure,                         spending.

                 Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability from the Perspective of the Health Sector   
Table 3 Conditions for the sustainable expansion of fiscal space
                                       Donor policies                                    Recipient policies
 Green Zone                            Donors are able to make long term commit-         Governments have affordable long term
 Far reaching changes in donor         ments to scale up aid                             investment and expenditure plans
 and government behaviour
                                       Donor aid flows are predictable and stable        Increase in aid is accompanied by a stronger
 allow fiscal space to be
                                                                                         tax effor t
 expanded rapidly and
 sustainably                                                                             Governments are able to finance any
                                                                                         residual cash-flow variations

                                       Donors are able to coordinate and harmonise       Governments are able to take responsibility
                                       aid, and thereby reduce recipients’ transac-      for the management of donor aid, and bring
                                       tions costs                                       it on budget

                                                                                         Where justified, governments reallocate
                                                                                         budgets in favour of the health sector

                                                                                         Government health systems are efficient,
                                                                                         effective and equitable

 Amber Zone                            Some progress in increasing the long term         Governments may take on new spending
 Par tial reforms in donor and         predictability of aid and reducing shor t term    commitments that cannot be sustained
 government behaviour allow            volatility.
 some increase in fiscal space,
                                       Some initiatives to improve donor coordina-       Governments do not improve their revenue
 but problems of sustainability
                                       tion and harmonisation, but limited use of        effor t
 remain
                                       budget suppor t.
                                                                                         Governments are unable to fully finance
                                                                                         cash-flow instabilities

                                                                                         Public expenditure management systems are
                                                                                         not yet robust enough to account for aid
                                                                                         expenditure on budget

 Red Zone                              Donors are unable to make long term               Very weak public expenditure management
 Great caution should be exer-         commitments or reduce aid flow volatility
 cised in raising health expenditure
                                       Aid remains highly fragmented and                 Donor spending remains largely off-budget
 until reforms in donor and gov-
                                       projectised.
 ernment policies show success                                                           Governments do not improve their revenue
                                                                                         effor t

                                                                                         Health care providers are not well motivated
                                                                                         or managed

                                                                                         The poor do not benefit from public health
                                                                                         expenditure




Reducing short term aid volatility                                      Coordination, harmonization and alignment
This paper has highlighted the extent of aid vola-                      Uncoordinated, off-budget and projectised aid con-
tility and has demonstrated that this is associated                     tributes little to durable fiscal space. Aid effective-
with significant instabilities in public expenditures                   ness would be increased if aid coordination was
on health. These, in turn, distort resource alloca-                     improved, and the alignment of donor funding
tion and have negative consequences for service                         with national priorities were strengthened. Where
delivery and health outcomes. The risks of short                        conditions allow, the greater use of budget support
term volatility may provide an additional reason                        would be desirable. There are encouraging signs of
for governments to be wary of budgeting on the                          improved donor practice, including the recent Paris
basis of additional aid resources. Donors need to                       Declaration. However, there are contradictory
address the risk that scaling up aid will generate                      tendencies in the health sector, where an increas-
even greater volatility and more disruptive effects.                    ing share of aid is provided through global health

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
initiatives that tend to operate through parallel struc-                    towards primary health care would improve efficiency
tures outside government budgets and management                             and equity.
systems.
                                                                            Addressing absorptive capacity constraints
                                                                            Important capacity constraints arise from organi-
Main priorities for aid recipients                                          zational, managerial and governance weaknesses,
Ensuring fiscal sustainability                                              which may reduce the returns to additional aid and
Ensuring the fiscal sustainability of health expendi-                       public expenditure substantially. In these conditions
tures will be a major challenge for recipient govern-                       it will be important to scale up aid at a measured
ments, particularly low income countries facing                             pace, and to accompany this with institutional and
‘windfall aid incomes’. There is a risk that some                           governance reforms to create conditions where aid
governments will make capital investments that                              can be used effectively.
they cannot fully maintain, take on too many staff
to pay properly, or take on other new spending                              Taking account of the macroeconomic effects of
commitments that prove to be unaffordable and                               higher aid inflows
unsustainable in the long term. On the other hand                           There are macroeconomic risks associated with
concerns about the unpredictability and unreliabil-                         scaling up aid, in particular real exchange rate
ity of aid flows may cause some governments to be                           appreciation and the crowding out of private sector
overly cautious about using additional aid to aug-                          investment. Development aid for health is no differ-
ment health expenditures financed from domestic                             ent to other types of aid in this respect. In many
resources. The key to ensuring fiscal sustainability                        cases it will still be justified to increase donor sup-
is for recipient governments to take a long term                            port to the health sector, in particular where this
view of expenditure commitments, growth and                                 supports expenditures that provides the public goods
mobilizing domestic revenues.                                               and generates the human capital that will be required
                                                                            to enable private sector-led growth in future. How-
Using aid productively                                                      ever, the impact on private sector investment and
In the long term the main source of additional fis-                         consumption should always be considered. At a
cal space will be economic growth. It is therefore                          certain level of public spending the marginal costs
crucial that recipient governments use aid in produc-                       of additional expenditure will exceed its marginal
tive ways. Careful judgements will need to be made                          benefits. This constitutes an upper limit to fiscal
on the allocation of public expenditure between and                         space that no government should exceed irrespec-
within sectors taking into account the best available                       tive of the amount of aid on offer. It is difficult to
evidence of the impact of public expenditure on                             establish where this limit lies. However, most would
human development and economic growth. The                                  argue that the poorest countries are some way from
central challenge will be to improve the efficiency                         reaching this limit. With careful economic manage-
of health systems to ensure that higher spending                            ment to ensure that scaled-up aid supports both
will generate improved health outcomes. In many                             improved service delivery and growth, fiscal space
cases reallocating resources within the health sector                       can still be expanded.




                 Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability from the Perspective of the Health Sector   
References                                                              Keefer, Philip and Stuti Khemani (2005) Democracy,
Andrews, D., Erasmus, L. and Powell, R. (2005)                          Public Expenditures, and the Poor: Understanding
“Ethiopia: Scaling Up”, Finance and Development                         Political Incentives for Providing Public Services,
42(3), IMF                                                              Research Observer Vol 20, No 1, Spring 2005 The
                                                                        World Bank
Bokhari, F.A.S., Gottret, P. and Gai, Y. (2005) Govern­
ment Health Expenditures, Donor Funding and Health                      Kweka J., Ngowi, D., Musa J. and Rutasitara L. (2005)
Outcomes, forthcoming                                                   The Macroeconomic Impact of Scaling up Aid Flows: The
Bulir, A. and Hamann, A.J. Volatility of development                    Case Study of Tanzania, Report prepared for ODI
aid: From the frying pan into the fire, IMF Working                     Lawson, A., Booth, D., Msuya, M., Wangwe, S. and
Paper. Draft February 2005                                              Williamson, T. (2005) “Does General Budget Sup-
Commission for Macroeconomics and Health (2001)                         port Work? Evidence from Tanzania”. ODI Briefing
Macroeconomics and health: Investing in health for eco­                 Paper
nomic development                                                       Lewis, M. (2005) “Addressing the Challenge of HIV/
DFID (2002) General Budget Support Evaluability                         AIDS: Macroeconomic, fiscal and institutional issues”,
Study: Final Synthesis Report, Department for Inter-                    Working Paper 58, Center for Global Development
national Development                                                    McGillivray, M. and Morrisey, O. (2001) “Fiscal Effects
Fagernäs, S. and Roberts, J. (2004) “The Fiscal Impact                  of Aid”, WIDER Discussion Paper 61, Helsinki
of Aid, A Survey of Issues and Synthesis of Country                     Michaud, C. (2003) Development Assistance for
Studies on Malawi, Uganda and Zambia”, ESAU                             Health: Recent Trends and Resource Allocation, Paper
Working Paper number 11, ODI                                            Prepared for the Second Consultation of the Com-
Foster, M. (2004) MDG­Oriented Sector and Poverty                       mission for Macroeconomics and Health, WHO
Reduction Strategies: Lessons from Experience in Health,                Geneva
Report prepared for Abuja High Level Forum on                           Rajkumar, A.S. and Swaroop, V. (2002) “Public
the Health MDGs.                                                        Spending and Outcomes: Does Governance Matter?”,
Gupta, S., Clements, B., Pivovarsky, A. and Tiong-                      World Bank Policy Research Working Paper 2840.
son, E.R. (2005) “Foreign Aid and Revenue Response:                     Roberts, J. (2003) “Poverty Reduction Outcomes in
Does the Composition of Aid Matter?” in S. Gupta,                       Education and Health Public Expenditure and
B. Clements and G. Inchauste (eds.) Helping Countries                   Aid”, Working Paper 210, Centre of Aid and Public
Develop: The Role of Fiscal Policy, IMF forthcoming                     Expenditure, ODI
Hay, Roger (2003) “The `Fiscal Space’ for Publicly                      Millennium Project (2005) Investing in Development,
Financed Healthcare”, OPI Policy Brief No 4                             A Practical Plan to Achieve the Millennium Development
(www.opi.org.uk)                                                        Goals
Heller, Peter, 2005, “Understanding Fiscal Space,”                      World Bank (2005) Health Financing Revisited,
Policy Development Paper 05/4, IMF                                      HDNHE, forthcoming.




  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
                                                                                                                                              5
FISCAL SPACE AND SUSTAINABILITY:
TOWARDS A SOLUTION FOR THE HEALTH SECTOR
By Mick Foster, Paris, November 2005




Executive Summary                                                            selling IMF gold, or making a special issue of IMF
Reaching the MDGs in low income countries will                               Special Drawing Rights (SDRs). These ideas will be
require substantial increases in public expenditure                          difficult to negotiate and will be of only limited
that can only be financed with much higher develop-                          help to a Government wishing to know how much
ment assistance sustained over many years. Donors                            aid it will receive. More secure global aid could be
have responded by promising big aid increases, with                          used to make longer term country commitments,
global aid expected to increase by over 60% between                          but at present the global figures have not been
2004 and 2010 while aid to Africa is expected to                             allocated to individual countries.
double. The fundamental problem addressed in                                     One way to give countries assured long-term
this paper is that donor commitments to individual                           access to increased aid is by providing the funding
countries remain short-term and highly conditional                           in advance and irrevocably. Debt relief is the only
and do not come close to reflecting these global                             form of irrevocable long-term funding that has
promises of increased aid, while donor disburse-                             been used on a large scale in developing countries
ment performance remains volatile and unreliable.                            (1.1), but it cannot provide sufficient support to
Governments are therefore understandably reluc-                              some of the countries of greatest concern. Other
tant to take the risk of relying on increased aid to                         forms of payment in advance have been proposed,
finance the necessary scaling up of public expendi-                          but are not attractive to donor countries that have
ture. The paper discusses options for addressing                             their own budget constraints, and wish to retain some
five issues that are critical to tackling the problem.                       leverage on the future behaviour of aid recipients.
The options, and their advantages and disadvan-                                  The obvious way to change recipient govern-
tages, are summarised in a matrix table after this                           ment assumptions about future aid levels into line
Executive Summary (Table 1). References are to                               with donor promises is for donor agencies to make
lines in the table.                                                          long term commitments setting out their intended
                                                                             level of aid to each country (1.2). A rolling forward
Issue 1: What can be done to encourage govern-                               pipeline of five to ten years, combined with assur-
ments to reflect donor promises of increased aid                             ances that adjustments beyond that date would be
in their expenditure plans?                                                  at a moderate pace, would probably give sufficient
Recipient country governments need to believe that                           assurance, if the commitments could be believed.
donors will increase aid and maintain it at the higher                       Confidence in commitment and disbursement
level before they will assume it in their expenditure                        promises might be improved by transparent donor
plans. At present, countries tend to include only                            reporting, with explicit advice on the nature of the
formal donor commitments in their budgets and                                risks of under-disbursement.
Medium Term Expenditure Frameworks (MTEFs),                                      Unfortunately, long term commitments of future
and countries such as Uganda discount even formal                            aid are difficult for many donor governments, who
commitments reflecting the past experience of                                face legislative constraints, and cannot commit their
incomplete and delayed disbursement.                                         successors (1.2). Donors also wish to retain some
   Ideas under discussion internationally mainly                             flexibility to react to events, and are reluctant to tie
focus on making the promised increase in global                              up a significant share of their budget in long-term
aid more certain, and less dependent on annual                               commitments. Even multilateral agencies reward
donor budget allocations (1.5). Proposals for financing                      staff more for eye catching new initiatives than for
increased aid include borrowing on international                             sound management of existing commitments.
capital markets (the proposed International Finan-                           Although some bilateral donors have given long-
cing Facility, IFF), hypothecating taxes on air travel,                      term indications of support, these are less binding

                   Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability: Towards a Solution for the Health Sector   
than formal commitments, and have in practice been                      additional, and may distort spending priorities as
subject to interruption due to policy differences and                   donor funds are withdrawn from other areas. For
governance concerns. The most that is currently on                      example, a government spending just $10 per head
offer from individual donors is non-binding assur-                      on health, half of which is donor funded, is un-
ances of ‘best efforts’ to maintain aid beyond the                      likely to choose comprehensive HAART treatment
medium term, which is not a secure foundation for                       unless it is confident that the resources to finance
financing a long-term commitment to higher public                       it are additional and do not reduce the aid available
expenditure.                                                            for basic health programmes. To minimise the
    Collective donor assurances, with the donor                         risks to both sides, it is helpful if expenditures are
group as a whole undertaking to ensure that the                         part of an understanding on public expenditure as
required level of external finance is forthcoming,                      a whole, and how it will be financed from domestic
have been tried, but with only limited success (1.4).                   and foreign sources. This takes us back to the need
It has proved difficult to mobilise additional fund-                    for longer term commitments of total aid to the
ing in the amounts and at the times required to                         government budget as the only way to ensure aid
offset the impact of aid falling short of expected                      additionality.
levels. Donor assurances are unlikely to be believed,                       If little can be done to extend longer term com-
given the past record of aid volatility and of disburse-                mitments to countries, there may at least be scope
ments falling short of commitments.                                     to help governments make realistic assumptions as
    Donors have historically found it easier to make                    to the aid they are likely to receive. Improved donor
longer term commitments to specific expenditure                         reporting, and the publication of improved long-
programmes or projects (1.3). In cases where long-                      term forecasts of global aid, would help countries to
term obligations are incurred by a government as                        make realistic assumptions. This needs to happen
a result of donor urging, there can be a compelling                     in country, but the realism of country level assump-
moral case for guaranteeing that the funding will                       tions could be improved by better international
not be abruptly withdrawn. Anti-Retroviral Treat-                       reporting and forecasting. Publication of commit-
ment for HIV/AIDS sufferers is the most important                       ment and disbursement data by donor would also
example, where ethical considerations require                           help pro-aid lobbyists place pressure on individual
treatment to be maintained for the life of the patient.                 donors to fulfil their promises. Governments can
Commitments could also be made to a specific                            manage the uncertainty (and lobby for increased
sector, or to a defined sub-set of the budget, such                     aid) by preparing more than one scenario, showing
as the EC proposal to provide longer term funding                       how extra aid would be used. However, none of
to support government spending on the Millennium                        these measures are an adequate response to the
Development Goals.                                                      fundamental problem that it is risky to use short-
    Long-term commitments to specific programmes                        term and volatile aid commitments to finance stable
in a country could be conditional on the prepara-                       long-term expenditure obligations.
tion of credible plans to achieve specific outcomes,                        In addition to the discussions on measures to
and would need to be based on an understanding                          increase long-term aid, there has also been discus-
as to how the programme will be financed, and how                       sion on how to address the problem from the other
it will be adjusted and rolled forward over time. This                  side, for example by reducing the cost of procure-
would provide a way to avoid a ‘Catch 22’ problem                       ment of medicines and other supplies by global
where aid is low because plans are un-ambitious,                        subsidies and advance bulk purchase. This can have
while plans are un-ambitious because of uncertainty                     a significant and very positive impact by reducing
over the aid available.                                                 the scale of the funding shortfall that needs to be
    If there is no agreement on overall public                          bridged.
expenditure priorities, the risk to donors is that the
expenditure may not be additional, but will enable                      Issue 2: How can longer-term commitments be
a government to redirect domestic revenues to                           reconciled with aid effectiveness?
other purposes such as defence. Donors can limit                        There is a fundamental inconsistency between the
this risk by disbursing their aid for the specific pro-                 long-term spending programmes that require sup-
gramme on condition that government spending                            port, and the short term conditionality used by
exceeds some threshold level. It is far more difficult                  donors to ensure aid effectiveness (2.1). Governments
to address the serious risk to government that aid                      know what they must do in order to meet the terms
allocated to a specific programme may not be                            of current aid agreements, but must gamble on

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
their ability to continue satisfying the donors                            though greater transparency might help to ensure
through a series of future agreements, the terms                           that misunderstandings do not cause avoidable aid
of which are currently unknowable.                                         suspensions (2.6). The proposed ‘swing donor’ role
    Abandoning conditionality entirely, in favour of                       might, however, provoke objections from bilateral
a needs based ‘entitlement’ approach to aid alloca-                        donors reluctant to see the results of their bilateral
tion, would have the advantage that populations                            allocation decisions undermined.
would not be penalised for the failures of their gov-                          If the main concern is to achieve and sustain the
ernments. However, the aid effectiveness literature                        MDGs, funds could be allocated to specific sector
suggests that such an approach would result in aid                         or sub-sector programmes, with only sector-level
being wasted in environments where it can not be                           conditions (2.4). Long-term programmes need to
effective – though it is arguable that the negative                        adapt to changing circumstances, and longer-term
effects of a weak environment might be somewhat                            conditions would need to focus on process (how
reduced if aid is committed longer term and is                             future decisions will be made) rather than seeking
available to address some of the recurrent cost                            to specify the policies and spending programme in
constraints (2.2).                                                         detail. There would be a graduated response to poor
    As an alternative, aid could be allocated based                        performance or policy disagreements:- analysis,
on a model that takes account of indicators meas-                          dialogue, and more restrictive conditions for access
uring the quality of policy and institutions, and                          to aid would be the first recourse, with reduced
development outcomes, as well as needs. There                              commitments or partial suspension only in extreme
would be no policy conditionality, but aid levels                          cases. The approach requires a high measure of
would respond over time to changes in the indica-                          mutual trust, though the experience of the longer-
tors, at a speed that a government can adjust to,                          running Sector Wide Approaches suggests that it
with opportunities to discuss how a higher aid path                        may be workable, if all partners are prepared to
could be re-established (2.3). The Country Policy                          work through disagreements. As with the overall
and Institutional Assessments (CPIA) already pro-                          aid allocation model, aid funding would maintain
duced by the World Bank could perhaps be devel-                            a medium-term pipeline of commitments, with
oped as the basis for such a system. The approach                          spending adjusting slowly to changes in sector
could be applied by individual donors in respect of                        performance, and with an implicit donor commit-
their own aid, or could be the result of agreement                         ment to continue supporting the sector into the
between donors, possibly with a lead donor agency                          long term future (2.5).
such as the World Bank identifying and publicising
aid requirements, and itself acting as a ‘swing donor’                     Issue 3: Should external aid support the
to offset biases in global aid allocation. If perform-                     government plan?
ance declines, aid cuts would be pre-announced,                            There needs to be a single overall policy and plan-
introduced slowly and based on explicit criteria.                          ning framework for public expenditure on health,
Any cuts would also be accompanied by dialogue                             although that plan may allow for diversity of funding
on how a higher aid path might be re-established.                          and of service providers, may be very decentralised,
    The advantage of such an approach would be                             and may include a range of experimental and pilot
greater certainty about aid in the medium-long                             projects. The importance of an overall framework,
term, and reduced risk of short-term volatility. If                        however, is to prioritise interventions that have the
the indicators include a stronger focus on outcomes,                       largest positive health impact for the funds allocated,
the approach would also improve country owner-                             and to minimise inequalities in what services are
ship, by allocating aid more on the basis of what it                       available, and who has access to them. Aid that is
is achieving rather than whether a government                              used to fund expenditures that are outside the gov-
agrees with the donors. The swing donor role could                         ernment plan may displace spending that the gov-
also help to improve the quality of aid, since coun-                       ernment would have preferred. They will normally
tries would have less incentive to accept aid with                         have lower ownership and be less sustainable, and
strings attached if any shortfall is likely to be made                     will often be of lower value for money than the
up by other donors. The approach would require                             planned activities they displace. If the aid is addi-
investment in a robust and credible indicator frame-                       tional to existing public expenditure plans, and on
work. Such an approach will not prevent donors                             a large scale, it may have implications for the macro
reacting quickly to political or governance concerns,                      economy, potentially squeezing out private sector

                 Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability: Towards a Solution for the Health Sector   
spending, especially if expenditure is on local costs.                     Volatility may be caused by absorptive capacity
These considerations carry less weight in fragile                       problems. Use of harmonised procedures based
states, where donors carry more responsibility for                      on existing processes of the recipient government,
co-ordination.                                                          together with support to reform public expenditure
                                                                        management, can ensure that donors are not the
Issue 4: How can the costs of aid volatility be                         cause of low disbursement (4.3, 4.4).
reduced?
Although the lack of long-term commitments is                           Issue 5: How can countries insure against donor
the more fundamental problem, the high volatility                       non-performance?
of aid flows poses problems for short-term macro-                       These measures may not be sufficient to persuade
economic and budget management. Volatility in                           governments to take the risk of relying on aid to
project disbursements does not cause a financing                        significantly increase their public expenditure obli-
problem, because the funds and the subsequent                           gations. It is not enough for donors to ensure that
expenditure usually move together. Volatility may                       the promises they have made will be delivered, they
require attention to building absorptive capacity,                      must also persuade partner governments that those
but does not create a financing problem. It is vola-                    promises can be relied on - a difficult task given the
tility in budget support that creates the problem.                      long history of volatile aid that falls short of prom-
     Best practice approaches to budget support try                     ised levels.
to address the problems by medium-term indica-                              In order to provide the required assurances, a
tions of support, earlier commitment in time for                        DFID-funded study proposes the establishment of
budget preparation, disbursement early in the                           an Aid Guarantee Facility that poor and highly aid
budget year, and reduced conditionality applied to                      dependent countries could draw on if donors do
the following year’s commitment to avoid inter-                         not fulfil promises of increased aid. It could also
rupting the current budget, with only a portion of                      be drawn on to slow any decline in aid in order to
funding at risk from policy failure in any one area                     give more time to manage the consequences. The
of performance (4.1). None of these measures can                        guarantee would be limited to budget and pro-
prevent occasional interruptions due to political or                    gramme support, ensuring that aid shortfalls do not
governance conditionality, although efforts are                         create financing gaps in the Government budget.
being made to set out the issues of concern more                        The fund would not guarantee 100% of donor
explicitly, and to ensure through dialogue that both                    promises, but would limit the extent to which
sides are informed of the likely impact of their                        increases in aid fall short of expected levels, while
decisions on aid flows.                                                 ensuring that higher aid levels, once achieved, are
     Despite these measures, budget support remains                     not abruptly withdrawn. The effect of slowing the
very prone to interruption, because it is the easiest                   rate of decline will be equivalent to providing a
form of aid to cut, and (more positively) it is the                     longer term commitment with a slow taper from
easiest to increase when additional funds become                        the peak, and could be an important additional
available. It is therefore important to help govern-                    assurance for finance ministers worried about the
ments to manage volatility, through full and accu-                      vulnerability of donor flows.
rate reporting and monitoring of aid flows, and by                          The cost would depend on the number of coun-
supporting active use of larger foreign exchange                        tries to be covered, the definition of the guarantee
reserves for smoothing the impact on expenditure.                       to be given, and the risk that donors do not fulfil
The use of foreign exchange reserves for smoothing                      their own promises. Establishing the fund would
public expenditure is difficult because high reserves                   thus in itself be a declaration of seriousness on
are a temptation to politicians who face spending                       behalf of the donors. The risks would be managed
pressures, while budget managers will find it hard                      by ensuring that there is transparency as to the
to distinguish between temporary aid shortfalls                         causes of any shortfalls (to encourage civil society
that can be smoothed by drawing down reserves,                          to lobby donors not meeting their commitments),
and longer-term reductions that require adjustments                     with reviews of prolonged or heavy use. Access
to expenditure plans. Recognising that volatility                       would be suspended in the event of catastrophic
cannot be eliminated, improved monitoring and                           events such as major human rights abuses, but
increased use of foreign exchange reserves to man-                      with an independent panel assessing the case for
age budget fluctuations can be helpful in mitigating                    suspending access to give governments assurance
the consequences (4.2).                                                 that arbitrary decisions will be avoided.

0  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    The proposed fund would need to be used to                                  The proposal requires further study, but could
smooth budget support as a whole. A specific fund                            be an important reinforcement of stated donor
for health would be difficult, given the problems                            intentions to increase global aid. Fuller details are in
of defining what portion of budget support assists                           section 5, and a response to the comments received
the sector.                                                                  on the proposal is at Annex 1.


Table 1 Summary of problems and options for addressing them
       Possible approaches to a solution               Benefits                                          Constraints and disadvantages
 1     Governments are assuming far less aid than donors have promised, leading to un-ambitious health & 
       other public expenditure plans that will fall far short of the MDGs. 
 1.1   Pay irrevocably in advance, e.g.                Assured long-term flow of additional              Does not reflect relative need, no
       through deeper debt relief.                     resources.                                        redress if misused.
 1.2   Longer-term donor commitments to                If commitments are believed, countries            Legislative constraints, inability to
       suppor t Government spending plans.             can plan and budget to meet long-                 commit successors, reduced flexibility
                                                       term goals with more confidence.                  to respond to events.
 1.3   Long-term commitments to specific               Long-term commitment to specific                  No guarantee that the aid, or the
       spending programmes conditional on              MDG goals is easier to justify, allowing          expenditure it finances, is additional,
       credible plans to achieve specific out-         the co-ordination of ambitious plans              unless there is agreement on the
       comes, joint review and decision taking.        and resources to implement them.                  overall budget and how it is financed.
 1.4   Collective donor commitments to                 If the collective commitment is cred-             Has not worked. Problems and delays
       ensure financing gaps in approved               ible, risks are reduced in implementing           in identifying need and mobilising
       programmes are met, ‘swing donors’              challenging spending plans and aid                resources, donors are reluctant to
       compensate aid orphans, offset shor t-          allocation improves.                              compensate for aid shor tfalls that are
       falls.                                                                                            deliberately imposed.
 1.5   Make global aid less dependent on               If agreed, the probability of realising           Time consuming negotiation with
       annual budget allocation: e.g. the IFF,         long-term donor commitment to                     uncer tain prospects of success. May
       the earmarking of aviation or other             increased aid rises.                              not help individual country predict-
       taxes to fund aid increases, IMF gold                                                             ability.
       sales or SDR issue, longer-term multi-
       lateral agency funding.
 1.6   Produce global aid forecasts based on           Permits more realistic country plan-              Closer monitoring may increase reluc-
       fuller repor ting of donor intentions           ning. Helps civil society hold donors             tance to commit. Requires judgement
       and performance to DAC.                         accountable. Identifies where aid                 on realism of promises. Need to
                                                       should increase.                                  separately identify aid to individual
                                                                                                         governments.
 1.7   Produce more than one aid scenario              Persuade donors to increase aid, by               Additional effor t required may
       for PRSPs and sector plans, to show             showing it can be well used. Helps                de-motivate staff if funding is not
       what extra aid could achieve.                   prioritize.                                       for thcoming.
 1.8   Reduce the cost of procurement of               Reduces the scale of the funding                  Reduces the scale of the problem, but
       medicines and other supplies by global          shor tfall that needs to be bridged.              does not solve it.
       subsidies and advance bulk purchase.
 2     Governments need long-term funding, but donors need to ensure aid effectiveness 
 2.1   Current approaches: aid is shor t to            Donors can cut aid if it is not used as           Does not provide the assured long-
       medium term in nature, subject to               agreed. Govt knows the minimum                    term funding that is needed, because
       frequent (usually at least annual)              shor t-term conditions it must meet,              long-term aid levels depend not only
       review and rolling forward.                     but aid can still be cut for other                on existing agreements, but on nego-
                                                       reasons (e.g. governance).                        tiating future ones.
 2.2   ‘Entitlement’: unconditional aid, based         People not penalised for Govt failures,           Ignores evidence that aid achieves
       on need, sustained whatever the Govt            MDGs are pursued equally everywhere.              less in difficult environments.
       does (though possibly via NGOs).
 2.3   Aid allocation model: adjust aid over           Limits poor use of aid in medium                  Use of CPIA-style indicators can not
       time to assessments of policy, institu-         term, while assuring the country that             avoid some donor subjectivity – political
       tions and outcomes, either by donor             aid availability will change at a speed           upsets may still provoke aid cuts.
       consensus or by ‘swing donors’                  they can adapt to. Swing donor role               Bilaterals may object to ‘swing donor’
       adjusting their aid to offset contrary          helps drive out poor quality aid.                 offsetting the impact of their policies.
       trends by others.



                   Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability: Towards a Solution for the Health Sector   1
         Possible approaches to a solution             Benefits                                      Constraints and disadvantages
 2.4     ‘Sector Blueprint’ approach: Donors           Specific inputs agreed in the MOU             Long-term plans need flexibility to
         make specific commitments to finance          are guaranteed provided the pro-              adapt. Tends to favour investment
         a medium-term expenditure plan for            gramme is implemented as set out in           rather than recurrent costs. Fragments
         a sector or sub-sector.                       programme documents.                          budget management.

 2.5     Longer-term (5+ years) commitments            Suppor t depends only on sector               Long-term aid commitment may
         linked to rolling plan & joint institu-       progress, with graduated response to          reduce pressures for reform. Requires
         tional arrangements to achieve specific       problems: analysis, dialogue, restric-        mutual trust and commitment to joint
         outcomes (e.g. related to a specific          tions on use, lower commitments, and          decision-making. May distor t spending
         sector or MDG)1 with assurances of            finally suspension of par t of aid in         priorities if not par t of an overall
         continued funding in long-term (10+           extreme cases. Builds on SWAP best            agreement on budget and aid levels.
         years) if performance is OK.                  practice.

 2.6     Greater clarity on donor political and        Reduces a major cause of uncer tainty         Donor political pressures over-ride
         governance concerns, and increased            and reluctance to increase aid                formal agreements and cannot be con-
         dialogue so decisions are made with           dependence.                                   trolled. There may be more scope for a
         knowledge of aid consequences.                                                              systematic approach to multilateral aid.

 3       Aid disbursements may be earmarked for expenditures outside the Government plan

 3.1     Fill gaps in Govt PRS as first call on aid.   Resources can be prioritised in support       Govt and donor priorities may not
         Collective Govt and donor decision-           of sustainable plan to achieve the MDGs.      coincide. In fragile states, donors may
         making on spending priorities, including                                                    need to assume more co-ordination
         both financial and TA suppor t.                                                             responsibility.

 4       Short-term aid volatility disrupts implementation of expenditure programmes

 4.1     Best practice approaches: medium              More reliable planning basis for MTEF,        Donor commitment still shor t-term,
         term indications of future aid, co-           earlier star t to budget implementa-          not enforceable, depends on subjec-
         ordinate with budget preparation,             tion, less disruption from delayed aid.       tive assessment, and can be suspended
         disburse early, no interruption within        Applying conditions to future commit-         for reasons not set out in the agree-
         the budget year, limit the share of aid       ments not current budget gives more           ment. Danger of volatility in year t+1
         that is subject to conditions on any          time to adjust spending obligations.          if all donors reduce funding when e.g.
         one area of performance, active aid           Avoids complete ‘stop go’.                    IMF review is delayed.
         repor ting, use Govt procedures.

 4.2     Improve aid monitoring, use larger            Reduced cost of volatility.                   Donors may resist use of aid for reserve
         foreign exchange reserves to offset                                                         build-up. Managing reserves is hard
         volatility, and prioritize spending to                                                      given spending pressures and uncer-
         avoid across the board cuts.                                                                tainty over duration of aid shor tfall.

 4.3     Improve Govt absorptive capacity:             Can improve disbursement, and help            Needs committed leadership to address
         capacity building, decentralized              motivate staff to deliver services.           motivation, overcome institutional
         management, public expenditure                                                              rivalries. Time needed to train skilled
         management reforms.                                                                         staff willing to work in remote areas.

 4.4     Donors use simpler, harmonized                Improves disbursement and aid effec-          Institutional and political constraints
         procedures based on those of                  tiveness, releases Government                 for some donors.
         Government.                                   capacity.

 5       Stronger assurances less dependent on continuing donor good will be needed to convince Governments 
         to assume the risk of ambitious aid dependent expenditure programmes

 5.1     Establish a facility to guarantee mini-       Automatic access to a facility guaran-        Relevance depends on first commit-
         mum ODA suppor t to Govt budget               teeing a floor level of aid greatly reduces   ting higher aid to countries. Needs
         in aid-dependent low-income                   the risk of using aid to finance higher       design, appraisal and negotiation.
         countries.                                    public spending.

 5.2     Sector guarantee fund.                        A sector guarantee fund on broadly            Hard to design a simple scheme able
                                                       similar lines might prove easier to           to address problems of fungibility and
                                                       establish.                                    distor ted priorities.

 5.3     Include in the design a transparent           Reassure donors that the facility will        Review panel and process needs to
         and independent review process with           not support countries guilty of human         command the suppor t of Govt and
         representation from low-income                rights abuses or egregious corruption,        donors.
         countries to determine the appropri-          while reassuring Governments that
         ate response to fundamental political,        aid will not be withdrawn without
         governance or human rights issues.            good reason.



  High Level Forum on the Health Millennium Development Goals     Selected Papers 2003–2005
1. Introduction                                                            cost is already absorbing funding equal to or greater
This study was commissioned by the High Level                              than the pre-existing total health budget5.
Forum to identify the issues surrounding the com-                              The problem is that governments in low income
mitment and predictability of aid and its impact                           countries are understandably reluctant to embark
upon budget management in order to plan and                                on ambitious plans for expanding their health sec-
implement a scaling up of health sector expenditure                        tors without reasonable assurances that the funding
financed by additional aid and to map out the param-                       is in place to sustain the expanded services.
eters of possible solutions.                                                   This report discusses possible approaches to five
    In many low income countries, reaching the                             questions that need to be addressed if governments
health MDGs will require an increase in public ex-                         are to rely on aid to fund the substantial increases
penditure on health that is far beyond what can be                         in expenditure that will be needed:
financed from domestic sources – even on optimis-                          i. Governments are assuming far less aid than
tic assumptions as to economic growth, resource                                 donors have promised, leading to un-ambitious
mobilisation, share of public expenditure devoted                               health and other public expenditure plans that
to the health sector, and the effectiveness with which                          will fall far short of the MDGs. What can donors
public health spending is used. The problems related                            do to persuade Governments to base their plans
to aid dependence are mainly concentrated in Africa,                            and budgets on the higher aid levels that donors
which contains all 12 of the countries where donor                              say they intend to provide?
support finances more than 35% of total public                             ii. How can the government need for reliable long-
health expenditures2. The Commission for Africa                                 term funding be reconciled with donor require-
estimates an immediate requirement for an addi-                                 ments to ensure that aid is used effectively and
tional $10bn per annum of donor support to health,                              can be withdrawn if governments misuse it or
on top of any increases in governments’ own con-                                are guilty of human rights abuses or other behav-
tributions, rising to an additional $20bn per annum                             iour that donors find unacceptable?
by 2015. Additional health spending represents 40%                         iii. A large share of aid disbursements are used for
of the total increase in aid called for by the CFA,                             expenditures that do not form part of govern-
which advocates an additional $25bn p.a. to Africa                              ment plans to achieve the MDGs and do not
by 2010, with a further $25bn by 2015, subject to a                             help to fill funding gaps. What are the implica-
review of effectiveness3.                                                       tions for ‘fiscal space’, and what can be done to
    According to the OECD, the commitments of                                   address them?
the G8 and other donors are broadly consistent                             iv. What can be done to reduce short-term aid
with this. They are expected to lead to an increase                             volatility, and avoid it disrupting government
of ODA to Africa by $25bn by 2010, more than                                    expenditure programmes and undermining
doubling aid compared to 2004 figures. The OECD                                 their effectiveness?
estimates that official development assistance to all                      v. Stronger assurances, less dependent on contin-
developing countries will increase from $80bn in                                uing donor goodwill may be needed to convince
2004 to nearly $130bn in 20104.                                                 governments to assume the level of risk implicit
    The majority of the incremental costs that need                             in ambitious aid-dependent programmes. How
to be financed represent long-term recurrent cost                               might such assurances be given? The paper
obligations from which a government cannot easily                               summarises proposals in an earlier DFID-funded
exit without incurring substantial economic or                                  report to establish an Aid Guarantee Facility for
political costs. Delivering the expanded package of                             underpinning global aid6.
health interventions needed to achieve the MDGs
will require extra staff to be recruited, trained, and                        Throughout the paper, reference is made to row
paid at rates that may need to be significantly in-                        numbers in Table 1, which summarises the advan-
creased in order to attract, motivate and retain them.                     tages and disadvantages of options for dealing with
Additional facilities from which outreach can be                           each of these issues.
organised and services delivered imply incremental
costs to operate and maintain them if the invest-
ment is not to be wasted. Obligations to treat HIV/
AIDS patients require a life-time funding commit-
ment, and in heavily affected countries the treatment

                 Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability: Towards a Solution for the Health Sector   
What can be done? Issues and options                                    plans on resource assumptions that are far less than
                                                                        is required to meet the MDGs, and far less than is
. Encouraging governments to reflect                                   potentially available. Moreover, in the absence of
donor promises of increased aid in                                      more ambitious plans, any additional sums that
their expenditure plans                                                 are made available by donors are less likely to be
a. The problem                                                          well spent.
Although donors have promised increased aid at
the global level, this is not reflected in commitments                  b. Payment in advance
to the expenditure programmes of individual coun-                       One way to address the problem is by providing
tries. Aid commitments to countries are short-term,                     the funding in advance and irrevocably. Debt relief
with indications of future aid levels rarely stretching                 is the only form of irrevocable long-term funding
beyond three years. This is clearly insufficient – the                  that has been used on a large scale in developing
scaling up of expenditure that is required in low-                      countries (1.1), but (though welcome) it can not
income aid dependent countries will only be sus-                        provide sufficient support to some of the countries
tainable if the increased aid is maintained for many                    of greatest concern. Other forms of payment in
years, well beyond the planning horizon of most                         advance have been proposed, such as payment into
aid programmes7.                                                        some form of ‘endowment’ fund that would be
    Even the medium-term indications provided by                        invested in international capital markets and drawn
donors tend to be relatively conservative. Donors                       on to finance future expenditures9. The endow-
are usually reluctant to disclose future aid intentions                 ment fund approach fails on a number of practical
before formally signing agreements, for fear of                         grounds, the most important of which is that Min-
being criticised if subsequent budget cuts become                       istries of Finance in donor countries are unlikely
necessary. A common pattern is for forecasts of                         to be attracted to payment in advance of need.
donor aid to over-estimate disbursements in the                         Indeed, the proposed International Finance Facility
coming year, due to implementation optimism, but                        takes the exact opposite approach of borrowing on
to show a declining future aid pipeline by including                    international capital markets in order to defer the
only those activities that have been firmly identified8.                cost of expanding aid flows.
This produces over optimistic assumptions for the
coming budget, leading to a chronic problem of                          c. Long-term commitments
under achievement in budget implementation, but                         The obvious way to shift government assumptions
excessively pessimistic forecasts of the longer term                    about future aid levels into line with donor promises
outlook, leaving little or no scope for more ambi-                      is for donor agencies to make long term commit-
tious plans.                                                            ments setting out their intended level of aid to each
    Ministries of Finance in aid dependent Africa                       country (1.2). If the commitments are believed,
have recent experience of the problems caused by                        countries can plan to meet long-term goals with
excessive budget deficits. Some are still struggling                    confidence that funds will be available. It is unreal-
to establish macro-economic stability and budget                        istic to aim for commitments covering the twenty
discipline, and habits of prudent economic manage-                      years or more for which increased aid may need to
ment remain fragile even in countries with a rela-                      be sustained10. A possible alternative would be to
tively long track record of improved macro-economic                     combine a five to ten year commitment with assur-
management. An important part of the struggle                           ances that, at the end of that period, the donor will
has been to move away from ‘needs based’ plans                          make every effort to limit the speed of reductions
that were never implemented towards prioritised                         in aid to a gradual pace to which countries can
plans and budgets based on a realistic assessment                       adapt. A rolling approach could also be taken, reg-
of the resources available. The increased realism                       ularly extending the forward commitment in order
has brought significant benefits, and governments                       to maintain a pipeline of sufficient length to inform
will not risk their improved economic performance                       planning and budgeting.
on the basis of vague indications of increased aid                          Unfortunately, donors have not so far been able
that may not materialise and may not be sustained.                      to provide meaningful long-term commitments.
In the absence of clear evidence of donor intent to                     Legislative constraints or sensitivity about commit-
increase and sustain aid flows, governments will                        ting successor governments prevent some donors
continue to base their health and other expenditure                     from making such commitments. Although some

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
donors are sympathetic to the principle, they have                          unless there is an understanding on the expenditure
been able to do no more than provide broad indi-                            programme as a whole, and how it will be financed.
cations of their future long-term intentions, and                               Crosscutting reforms could also merit assured
actual disbursements have proved vulnerable to                              long-term funding. Salary supplementation would
being interrupted due to policy concerns that lie                           be one obvious example, to enable higher salaries
beyond the formal conditionality of the agreement11.                        to be paid now in order to recruit, motivate and
Donors may also be reluctant to provide an increas-                         retain key staff, with the supplements phasing out
ing share of their aid in the form of long term                             over time as GDP and revenue growth enables them
commitments for fear of reducing their ability to                           to be met from domestic revenue. Reallocation of
respond to changing priorities or the threat of                             even a portion of the sums currently spent on ex-
budget cuts. Donors are of course far better placed                         patriate advisers could have a substantial impact if
to manage such pressures than the poor countries                            re-applied to finance domestic salaries, but would
they are assisting, but may nevertheless resist accep-                      need to be used for assured funding rather than
ting the increased risk.                                                    being subject to hand-to-mouth conditions. The
                                                                            scheme could be either a general one, or limited
d. Long-term commitments to specific expenditure                            to specific categories of staff that are difficult to
programmes                                                                  retain, or used to attract and retain staff to live and
It may be a little easier for donors to make longer                         work in rural areas where the poor live.
term commitments to specific expenditure pro-                                   There is a danger that long term donor spend-
grammes within a country (1.3). Donors have tradi-                          ing commitments earmarked to specific spending
tionally been able to make long-term commitments                            programmes may result in a transfer of perceived
to projects, commitments that are usually honoured                          ownership and responsibility, as a government gets
subject to any implementation delays. Projects are                          used to not budgeting its own funds for the purpose.
not a suitable instrument for funding a major scaling-                      This concern can be partly addressed if donor fund-
up of expenditure dominated by recurrent costs,                             ing is part of the government budget, using govern-
but it would be feasible to make longer term com-                           ment systems to plan and disburse funds, perhaps
mitments of budget support earmarked to health.                             with donor disbursements triggered by reimburse-
They could be designed to overcome the ‘Catch 22’                           ment requests.
problem that aid to health may be low because plans
are un-ambitious, while plans are un-ambitious                              e. Collective donor assurances of future aid
because aid offers are low. Government and donor                            Although longer term commitments are a highly
partners to the sector could work together in an                            desirable and indeed essential part of the solution,
iterative process to develop the sector plan and                            they do not provide more than a very partial answer.
budget and identify the necessary funding.                                  Donors are unlikely to be able to make the longer
    The aim of earmarked long-term funding is                               term commitments that are required. If they do
to help finance more ambitious spending on pro-                             provide longer-term indications of support, they
grammes that both government and development                                will be hedged around with caveats and are unlikely
partners regard as of high priority, but which the                          to be believed without heavy discounting of prom-
recipient government is unable to expand without                            ises. Indeed, prudent finance ministries would be
additional and assured finance. However, it is diffi-                       well advised to discount donor promises in the light
cult to know whether the aid, or the expenditure                            of experience.
that it finances, is actually additional. Donors may                            One approach to addressing the problem of
fear that additional aid may be offset by a reduced                         individual donors failing to disburse at expected
government contribution, resulting in no overall                            levels could be a collective donor commitment to
increase in health expenditure but releasing govern-                        maintain aid above a specified level, with shortfalls
ment funds for other purposes. The government                               by one donor made up with additional commitments
may fear that the aid allocated to health may not                           from others (1.4). The level of donor support to be
be additional but comes at the cost of lower donor                          defended in each country could be based on gov-
spending on other sectors, distorting national priori-                      ernment assumptions included in the budget and
ties if no offsetting action is taken. Neither recipient                    the medium-term expenditure framework. There
governments nor development partners can be                                 have also been a number of attempts to provide
confident of achieving their expenditure intentions                         similar assurances through international agreements.

                  Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability: Towards a Solution for the Health Sector   
The Strategic Partnership for Africa (SPA) in the                       g. Improve aid forecasting, based on better donor
1990s, for example, attempted to ensure that no                         reporting and accountability
African country with a credible adjustment pro-                         Although Governments should continue to be
gramme would fail for lack of donor finance, while                      sceptical of donor promises, it does seem clear that
the Fast Track Initiative is motivated by a similar                     aid is increasing, and that developing countries
objective with respect to the funding of programmes                     should factor the increase into their plans.
to achieve Education for All. Unfortunately, it is                           Donors should help Governments to make
difficult in practice to make collective assurances                     realistic assumptions about the level of future aid
work, either at the country or the global level.                        they should assume. The main focus should be at
Donors try to avoid having idle funds, and the                          country level (discussed under aid volatility), but
commitment and disbursement lag is such that it                         there is also a useful role for improved international
is difficult for replacement funding to be disbursed                    aid reporting and forecasting. In the same way that
in the amounts required at the time when it is                          the World Bank produces commodity price forecasts
needed. Attracting additional commitments will be                       that are helpful to country economic managers in
especially difficult if the cause of under-disburse-                    making assumptions about export earnings and tax
ment is related to policy reservations by a specific                    revenues, it would be possible to produce global
donor. Other donors may not share the specific                          and regional aid forecasts to help countries make
donor’s view of the situation and the case for                          reasoned assumptions about the aid they might
reducing aid, but may nevertheless be reluctant to                      receive, based on an informed assessment of the
increase their own exposure. Given these various                        overall aid environment (1.6). It is suggested that
problems, a dedicated facility, as proposed in a                        this role might be taken on either by the DAC or
DFID financed paper discussed in section 5, would                       by the World Bank. The DAC has published on its
seem to be a necessary underpinning to make any                         website a donor by donor forecast of aid to 2010, but
collective assurance credible.                                          it is explicitly based on the assumption that OECD
                                                                        donors deliver on their public statements. The World
f. Increase donor credibility by making aid less                        Bank produces a limited forecast for Global Devel-
dependent on annual donor budgets                                       opment Finance and might be the more obvious
The credibility of the promised increase in global                      choice, given that the consensual nature of the
aid will be increased if measures are taken to make                     OECD may make it difficult for it to be associated
future global aid flows less dependent on annual                        with forecasts that would need to take a realistic
budget votes (1.5). Measures such as the IFF (and                       and sometimes sceptical view of donor assertions.
the ‘mini IFF’ recently established to support GAVI),                        The value of such aid forecasts would be to
the proposed tax on aviation fuel or airfares, global                   provide a starting point for framing realistic aid
carbon taxes, or the use of gold sales or SDR issues                    assumptions to be used in PRSPs, IMF programme
to fund development finance have the merit that,                        discussions, medium term expenditure frameworks,
once agreed, they provide a secure stream of addi-                      sector programmes, and public expenditure reviews.
tional global development finance12.                                    The global aid forecast would provide a reality
    The funding of the multilateral development                         check on national assumptions. For example, it
banks is agreed over longer-term periods and can                        might prompt questions if the country is assuming
be supplemented from their profits and capital                          aid to be flat when the global and regional forecast
market borrowing, making them less subject to                           is for a significant increase. The reasons for the dif-
fluctuations than the bilateral agencies. One way                       ference would need to be investigated, comparing
to secure the promised aid increases would be                           aid: GDP ratios to the regional norm for countries
through larger and longer-term capital replenish-                       of similar per capita income and population, and
ments for the multilaterals. If funding for the multi-                  considering whether there are factors affecting aid
laterals were to be linked to hypothecation of some                     effectiveness that might account for the difference.
global tax, such as airline taxes, there would be a                     In other words, by informing judgements about the
guaranteed source of future vigorous growth in                          future aid environment, use of the forecast would
resources for aid.                                                      help to avoid systematic bias in aid assumptions.
    It is recognised that considerable time and effort                       The value of aid forecasts depends on their
will be required to make progress towards imple-                        quality. It would be difficult to produce meaningful
menting any of the proposals at 1.5.                                    forecasts without some related improvements in

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
donor reporting. It is suggested that aid forecasting                       ensure that unexpectedly high commitments can
could be improved by each donor agency producing                            be used in a timely and effective manner.
global forecasts of their overall future aid commit-
ment and disbursement intentions, even if they are                          i. Procurement subsidies
unable to make explicit future commitments to                               In addition to measures to increase long-term aid,
individual countries. These would need to include                           there has also been discussion of measures to
a reasonable degree of detail to be helpful. There                          address the problem from the other side, reducing
is a particular need to improve reporting on the                            the cost of procurement of medicines and other
share of donor aid that finances Government expen-                          supplies by global subsidies and advance bulk pur-
diture plans. A significant share of the ODA flows                          chase. This can have a significant and very positive
that are reported to DAC never enter public expen-                          impact by reducing the scale of the funding short-
diture or the budget, and do not contribute to finan-                       fall that needs to be bridged.
cing the PRSP or Government plans.
    A useful reality check could be provided if the
annual DAC report included data on actual disburse-                         . Reconciling longer­term commitments
ments compared to previously declared intentions.                           with aid effectiveness
This will require considerable effort to make donor                         a. The problem
reporting to DAC rather more meaningful than it                             Since the early 1980s, donors have used conditionality
is at present. Donor self reporting at present is                           to ensure that aid is disbursed in a policy environment
impossible to compare with country level data on                            in which it can be effective (2.1). Budget support is
what has been received, and it is difficult to know                         particularly dependent on reaching an understanding
what value or meaning to attach to it. Data that                            with Government on future policy measures, but
enabled donor promises to be verified would be                              the approach is also common in sector discussions,
immensely useful. It would provide an objective                             and the ‘policy matrix’ is also a common feature
basis for adjusting aid forecasts. It would also enable                     of PRSPs that have a significant influence on the
Governments, civil society aid lobbyists, and donor                         overall level of donor support. The donor approach
peers to hold agencies to account, questioning the                          has been modified to place less emphasis on buying
reasons for low disbursement and pressing for prom-                         future promises, and more on Government owner-
ises to be met. For that very reason, donors might                          ship and the track record of implementation. How-
be reluctant to provide indications of their future                         ever, the modifications of approach that have been
aid, and might also resist publication of the data.                         implemented or are under discussion do not address
However, if there is reluctance to publish future                           the fundamental problem that Governments are
aid expectations, that in itself is an indication that                      being asked to take on long-term spending obliga-
Governments need to err on the side of caution in                           tions based on short-term and conditional offers
discounting aid promises.                                                   of support. The Government must be confident
                                                                            not only that it can implement current agreements
h. Multiple aid scenarios for national planning                             with donors, but that it will be able to keep the aid
Even with these measures in place, Governments                              flowing by negotiating a series of future agreements,
will face uncertainty as to their future aid flows.                         the terms of which are presently unknown. Most
There may therefore be a case for low-income coun-                          forms of programme aid or budget support are
tries producing more than one forward scenario                              based on an annual commitment cycle, linked in
for their PRSP and medium and long-term expen-                              best practice cases to the Government budget cycle.
diture plans, reflecting inter alia the impact of                           Although this can bring greater predictability to the
alternative aid assumptions (1.7). The preparation                          annual budget, it is of little help to a Government
of multiple scenarios does imply additional effort                          deciding whether it dare take the risk of relying on
by hard pressed Governments, and there are dangers                          aid to implement a long-term plan to scale up pub-
of demotivating staff if the higher scenario proves                         lic expenditure, involving recurrent expenditure
impossible to implement due to lack of resources.                           obligations that will be difficult to withdraw from
Nevertheless, a clearly articulated ‘high’ scenario,                        if funds fall short.
setting out what could be achieved with higher                                  The risks are multiplied by donor insistence on
aid, would be valuable for persuading donors to                             retaining clauses that enable them to withdraw aid
increase their commitments, and would also help                             if Government behaves in ways that they find un-

                  Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability: Towards a Solution for the Health Sector   
acceptable. It is clearly necessary to be able to with-                     Development Ministers of the OECD
draw funds in the light of major corruption scandals
                                                                            countries and African Finance Ministers,
or human rights abuses. The problem from the
Government perspective is that it is difficult to                           along with representatives of civil society
predict or control the issues over which donors                             and international organisations. This
may choose to interrupt funding, and the potential
intrusion on national sovereignty can be difficult to
                                                                            should consider aid allocation criteria
accept.                                                                     and make suggestions for a better distri­
                                                                            bution, including between middle and
b. ‘Entitlement’ approach                                                   low income countries. In countries where
The only way to provide completely assured long-
term funding would be through an ‘entitlement’                              governance and institutions are weaker,
approach to aid allocation (2.2), with commitments                          donors should seek to provide adequate
based on need and maintained irrespective of Gov-
                                                                            and effective flows through appropriate
ernment behaviour (though aid could perhaps be
directed through non-Government routes in the                               channels, bearing in mind the need to
worst cases.) This would ignore the evidence that aid                       avoid undermining national systems
achieves less in difficult environments, and would
be unlikely to be acceptable to donor Governments,
                                                                            and/or long­term sustainability14.’
nor would it result in the best contribution to pov-                        Either as an alternative or a complement to
erty reduction.                                                         such an approach, one or more donors (the World
                                                                        Bank?) could operate as ‘swing donor’, taking ex-
c. An allocation model with performance assessment                      plicit account of other donor commitments when
A more realistic approach to the need to ensure                         allocating funding in order to achieve a desirable
aid effectiveness in the context of moving towards                      global allocation of aid. This might have the added
longer-term commitments would adjust the level                          benefit that donors with a poor track record would
of commitment each year based on an annual                              be forced to reform, since partner Governments
assessment of need, and of the policy, institutions,                    would be more inclined to refuse poor quality aid
and progress being achieved towards development                         in the knowledge that lower receipts from weak
outcomes (2.3). The level of aid would change                           donors would be at least partly compensated by
slowly in the light of changing performance, giving                     higher receipts of better quality aid from the World
enough time for dialogue on how matters can be                          Bank. The swing donor role might be controversial,
improved and, if unsuccessful, giving Government                        given that it explicitly seeks to alter the impact of
time to adjust spending commitments to a more                           allocation decisions by bilateral donors.
constrained aid outlook. Ideally, the aid allocation                        The main constraint on moving towards such
model(s) in use should include not only policy and                      an approach to conditionality is probably the con-
institutional indicators, but also (and perhaps                         tinuing donor need to react quickly to serious
mainly) indicators tracking the change in out-                          problems of a political, governance, or human
comes, as Ravi Kanbur has argued13. This would                          rights nature. It is unlikely to be feasible to insulate
shift the policy debate towards what is working                         aid flows from such concerns, though it might be
rather than what is popular with the donors, and                        possible to ensure that funding that is clearly linked
would be consistent with improved country own-                          to specific long-term welfare goals is protected
ership and responsibility.                                              even if aggregate aid to Government is reduced.
   Ideally, the approach should apply to total aid
to a country, from all sources. This could be done                      d. Conditionality at sector and sub-sector level
through a joint consultation and commitment pro-                        There are a number of alternative approaches in
cess. The Commission for Africa proposed something                      use that attempt to provide reasonably predictable,
broadly along these lines:                                              on-budget funding to medium-term expenditure
                                                                        programmes, whether sectoral SWAPs or vertical
  ‘To improve the quality of aid an annual                              interventions in areas such as HIV-AIDS. The main
   discussion should take place between the                             donor concern about making longer commitments

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
to sectors is how best to ensure that they are well                             There is no reason in principle why longer term
used, given that ‘blueprint’ style conditions and                           commitments to specific spending programmes
complete definition of future spending programmes                           should not be made in countries with relatively
is not feasible beyond a short to medium term time                          weak policy and institutional frameworks, particu-
frame (2.4). Longer- term commitments therefore                             larly if the scale of the donor commitments enables
require a combination of both conditions at entry,                          programmes to be significantly protected from some
and agreement on how future decisions will be made                          of the problems. However, the stress on Government
in order to ensure that the agreed goals continue                           ownership might be different in such environments,
to be pursued effectively.                                                  with a focus on helping to build competent and
    These considerations could lead in the same                             accountable institutions, but with more checks and
direction as the ‘aid allocation model’ option, with                        balances and more earmarking of funds until and
long term indications of support if progress is main-                       unless such efforts pay off.
tained, annual performance review, and specific
assurances that worse than expected performance                             f. Conditionality and predictability: Summary
will provoke first discussion, and then a moderated                         In summary, the approach to conditionality needs
response calculated to be gradual enough for the                            to change if longer-term commitments are to be a
Government to adjust to lower aid flows (2.5). Such                         basis for longer-term and more ambitious plans to
a partnership approach is close to existing practice                        reach the MDGs. It seems unlikely that commit-
in sector SWAPs, some of which have already been                            ments can be entirely unconditional. However,
in place since the mid 1990s, and have weathered                            there is scope for moderating the share of aid that
major disagreements.                                                        is subject to interruption for non –performance,
                                                                            and moderating the speed at which donors react
e. Expenditure programmes meriting long-term                                to poor performance, in order to build in time for
finance with minimal conditions                                             dialogue and, if agreement is not reached, for
It might be feasible for donors to provide assured                          adjustment to lower aid levels. Specific longer-
long-term finance for specific expenditure obliga-                          term spending obligations could be supported by
tions judged to carry a low risk of significant policy                      assured and longer-term commitments from donors,
disagreements, irrespective of problems in other                            subject to Government implementing the agreed
aspects of the aid relationship. Although the effec-                        plan and spending allocations. Commitments will
tiveness of most public expenditure depends on the                          never be made for the 20 year period that increased
overall effectiveness of public sector management,                          aid will need to be sustained in some country cases,
it may be feasible to identify some expenditure areas                       but sufficient assurance might be provided by a
where long-term commitments are particularly                                combination of 5+ year commitments, assurances
needed and where donors are willing to make them                            of notice before funding is reduced, and a reason-
with minimal and clearly specified conditionality.                          able faith that good performance will continue to
Treatment of HIV/AIDS patients is the most obvi-                            attract the required aid to sustain services. Assur-
ous (and most expensive) one. Once people are                               ances would be more effective in the context of
started on HAART treatment, it would be unethical                           coordination arrangements in which Government
not to continue it, yet treatment programmes are                            and donors jointly review funding needs and iden-
being committed in five-year tranches, even though                          tify ways to meet any financing gap. As a DFID
Governments will be unable to sustain them there-                           financed report has suggested, country level donor
after. It should be axiomatic that AIDS treatment                           efforts to provide more secure donor finance could
programmes take responsibility for maintaining                              be underpinned by access to a new Aid Guarantee
the treatment of those recruited to the programme                           facility, an external source of funds to compensate
for the rest of their life; indeed, where the programme                     for unanticipated funding shortfalls. Section 6 sets
creates an expectation that the much larger numbers                         out the proposal in more detail.
yet to show symptoms should also receive treat-
ment, it will be necessary to also meet those costs
externally. If donors cannot provide such assurances,                       . Ensuring donor support helps
it could be argued to be irresponsible to encourage                         finance the government plan
countries to embark on treatment programmes                                 With limited resources available, it is important that
that divert funding from interventions that could                           they be prioritised in support of a single strategy,
save more lives at lower cost.                                              plan, and budget that has been prioritised and

                  Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability: Towards a Solution for the Health Sector   
assessed for longer term sustainability. This does                      Government strategy, plan, and budget for the sec-
not imply some form of Stalinist central planning.                      tor. Donor agencies can and should participate in the
The Government strategy may well include support                        dialogue around the formulation of Government
for a mixed system with a combination of public                         policies and plans, but their support should focus on
and private finance and a range of service providers.                   helping Government to fill the financing gaps in
It may include provision for supporting a range of                      order to realise the strategy that has been articulated.
pilot projects designed to learn lessons for future
replication. It may involve a good deal of devolu-
tion of responsibility to local authorities. However,                   . Reducing the cost of aid volatility
what it needs to avoid is a situation where uncoor-                     a. The problem15
dinated donor interventions result in big differences                   Aid is a far more volatile source of finance than
between areas in the resources and services that are                    domestic revenues. This volatility is most severe in
available and the ability of the population to access                   those countries that depend most heavily on aid.
them. It needs to avoid expensive health interven-                      The variability of aid does not offset the impact of
tions being prioritised over others that may save                       other shocks on the receiving economy, but actually
more lives for the same budget.                                         seems to amplify them, increasing in good times,
     In terms of the macro economy, much depends                        but falling when difficult conditions increase the
on the foreign content of donor commitments.                            need for external finance. The problem of aid vari-
The Ministry of Finance and the Central Bank will                       ability is highest in countries suffering high levels of
have established with the IMF a macroeconomic                           domestic revenue variability, compounding their
programme that aims for a growth in domestic                            problems.
demand that is thought to be consistent with their                          Aid is not only very variable, it is also hard to
inflation target. Unless aid is spent entirely on for-                  predict. Donor commitment promises are so unre-
eign exchange with no implications for domestic                         liable that predictions based simply on past trends
demand, any aid expenditure can in principle only                       are more accurate than those that make use of
be accommodated within the macroeconomic                                donor commitments. Average shortfalls in aid
programme by displacing some other expenditure                          receipts relative to the budget were equivalent to
with equivalent impact on domestic demand. If                           nearly 2% of GDP in a sample of 28 countries,
donors fund activities that are outside the Govern-                     with no less than 24 of them suffering shortfalls.
ment plan, Government has two alternatives. If it                       Moreover, the shortfalls were greatest on programme
leaves total public expenditure unchanged, the donor                    aid, the untied funds of most importance for macro
support will displace other expenditure that Gov-                       and budget management. Even countries that met
ernment would have preferred. If a reasonable plan                      policy conditions experienced large shortfalls16.
has been produced, expenditure allocation is un-                            The uncertainty and unpredictability of aid has
likely to be improved by sacrificing elements of it                     a statistically significant negative impact on growth.
in favour of donor project commitments that have                        It also makes macro and budget management more
less Government ownership. If Government decides                        difficult.
instead to increase public expenditure to include
the off-plan donor commitments, it adds to aggre-                       b. Best practice approaches
gate demand, and may require a tighter squeeze                          A number of best practice approaches have been
on the private sector in order to accommodate the                       identified to tackle the problem of short-run aid
extra spending. Although these issues may seem of                       volatility, particularly with respect to budget sup-
little practical significance at current levels of aid                  port17. Where budget support groups exist, donors
spending, they will become important if aid is sig-                     are trying to move towards providing medium term
nificantly increased. It matters a great deal whether                   indications of future aid, committing funds early
a 10% of GDP increase in aid is used to finance                         enough to inform budget preparation, being explicit
agreed national priorities, or ends up displacing                       on donor conditionality (but with not all funding
private investment and higher priority Government                       vulnerable to poor performance), providing budget
spending programmes in favour of donor interven-                        support disbursements in a single tranche sched-
tions of doubtful sustainability.                                       uled early in the year, with active reporting and
     It is therefore proposed that donor funding                        monitoring of actual flows, and using Government
needs to give first priority to filling gaps within the                 procedures to disburse and account wherever possible.

0  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
As far as possible, conditionality is being applied to                           Although it would be worthwhile to ask the
the following financial year, avoiding disruption of                         IMF to look at the implications for forex targets of
the approved budget. Similar approaches are begin-                           this approach, there are some important constraints.
ning to be considered in sector wide approaches.                             There are risks in encouraging Governments to
    Where they are effective, these approaches facili-                       think of foreign exchange reserves as part of budget
tate timely and full budget implementation, and                              finance rather than one of the resources available
give Government more time to react and adjust to                             to an independent central bank for macro manage-
donor concerns and funding intentions. The problem                           ment; and there are clear temptations for Govern-
is that the formal agreements have not prevented                             ments to raid larger foreign exchange reserves to
individual donors interrupting disbursements during                          help fund pet projects or their own re-election.
the year due to political or human rights concerns                           Donors may also object to increasing aid to coun-
not reflected in formal conditionality, while next                           tries holding substantial foreign exchange reserves,
year’s budget remains hostage to the ability of the                          though that problem should be possible to deal with
Finance Ministry to convince the donors that past                            through explicit discussion of the rationale for the
performance and the future programme merit con-                              target. The risks of Government raiding the reserves
tinued support.                                                              could also be reduced through the design of IMF
    In addition to measures to reduce the volatility                         programme targets.
of donor funding, it is also possible to mitigate the                            It is possible that foreign exchange reserve increases
effects.                                                                     may happen anyway as a consequence of a large
                                                                             increase in external aid used to finance an increase
c. Use foreign exchange reserves to smooth                                   in public expenditure with a fairly low foreign
fluctuations                                                                 exchange content. Central Banks have tended to
The impact of fluctuating aid levels can be smoothed                         accumulate foreign exchange reserves to avoid real
through active use of foreign exchange reserves, and                         exchange rate appreciation damaging export growth.
through adjusting Government use of domestic                                 In the short term, this problem may disappear due
credit. IMF programmes usually include provision                             to the impact of higher oil prices, but it is likely to
for automatic adjustments to foreign exchange and                            re-emerge, and the scope for ameliorating it through
net Government borrowing targets to offset over or                           further import liberalisation may not be sufficient
under estimation of donor funding. Foreign exchange                          to absorb the level of aid increase that is now con-
reserve targets are normally set in relation to the                          templated. If donors are able to adopt a relaxed
need to smooth fluctuations in the foreign exchange                          attitude to the increase in foreign exchange reserves,
market. It is arguable that it is at least equally relevant                  this may provide a useful mechanism for building
(in a world of floating exchange rates) to set foreign                       capacity for countries to protect themselves from
exchange reserves at the level required in order to                          future reductions in aid. The fiscal space implica-
smooth fluctuations in the resources available for                           tions, however, are not entirely benign. If increased
funding the budget. It would be recognised that                              aid is not absorbed through increased demand for
countries that are relatively more aid dependent                             foreign exchange, the implication is that the increased
(and those that are increasing their aid dependence)                         public expenditure has been financed from domestic
would need to also have higher foreign exchange                              rather than foreign sources, essentially by squeezing
reserves to cushion fluctuations in aid, and provide                         private sector demand.
more time to adjust to any unexpected decline in
aid levels. Rather than setting the foreign exchange                         d. Helping governments address absorptive capacity
reserve target mainly in terms of months of import                           constraints – and ensuring donor procedures do
cover, it could also be set with reference to fluctua-                       not cause them
tions in budget resources and the required level of                          Volatility or shortfalls in aid disbursements may not
reserves to achieve a target degree of smoothing                             originate with the donor. Donors often ascribe low
of the flows. The level would also depend on the                             disbursement to absorptive capacity constraints
size and sophistication of domestic credit markets,                          within the recipient Government. Absorptive capa-
and the extent to which Government can finance any                           city constraints may reflect absolute supply limita-
external aid shortfall domestically without incurring                        tions within the economy:- shortages of skilled
debt service problems or generating inflation or a                           personnel or of construction capacity that can only
squeeze on private credit.                                                   be overcome by bidding resources away from other

                   Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability: Towards a Solution for the Health Sector   1
sectors in the short-term, or by investment in new                           mitments, a shortfall in expenditure reduces aid
capacity in the longer term. In most cases, however,                         disbursements, but the remaining balance of
the problems in making timely and effective use of                           donor commitments remains available for when
additional external aid reflect problems in the effec-                       implementation picks up, and no funding gap is
tiveness with which resources are allocated and man-                         created. The low disbursement might trigger a
aged. Common problems include late availability                              review of the causes of low implementation and
of budgeted funds, and excessively time-consuming                            what can be done about them, but would not be
and bureaucratic procedures for using them. Donors                           an argument for seeking additional commitments.
can help to address these issues by supporting pub-                     iii. Donor commitments to projects or programmes
lic expenditure management reforms that aim to                               that are outside the Government budget would
decentralise budgets and management authority to                             remain the responsibility of the donor, and would
those responsible for delivering services, while them-                       not be the subject of any collective assurance.
selves adopting ‘best practice’ approaches to ensure
their own procedures are not causing delays.
    Governments desire assured donor funding to                         . Insuring countries against donor
avoid aid shortfalls leading to interrupted imple-                      non­performance?1
mentation or unplanned budget deficits. However,                        a. The problem
how should donors react when absorptive capacity                        The long term nature of the public expenditure
constraints prevent Government from meeting                             obligations involved in trying to achieve the MDGs
their spending targets, resulting in a reduced need                     will inevitably make Governments wary of embark-
for funds? This issue is actually fairly straightforward                ing on a major scaling up of expenditure based simply
to handle:-                                                             on faith in the continuing goodwill of the donor
                                                                        community. It may be helpful to establish a mech-
i. The main focus of collective donor assurance
                                                                        anism to insure aid-dependent countries against
    should be donor support to the annual budget.
                                                                        the risk of aid donors not fulfilling their promises.
    Dialogue between Government and the donor
    group providing budget support should be
    capable of identifying funding gaps relative to                     b. Proposed Aid Guarantee Facility
    previous assumptions reflected in the budget and                    The Aid Guarantee Facility that has been proposed
    the MTEF. A methodology involving advance                           in a DFID-funded study would aim to limit the risk
    funding of an account that is replenished based                     that aid may be less than has been promised, may
    on evidence of expenditure provides a ‘cushion’                     be excessively volatile, and may decline abruptly
    of funds that gives time for aid shortfalls to be                   leaving Governments with obligations that are
    made up from new commitments, without                               difficult for them to meet. Access to the facility
    causing interruptions in budget implementation.                     would mean that, even if donors provide no long-
    On the other hand, aid disbursements would                          term commitments, Government can be confident
    not be triggered if low budget implementation                       that the speed at which aid declines from peak levels
    meant there was no need to replenish the account.                   will be moderated to a pace that they should be able
    In principle, budget support could become the                       to adjust to.
    main mechanism for external support to Gov-
    ernment expenditure, including the development                      c. What types of aid should be stabilised?
    or investment budget.                                               Access to the facility would be limited to highly aid
ii. Where donor commitments continue to be given                        dependent low-income countries, to focus support
    for specific Government projects or for earmarked                   on countries most vulnerable to aid shortfalls, and
    support (e.g. condoms or other commodity im-                        to limit the cost. For eligible countries, the facility
    ports), the key question is whether the costs of                    would guarantee minimum levels of programme
    the programme are fully covered by Government                       aid (general and sectoral budget support, plus some
    and donor funding commitments. Government                           types of commodity support and basket funding).
    would as at present seek additional donor com-                      Project aid would be excluded because it covers a
    mitments for filling funding gaps (for example,                     wide range of disbursement methods, is difficult to
    to keep the future pipeline of drugs and other                      monitor, and because spending often reflects phys-
    commodities full). However, if programmed                           ical implementation and therefore aid shortfalls
    expenditures are fully covered by existing com-                     need not imply a funding gap that needs to be filled.

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
d. Suggested procedure for accessing funds                                        stances such as societal breakdown or grave
The proposal is that:                                                             human rights abuses, while also protecting the
                                                                                  Government from donors arbitrarily denying
•   Each eligible country, with the endorsement of                                access to the facility. For reasons of speed and
    the participating donor group, would agree with                               cost, the panel would use e-discussion, confer-
    the facility managers which categories of aid will                            ence calls or video conferencing to make quick
    be insured against shortfalls, how disbursements                              decisions, and would have a sufficient number
    will be monitored, and what level of expected                                 of alternates to avoid delaying decisions for lack
    aid will be guaranteed.                                                       of a quorum.
•   In the third quarter of the budget year, the
    Government, together with a designated lead
    donor, would assess the expected disbursements
                                                                             e. Defining minimum guaranteed aid
                                                                             The DFID study leaves open the definition of min-
    of relevant categories of aid compared to the
                                                                             imum aid levels to be guaranteed. To fully meet the
    guaranteed minimum and, if there is a shortfall,
                                                                             objectives, guarantees would need to be of two
    apply to the facility for a drawing on the fund.
                                                                             types, both of which would be applied in all eligible
    To avoid the need for a cumbersome and time-
                                                                             countries.
    consuming process for verifying and agreeing
                                                                                  The first guarantee protects countries from a
    the numbers, the other donors providing finance
                                                                             sharp decline in the level of disbursements, and is
    would be copied in but only consulted on a ‘no
                                                                             independent of the level of commitments that
    objection’ basis.
                                                                             donors may have made. For example, the facility
•   If there were no objection from donor partners,
                                                                             might guarantee that disbursements of relevant
    funds would be released on a non-discretionary
                                                                             categories of aid in any year, including drawings
    basis by the facility managers, within (say) one
                                                                             on the facility, would not fall below (for example)
    month of receiving the application, enabling                             90% of the average of the two previous years. This
    disbursement to occur within the financial year                          would ensure that, having used aid to increase
    to which the application refers. The facility                            public expenditure, the country is not then faced
    managers would only conduct basic checks to                              with a massive financing gap due to an abrupt
    ascertain that the guaranteed funding level was                          withdrawal of budget support. Disbursements may
    as previously agreed, and that the donor partner                         still decline over time, but the facility would aim to
    had endorsed the estimates of likely disbursement.                       limit the speed of decline and give the Government
•   There will be discrepancies between actual aid                           more time to adjust spending obligations to the
    disbursements and those expected at the time of                          reduced level of external support.
    application. Excess drawing from the fund would                               The second guarantee would apply in circum-
    be repaid in the following year, subject to not                          stances where donors have committed themselves
    causing a dip in aid below the guaranteed level                          to increase aid, and would insure the country
    for that year. If the initial drawing proves too low,                    against the risk of donors falling short of their
    supplementary requests should be made once it                            promises. The normal profile in a scaling-up situa-
    becomes clear that aid has been over-estimated.                          tion will be one in which the pipeline of future
•   The facility would operate as a revolving fund,                          donor commitments implies increased aid for the
    but drawings from the fund would only become                             next two to three years, tailing off thereafter because
    repayable if and when actual aid receipts exceed                         of relatively short donor commitment horizons. If
    the guaranteed level for the relevant year, and                          longer-term commitments are made, it is possible
    will be limited in amount to ensure that aid net                         that the country will request the fund to guarantee
    of repayments never falls below the guaranteed                           a relatively steep and relatively long-term increase
    level.                                                                   in aid. The facility managers will assess the risk
•   Access to the facility would be unconditional,                           and inform the country of the aid levels that it will
    unless two or more donor partners object, in                             guarantee. The normal approach will be for the
    which case the proposal would go for final deci-                         facility to guarantee a minimum rate of increase
    sion to an international panel with good repre-                          during the period when aid receipts are expected
    sentation from low-income countries. The aim                             to grow. For example, if donor promises indicate a
    of this procedure is to protect the facility from                        20% per annum increase in the relevant categories
    the risk of having to disburse in extreme circum-                        of support in the next two budget years, the guar-

                   Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability: Towards a Solution for the Health Sector   
antee might aim to ensure that actual disbursements                         It is proposed that, in all but the most extreme
increase by at least 10% each year above the previous                   circumstances, the facility should always prevent a
actual disbursements (including drawings on the                         sharp reduction in aid from levels experienced in
facility).                                                              previous years. The only circumstances in which
    The two guarantees, taken together, ensure                          this would not apply would be egregious corruption,
that a reasonable proportion of promised donor                          major deterioration in human rights or security, or
increases in budget support will be received, and                       planned aid withdrawal following a big increase in
that (once a higher level of aid receipts has been                      wealth due to, for example, bringing on stream of
achieved) disbursements will be phased out slowly                       significant oil or mineral production. The facility
rather than abruptly withdrawn. These two guaran-                       would thus ensure that the operation of conven-
tees, taken together, significantly reduce the risks of                 tional policy conditionality results in a slowing of
relying on aid to finance higher public expenditure.                    aid disbursements rather than an abrupt cut.
                                                                            It is more difficult for the facility to guarantee
                                                                        previous promises of continuously rising aid levels
f. Ensuring the solvency of the facility
                                                                        if actual disbursements are flat or declining. One
The guarantees offered by the proposed facility will
                                                                        way to provide a useful guarantee without risking
only be credible if Governments are convinced that
                                                                        exponential growth in drawings would be to base
the facility will not itself run out of funds. Some
                                                                        the guarantee on achieving a minimum annual in-
arrangement is needed to underwrite the funding
                                                                        crease above actual disbursements in the previous
of the facility which, although set up as a revolving
                                                                        year or two, including facility drawings, but with
fund, will not be self-sufficient and will need a
                                                                        the speed of increase limited by the exposure the
secure source of long-term funding. The problem                         fund can afford. The proposed review would then
could be solved by signed long-term agreements                          examine whether donors still intend to increase
from supporting donors, or by linkage to one of the                     their support, and would adjust the guarantee as
sources of long-term funding discussed in Table 1                       necessary to reflect a realistic future profile.
(row 1.6).                                                                  This approach, though inevitable, is a little un-
    The facility would also need to limit the risk of                   satisfactory, in that it protects countries from abrupt
continuing to guarantee previous donor promises                         declines in aid, but does not ensure that aid will
of medium to long-term increases in relevant cate-                      grow as rapidly as has been promised. To mobilise
gories of aid in a situation where circumstances have                   aid for countries facing shortfalls, increase pressure
changed and disbursements are static or falling.                        on donors, and enable civil society organisations
There is a danger that perceived poor performance                       to monitor action and lobby for more to be done,
may lead donors to reduce their disbursements to                        the facility web site could publish data on countries
a country, making the aid guarantee increasingly                        making use of the facility, and copies of the explan-
unrealistic if not revised, and posing a risk to the                    atory letters and review findings, drawing attention
solvency of the facility.                                               to the scale of the aid shortfalls and actions needed.
    To control this risk, it has been proposed that,
after any drawing on the facility, the Government                       g. Next steps
and contact donor should submit a joint letter set-                     The quickest and simplest way to get something up
ting out the causes of the shortfall, and what action                   and running would be to develop a proposal and
has been taken to mobilise additional funds and                         then seek voluntary donations from interested
improve disbursement outturn. If a country draws                        donors. Detailed modelling is required to establish
particularly heavily (aid less than 70% of guaran-                      the required size of the facility, and review alterna-
teed levels, or more than 15% of fund resources?)                       tive options for country coverage and the level of
or persistently (either two or three years in a row),                   guarantee. If the proposed facility is felt to have
then Government and donors to the country would                         merit, a working group of interested donors and
review the situation with the facility manager, to                      potentially eligible countries might be convened to
assess whether the guaranteed minimum aid levels                        develop it further, commissioning a more detailed
remain appropriate and how they can continue to                         design study to flesh out the organisational arrange-
be funded.                                                              ments and operating procedures, and to estimate
    The action taken following a review will depend                     the financing required on various approaches to
to some extent on the nature and causes of the                          defining eligibility for funds. Outline TORs for a
donor shortfall.                                                        design study were included in the DFID study.

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    To reduce the risks of funds lying idle or of                                health spending from domestic resources, but
donors facing unexpected and large calls for supple-                             this may prove difficult to identify in a situation
mentary resources, it is suggested that the proposed                             where the amount of donor support helping to
facility should focus to begin with on a small group                             finance the overall budget and the health budget
of very poor and aid dependent countries, and                                    may be changing.
with cautious assumptions as to the minimum aid                             •    If Government favours receiving an increased
guarantees, in order to ensure that costs are within                             proportion of aid as general budget support, it
the resources available. The ambition of the fund                                is important to avoid designing a sectoral guar-
could be expanded as experience improves knowl-                                  antee fund that provides a positive incentive for
edge of the financial risks, and as (hopefully) success                          donors to continue earmarking their aid to
attracts additional donor contributions.                                         health.
                                                                            •    There is no point compensating Government
h. Health Sector Guarantee Fund?                                                 after the event for donor failure to provide
The DFID report suggests that it would also be                                   finance for expenditure that did not take place.
possible to develop one or more sectoral funds to                              Although it should be possible to design a sector
guarantee aid for specific purposes, such as the                            guarantee fund that is capable of handling these
expansion of health sector expenditure. The idea                            problems, it would be complicated and not very
is not, however, fully developed.                                           transparent, and might as a consequence fail to
    The main issue that would need to be addressed                          achieve the main objective, which is to convince
in applying the idea at sector level would be how                           Government that it can safely increase health expen-
to define aid to the health sector, in a context in                         diture based on increased aid commitments. It is
which an increasing share of ODA to some of the                             therefore suggested that any guarantee fund should
more aid-dependent countries is being provided as                           be general, rather than sector specific.
general budget support, not earmarked to specific
sectors or purposes. There would be a number of
issues to be addressed:
                                                                            i. Response to comments on the DFID-financed study
                                                                            The initial DFID study has so far received only
•   It would not be appropriate to guarantee funding                        limited discussion. Annex 1 discusses the comments
    earmarked to health in a situation where total                          received to date. Although the practical and political
    aid is in line with promised levels, but aid ear-                       difficulties that need to be resolved are formidable,
    marked to health had been reduced in favour                             there is nothing in the comments that need prevent
    of general budget support, or spending on a                             the suggestion receiving further study. It remains
    different sector. In such a situation, Government                       the only proposal on the table that has the potential
    is able to make up for any shortfall in health aid                      to provide aid-dependent Governments with the
    from the increased general budget resources                             assurance they need that future aid will be reason-
    now at its disposal.                                                    ably close to promised levels, and that any subse-
•   It would also be inappropriate for donor sup-                           quent reductions will be phased at a speed to which
    port to compensate for reduced Government                               they can adjust.




                  Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability: Towards a Solution for the Health Sector   
Annex 1 Proposed Aid Guarantee Fund: Comments on the Proposal and Responses from the Author
 Comment                                                               Response
 An Aid Guarantee Fund could do little or nothing in cases             It is of course true that implementation problems may result
 where the reason for the gap between commitment and                   in lower than expected expenditure, reducing the need for
 actual expenditures is due to public expenditure management           aid or for minimum aid guarantees. The proposal aims to
 issues in the recipient country. Rather a program that helps          guarantee only budget suppor t, recognising that the
 the country overcome these flaws is needed.                           development budget (mainly funded by project aid at
                                                                       present) is likely to be prone to implementation problems
                                                                       with reduced expenditure matched by reduced finance.

                                                                       Of course, budget suppor t may also be funding areas of
                                                                       expenditure that can be subject to implementation problems,
                                                                       especially if expenditure is increasing rapidly. However, the
                                                                       likelihood of experiencing implementation problems can be
                                                                       reduced if aid is reliably available when needed. Access to
                                                                       guaranteed minimum budget suppor t will be a helpful
                                                                       complement to programmes to improve public expenditure
                                                                       management, enabling the Ministry of Finance to make the full
                                                                       and timely budget releases that are necessary to underpin
                                                                       planned improvements in budget formulation and execution.

                                                                       Aid shor tfalls cause major damage to economic growth and
                                                                       public expenditure outcomes, whereas much good, and little
                                                                       harm, is done by donors meeting their budget suppor t
                                                                       commitments in full, even if public expenditure is lower than
                                                                       budgeted. Government borrowing will be a little lower, foreign
                                                                       exchange reserves a little higher, while annual expenditure
                                                                       and PRSP reviews can address the causes and remedies and
                                                                       the implications for the budget in the following year. In any
                                                                       case, the proposal is to guarantee only a por tion of expected
                                                                       budget suppor t, keeping any shor tfall within manageable
                                                                       bounds, but not eliminating it.

 The facility is essentially an insurance mechanism. As such, the      The problem is that the aid will be needed long-term, but the
 incentives created by the facility for both donors and recipi-        conditions are set annually, so that the Government is taking
 ents must be carefully taken into consideration to avoid moral        on the risk of increased aid dependence without even knowing
 hazard. This is especially true for the case of insurance against     what conditions will be imposed in return for funds that have
 non-disbursement due to non-compliance with conditionalities.         yet to be committed. Conditions are therefore not in any
 If the condition in question is fully under the control of the        sense ‘under their control.’ With the proposed facility in place,
 recipient country, there should be no need for such an insur-         Governments that are unable to agree to donor conditions or
 ance mechanism. The facility should not be used for “fixing”          do not comply with them will face a reduction in their future
 conditionalities which were poorly designed or should not             aid flows, but it will be at a measured pace, designed to give
 have been set in the first place.                                     them time to adjust their spending obligations to lower than
                                                                       expected aid receipts. The guarantee limits the impact of
                                                                       shor t-term conditionality, recognising that Governments need
                                                                       to implement reforms because they believe in them, not
                                                                       because of donor conditions, and that dialogue and slow
                                                                       adjustment to funding levels is likely to produce better
                                                                       development outcomes than stop-go did.

 The Facility must be carefully designed to avoid moral hazard         In addition to policy conditionality, discussed above, the design
 on the par t of both donors and recipient countries.                  recognises dangers of creating incentives to distor t aid figures
                                                                       in order to maximise drawings on the fund, and seeks to reduce
                                                                       them through dual Government and lead donor responsibility,
                                                                       and through the requirement for reviews of fund drawings.
                                                                       Donor exaggeration of commitments will attract publicity and
                                                                       pressure from peers and CSOs.



  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
Comment                                                                         Response
In the case that the facility is geared towards insuring volatility             Who pays makes little practical difference. Repayments will
caused by donor behaviour, it would make sense that the                         only be triggered if aid receipts exceed the guaranteed level.
repayments for drawing on the facility be made by the donors                    Although obliging the donors responsible for the shor tfall to
and not by the recipient countries.                                             repay may appear attractive, attribution and collection is likely
                                                                                to prove a messy political and bureaucratic process. The
                                                                                proposed approach has the merit of simplicity. In the event
                                                                                that obtaining repayment proves difficult, the option of budget
                                                                                suppor t donors making repayments to the facility as a first
                                                                                charge on new suppor t is potentially available.

The Aid Guarantee facility cannot and should not insure                         The proposal is to guarantee levels of budget suppor t against
against all. . . causes of volatility.                                          all causes of shor tfall from previously promised levels, with
                                                                                the exception of extreme circumstances (e.g. major corruption
The instrument is probably most appropriate for insuring
                                                                                scandals, human rights abuses, governance breakdown), when
against those risks caused by donor behaviour or that are
                                                                                the guarantee would be suspended only if either all donors
exogenous in nature.
                                                                                agree or the suspension is approved by an independent panel.
There is an urgent need for a detailed analysis of the relative                 For reasons discussed above, problems of conditionality and
impor tance of the factors causing volatility of aid (defined as                difficulties of budget execution are not sufficient reasons for
the difference between donor commitments for a given                            suspending the guarantee, which is in any case proposed to
period and actual expenditures by the recipient country in                      be par tial, and would permit gradual reduction in aid levels
such period). This volatility may be caused by multiple set of                  over time.
factors, some of which are the donors? responsibility (such as
                                                                                The proposed facility insures against shocks emanating from
decreased commitments due to political and budgetary
                                                                                fluctuations in donor aid. It would not try to offset exogenous
reasons or slow disbursement due to bureaucracy in the
                                                                                shocks via the terms of trade or natural disasters, though
donor country), some of which are the recipient countries?
                                                                                exchange rate impact on the value of aid does need to be
responsibility (lack of capacity to disburse, public expenditure
                                                                                insured against. The repor t proposes guaranteeing aid in
management difficulties or non-compliance with conditionalities
                                                                                terms of constant price units of the currency of the recipient.
under the control of the recipient country)
                                                                                A study of causes of aid volatility may be valuable for other
                                                                                reasons, but is not required for the design of the proposed
                                                                                facility.

The Facility as initially proposed does not lengthen the                        The operation of the facility has the effect of increasing the
maturity of the funding provided by donors, which, in the case                  maturity of donor funding, because it not only guarantees that
of the social sectors, is a major deterrent to increasing                       promised increases take place, it also limits the subsequent
recurrent expenditures in a sustainable manner.                                 rate of decline in future aid from the new peak. The extent to
                                                                                which this secures a guaranteed increase in funding into the
                                                                                medium-long term will depend on the funds available for the
                                                                                facility, and the implications for the percentage of promised
                                                                                aid levels that can be guaranteed.

A specific mechanism for diminishing the difference between                     Agreed. The repor t proposes discussion in a working group,
commitments and actual expenditures, although reasonable                        and sets out terms of reference for a design study to take this
and desirable in principle, requires fur ther analysis.                         forward.




                       Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability: Towards a Solution for the Health Sector   
References                                                              Heller, Peter S, and Gupta, Sanjeev (2002), Challenges
Bulir Ales and A. Javier Hamann, ‘How volatile and                      in Expanding Development Assistance. IMF Policy
unpredictable are aid flows, and what are the policy                    Discussion paper PDP/02/5. Washington, DC: IMF.
implications?’ IMF Working Paper WP/01/167.                             HM Government policy paper: Partnerships for
Commission for Africa, Our Common Interest.                             Poverty Reduction: changing aid ‘conditionality’,
Report of the Commission for Africa.                                    improving the predictability of aid: issues and
www.commissionforafrica.org March 2005                                  prospects
Crown Agents, Increasing The Predictability Of                          Joint NGO response to HM Government policy
Aid Flows, Study Of Good Practice Principles                            paper: Partnerships for Poverty Reduction: changing
(Study 2, Phase 2), Joint Venture On Public Finan-                      aid ‘conditionality’, improving the predictability of
cial Management, OECD-DAC Working Group                                 aid: issues and prospects
Contract Ref No: Cntr 04 5677                                           IMF/World Bank (2005), Development Committee,
Crown Agents, Identification of Existing Donor                          Moving Forward Financing Modalities Towards
Practices, Department for International Develop-                        The MDGs, Background Document, DC 2005-
ment, Good Practice Principles Underpinning the                         0008Add.1, April 14th 2005-09-19
Notification of Aid Flows, Contract Date 23 Decem-                      IMF/World Bank (2004), Development Committee,
ber 2003                                                                Aid Effectiveness And Financing Modalities, Back-
DFID, improving the predictability of aid flows:                        ground paper, September 29th 2004, DC2004-0012/
Proposals for action (DFID)-development finance                         Add 1.
team, Dec 2004                                                          IMF-World Bank Concept Note, ‘Aligning Donor
DFID Non-Paper, November 2004, Accelerating                             Budget Support with the PRSP Process’
Progress towards the MDGs: A proposal to provide                        Kanbur, Ravi, 2004, Reforming the Formula: A
longer term predictable financing for stepped up                        Modest Proposal for Introducing Development
recurrent costs for health.                                             Outcomes in IDA Allocation Procedures
DFID, Partnerships for poverty reduction: changing                      OECD-DAC Working Party on Aid Effectiveness
aid ‘conditionality’, a draft policy paper for comment.                 and Donor Practices (2004), Joint Venture on Pub-
September 17th 2004.                                                    lic Financial Management, Draft Good Practice
Foster, Mick (2005), Improving the Medium to Long-                      Paper: 8 December, Good Practices in Public Finan-
term predictability of Aid, January (for DFID).                         cial Management: Increasing the predictability of
                                                                        aid flows
Foster, Mick (2004), MDG-Oriented Sector and Pov-
erty Reduction Strategies: Lessons from Experience                      OECD-DAC Joint Venture on Public Financial
in Health: Main Report, and presentation to High-                       Management (2004), Good Practice Note on the
level Forum on the health MDGs                                          Provision of Budgetary Support- A Public Financial
                                                                        Management Prospective -Draft – December 2, 2004
Foster, Mick, with Andrew Keith (2003), The Case
for Increased Aid, Final Report to the Department                       SPA Budget Support Alignment Survey 2004, DRAFT
for International Development (August)                                  of 03/12/04

Foster, Mick, Adrian Fozzard, Felix Naschold and                        Wagstaff, Adam and Mariam Claeson (2004), The
Tim Conway (2002), “How, when and why does pov-                         Millennium Development Goals For Health, Rising
erty get budget priority? Poverty reduction strategy                    To The Challenges, World Bank
and public expenditure in five African countries.                       World Bank, HDNHE (2005), Health Financing
Synthesis Paper.” Overseas Development Institute,                       Revisited, forthcoming.
Working Paper 168. ISBN 0850035791.                                     World Bank, Operations Policy and Country Serv-
Gottret Pablo and George Shreiber, Fiscal Sustain-                      ices, Review Of World Bank Conditionality, Issues
ability and Aid Predictability Brief, January 3, 2005                   Note, December 6, 2004




  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
Section 2: Fiscal Space and Financial Sustainability   Fiscal Space and Sustainability: Towards a Solution for the Health Sector   
0  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
GLOBAL HEALTH PARTNERSHIPS




                    3Contents   1
                                                                                                                               6
GLOBAL HEALTH PARTNERSHIPS:
ASSESSING COUNTRY CONSEQUENCES
By Kathy Cahill, David Fleming, Michael Conway and Srishti Gupta, Paris, November 2005




1. Introduction                                                             To answer these questions, the Bill & Melinda
In the last decade, over 70 health alliances, or Global                 Gates Foundation and McKinsey & Company have
Health Partnerships (GHPs) have been created to                         conducted an assessment of country-level perspec-
address today’s complex global health issues. GHPs                      tives on GHPs. This study focuses on the issues that
are now the dominant model of organization in                           recipient countries struggle with when working with
this space. In 2002, the Bill & Melinda Gates Foun-                     GHPs individually and collectively, in the context
dation and McKinsey conducted an assessment of                          of the benefits GHPs deliver.
GHPs, and identified five benefits.                                         Specifically:
    When compared with individual partners, health
alliances:
                                                                        •     What are the transaction costs and other conse-
                                                                              quences for recipient countries as a result of
                                                                              interactions with multiple GHPs?
•   Avoid duplication of investments and activities,
•   Produce economies of scale,                                         •     How can GHPs and countries address these
                                                                              consequences?
•   Pool resources to enable higher-risk activities
    than any partner would undertake alone,
•   Share knowledge and resources to improve                              About the research
    effectiveness, and                                                    We conducted field research for this study during the

•   Create momentum and attract funding by build-                         summer of 2005 in 20 countries1. We chose these countries
                                                                          because:
    ing a common “brand” that gains legitimacy and
    support.                                                              •    At least two major GHPs are active in each of them,
                                                                          •    Both the Global Alliance for Vaccines and Immunization
    We believe these benefits should enable GHPs to                            (GAVI) and the Global Fund to Fight AIDS, Tuberculosis
tackle major public health challenges such as HIV/                             and Malaria have made grants to these countries, and
AIDS, malaria, tuberculosis and vaccine-preventable                       •    They reflect a variety of geographies, development/
                                                                               health spending levels, and population sizes.
diseases more effectively than individual players.
    Indeed, our research suggests that these alliances                        Our team of eight people gathered evidence primarily
                                                                          through in-person and phone interviews. We used a struc-
have made progress in preventing and fighting dis-
                                                                          tured, but not quantitative, interview guide. Examples of
eases. They have won attention and financing for                          questions we asked are:
public health challenges at the highest political lev-
els. Countries have boosted access to antiretroviral                      •    How do GHP plans relate to national and district level
                                                                               plans and priorities?
therapy for HIV/AIDS patients, raised vaccination                         •    What should GHPs do to improve coordination and/or
rates and increased the use of directly observed                               reduce the burden of current coordinating mechanisms?
therapy, or DOTS, for tuberculosis. The Working                           •    Has national monitoring and evaluation capacity
Group on Global Health Partnerships established                                changed as a result of GHP activity, and how has that
                                                                               been demonstrated?
by the High-Level Forum on the Health Millennium
Development Goals also found that GHPs attract                                 We interviewed over 350 stakeholders from ministries
new partners into the global fight against specific                       of health, finance, and planning, multilateral agencies, bilat-
                                                                          eral development agencies, NGOs, district health management
diseases and spur innovation.
                                                                          teams and local health facilities. We sought out people
    We know that GHPs work. The discussion,                               whose work lets them see the costs and benefits of GHPs
therefore, needs to shift from “Do we need such                           directly. This includes people responsible for making policies,
partnerships and what value do they add?” to “What                        applying for grants, designing budgets and financial stability
will it take to increase their effectiveness and reap                     plans, attracting health care workers and strengthening
                                                                          health systems.
their full benefits?”

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
      We sought the perspectives of the public, private, and              helped countries craft plans for key diseases that
 civil society sectors. The findings are primarily in the public          might otherwise have been neglected.
 sector, however, since most GHPs choose to interact with                     Angola, for example, recently emerged from
 governments. Where possible, we have tried to verify our                 nearly three decades of civil war. The government
 perceptions with facts and/or cross-check these views with               historically allocated less than 5 percent of its
 multiple stakeholders. We suppor ted survey findings with
                                                                          budget to health. GHP funding has allowed Angola
 data analysis and a review of secondary literature, including
 assessments of GHPs conducted over the last two years.                   to look beyond these basic efforts. This has been
                                                                          especially crucial as the country transitions to
                                                                          peace. The civil war kept HIV/AIDS prevalence
   Our assessment focused on the major GHPs and
                                                                          rates low (less than 5 percent reported incidence)
global initiatives. These include:
                                                                          because populations were often isolated. Develop-
•   The Global Fund to Fight AIDS, Tuberculosis                           ment partners recognized that in the post-war
    and Malaria                                                           environment, HIV/AIDS could spread as Angolans
•   The Global Alliance for Vaccines and Immuni-                          began to move freely. Donor and GHP funding from
    zation (GAVI)                                                         the Global Fund and the World Bank has been crit-
•   The Stop TB Partnership                                               ical in controlling this epidemic before it starts.
•   Roll Back Malaria                                                         In some countries, a combination of funding and
•   The Global Alliance for Improved Nutrition                            procurement capability has increased vaccination
    (GAIN)                                                                rates. Vietnam, for example, had a limited hepatitis
•   The World Bank’s Multi-Country HIV-AIDS                               B vaccination program before GAVI offered its
    Program (MAP)                                                         support. The country now vaccinates newborns
•   The President’s Emergency Plan for AIDS Relief                        for hepatitis B within 24 hours of delivery.
    (PEPFAR)
    Interviewees were most familiar with high-pro-                        b. GHPs have encouraged countries to improve
file, grant-making GHPs such as the Global Fund                           transparency by strengthening program monitoring
and GAVI, but while most of the issues in this paper                      In Zambia, for example, clinics monitor vaccination
arise in the context of large GHPs, they are not                          rates to report back to GAVI and other donors.
unique to large GHPs. GHPs that are smaller and/                          This data is then used by districts when designing
or do not provide funding can also create distortions                     vaccination programs and targeting outreach (e.g.
                                                                          child health weeks and booster campaigns).
and extract similar costs. Therefore, the cost drivers
and opportunities we identify apply across the
spectrum of GHPs.                                                         c. GHPs have boosted stakeholder participation
    This report will look at what GHPs do right,                          Because GHPs interact with all players in the health
issues that arise in their relationships with countries,                  sector, they have helped increase the profile of non-
and what GHPs can do better.                                              governmental stakeholders and the private sector.
    It is structured in three parts:                                      In Zambia, and Bangladesh (where over 50 percent
                                                                          of health care services are delivered outside of pub-
•   Overview of GHP benefits                                              lic institutions), NGOs have applied for and been
•   Consequences stemming from GHP interactions                           accepted as principal recipients for several of the
•   Innovative practices and emerging opportunities                       Global Fund’s grants.
    to address these issues

                                                                          . Consequences stemming from GHP
. Overview of GHP benefits                                               interactions
In addition to the two major benefits of bringing                         These benefits, though, are not without their draw-
much-needed attention and funding to critical dis-                        backs. As the development community has known
eases, GHPs have helped countries in three key ways.                      for years, introducing vertically-oriented external
                                                                          resources into horizontally organized health systems
a. GHPs have spurred countries to craft smarter                           in resource- constrained environments is never easy.
policies and plan for the future                                          Given the expansion of GHPs during the last few
The GHP grant application process encourages                              years, we started this study fully expecting to encoun-
countries to improve their capacity to plan and                           ter a range of issues arising from GHP interactions
anticipate future needs. GHP feedback has also                            with countries.

                                        Section 3: Global Health Par tnerships   Global Health Par tnerships: Assessing Country Consequences   
    Our study identified two major consequences                             These recommendations are based on what these
for countries, and one compounding factor due to                        GHPs and international agencies like the WHO
GHP interactions:                                                       believe are the most effective approaches. However,
                                                                        such tying has had some negative consequences
i. Countries continue to struggle to use the new
                                                                        and countries report concerns with the way GHPs
     resources, given inadequate country systems
                                                                        make policy and technology decisions.
     and infrastructure. Though funding from GHPs
                                                                            Tying funding to policy/technology shifts has
     has increased, GHPs do not provide adequate
                                                                        created uncertainty and a sense, as one interviewee
     support, technical and other, to countries to
                                                                        told us, of “being forced without discussion.” In
     meet the challenge of absorbing funds and
     implementing programs.                                             some cases, when a policy has shifted toward a
ii. Because external resources, by default, arrive                      newer technology or treatment guideline, key stake-
     with their own processes attached, integrating                     holders have received mixed signals about the deci-
     GHP processes with those of recipient countries                    sion. Often, they don’t receive evidence, such as
     can be difficult. Unfortunately, countries are bur-                cost-benefit analyses, to support the change. Neither
     dened with parallel and duplicative processes                      the policy rationale, nor whether there is room for
     from multiple GHPs, because GHPs often bypass                      flexibility is communicated. Some GHPs do not
     the processes that countries already have in place.                adequately discuss the trade-offs and logistics of
iii. To complicate matters, GHPs have not commu-                        using new technologies. Finally, in some cases,
     nicated adequately or effectively with countries                   country officials and local NGOs report that GHP-
     and partners. Communication between GHPs                           chosen policy/technology solutions were not the
     and countries is often one-way and the feedback                    most appropriate for their countries given financial
     loop from countries is weak. Furthermore,                          and health system constraints.
     because GHPs are relatively new aid vehicles,                          Consequently, stakeholders are insufficiently
     relationships between GHPs and their partners                      bought-in, rendering the process of adopting recom-
     at the global and country level have not been                      mended technologies more difficult than necessary.
     solidified. Indeed, this weakness amplifies all
     other problems.                                                      Case study: The need for quicker responses to policy
                                                                          shifts in Burkina Faso and Angola
    In this section, we describe GHPs’ deficiencies                       African countries have long battled malaria, struggling with
in each of these three areas.                                             both costs and resistance. In 2002, domestic research in
                                                                          Burkina Faso demonstrated chloroquine, a relatively inex-
a. Countries struggle to absorb GHP resources                             pensive therapy, was more than 90 percent effective in
                                                                          treating malaria, and had a 10 to 15 percent rate of resis-
Our research found that country stakeholders
                                                                          tance. The national health policy therefore suppor ted using
believe that GHPs do not adequately support shifts                        chloroquine for malaria treatment. The government applied
in policy and technology, do not provide adequate                         to the Global Fund for a Round 2 malaria grant for the use
implementation assistance, and have created too                           of chloroquine, amodiaquine, and sulphadoxine-pyrimeth-
many country coordination forums for such forums                          amine to fight this disease.
to be effective.                                                               After the grant application was approved, though, the
                                                                          WHO and the Global Fund made policy changes favoring
i. GHPs do not adequately support shifts in policy                        ACTs. That, coupled with new repor ts showing that the
and technology                                                            rate of chloroquine resistance was under 15 percent in
GHPs often explicitly or implicitly tie technology and                    several districts, led Burkina Faso to develop a national
                                                                          policy of ACT use, even though ACT treatment is roughly
policy recommendations to their grants. For example:
                                                                          20 times more expensive than chloroquine. The country
•   GAVI has pushed countries to use the pentava-                         applied for full transition funding in Round 5, but in the
                                                                          meantime, Burkina Faso did not receive additional funds to
    lent hepatitis B vaccine.
                                                                          cover the increased costs.
•   PEPFAR requires countries to use FDA-approved
                                                                               Country interviews during the summer of 2005 revealed
    antiretroviral medicines.                                             that stakeholders remain concerned about these costs.
•   The Global Fund puts its weight behind the                            They worry that the country succumbed to pressure to
    WHO policy on Artemisinin Combination                                 adopt the new technology in the absence of meaningful
    Therapy (ACT) use for malaria.                                        long term planning, and they worry whether the program
•   The Stop TB Partnership/Global Drug Facility                          will be financially sustainable.
                                                                               Stakeholders in other countries expressed similar senti-
    favors the four-drug fixed-dose combinations for
                                                                          ments. In Angola, ministry officials found the Global Fund to
    TB treatment.

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
 be slow to change the country’s malaria grant from amodia-               country scaled back the proposal by cutting back
 quine to ACT after new surveillance data showed higher levels            on the amount of money requested instead of
 of resistance to non-ACT therapies. Although the country                 spreading it out over a longer period to adjust for
 eventually submitted a grant application for additional funding          the time needed to ramp up new programs. As a
 to cover the higher cost of ACTs, officials were frustrated              result, after one year, the program has reached
 that the change in treatment had to be implemented with-
                                                                          10,000 people on treatment as a result of Round 4
 out clear financial sustainability planning or suppor t.
                                                                          money but now Tanzania is looking for additional
                                                                          financial support to scale up the program.
ii. GHPs do not provide adequate implementation
                                                                              Inadequate support for implementation is a real
assistance
                                                                          threat to countries’ ability to meet performance
Countries invest heavily in writing applications for
                                                                          metrics. Laos, for example, a country with weak
GHP funding. They often hire external consultants,
                                                                          infrastructure and scarce talent, risked not meeting
but these experts do not always understand what is
                                                                          disbursement targets for its Global Fund grant and
feasible, and tend to leave before implementation
                                                                          having its Global Fund funding held back until finan-
begins. As a result, plans can be difficult to execute
                                                                          cial and monitoring and evaluation system issues
because no one has planned for what to do after the
                                                                          were resolved. This would have created a negative
check arrives.
                                                                          cycle for the country.
    Across countries, we found ample technical assist-
                                                                              To best serve countries, GHPs need to provide
ance available for applications. Recent secondary
                                                                          more and better technical assistance for implemen-
literature supports these findings2. In 2003, UNAIDS
                                                                          tation. Interviewees said they needed assistance in
provided technical assistance to all countries that
                                                                          the following areas:
wanted help writing Global Fund grant applications.
Forty-seven countries asked for assistance and 27                         •      Planning, budgeting and achieving financial
(57 percent) were successful in obtaining grants – a                             sustainability – including financial planning,
success rate more than four times that of proposals                              financial management, training in broad-based
developed without UNAIDS technical assistance.                                   health planning and linking epidemiological
    But what happens after a country receives a                                  data to medium- or long-term planning;
grant? Country ministers repeatedly told us that                          •      Monitoring, evaluation and reporting – includ-
GHPs did not provide them with adequate support                                  ing strengthening existing systems, general
for implementation. For example, for the Round 4                                 monitoring and evaluation procedures, financial
Global Fund HIV/AIDS application in Angola,                                      reporting, health management information sys-
UNAIDS invited three foreign consultants to write                                tem (HMIS) development, and commensurate
the application. These consultants have since left                               funds to implement and support these activities;
the country, but work plans have been inconsistent                        •      Expertise and human resources – including
and no one can clarify assumptions used in budget-                               training in managerial skills, health planning
ing and program design. The principal recipient                                  and clinical skills; and
for Angola, the United Nations Development Pro-                           •      Execution and implementation – including
gramme (UNDP), is midway through the process                                     aspects of program design, procurement, logis-
of rewriting work plans for the grant that was                                   tics and access to best practices from other
approved as part of Round 4.                                                     countries.
    Countries may also not understand what kind
                                                                             GHPs do offer some technical assistance, but
of funds they will need for implementing programs,
                                                                          our research found several problems with current
or what programs they can realistically implement.
                                                                          provisions:
GHPs note that targets are often overly ambitious,
timelines unrealistic, and capacity inadequate. In                        •      First, countries report that the technical assist-
Tanzania, bilateral donors reported that the country                             ance they do receive is inadequate. This hinders
had issues with the scale of the Round 4 applica-                                their ability to use GHP funds effectively.
tion for HIV/AIDS funding from the Global Fund                            •      Second, country partners report that ministry
– originally proposed at $1 billion. At the time of                              officials are often unable or reluctant to ask for
application, in-country partners asked the govern-                               specific technical assistance to implement the
ment to scale back because “they did not think the                               program that goes beyond basic needs. For ex-
Global Fund had that kind of money and that the                                  ample, in Zambia we observed that everyone
country could not absorb that much money.” The                                   from the central level down to the district level

                                        Section 3: Global Health Par tnerships    Global Health Par tnerships: Assessing Country Consequences   
    knew there was a need for assistance, but this                          First, every GHP wants its own coordination
    need was discussed vaguely as “capacity building”                   mechanism, but the roles and responsibilities of
    rather than becoming an actual request for help.                    these coordinating bodies are not clearly defined.
    In both Indonesia and China, partners noted that                    An interviewee in Mozambique said that GHPs
    government officials were reluctant to demand                       did not take the time to understand other programs
    forward-looking technical assistance, such as                       in order to prevent duplication. “PEPFAR does not
    help in designing drug resistance surveys. This                     ask, ‘What are you doing for [the World Bank’s
    finding is supported by the Global Task Team                        Treatment Acceleration Project]?’” the official said,
    report on technical assistance: “In many cases                      “so we do not go into that.”
    where implementation has been slow or sub-                              In Angola there are many coordinating bodies,
    standard, the information deficit (on country’s                     but none meet the country’s needs. In Tanzania
    technical assistance needs) is compounded by                        there are at least four committees focused on HIV/
    countries’ reluctance to engage in technical col-                   AIDS, and although there is a clear division of labour,
    laborations beyond support in the preparation                       there is little communication between the groups.
    of proposals for funding”3.                                         Activities occur as if the other committees do not
•   Third, countries are unfamiliar with the kinds                      exist. Similarly, in the Democratic Republic of Congo,
    of technical assistance available beyond basic                      four separate committees focus on HIV. Ugandan
    application support and training. They don’t                        officials say they would rather have folded the
    know what to ask for, so aid arrives without                        Country Coordinating Mechanism (CCM) into an
    countries’ input. Consequently, there is a lack                     existing HIV committee rather than create an entirely
    of ownership. In Zambia, our interviewees ex-                       new group.
    pressed a belief that technical assistance is often                     Second, coordination meetings achieve little
    pushed onto the country and draws on non-                           real progress. Country officials lack experience in
    locals. Interviewees in Mozambique noted that                       running such meetings, and many countries hardest
    the country has been given technical assistance                     hit by the diseases GHPs fight lack experience with
    that does not fit its needs.                                        the good governance practices, like transparency,
•   Fourth, most technical assistance takes the                         required to run effective meetings. Compounding
    form of advice and reports with recommenda-                         countries’ limited experience with coordination
    tions instead of the long-term, hands-on support                    meetings, countries also often have limited or non-
    countries need to fight diseases effectively. For                   existent budgets for basic administrative services.
    example, in Laos, we heard that “GHPs tend to                       Moreover, because countries lack senior managerial
    send people in for intense bursts of activity and                   expertise, the same people tend to serve on several
    leave reports with a lot of ‘shoulds’ but not a                     coordinating bodies. For instance, in Burkina Faso,
    lot of ‘hows’.”                                                     Tanzania, Bangladesh, Vietnam and Angola, we
•   Last, in-country development partners feel that
                                                                        discovered that many of the same people who
    they do not have the staff or funds to support
                                                                        served on the CCM for the Global Fund served on
    GHP programs. In Vietnam, Zambia and China,
                                                                        the Interagency Coordinating Committee (ICC)
    for example, partners expressed concern about
                                                                        for GAVI, and other national committees. These
    their ability to support an increasingly “unfunded
                                                                        managers’ skills are spread too thin for them to be
    mandate” for technical assistance. Furthermore,
                                                                        fully effective.
    technical assistance needs to be backed by addi-
                                                                            The costs of poor coordination at the central
    tional funds to revamp systems like M&E and
                                                                        level wind up falling on front-line district health
    lab infrastructure. However, funding substantial
                                                                        management teams. NGOs (including those funded
    cross-cutting systems development is beyond
                                                                        by the GHPs) do not consistently share plans with
    the mandate or ability of any single GHP.
                                                                        or disclose finances to districts. In Zambia, for ex-
iii. GHPs have created too many inadequately                            ample, experts estimate that 50 percent of activities
structured country coordination forums                                  in the field are not known to national planners
In the past few years, numerous country-level coordi-                   before they happen.
nation groups, committees and programs, particularly                        The situation is not completely dire, though.
in the field of HIV/AIDS have been created. However,                    Many countries reported that the ICC functions
country interviews suggest that there is very little                    better than the Global Fund’s CCM. The ICC has a
actual coordination to show for this proliferation.                     narrower and less political scope, a clear operational

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
role beyond application submission to ensure that                     Monitoring & evaluation: Officials often collect
EPI targets are met, and greater flexibility in com-                  surveillance metrics for GHP-funded programs in
position and meeting norms.                                           a fragmented manner. These metrics are not con-
    In addition, some countries are addressing the                    sistently integrated into national systems, and con-
issue of proliferating coordination forums in inno-                   sequently GHPs may be duplicating efforts to collect
vative ways. The Kyrgyz Republic, for instance, is                    metrics (e.g., through NGOs). In Zambia, two of the
attempting to merge the CCM and an existing health                    four principal recipients of Global Fund resources
coordination committee to form a new umbrella                         are NGOs and do not currently share the metrics
structure.                                                            they collect for Global Fund programs with the
                                                                      National Statistics Program. Officials in the Office
b. Countries are burdened with parallel and                           of Statistics report, “Collecting data outside of the
duplicative processes from multiple GHPs                              national systems undermines our planning efforts.”
Interviewees told us that the “one size fits all” pro-                Beyond disease-specific surveillance metrics, GHPs
cesses GHPs find tempting to impose on countries                      often require programmatic metrics. This type of
do not recognize their diversity, and that GHPs have                  monitoring can increase program effectiveness and
trouble dealing with system-level issues.                             foster a performance mindset. In some cases, though,
                                                                      GHPs do not align with the country on reporting
i. “One size fits all” processes do not recognize                     formats and timing, even when the content is similar.
country diversity                                                     Furthermore, writing reports and hosting missions
GHPs aim to support country efforts and processes,                    takes up scarce capacity at the district level.
but they sometimes fall short. More often, GHPs
                                                                      Procurement systems: Some observers report that
overlay their processes on country processes. This
                                                                      GHPs have encouraged countries to use procure-
“one size fits all” approach can duplicate and under-
                                                                      ment systems that duplicate efforts and deplete
mine a country’s processes in key areas:                              resources, but in other cases GHP procurement
Planning: GHP planning timelines are often differ-                    systems have helped prevent gaps in service delivery
ent from those of countries. In Ethiopia, Vietnam,                    (see Case study: Procurement systems in Burkina
and Bangladesh, for example, interviewees told us                     Faso, Bangladesh and Angola).
that the clashing schedules have led to duplication,
confusion and misalignment between proposals and                        Case study: Procurement systems in Burkina Faso,
plans. On balance, however, this is a cost countries                    Bangladesh and Angola
                                                                        The government of Burkina Faso was rejected for two
are willing to accept given the magnitude of the                        Global Fund TB grants because the Local Funding Agent
accompanying funding and the infrequency of the                         (LFA) had concerns about the country’s procurement system.
planning exercise. Some have adopted a mid-year                         No formal feedback was available, and officials misinterpreted
review process to assess new sources of funding.                        the rejections as a message that they were required to use
                                                                        the Stop TB Par tnership’s Global Drug Facility (GDF) for
In Bangladesh for example, if GHP grants start in
                                                                        procurement of TB drugs. Indeed, when Burkina Faso sub-
the middle of the annual operational health plan,                       mitted a third application using the GDF for procurement,
the annual plan is changed mid-year to accommo-                         it was approved. Unfor tunately, using the GDF reduced the
date new funding and activities.                                        country’s bulk purchasing power. In addition, after GDF drugs
                                                                        were delayed for several months (delivered mid-February
Financing: For the most part, GHP financing mech-                       2005 rather than November 2004 as expected by the
anisms are separate from country mechanisms. As                         country), Burkina Faso had to dip into the health budget to
a result of this separation, it is difficult for countries              replenish depleted stocks, creating a deficit of 3 to 5 percent
                                                                        for that year’s procurement budget.
to track financial flows, plan medium-term expen-                           Similarly in Bangladesh, after two unsuccessful Global Fund
ditures and think about financing health sector                         TB applications, the country believed it needed to procure
priorities in a holistic manner. Some GHPs and                          TB drugs through the GDF. Even though Bangladesh had been
donors do not finance through health baskets,                           procuring through the private sector, government officials
                                                                        are now dividing the supply chain between the GDF and the
while others finance outside of the government
                                                                        central procurement mechanism/private sector suppliers.
entirely. While separate systems are sometimes                              In cases where country systems are weak or non-existent,
justified, separate mechanisms for financing through                    though, creating a parallel system may be warranted to
GHPs create fragmentation and increase the admin-                       reach program targets. Angola has succeeded in preventing
istrative burden in already resource-constrained                        the usual stock outs of TB drugs this year due to procure-
                                                                        ment through the GDF.
environments.

                                    Section 3: Global Health Par tnerships   Global Health Par tnerships: Assessing Country Consequences   
Figure 1 Fragmentation makes tracking financial flows difficult, though partially justified by
governance concerns


                                                                                                                           President’s
                        MoF                                                                              Global Fund       Malaria init.
                                     World Bank
                                      HAMSET



                                      MoPlanning
                    Provincial         HAMSET
                                       program                       MoH                                    UNDP              USAID
                   government
                                         unit


                              Provincial               National                          Multilaterals
           Provincial                                                       National                                      International
                                public                  public                            (e.g. WHO,     Local NGOs
           hospitals                                                        hospitals                                         NGOs
                               health                   health                             UNICEF)



  Academic                           NGOs/CBOs/      National EPI                                           Local            Local
                    Bilaterals
 institutions                          FBOs            program                                             partners         partners



                                                         GAVI
                                                       provides
 Financial flows to                                  vaccines, ISS                        External
 Angolan government                                    funding                            financial flows             Sources of funds


•   Donors have adopted a variety of routes to fund the health sector. Many do so because of good governance concerns in Angola.
•   It is currently impossible for national or provincial level government to know how much money flows through its region because
    many donors work outside of the central MoF/MoH structure. Even if it had the capacity to do so, government cannot push
    donors to fund gaps or reduce duplicative activities. Also, it is difficult to think about sustainability when no one has a complete
    picture of the country’s health financing.
•   The proliferation of donors focusing on the same programs has also complicated funding flows (e.g. in addition to bilaterals,
    WB and Global Fund both fund HIV/AIDS, TB and Malaria – both through different routes (i.e. MoP and UNDP, respectively).
    Donors should consider focusing on their “comparative advantage”.


ii. GHPs often stumble when dealing with                                      These efforts do make sense for GHPs individ-
system­level issues                                                        ually – but the cumulative effect of such efforts by
The influx of GHP funding has highlighted challenges                       multiple partners could overwhelm countries with
and gaps in country health systems, including                              weak systems for several reasons.
problems with infrastructure, procurement, logis-
tics, health information and financial systems and                         •   First, countries often lack the necessary expertise
human resources. GHPs have not created these                                   or mechanisms to develop system level plans. A
system-level issues. Addressing them is outside the                            CCM member in China stated that “We did not
core mandate of GHPs.                                                          submit a grant for health systems strengthening
    However, these issues do present serious barriers                          (HSS) because the CCM is divided into disease
to realizing the full value of GHPs. Hence, GHPs                               specific sub-committees for applications and
such as the Global Fund and GAVI have started to                               there was no mechanism to create a broad HSS
address these system-wide gaps. Similarly, many                                grant.”
GHPs are undertaking program-specific sustain-                             •   Second, GHP-led health systems strengthening
ability planning efforts, for both human and finan-                            could result in verticalization. A CCM member
cial resources4.                                                               in Zambia noted that “We did not apply for HSS

  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    funding in Round 5 because the Global Fund does                  i. Countries have neither the power nor the appro­
    not fund through basket/pooled funds and that                    priate channels to provide feedback to GHPs
    is where we need support.” In Indonesia, we heard                One of the most common misunderstandings be-
    that the Stop TB Partnership’s efforts to strengthen             tween GHPs and countries is the level of flexibility
    lab diagnostic capabilities, M&E and drug man-                   available for applications and plans. Most countries
    agement can have benefits for the broader health                 do not feel empowered to ask GHPs to tailor their
    system, at least in theory. However, “the reality                approach. They never broach the topic. For example,
    is that TB is still a vertical program and HSS is                a ministry official in Ghana told us, “We changed
    happening largely in disease-specific contexts.”                 our SWAp [Sector Wide Approach] to accommodate
•   Third, in the absence of sound technical assist-                 the Global Fund. We did not think about asking
    ance or planning mechanisms, GHPs may inad-                      them to change – that would be impossible.”
    vertently encourage countries to develop HSS                         In some cases, country officials suspect that the
    plans that are technically weak and too complex.                 GHP representatives in the country are not senior
    An interviewee in Mozambique told us, “Don’t                     enough to discuss policy and flexibility issues. In
    create a complex set of interlinked programs                     Tanzania, for instance, donor partners were reluc-
    and call them systems strengthening.”                            tant to approach the fund manager for the Global
                                                                     Fund given reservations about his influence or
    Any good sustainability plan must address human
                                                                     ability to change elements of that country’s Global
resources and funding. In both areas, GHPs encoun-
                                                                     Fund grant.
ter system-level issues.                                                 Some countries also reported that the time it
•   GHPs may be underestimating the human                            takes for GHPs to respond to countries’ queries is
    resources required for healthcare delivery to                    not conducive to having a productive conversation.
    implement grants. Furthermore, the scarce                        When countries don’t receive answers for months,
    managerial and administrative expertise available                they tend to make decisions on their own. In the
    is sometimes consumed by program-specific                        Kyrgyz Republic, for example, confusion and slow
    project management units.                                        communication about GAVI support for the penta-
•   In funding, the large gap between most coun-                     valent vaccine resulted in the government turning
    tries’ current financial situations and the funding              down GAVI support except for some safety supplies.
    required to sustain GHP programs causes three                        Perhaps the worst result, though, is that poor
    problems. First, because sustainability planning                 communication leads to the propagation of myths
    discussions are held at the program-level and not                about GHP policies. One Asian country’s officials
    at the health sector-level, plans may become                     told us that GHPs consider African countries to be
    ineffective. Second, because GHPs often provide                  a higher priority than countries in their region. In
    support for only a three-year horizon, countries                 Ghana, we heard that the country felt that GHPs
    find it difficult to develop long term sustainabil-              “probably already knew which countries would
    ity plans. Third, because multiple GHPs aim for                  receive money before anyone applied. They should
    countries to sustain the costs of programs after                 have just told us that Ghana was not on the list – it
    grants expire, the collective expense of these                   would have saved a lot of effort that went into the
    programs may be difficult for countries to bear.                 application.” Similar myths about priority programs
    A Ministry official in Tanzania noted that, “In                  exist, including the perception that “The first grant
    three years, we know that we need to take over                   was for HIV/AIDS because that is the biggest pri-
    the HepB vaccine. But in addition to HepB,                       ority for the Global Fund. The next one was for
    we’re supposed to take over ACTs and ARVs.                       TB. Now it is malaria’s turn.” None of this is true,
    We can’t sustain the expense of all of them.                     but in the absence of good communication, coun-
    ARVs alone will cost $34 MM annually, which is                   tries don’t hear differently.
    one-third of Tanzania’s entire public sector                     ii. Partners are unclear about their roles and
    budget.”                                                         responsibilities as they relate to GHP activities
                                                                     GHPs tend to operate with lean central administra-
c. GHPs have not communicated adequately and                         tive staff and minimal or even no in-country staff.
effectively with countries                                           They reason that GHPs should harness the power
Communication across GHPs, partners, and coun-                       of partnerships and not duplicate partner resources,
tries is deficient in two ways.                                      since many of these partners have a country presence.

                                   Section 3: Global Health Par tnerships   Global Health Par tnerships: Assessing Country Consequences   
For the most part, however, countries express frus-                     there is more and more work, our staffing capacity
tration in dealing with GHPs in the absence of a                        has not been increased at all. We do all this support
“country face.”                                                         because we are here to assist the country.”
    In-country partner agencies are not prepared to                         Furthermore, country agencies feel as ill-equipped
be the face of GHPs in the country for a variety of                     to work with GHPs as the countries themselves.
reasons.                                                                For example, in-country WHO and UNICEF staff
    GHPs, for the most part, have not structured                        trying to help countries with GHP applications or
clear agreements about country interactions with                        programs often can’t answer key questions or even
their partners. Global-level memoranda of under-                        tell countries where to turn for help. For example,
standing have a limited impact in defining the role                     one interviewee from a multilateral agency said, “It
of partners on a country-by-country basis. While                        was a slap in the face that the Global Fund originally
country agency staff support grants in some coun-                       wanted to sidestep working with UN agencies. . . .
tries, our interviews found a growing sentiment                         Now the Global Fund expects us to help with their
that this support is often ad-hoc and depends on                        programs, and it works in [this country] because
individual personalities to make it work.                               the personalities here have made it work. . . . The
    GHPs also tend to rely on in-country development                    UN agencies have tried to be a silent partner, but
partners to provide technical assistance for GHP-                       we’d love to see a formalized partnership with the
funded programs. However, with the expanding                            UN agencies to articulate the specifics of what role
scale of GHP-funded programs, country partners                          each partner should play. We think it would be
told us they lack the resources to support countries’                   mutually beneficial.” In the absence of such clarity,
expanding technical assistance needs. One partner                       GHPs run the risk of not harnessing the power of
in Vietnam noted, “We are simply unpaid workers                         these partnerships and becoming yet another donor
of GHPs like the Global Fund and GAVI. While                            entity with a vertical program in the country.



Figure 2 Hosting missions and report writing are major burdens at the district level
Missions can consume                            Report writing can consume even
10–20% of a DMO’s time                          more time
Number of one day missions to Temeke            Number of full days per quarter spent on        Harmonizing report writing can help
during last 6 months                            writing reports (Morogoro)                      reduce the burden
PEPFAR                                  4       JICA                                     2
GFATM                                   2       Finnish                                  2
NTLP                                    2       Axios                                    2
Gates Foundation                        1       UNICEF                                   2
Norwegian TB                            1       World Vision                             2
EPI                                     1       MoH – TB                                 3
UNICEF                                  1       MoH – Malaria                            3
WHO                                     1       MoH – AIDS                               3
NACP                                    1       MoH – EPI                                3
NMCP                                    1       MoH – Maternal health                    3
London School                           1       Weekly notifiable disease repor ts    0.25
Total                                  16       Total                                25.25


We visited several districts in Tanzania to assess the burden of monitoring, evaluation, and repor t writing at the district level. Inter-
views conducted with the DHMT and visitor logs were scored.
It was found that repor t writing can take 40–50% of the time of the District Medical Officer. Repor ts written in the previous
quar ter in Morogoro District included a majority written for the Ministry of Health (over 60%). Hosting missions was an additional
burden on DHMT time that could be spent implementation. In Temeke district, hosting missions absorbed 10–20% at the time of
the DMO. Missions included those from PEPFAR, the Gates Foundation, the Global Fund, as well as multilaterals, research institu-
tions, and bilaterals. Predominant reasons for missions included audits, evaluations, and assessment of new program feasibility.


100  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    We see this risk most clearly in the area of moni-                     like HIV/AIDS. Such countries saw little or no dis-
toring and evaluation. Few GHPs have been able                             tortion of existing priorities. In Mozambique, the
to streamline the M&E requirements of partner                              government was able to work with the Global Fund
organizations into one report. As a result, districts                      to route funding through its existing, functioning,
have to write multiple reports, taking health officials’                   donor-supported SWAp. Countries such as Tanzania,
time away from more pressing matters. (see box                             Zambia, and Vietnam, where policies are set at the
below).                                                                    national level and action plans are determined at the
                                                                           district level in accordance with national priorities,
 Case study: The burden of monitoring and evaluation                       were better able to fit GHP resources into their
 in Angola                                                                 health activities.
 Repor ts help donors know whether their programs are                          In all these cases, leadership and management
 working, but they also add to the workload of in-country
                                                                           capacity have been crucial to creating positive out-
 officers. In theory, GHPs should reduce this burden by
 streamlining repor ting requirements, but in Angola, we
                                                                           comes.
 found that for the Expanded Program on Immunization                           In these countries, local knowledge and evidence
 (EPI) officer, this is not the case.                                      allow country governments to independently plan,
      The WHO/UNICEF Joint Repor ting Form (JRF), the                      design and execute programs and hold a two-way
 GAVI repor t, and Government of Angola EPI program                        dialogue with GHPs to ensure outcomes that are
 monitoring form all track progress with immunization, and
                                                                           optimal for the country.
 so the EPI officer is responsible for all three. The JRF uses
 some data from the country EPI repor t, but still requires
                                                                               To leverage GHPs to reach health outcome tar-
 additional indicators not tracked in the country system.                  gets, countries need to nurture their homegrown
 The GAVI repor t has some overlap with the two repor ts                   talent. It is critical to success.
 for historical data but also focuses on financial data,
 projected immunization targets and qualitative progress.
      This results in major differences in repor t formats for
                                                                           b. Opportunities to reduce costs abound
 all repor ts. Fur thermore, these repor ts are all due at                 We know GHPs operate in a tough and diverse
 different times.                                                          environment.

                                                                           •    Developing country health systems are often
                                                                                inadequate and opaque.
. Innovative practices and emerging                                       •    There are tensions with partners at global and
opportunities to address the issues                                             country levels.
countries face when working with GHPs                                      •    Country situations vary significantly.
While all the countries we surveyed face some of
the issues raised in this assessment, the magnitude
                                                                           •    Multiple priorities compete for scarce leadership,
                                                                                management time and resources.
of the costs vary. Some countries are better at
managing interactions with GHPs than others.                                   Despite the challenging environment, we believe
Similarly, some GHP practices have helped mitigate                         there are several opportunities – within the control
costs and smooth interactions with countries.                              of GHPs – to reduce the costs they impose on recipi-
                                                                           ent countries while retaining the benefits they create.
                                                                           In fact, many of the opportunities suggested below
a. What countries can do                                                   come directly from country stakeholders. The High
In our research, we discovered that countries that
                                                                           Level Forum to advance Health Millenium Devel-
work well with GHPs have a few defining charac-
                                                                           opment Goals could make these opportunities part
teristics:
                                                                           of a monitored action plan for GHPs.
•   They have strong, integrated health plans.                                 To reduce costs, there are steps that GHPs can
•   They have established funding mechanisms in                            take both individually and collectively. GHPs can:
    which donors participate.
                                                                           i. Ensure GHP funding is accompanied by the
•   They clearly establish the roles of central and
                                                                           resources required for implementation
    district governments.
                                                                           Address shifts in policy and technology: The pace of
    For example, in countries with strong plans –                          policy and technology shifts will only accelerate in
such as Vietnam, Bangladesh, the Kyrgyz Republic,                          the coming years. These shifts are pivotal but diffi-
China, Tanzania and Ghana – we found that GHP                              cult events for countries to manage and will have
funding supported execution of an existing health                          long-term ramifications for countries’ health out-
strategy or brought focus to under-funded priorities                       comes. To achieve their policy goals, GHPs must,

                                       Section 3: Global Health Par tnerships   Global Health Par tnerships: Assessing Country Consequences   101
over the long-term, let countries lead discussions                      and processes to work better with specific country
on the optimum timing, pace, and scale of new                           health systems. Most GHPs do want to strengthen
technology adoption. For instance, instead of                           and work through existing country systems, and
immediately adopting ACT therapy for malaria, as                        several are doing just that. They are using continuous
GHPs pushed, some countries might have phased                           funding cycles or funding system wide approaches.
in ACT use, focusing on the neediest districts first.                   They are changing their mindsets to “becoming
                                                                        the best provider” instead of “not being the worst
Provide adequate implementation support: Countries
                                                                        offender.” Specifically, GHPs need to be flexible with
shoulder the costs of implementing GHP programs,
                                                                        countries, and let countries know that, if they achieve
so GHPs should allow countries to include overhead
                                                                        a good track record and develop strong health sys-
costs in their grants. This will allow countries to
                                                                        tems, flexibility is an option in areas including:
build the management capacity and technical infra-
structure needed to implement grant activities. GHPs                    •   Frequency of and level of detail in grant appli-
could suggest what portion of a grant would be                              cations
appropriate for implementation and infrastructure                       •   Grant size
support. Encouraging countries to explicitly budget                     •   Use of existing country systems and timelines
for and access support will stimulate demand for                            in areas like planning, monitoring and evalua-
such assistance.                                                            tion, procurement or coordination
    Collectively, GHPs should collaborate to develop                    •   Pace of ramp-up and duration of support for
an easily accessible database of providers of tech-                         sustainability planning
nical assistance and technical solutions. These pro-                    •   Nature of interactions with central, state and
viders should have expertise across diseases, health                        district-level decision makers
systems, geography and solutions areas (e.g., install-                      We understand that tailoring processes, while
ing and upgrading health IT systems, opening new                        helpful, will exacerbate the challenges of commu-
clinics and designing patient-advocacy campaigns).                      nication by making the rules less clear for both
The database should contain experience profiles                         countries and potentially for GHP partners. Hence,
and track records.                                                      GHPs will have to communicate the boundaries of
    True collaboration means sharing best practices.                    flexibility and establish clear standards for country
GHPs should create a knowledge management                               interactions with GHPs.
tool to share information across countries, regions                         Moreover, GHPs should use technical assess-
and partners - a service that several countries have                    ments to provide concrete feedback to countries.
asked for.                                                              This feedback could address areas such as procure-
    Make country level coordination effective, par-                     ment systems and HR capacity. Transparent feedback
ticularly in the area of HIV/AIDS: GHPs active in                       will help countries decide where to invest in system
HIV/AIDS are responsible for addressing the lack                        improvements. Stronger systems, in turn, will allow
of meaningful coordination in this disease area, and                    GHPs to be more flexible.
must be held accountable for the resulting costs                            Stop duplicating efforts:
for countries. GHPs and other international HIV/
AIDS initiatives can help by providing tangible sup-                    •   GHPs need to collaborate to ask countries for
port for coordination mechanisms. This includes                             one unified multi-year health sector plan. This
facilitating meetings or workshops, establishing                            plan would cover priorities, programs, infra-
communication norms, and earmarking part of                                 structure requirements and expected financial
the grant to support the coordination mechanism’s                           flows and funding. This plan should cover all
activities. This can be led by an in-country partner                        health sector actors including the national
or supported by GHPs’ administrative teams. In                              health system, the private sector and NGOs.
addition, GHPs should develop memoranda of                              •   Countries and GHPs should evaluate alternative
understanding between partners in coordination                              models of funding health system strengthening
mechanisms that clarify roles and responsibilities.                         instead of individual GHP efforts. For example,
                                                                            countries could incorporate overhead charges in
ii. Design processes and systems so they comple­                            individual grants to fund shared health system
ment each country’s own processes and systems                               investments.
Realize “one size fits all” processes don’t work:                       •   Collectively, GHPs should reduce the burden
GHPs must tailor their approaches, requirements                             of missions and reporting by creating a single

10  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    unified mission for all partners in a disease area,                   establish basic norms for communication (e.g.
    and creating one unified report for country offi-                     promise to answer queries in three days and
    cials to complete.                                                    resolve issues in 30 days).
iii. Improve communication with countries                            •    Clarify when partners are the face of the GHP.
                                                                          Because countries do not know when a partner
Boost communication between GHPs, partners
                                                                          represents the GHP and because partners don’t
and countries: Delayed and patchy communications
                                                                          fully align their policies and technical support with
dilute program quality and create a negative percep-
                                                                          relevant GHPs, countries look to global level
tion of GHPs. Fortunately, GHPs can change this
                                                                          administrators for information and support when
quickly. They can:
                                                                          they could ask questions closer to home. To this
•   Increase the size and quality of GHP global level                     end, GHPs should develop country-specific
    administration to ensure prompt and qualified                         memoranda of understanding with lead partners
    dialogue with countries on administrative and                         about local planning and implementation activi-
    technical topics. This would allow GHPs to                            ties that make roles and responsibilities clear.




                                 Section 3: Global Health Par tnerships   Global Health Par tnerships: Assessing Country Consequences   10
                                                                                                                         7
BEST PRACTICE PRINCIPLES FOR GLOBAL HEALTH
PARTNERSHIP ACTIVITIES AT COUNTRY LEVEL
By Karen Caines, Paris, November 2005




1. Introduction                                                         ciples of effective aid and the practice of major
The High Level Forum on the Health MDGs (HLF)                           GHPs at country level. It therefore developed pro-
in December 2004 in Abuja held a session on Global                      posals for best practice principles for GHP activities
Health Partnerships and Funds (GHPs). It identified                     at country level and their follow-up, with examples
the need for action to:                                                 of practical implications and enabling actions required
                                                                        from other parties.
•   review cross-cutting issues and identify oppor-                         Global Health Partnerships (GHPs) have a major
    tunities for synergies and harmonization between                    role to play in scaling up priority health interven-
    different initiatives and partnerships                              tions and investments, improved health outcomes
•   support further analytic work (building on                          and faster progress towards achieving the health
    studies and evaluations already carried out by                      and poverty reduction MDGs. Indeed, a key reason
    DFID and its Health System Resource Centre,                         for establishing such partnerships and funds stemmed
    the World Bank, the European Commission and
                                                                        from global concern about the growing burden of
    DAC) to provide greater clarity about guiding
                                                                        disease pandemics, particularly in Africa, and the
    principles and actual practices, draw out lessons
                                                                        need to accelerate action substantially if global
    about best practice, and support the develop-
                                                                        targets were to be achieved. A fundamental strategy
    ment of common principles of engagement and
                                                                        of GHPs has been to work in new ways to expand
    systems for monitoring their application.
                                                                        effective collaboration – including promoting
    To consider these issues further, a High Level                      greater participation by civil society and the private
Forum Working Group on Global Health Partnerships                       sector – and increase access to resources to serve
was established to bring together representatives of                    those in need.
recipient countries, donor countries, partnerships,                         Overall GHPs have contributed many benefits.
foundations, and multilaterals. It met twice, in                        The major GHPs have been instrumental in advo-
April and September 2005.                                               cating for, or providing, large-scale new financing.
    It concluded that a new country-level study                         They have raised the profile of their target diseases
would add value to current knowledge. The Bill                          at the highest political levels globally and nationally.
and Melinda Gates Foundation was already com-                           Other key areas of success have been to accelerate
missioning a study of GHPs to be undertaken by                          progress; attract new partners and increase the
McKinsey & Co. who have since surveyed 20 coun-                         profile of non-governmental stakeholders, includ-
tries and undertaken field visits to six. The study                     ing NGOs and the private sector, in the global fight
provides an up to date assessment of the country-                       against specific diseases; provide a means of support-
level perspective on global health partnerships and                     ing global public goods; secure substantial economies
initiatives. It focuses on the transaction costs at                     of scale (eg in drug procurement); and in some cases
country level of multiple GHP interactions (on                          lead innovation. Development of a clear strategy,
top of existing donor communities), in the context                      building a consensus around it, and coordinating
of the benefits provided by GHPs.                                       partner efforts are fundamental added-value objec-
    The Working Group examined the relevance of                         tives for technical GHPs.
the Paris Declaration on Aid Effectiveness for the                          At the same time, the proliferation of global
health sector generally and GHPs in particular. In                      health partnerships and funds over the last few years
the light of previous studies of Global Health Part-                    – alongside traditional donor activity – has raised
nerships and provisional findings and conclusions                       new issues. GHPs are highly diverse in nature, scope
from the McKinsey & Co. country study, it noted a                       and scale, and any attempt to compare them with
gap between these internationally-recognised prin-                      the same yardstick has considerable limitations.

10  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
Most are relatively small or very specialised. The                          Draft best practice principles have been derived
main concerns at country level relate to a few major                     from a GHP-specific adaptation of the five key areas
global health partnerships. Overall the collective                       of the Paris Declaration on Aid Effectiveness:
impact of GHPs has created or exacerbated a series
of problems at country level including: poor coor-                       •    ownership: GHPs respect partner country leader­
                                                                              ship and help strengthen their capacity to exercise it;
dination and duplication among GHPs; high trans-
action costs to government and donors from having                        •    alignment: GHPs base their overall support on
                                                                              partner countries’ national development strategies,
to deal with multiple initiatives; variable degrees
                                                                              institutions and procedures;
of country ownership; and lack of alignment with
country systems. The cumulative effect of these                          •    harmonisation: GHPs’ actions are more harmo­
                                                                              nised, transparent and collectively effective, and GHPs
problems is to risk undermining the sustainability
                                                                              collaborate at global level with other partners to
of national development plans, distorting national
priorities, diverting scarce human resources and/or                           address cross­cutting challenges such as health system
establishing uncoordinated service delivery structures.                       strengthening;
    In addition, without increased support to help                       •    managing for results: GHPs work with countries
build health system capacity in almost all develop-                           to adopt and strengthen national results­based man­
ing countries, the resources mobilised by global                              agement
health partnerships and initiatives are unlikely to                      •    accountability: GHPs provide timely, clear and
achieve their full potential. Longer-term there will                          comprehensive information.
be need to sustain the achievements realized through                         In addition, a few best practice principles on
shorter-term support from GHPs.                                          GHP governance are proposed. In the interest of
    Evidence from studies of GHPs1 suggests a gap                        public accountability, GHPs should ensure that their
between the overall practice of GHPs at country                          purpose, goals and objectives are clear; procedures
level and internationally-recognised principles of                       are transparent; and key documents should be
effective aid, as set out most recently in the Paris                     publicly available on the internet.
Declaration on Aid Effectiveness (March 2005).                               If best practice principles are agreed, the inten-
Successful scaling up will require more aligned and                      tion is to move forward swiftly to practical action.
harmonised approaches (for example, in relation                          Further work in collaboration with individual GHPs
to GHP application procedures, transfer of funds,                        is required to explore fully the implications for GHPs
management, monitoring, reporting and auditing).                         of operationalizing the best practice principles,
    There are opportunities within the control of                        which are likely to be different for each GHP. The
GHPs to make changes in their approach and pro-                          full paper lists examples of the kinds of issues that
cesses to reduce the costs they impose on recipient                      are likely to emerge.
countries. Most of the Paris Declaration principles                          Given the need to tailor approaches to different
are already being practised by some GHPs in some                         settings, these principles are primarily to be opera-
countries – which suggests that there may be chal-                       tionalized at country level. Countries may wish to
lenges but no insuperable barriers. Yet no single                        set their own targets and indicators. There is scope
GHP appears to practise all in all environments. A                       for the development of country-level mechanisms to
key message for GHPs is the importance for them                          support compliance through country-specific agree-
to act with speed and flexibility:                                       ments between all partners on rules of engagement.
•   to endorse and enact some best practice princi-                          An issue-focused global forum should be held
    ples for the engagement of GHPs at country                           on a regular basis to provide an opportunity for key
    level, primarily relating to alignment and harmo-                    players from major GHPs, recipient governments
    nisation, in the belief that better harmonized                       and donors to review principles, practice and pro-
    and aligned aid from GHPs will ultimately lead                       gress; and address issues of joint concern, including
    to better results; and                                               overlaps, gaps and systems issues. Ideally such a
•   to work with countries, and with other agencies                      discussion would take place within the wider con-
    and GHPs, rapidly to get in place solutions to the                   text of taking stock of developments in the health
    simpler problems raised, while at the same time                      sector as a whole.
    developing approaches to the more challenging                            If best practice principles are adopted, follow-up
    problems.                                                            action from GHPs should include a self-assessment

                  Section 3: Global Health Par tnerships   Best Practice Principles for Global Health Par tnership Activities at Country Level   10
of individual GHP practice in relation to the prin-                     Development Assistance Committee of the OECD,
ciples; development of proposals for action; and                        UN system organizations (through the UNDG), and
consideration with countries and other partners of                      the World Bank.
those wider issues needing collective action.                              The five key areas of the Paris Declaration are:
   Enabling action will also be required from other
                                                                        i. ownership: partner countries exercise effective
partners, including countries, and bilateral and
                                                                             leadership over their development policies and strat­
multilateral agencies.
                                                                             egies, and coordinate development actions
                                                                        ii. alignment: donors base their overall support on
. Health and the OECD/DAC Paris                                             partner countries’ national development strategies,
Declaration on Aid Effectiveness                                             institutions and procedures
                                                                        iii. harmonisation: donors’ actions are more harmo­
a. The Paris Declaration on Aid Effectiveness:                               nised, transparent and collectively effective
General                                                                 iv. managing for results: managing resources and
Global Health Partnerships operate within a wider
                                                                             improving decision­making for results
health and development context. Best practice
                                                                        v. mutual accountability: donors and partners
principles for GHPs should be set within the frame-
                                                                             enhance mutual accountability and transparency for
work of existing agreements to streamline, harmonise
                                                                             development results and the use of resources.
and strengthen development cooperation.
    As early as the 1980s, there was concern that a                         ‘Alignment’ refers to efforts to bring the policies,
proliferation of donor projects (combined with dif-                     procedures, systems and cycles of the donors into
ferences in donor policies, operational procedures                      line with those of the country being supported, and
and reporting mechanisms) were hindering the                            ‘harmonisation’ refers to efforts to streamline and
effectiveness of aid, creating an unsustainable                         coordinate approaches among donors.
administrative burden on countries and reducing                             Within these five areas, the Paris Declaration has
local ownership. Recognition of these problems                          some 50 commitments to improve aid quality, involv-
led to the emergence, in the late 1980s and early                       ing action by both donors and partner countries.
1990s, of budget support, sector-wide approaches                        These will be monitored by twelve indicators and
and Poverty Reduction Strategy Papers (PRSPs).                          specific targets for the year 2010 (set out in Annex 1).
These new approaches were guided by the idea that                           Examples of targets for 2010 include:
aid should be provided more flexibly; that govern-
ment (rather than donors) should set priorities and
                                                                        •   at least 85% of aid to be reported on government
                                                                            budget(s);
allocate resources; and that the transaction costs
of aid should be reduced.
                                                                        •   66% of aid flows to be provided through pro-
                                                                            gramme-based approaches;
    The movement towards better aid resulted in
two High Level Forums on Aid Effectiveness – in Rome
                                                                        •   40% of donor missions to the field, and 66% of
                                                                            country analytic work to be joint;
in February 2003 and Paris in March 2005. Donors
and partner countries defined the ‘aid effectiveness’
                                                                        •   parallel project implementation units to be
                                                                            reduced by two-thirds.
agenda and committed to implementing it. At Rome,
donors agreed (among other things) to ensure that
development assistance is delivered in accordance
                                                                        b. The significance for health2
                                                                        From a health perspective, the move towards more
with partner country priorities, including poverty
                                                                        streamlined and predictable donor support has a
reduction strategies; reduce the number of missions;
                                                                        number of implications. For example:
streamline conditionalities; and simplify and har-
monize reporting procedures.                                            •   The concept of country ownership over develop-
    Earlier this year in Paris, a new Declaration on Aid                    ment policies and poverty reduction strategies
Effectiveness was issued which moved the agenda                             should extend to the health sector. This has
on by adding indicators and targets to the commit-                          two aspects: first, health sector plans should be
ments. It has the support of over 100 developing                            country-owned and developed. There remains,
and donor countries, and organisations including                            however, a role for development partners (includ-
the African Development Bank, Asian Development                             ing GHPs) to challenge and help strengthen
Bank, European Bank for Reconstruction and                                  country plans which do not adequately prioritise
Development, Inter-American Development Bank,                               the health needs of the poorest people. Second,

10  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    health ministries should engage in framing ‘up-                       Coordination Among Multilateral Institutions and Inter­
    stream’ development strategies, as these impact                       national Donors which reported in June 20053.
    on (for example) health workers’ pay and sector
    budget ceilings. There is need therefore to build
    capacity within ministries of health to engage                        . Paris Declaration commitments and
    with ministries of finance and planning, and                          GHP practice at country level
    with poverty reduction strategy (PRS) processes.                      This section identifies target GHPs and provides a
    Ideally the PRS should build on a sound health                        general overview of findings on GHPs from recent
    sector plan and expenditure framework.                                studies. It then examines study evidence about GHP
•   Development assistance for health should be                           practice at country level in relation to the main
    aligned with national systems, including health                       areas of the Paris Declaration commitments: owner-
    service delivery systems; information and moni-                       ship, alignment and harmonisation (with relevant
    toring systems; and national procurement systems.                     indicators like aligning aid flows on national priori-
    Multi-year commitments on aid flows are essen-                        ties, using country systems, avoiding parallel imple-
    tial if countries are to make sustainable plans to                    mentation units and making aid more predictable),
    scale up health provision, for example by employ-                     managing for results, and accountability.
    ing more health workers or beginning long-term
    treatment programmes. Multi-year commitments                          a. Target GHPs
    on budget support are seen by many as a way                           Estimates suggest there are from 75-100 GHPs,
    of increasing predictability. However, as donor                       depending on definition. The main types have been
    support moves upstream, it will be important                          classified as:
    to maintain government-partner dialogue to
    ensure that health remains a priority within                          •    research and development: GHPs involved in prod-
    overall development efforts, and that improved                             uct discovery and development of new therapies
    health service delivery and better health out-                             (vaccines, treatments etc.);
    comes are being achieved.                                             •    technical assistance/service support: GHPs provid-
                                                                               ing drug donations, support improved service
•   Harmonisation and simplification of donor
                                                                               access and/or give technical assistance;
    practice are particularly important to the health
    sector, which is typically characterized by a                         •    advocacy (national and international levels):
    large number of actors (bilateral, multilateral                            GHPs advocating for increased international
    and GHPs), many with a particular disease or                               and national response to specific diseases, fund-
    age focus (eg malaria, or child health). At present,                       raising for specific control programmes etc.
    coordination mechanisms in health are highly                          •    financing/funding: GHPs providing funds for
    variable from country to country.                                          specific programmes.
•   Improved, accessible information is key to meas-                          They are highly diverse in nature, scope and
    uring performance and ‘managing for results’.                         scale, and any attempt to compare them with the
    There is need to strengthen health information                        same yardstick has considerable limitations. Most
    systems, particularly in low-income countries,                        are relatively small or very specialised.
    and to agree on a set of process indicators that                          Studies suggest that the main concerns at country
    can help policy makers assess health system                           level relate to a few major global health partner-
    performance.                                                          ships (GFATM, GAVI, the Stop TB Partnership and
•   Innovative approaches to strengthen direct                            Roll Back Malaria). Most either channel significant
    accountability between health providers and
                                                                          resources and/or coordinate major health partners
    clients are needed, as well as mutual account-
                                                                          in key areas.. Two further Partnerships – the Health
    ability between donors and partner countries.
                                                                          Metrics Network and the Partnership on Maternal,
    Experience is needed of effective ways to tackle
                                                                          Newborn and Child Health – are too new to pro-
    corruption, fuelled by low pay and constrained
                                                                          vide country-level evidence but are likely to form
    resources in the health sector.
                                                                          part of future collaboration among major GHPs.
   The Declaration is already providing at least                          There are significant differences in function and
part of the context for other relevant action in the                      operation between GHPs providing funding (GFATM
health and related sectors, for example the work of                       and GAVI) and those concerned with coordination,
the UNAIDS’ Global Task Team on Improving AIDS                            advocacy and technical support (Roll Back Malaria

                   Section 3: Global Health Par tnerships   Best Practice Principles for Global Health Par tnership Activities at Country Level   10
and the Stop TB Partnership). Proposals for best                            At the same time, there is a striking consensus
practice principles would, however, have relevance                      among recent multi-GHP studies that – alongside
to all global health partnerships.                                      the many important contributions made by GHPs
                                                                        – their collective impact has created or exacerbated
                                                                        a series of problems at country level. For example:
b. General overview of findings on GHPs from
recent studies                                                          •   poor coordination and duplication among
Overall most studies agree that GHPs have contri-                           GHPs and with other agencies. For example,
buted many benefits. The major GHPs have:                                   several GHPs – in addition to multilateral and
                                                                            bilateral agencies – are undertaking programme-
•   been instrumental in advocating for or providing
                                                                            specific sustainability planning for both human
    large-scale new financing;
                                                                            and financial resources.
•   raised the profile of their target diseases at the
                                                                        •   high transaction costs to government and donors
    highest political levels globally and nationally;
                                                                            from having to deal with multiple initiatives.
•   accelerated progress (though it remains unclear
                                                                        •   variable degrees of country ownership; and
    whether some GHP targets will be delivered on
    time);
                                                                        •   lack of alignment with country systems.

•   attracted new partners and increased the profile                        The cumulative effect of these problems is to risk
    of non-governmental stakeholders, including                         undermining the sustainability of national develop-
    NGOs and the private sector, in the global fight                    ment plans, distorting national priorities, diverting
    against specific diseases;                                          scarce human resources and/or establishing unco-
•   encouraged the use of evidence-based approaches                     ordinated service delivery structures. This has been
    to public health (such as harm reduction and                        a long-running concern and GHPs have made efforts
    substitution therapy) which may be neglected                        to minimise transaction costs. Even so, the most
    by governments;                                                     recent study still finds that there are multiple oppor-
•   provided a means of supporting global public                        tunities for GHPs to reduce the burden on countries
    goods;                                                              further. Countries also have opportunities to improve
•   secured substantial economies of scale (eg in                       the way they deal with GHPs.
                                                                            Delayed, patchy and weak communication
    drug procurement); and
•   in some cases led innovation.                                       between some GHPs, countries and partners can
                                                                        seriously dilute program quality and create a nega-
    Development of a clear strategy, building a con-                    tive perception of the GHP. In some cases, countries
sensus around it, and coordinating partner efforts                      have faced delays in getting clear feedback, advice
are fundamental added-value objectives for techni-                      and technical assistance from the GHP headquarters.
cal/coordination GHPs.                                                  The rationale for policy and technology shifts has
    A study currently being finalised by McKinsey                       not been sufficiently communicated. The problem
and Co. provides up to date evidence of findings at                     may stem in part from the emphasis on GHPs
country level4. Given the speed of developments,                        operating with lean secretariats. In-country partner
most findings in this paper are drawn from its pro-                     agencies are not always prepared to be the face of
visional report unless specified otherwise. The study                   the GHP in the country, and conversely some GHPs
agrees with earlier work that GHPs are achieving                        are not always comfortable about being represented
their goal of increasing focus and activities on specific               by partner agencies.
health priorities that may have been marginalised                           The influx of money from GHPs has highlighted
or under-resourced.                                                     existing problems in the basic health systems in many
    Besides getting much-needed attention and                           recipient countries. Without increased support to
funding to fight diseases, countries have benefited                     help build health system capacity in almost all
from GHPs’ interactions in a variety of ways. For                       developing countries, the resources mobilised by
example, GHPs’ requests have caused countries to                        global partnerships are unlikely to achieve their
increase planning capacity and GHP feedback has                         full potential. Critical components include preven-
helped countries craft robust plans for key diseases.                   tion, system capacity building (reflected most drama-
Countries have strengthened the rigour of pro-                          tically in shortages of professional health workers),
gramme monitoring and improved accountability                           surveillance, research, monitoring and evaluation,
for use of funds and overall transparency.                              other essential public health functions, and the

10  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
role of non-health sectors. GHPs are now planning                         to work with others to address key challenges, for
to put substantial funds into systems building, but                       example in relation to human resources.
their plans and activities need to be coordinated
within wider national and global efforts rather than                      c. Ownership
creating a multiplicity of individual GHP efforts.                        National ownership is fundamental since national
    GHP programmes may under-estimate the                                 partners are accountable to their own societies for
human resources required to implement grants,                             the services they provide. As a matter of principle,
although this may be changing. In a recent applica-                       GHPs need to ensure that their activities are coher-
tion to the GFATM from the Democratic Republic                            ent with national development strategies, as well as
of the Congo, only 5% was allocated to human                              sectoral strategies.
resources; this subsequently increased to 20% when                            Equally, national development plans should
UNDP as the Principal Recipient requested a reallo-                       acknowledge the contribution of GHPs to achiev-
cation of the budgets. There is also an acute short-                      ing health sector goals. GHP activities often involve
age of skilled managers. In these circumstances,                          a wide stakeholder group (including civil society,
GHPs often attract scarce talent from government                          private sector and government), which is in line
activities, and the cumulative impact of GHPs amid                        with commitments to increase participation in
multiple partners in-country may well overwhelm                           national development strategies.
countries. In some cases, GHPs have allowed signi-                            In practice, studies suggest variable degrees of
ficant salary inflation to occur, particularly for pro-                   country ownership. For example, the recent Final
gramme managers. This undermines countries’                               Report of the Global Task Team on Improving AIDS
ability to deal with retention, and can become even                       Coordination among Multilateral Institutions and Inter­
more problematic if donors escalate salaries to com-                      national Donors found that progress towards realiz-
pete with each other for talent, as has happened in                       ing this vision of national ownership has been uneven,
Viet Nam and Cambodia.                                                    hindering progress towards realisation of the ‘Three
    While GHPs have mobilised technical assistance                        Ones’ principles for AIDS5. It judges that relatively
to help countries prepare applications for funding,                       few of the existing national AIDS strategies meet
post-application technical assistance is neither well-                    the requirements of one national AIDS action
articulated by countries nor well-supported by                            framework, as defined within the ‘Three Ones’.
partners. Inadequate funding of technical support                             Conversely there was little evidence of interna-
for implementation – as well as management capa-                          tional partners supporting nationally-owned plans
city to execute and oversee scaled up programmes                          and policies, and ensuring that their own activities
– is a real threat to countries’ ability to meet perform-                 are included in national plans. The Global Task
ance measures. In the short-term, there is increased                      Team report challenges countries to secure owner-
and urgent demand at country level for aligned and                        ship by developing capacity to identify problems, set
harmonised technical assistance for implementation.                       priorities and establish accountable systems to en-
Coordinated and expanded support is needed from                           able the rapid scaling up of a multisectoral response
throughout the UN system. There is also a role for                        to AIDS. It also challenges multilateral institutions
foundations and the private sector. All technical                         and international players (which include relevant
assistance should be demand-led by countries and                          GHPs) to be accountable for providing support to
capacity-building in nature. The long-term aim                            national plans, policies, procedures, systems and
must be to develop good quality competence and                            cycles, including through aligning with them and
infrastructure at country level, with diminishing                         harmonising with each other. The underlying
need for external assistance. This is likely to run                       principles would apply equally to GHPs in other
beyond the scope of individual GHPs and require                           health areas.
an institutional base.                                                        National coordination of GHPs is the key to
    In general, these cross-cutting system-level issues                   better performance, for which capacity to manage
have neither been directly caused by GHPs nor are                         external partners is critical. There are several coun-
they unique to GHPs. Solutions will require collec-                       tries that exemplify how this can be done effectively.
tive consideration and action from a broader set of                       However, there are others where the institutions
stakeholders. It is imperative upon GHPs both to                          of government function poorly or are on the point
help build country ownership of health programmes                         of collapse. Strategies for better co-ordination in
and support development of country systems, and                           these circumstances require attention.

                   Section 3: Global Health Par tnerships   Best Practice Principles for Global Health Par tnership Activities at Country Level   10
      The GFATM, through its Country Coordinating                       2015). Similarly the Roll Back Malaria Partnership
Mechanisms (CCMs), is frequently cited as having                        has this year produced a Global Strategic Plan
increased the involvement of the private and civil                      2005-2015 to coordinate partners’ activities, and a
sectors, and improved transparency. Countries are                       small task team is preparing proposals for discussion
piloting innovative ways of strengthening coordi-                       at a global RBM forum in November 2005.
nation bodies.                                                              However, there remains scope for greater harmon-
     Overall however, countries are seeing a surfeit                    isation and collaboration across GHPs, including
of coordination mechanisms, with little effective                       the smaller GHPs. There is already an initiative to
coordination to show for it. The costs of poor co-                      secure greater integration of GHP programmes
ordination at the central level fall on the districts at                for schistosomiasis, lymphatic filariasis, trachoma,
the front line of execution. NGOs (including those                      onchocerciasis, intestinal helminths, and the micro-
funded by GHPs) do not consistently share plans                         nutrient initiative, in countries in which they are
with districts, nor disclose finances. The McKinsey                     co-operational.
study notes an estimate that in Zambia, 50% of
activities at district level are unplanned, mostly as                   e. Aid flows are aligned on national priorities
a result of NGO activities.                                             The rationale for the creation of GHPs was pre-
     In Burkina Faso, Tanzania, Bangladesh, Viet Nam                    cisely to focus attention on specific areas regarded
and Angola among other countries, many of the                           as requiring greater attention by partners acting in
same people are stretched across the main coordi-                       concert at the global level. Both stimulated and
nating bodies, including the CCM for the GFATM                          accompanied by effective advocacy programmes,
and the Inter-Agency Coordinating Committee                             GHPs have led to a major increase in resources for
(ICC) for GAVI, in addition to various national                         communicable diseases.
committees. Many countries report that ICCs                                 The issue of the extent to which GHPs are
function better than CCMs, perhaps because of                           aligned on, or distort, national priorities has been
their more limited scope, clear operational role                        a matter of vigorous debate not fully resolved by
beyond application submission, and lack of formal-                      past studies. The current McKinsey & Co. study
ity. Despite the ‘Three Ones’, HIV/AIDS has seen                        describes a distinction between countries based on
a proliferation of coordinating bodies and national                     the strength of their health plan (which may itself
bodies where HIV/AIDS is a major agenda item,                           be an indicator of institutional capacity in the
with little evidence of increasing coordination.                        health sector).
                                                                            In those countries where a strong health plan
d. Alignment and harmonisation                                          exists and is utilised, (for example, Viet Nam,
The current multiplicity of disease-specific GHPs,                      Bangladesh, Kyrgyzstan, China, Tanzania and
together with the activities of traditional interna-                    Ghana), priority areas have not been affected by the
tional organisations (which are a mix of disease-                       availability of additional funding. In some cases,
specific and system-wide interventions), carry high                     the influx of HIV/AIDS funding has increased the
transaction costs for developing countries. GHP                         priority given to the disease where countries might
requirements – for preparing proposals, reporting                       otherwise ignore it. For example, in Bangladesh
progress, procuring supplies, or in terms of insti-                     the team heard that “given the social stigma of
tutional arrangements – differ significantly from                       HIV/AIDS, government will to address the poten-
programme to programme. A particular feature of                         tial health epidemic would not exist in the absence
some GHPs has been their pressure on countries                          of donor funding and focus on the disease”. More-
to respond urgently to a very tight timeframe.                          over, the study found that countries set incoming
    The technical/coordination GHPs already pro-                        funding against execution of their health strategy.
vide a vehicle for harmonisation in relation to                             In other – often resource-scarce – countries with
their specific disease. Among the first products of                     weak health plans, (for example, Chad, the Demo-
the coordinated work of country authorities, donors                     cratic Republic of the Congo, Angola, Cambodia,
and technical partners coming together as the Stop                      Zambia, Guinea and Laos), the limited capacity in-
TB Partnership were DOTS Expansion Plans –                              country is drawn to areas with financial resources,
generally formulated as part of larger 2-5 year                         such as HIV/AIDS. In these countries, there is no
development plans of Ministries of Health – and                         spill-over from funded areas into other areas. Areas
the Global Plan to Stop TB 2001-2005, (shortly to                       such as maternal and child health remain highly
be succeeded by the Global Plan to Stop TB 2006-                        under-resourced, despite need. The Partnership on

110  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
Maternal, Newborn and Child Health is too new                            on countries from multiple, parallel financing,
for impact yet to be seen at country level. In Chad,                     planning, management, procurement and reporting
for example, while active diversion of resources is                      systems and secure better health outcomes.
not occurring, donors’ lack of focus on certain                              Most GHPs do profess to want to strengthen
health areas reinforces their low prioritisation.                        and work through existing country systems but
Furthermore, even where areas of GHP activity                            this is not the case in practice. GHPs have often
are prioritised, lack of resources can result in frag-                   overlaid a standard set of their practices on coun-
mented implementation (for example, in relation                          tries (NB this is likely to apply mostly to the funding
to malaria control in Zambia).                                           GHPs, especially the GFATM). This results in dupli-
    Overall, some countries seem better able to                          cation of effort and undermining of country pro-
work with GHPs, withstand shifts in priorities and                       cesses. GHPs must continue to tailor their approach,
handle some of the associated transaction costs.                         requirements and processes to better reflect country
Contributory factors include the existence of a                          capacity.
strong, integrated health plan; an established fund-                         Planning: GHP planning timelines and scope
ing mechanism in which donors participate; and                           differ from those of the country, for example in
the clear delineation of roles between central and                       Ethiopia, Viet Nam and Indonesia. This leads to
district governments. Countries in which policies are                    duplications, confusion and misalignment between
set at the national level and action plans determined                    proposals and plans. On balance, this is a cost coun-
at the district level in accordance with national pri-                   tries are willing to accept given the magnitude of
orities (for example, Tanzania and Viet Nam) are                         the accompanying funds and the infrequency of
better able to fit GHP resources into activities.                        the exercise. Some countries have adopted a mid-
    This reinforces the wider need for GHPs and                          year review process to assess new sources of funds
donors to help strengthen country processes, espe-                       and resources that come outside their planning
cially an integrated health plan. Where GHPs                             cycle (eg in Bangladesh).
require applications (most notably the GFATM),                               Financing: For the most part, financing mecha-
the application process itself – though it can be                        nisms for funding GHPs are still separate from the
time-consuming and intense – has often led coun-                         country’s mechanisms, leading to planning com-
tries to develop or strengthen health plans.                             plexity and administrative costs in tracking funds.
    GHPs often explicitly or implicitly tie policy                       While there are circumstances which justify sepa-
recommendations to grant-making, with some                               rate systems (eg governance concerns, a budget
negative consequences. In some cases, countries                          ceiling for health, or funding for the private or NGO
perceive that they have been encouraged to replace                       sector), separate mechanisms for financing through
policies that were most appropriate for them, given                      GHPs creates fragmentation. For example, in Angola
local financial and health system considerations.                        where there are concerns about lack of good gov-
More generally, communication about policy ration-                       ernance, it is currently impossible for national or
ales and GHP flexibility seems poor, and new tech-                       provincial level government to track financial flows,
nology adoption is not well-supported. Potential                         since donors have adopted a variety of routes to
funders need to announce their policies earlier and                      fund the health sector. The proliferation of donors
more consistently so that countries can plan appro-                      focusing on the same programmes but through
priately (ie, both for programmatic and financial                        different financing routes has further complicated
sustainability purposes). GHP new technology                             funding flows. Thinking about sustainability is also
requirements include GAVI pentavalent/Hep B                              difficult when there is no complete picture of the
vaccine; Stop TB Partnership/Global Drug Facility                        country’s health financing.
4-drug combination product; PEPFAR FDA-approved                              Several GHPs are experimenting with proposals
antiretrovirals; and GFATM support for artemisinin                       to adapt processes to the needs of individual or
combination therapy (ACT) only where indicated                           segments of countries e.g. continuous cycles, fund-
by WHO guidelines.                                                       ing SWAps and baskets. But overall the McKinsey
                                                                         study finds that GHPs are not adequately supporting
f. Use of country systems                                                country financial mechanisms. In those countries
Alongside the push for better health outcomes,                           with Sector Wide Approaches (SWAps) with pooled
much of the global debate around GHPs has been                           funding, GHP participation remains very limited.
about the need for alignment and harmonisation                           The Global Fund, for example, has to date formally
at the country level, in order to reduce the burden                      joined SWAps only in Malawi and Mozambique.

                  Section 3: Global Health Par tnerships   Best Practice Principles for Global Health Par tnership Activities at Country Level   111
McKinsey & Co. study findings: GHPs are not adequately supporting country financial mechanisms
 Country                 Country mechanism                                                                  GHP outside
                                                                                                            mechanism
 Bangladesh              SWAp (HNPSP) with >80% of budget from government and donors falling                GAVI
                         under single financial and repor ting system. GHPs funding equals 2.5% of budget   GFATM
                         but each GHP adds repor ting requirements.

 Burkina Faso            Emerging SWAp – PADS – integrates single repor t for all donors and provides       GAVI
                         decentralised funding to districts. Limited GHP engagement with districts.         GFATM

 Mozambique              Established SWAp with 10 major par tners, including GFATM, contributing to         GAVI
                         common fund with single repor ting system.                                         PEPFAR




    A GFATM report on Harmonization of Global                           no insuperable barriers. For their part, countries
Fund programs and Donor Coordination provides                           should be aiming to strengthen systems so that
four case studies with a focus on HIV/AIDS6. They                       donors are more comfortable relying on them. In
describe action to improve harmonisation and align-                     the short-term, while such systems are weak, GHP
ment, but also the reality of the challenges. For                       activities should be ‘shadow aligning’ with countries
example, in Mali a broadly representative body                          systems and contributing to building their capacity.
(HCNLS) has been established to take responsibility
for leading the country’s multisectoral response to                     g. Avoiding parallel Project Implementation Units
HIV/AIDS, and its role as Principal Recipient for                       Implementation conducted vertically through Pro-
three large HIV/AIDS programmes has begun to                            ject Management Units (PMUs) may allow greater
show potential for alignment on the part of the                         focus and increase the individual programme’s
World Bank, the GFATM and the African Develop-                          potential for success, but it can also fragment
ment Bank. UNAIDS and other partners have pro-                          implementation efforts within a disease area, create
vided funding to develop a common monitoring                            parallel structures and consume scarce resources.
and evaluation (M&E) system and database. The                               For example, a 2004 study in Uganda found
GFATM expects to use the National Program for                           that a separate Global Fund Project Management
Social and Health Sector Development and HCNLS                          Unit (‘the Ugandan Global Fund for AIDS, TB and
audit procedures at the end of the first year of its                    Malaria’) had been established with 20 staff 7. Instead
grant. Nonetheless, the study identifies challenges                     of adopting a more integrated approach and making
in ensuring that the common monitoring and evalu-                       use of existing MoH resources and structures, it
ation system is fully implemented; aligning procure-                    required the MoH national disease programmes at
ment and supply management plans; strengthening                         both national and district levels to submit separate
the capacity of the new HCNLS; and further defining                     workplans from their own MoH workplans, and
the HCNLS’ relationship with the CCM.                                   established its own procurement facility and a parallel
    In Mozambique, joining the SWAp has prompted                        transport system. The study noted a lack of clarity
the GFATM to explore ways in which its requirements                     about links between the PMU and the CCM, and
for assessments of Principal Recipient capacities,                      between the PMU and the MoH decision-making
approval of procurement and supply management                           and monitoring bodies under Uganda’s health SWAp.
plans, audit reports, and monitoring and evaluation
plans can be adjusted to use the mechanisms already                     h. Predictability (and sustainability) of aid
established by the SWAp.                                                GHPs are delivering large-scale new financing for
    The overall conclusion is that GHPs should be                       communicable diseases and other global public
working towards much greater use of national                            goods, against a backdrop of strong growth in
systems for disbursement of funds, procurement,                         development assistance for health over the last three
monitoring and evaluation. The fact that the fund-                      decades8. However, in 2004 GHPs had not achieved
ing GHPs have been able to finds ways to participate                    their aim of attracting new funding sources with
in SWAps with pooled funding in some countries –                        the exception of Foundations, especially the Gates
for example, the GFATM in Mozambique and GAVI                           Foundation. Most funds continued to be provided
in Uganda – suggests that there are challenges but                      by traditional donors, who were then providing

11  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
97% of pledges for the GFATM. There were and                              a forecast funding gap for HIV/AIDS of at least US$
remain concerns about the uncertainty of future                           56 million compared to 2006 peak levels as funding
levels of funding for the GFATM, and hence for the                        from global health initiatives, partnerships and
disease areas it supports9.                                               other donors tapers off.
    Uncertainty in disbursement leads to difficulty
in short and medium-term planning. In some cases                          i. Managing for results
(e.g. Ghana) where Government identified GHP-                             There is need for common reporting on country
funded proposals as part of its national strategies,                      results as defined in overall national plans rather
distortions were created when GFATM applications                          than the results attributable to a particular GHP
were not approved10.                                                      programme. This might be an indicator of progress
    Tackling the challenges of controlling major                          in relation to good practice. Some GHPs do use
diseases requires sustained long-term financing to                        only existing national metrics systems, and in the
support sustained, long-term action. In a demonstra-                      case of GAVI have provided additional resources
tion project in Zambia, the Gates/PATH Malaria                            to improve their quality and audit11. GFATM and
Control and Evaluation Partnership in Africa                              PEPFAR have agreed on joint reporting.
(MACEPA) programme, funding has been com-                                     The McKinsey study found that surveillance
mitted for nine years. But replicating this model                         metrics for GHP-funded programmes are collected
would be challenging on a number of fronts, not                           in a fragmented manner and not consistently inte-
least that it requires longer-term commitments                            grated into national systems. In Zambia, two of
than are typically made today.                                            the four Principal Recipients of GFATM funding
    If GHPs were to move towards direct budget                            are NGOs who do not currently share the metrics
support, the trade offs in terms of measuring addi-                       they collect for GFATM programmes, since they
tionality and impact of GHP money would need to                           are not required to do so. This undermines national
be recognized. The general move from sector-based                         planning efforts.
aid to direct budget support raises issues about en-                          Programmatic monitoring and reporting take
suring that governments allocate sufficient resources                     significant amounts of valuable time from district
to health in their expenditure frameworks, and the                        and health facility staff. Major variations in report-
skills needed in Ministries of Health to prepare                          ing indicators and formats (eg in Angola, between
scaled-up budgets and negotiate with Ministries of                        the country Health Management Information Sys-
Finance.                                                                  tem (HMIS), the WHO/UNICEF Joint Reporting
    Sustainability is a recurring concern in studies.                     Form ( JRF) and the GAVI report) make the system
GHPs have had a prominent role in introducing high                        very cumbersome. In some cases the frequency and
value goods (eg antiretrovirals) into under-resourced                     timing of GHP reports may also be misaligned,
health systems. Most interventions funded by GHPs                         creating additional burdens. For example, in Viet
are potentially highly cost-effective – except antiretro-                 Nam all national health/donor reporting is aligned
virals where there are social justice arguments. Even                     with Ministry of Health quarterly and biannual
so, low-income countries are unlikely to be able to                       reporting, except for GFATM quarterly financial
meet ongoing costs themselves. This has major impli-                      and activity reporting on a TB grant. The latter’s
cations for sustainability of health sector expendi-                      financial report is off cycle by just one month,
ture. For example, in several countries external                          resulting in the need to recompile all the quarterly
funding for HIV/AIDS (most of which has been                              financials rather than use existing data.
provided by GHPs) is already equivalent to or                                 Most countries do not feel sufficiently empowered
greater than the public health budget. (This issue is                     to ask GHPs to tailor their approach. For example,
dealt with in greater detail in another paper prepared                    Ghana changed its SWAp to accommodate the
for the High-Level Forum: Fiscal space and sustain-                       GFATM without asking the Fund about flexibility.
ability from the perspective of the health sector.)                       This is part of the picture of weak – and on the part
    Planning for financial sustainability is often                        of GHPs, unresponsive – communications between
seen as difficult to achieve and not taken seriously.                     GHPs, partners and countries. An unfortunate side-
Countries perceive that the magnitude of funding                          effect is the propagation of myths about GFATM
is too large to plan for a handover. For example, in                      intentions and policies.
Vietnam, the Ministry of Health supports just 10%                             Funding GHPs like GAVI and the Global Fund
of the HIV/AIDS budget in 2005. By 2010, there is                         have adopted principles of performance-based

                   Section 3: Global Health Par tnerships   Best Practice Principles for Global Health Par tnership Activities at Country Level   11
funding or disbursement. Stronger information                           k. Conclusions
and accountability systems are needed to inform                         Country studies have for some time now consistently
judgements in relation to performance-based                             concluded that the undoubted benefits of GHPs are
funding. Tying funding to performance creates                           accompanied by high transaction costs – costs that
greater incentive to deliver outcomes and increases                     are the direct result of interventions by at least the
accountability of some programmes. There is,                            major GHPs, especially those concerned with fund-
however, an issue as to how to balance this with                        ing. The growing human resource gap in some
the need for more predictable funding, especially                       countries implies that they can even less afford the
given concerns specific to the health sector. If long-                  transaction costs imposed by GHPs.
term treatment programmes are started with short-                           At global level, there is a marked acceleration
term funding, or if such programmes are “switched                       in action to address some key problems and chal-
off ” because performance is judged to be poor,                         lenges directly caused by GHPs. For example, various
there are ethical and public health implications (for                   activities are being taken forward urgently as a result
example, drug resistance).                                              of the Global Task Team report, including:
    When a country’s Health Management Informa-
tion System (HMIS) is strong, GHPs should use it.                       •   The GFATM and the World Bank intending to
                                                                            work together to review and improve their
When it is weak, they should invest to improve it
                                                                            alignment with national cycles and action plans;
rather than develop parallel systems. There should
                                                                            undertake joint annual reviews as primary eval-
be investment in training of country level staff to
                                                                            uation where their Principal Recipient of funding
improve analytical capability, and ability to make
                                                                            is the same (in at least three countries by June
decisions based on data, which would in turn in-
                                                                            2006); pilot joint fiduciary assessments; foster
crease the sense of ownership of the data. Helping
                                                                            communications, information-sharing and joint
countries improve their health information systems
                                                                            action, for example by regular meetings and
and use their data will be a key task of the Health
                                                                            sharing reports, terms of reference and mission
Metrics Network.
                                                                            reports; identify procurement and supply bottle-
                                                                            necks in the implementation of grants; define
j. Accountability                                                           problems between National AIDS Commissions
At present the accountability of a GHP is generally                         and CCMs.
judged in relation to its own objectives. Judging its
impact on overall health sector and PRS objectives
                                                                        •   Establishment of a joint UN System/Global
                                                                            Fund problem-solving team and national task-
is also required.                                                           specific problem-solving teams.
    Several GHPs already make considerable
amounts of information available on their web-                              Other actions are underway:
sites. As a matter of principle, in order to ensure                     •   GAVI in its second phase will base support on
public accountability, all GHPs should publish key                          country's multi-year plans (immunization and
documents on the internet: annual plans, budgets                            health sector plans). Long-term (5-10 year) pre-
and performance reports (including income and                               dictable funding will be a legal requirement in
expenditure reports); evaluations; standing orders,                         the case of the IFFim, and is likely to provide
including processes for appointments of Board                               greater security for governments than current
members and Chairs; and papers and reports of                               bilateral donor financing which studies have
key meetings, especially Board meetings. Funding                            shown to be surprisingly volatile. Coordination
GHPs should provide timely, clear and compre-                               mechanisms other than for technical matters
hensive information on GHP assistance, processes,                           (ICC) will fold into sectoral or programmatic
and decisions (especially decisions on unsuccessful                         processes.
applications) to partner countries requiring GHP                        •   The Stop TB Partnership is working closely
support.                                                                    with the GFATM.
    This paper addresses itself to best practice prin-                  •   The last few months have seen the launch of
ciples for GHPs but, as with the Paris Declaration,                         the Health Metric Network, action to create a
the logic would be that success would require mutual                        Health Workforce Alliance, and broader WHO-
accountability, with complementary commitments                              led collaboration – involving GAVI, the GFATM
from countries and other partners.                                          and Stop TB among others – on health systems

11  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    strengthening issues (including a sub-group on                        each partner country. The evidence suggests that
    the non-state sector).                                                most of the principles are already practicable for
                                                                          some GHPs, but no single GHP appears to practise
     One crucial importance of the McKinsey study
                                                                          all. If the principles are agreed, GHPs may wish to
is its demonstration that the problems associated
                                                                          review policies and practices, and prepare an action
with GHPs still figure very large at country level,
                                                                          plan for operationalization.
despite the perception at global level of shifts of
attitudes, increased flexibility and progress having
been made towards alignment and harmonisation.                            b. Implications of draft Best Practice Principles
A possible reason for the gap between global level                        i. Implications for GHPs
expressions of support to the principles of align-                        The intention is to move forward swiftly to practical
ment and harmonisation and the country findings                           action. Further work in collaboration with individual
may simply be the time-lag. Most of the global                            GHPs is required to explore fully the implications
progress described has been made within the last                          for GHPs of operationalising the best practice prin-
few months.                                                               ciples, which are likely to be different for each GHP.
     Against this background, a key message for GHPs                          The following points may serve as useful exam-
is the importance for them to act with speed and                          ples of the kinds of issues that are likely to emerge:
flexibility:
                                                                          •    GHPs should not normally be active in countries
•   to endorse and enact some best practice princi-                            where the target disease or condition is not an
                                                                               identified priority in country-owned and -led
    ples for GHPs, primarily relating to alignment
    and harmonisation; and                                                     strategies such as the poverty reduction strategy
•   to work with countries, and with other agencies                            (PRS) and/or health sector plan. However, there
    and GHPs, rapidly to get in place solutions to                             are cases where these plans do not adequately
    the simpler problems raised, while at the same                             reflect health or prioritize health issues. In such
    time developing approaches to the more chal-                               cases, GHPs (like other development partners)
    lenging problems.                                                          have a role in supporting countries to ensure that
                                                                               health is appropriately reflected in PRSs, Sector
                                                                               plans, MTEFs and budgets;
. Proposals for Best Practice Principles                                 •    GHPs without a country presence should con-
for GHP activities at country level                                            sider reaching explicit agreement, possibly
a. Draft proposals for best practice principles                                backed by formal MOUs, with partner agencies
The Paris Declaration on Aid Effectiveness is directly                         able to represent them in-country, in order to
relevant to the health sector, and application of its                          address some current problems about commu-
commitments should improve the effectiveness of                                nication and speed of response issues. It may
health development assistance. While there is need                             be helpful to extend any such agreement to
to keep GHPs free of unhelpful bureaucracy, they                               providing support for implementation;
too should honour its commitments since they are                          •    Disbursement of funds should be aligned to
now a key part of the global health architecture12.                            the government budget cycle, and resources
The Paris Declaration generally offers an appropriate                          pledged 5 years in advance in order to support
framework for developing best practice principles                              health sector planning;
for GHP activity at country level, though it notably                      •    The implications for fiscal space and fiscal sus-
did not cover technical assistance which is an impor-                          tainability of introducing (expensive) new tech-
tant issue in relation to the success of GHP support                           nologies should be discussed with ministries of
for countries.                                                                 health, finance and planning, and with develop-
    The table below therefore sets out draft proposals                         ment partners;
for best practice principles for global health partner-                   •    GHPs should be represented at regular health
ships and initiatives which are active at country level.                       sector partners’ meetings, either directly or
These are intended not as an end in themselves but                             through representatives;
as a means to improve health outcomes and accel-                          •    Sustainability planning (for a realistic timeframe)
erate progress towards achieving the health and                                should be coordinated across GHPs, based on a
poverty reduction MDGs.                                                        unified discussion with ministries of health,
    The principles will need to be interpreted in                              finance, planning and any other relevant national
light of the specific circumstances of each GHP and                            bodies;

                   Section 3: Global Health Par tnerships   Best Practice Principles for Global Health Par tnership Activities at Country Level   11
Draft Best Practice Principles for Engagement of Global Health Partnerships at Country Level
Global Health Par tnerships (GHPs) commit themselves to the following best practice principles:

 Ownership
 1         To respect par tner country leadership and help strengthen their capacity to exercise it.
           GHPs will contribute, as relevant, with donor par tners to suppor ting countries fulfill their commitment to develop
           and implement national development strategies through broad consultative processes; translate these strategies into
           prioritised results-oriented operational programmes as expressed in medium-term expenditure frameworks and
           annual budgets; and take the lead in coordinating aid at all levels in conjunction with other development resources in
           dialogue with donors and encouraging the par ticipation of civil society and the private sector.

 Alignment
 2         To base their suppor t on par tner countries’ national development and health sector strategies and plans, institutions
           and procedures. Where these strategies do not adequately reflect pressing health priorities, to work with all par tners
           to ensure their inclusion.

 3         To progressively shift from project to programme financing.

 4         To use country systems to the maximum extent possible. Where use of country systems is not feasible, to establish
           safeguards and measures in ways that strengthen rather than undermine country systems and procedures.
           Country systems in this context would include mechanisms such as sector-wide approaches, and national planning,
           budgeting, procurement and monitoring and evaluation systems.

 5         To avoid, to the maximum extent possible, creating dedicated structures for day-to-day management and implemen-
           tation of GHP projects and programmes (eg Project Management Units)

 6         To align analytic, technical and financial suppor t with par tners’ capacity development objectives and strategies; make
           effective use of existing capacities; and harmonise suppor t for capacity development accordingly.

 7         To provide reliable indicative commitments of funding suppor t over a multi-year framework and disburse funding in a
           timely and predictable fashion according to agreed schedules.

 8         To rely to the maximum extent possible on transparent par tner government budget and accounting mechanisms.

 9         To progressively rely on country systems for procurement when the country has implemented mutually agreed
           standards and processes; and to adopt harmonized approaches when national systems do not meet agreed levels of
           performance13. To ensure that donations of pharmaceutical products are fully in line with WHO Guidelines for Drug
           Donations14.

 Harmonisation
 10        To implement, where feasible, simplified and common arrangements at country level for planning, funding, disburse-
           ment, monitoring, evaluating and repor ting to government on GHP activities and resource flows.

 11        To work together with other GHPs and donor agencies in the health sector to reduce the number of separate, dupli-
           cative missions to the field and diagnostic reviews assessing country systems and procedures. To encourage shared
           analytical work, technical suppor t and lessons learned; and to promote joint training, (eg common induction of new
           Board members).

 12        To adopt harmonized performance assessment frameworks for country systems.

 13        To collaborate at global level with other GHPs, donors and country representatives to develop and implement
           collective approaches to cross-cutting challenges, par ticularly in relation to strengthening health systems including
           human resource management.

 Managing for results
 14        To link country programming and resources to results and align them with effective country performance assessment
           frameworks, refraining from requesting the introduction of performance indicators that are not consistent with
           par tners’ national development strategies.

 15        To work with countries to rely, as far as possible, on countries’ results-oriented repor ting and monitoring frameworks.

 16        To work with countries in a par ticipatory way to strengthen country capacities and demand for results-based manage-
           ment, including joint problem-solving and innovation, based on monitoring and evaluation.

 Accountability
 17        To ensure timely, clear and comprehensive information on GHP assistance, processes, and decisions (especially decisions
           on unsuccessful applications) to par tner countries requiring GHP suppor t.



11  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
Governance
The governance principles are intended for larger partnerships with formalized governance arrangements. Partnership activities must be
consistent with the regulatory framework of their host arrangements.
18       To make clear and public the allocation of roles and responsibilities within the management structure of the par tner-
         ship or fund. The governing board or steering committee should have broad representation and a strong developing
         country voice.

19       To make clear and public the respective roles of the par tnership and relevant multilateral agencies, including how the
         par tnership relates to the host organization.

20       In the interest of public accountability, to ensure that GHP purpose, goals and objectives are clear ; procedures are
         transparent; and timely and comprehensive information is provided publicly.

21       There should be a strong commitment to minimizing overhead costs and achieving value for money; each par tnership
         should have an evaluation framework.

22       To be subject to regular external audit. For hosted par tnerships, the auditing procedures of the host UN organization
         would apply. A copy of the relevant portion of the external auditors’ certification of accounts and audit repor t should
         be made available to the par tnership board.




•   Individual GHPs may need to adapt the indica-                           ii. Enabling conditions
    tors used to monitor progress at country level,                         The corollary to these best practice principles for
    in line with the development of national health                         GHPs would be some complementary commit-
    information systems;                                                    ments on the part of countries and other partners
•   Wherever possible, GHPs should use existing                             to assist in providing the enabling conditions.
    robust analytical work and appraisals of man-                              For countries, commitments would include as a
    agement systems, for example relating to pro-                           minimum to:
    curement;
•   GHPs should allow countries to experiment
                                                                            •    develop clear national health sector strategies,
                                                                                 with a medium-term expenditure framework
    with the organisation of coordinating bodies to                              and a health sector plan, within the framework
    increase efficiency and participation (and coun-                             of a broader national development strategy such
    tries should ensure appropriate leadership of                                as a poverty reduction strategy.
    such bodies);
                                                                            •    exercise leadership in coordinating partner actions
•   GHPs should provide guidance which clearly
                                                                            •    have procurement and public financial manage-
    states that technical assistance for implementa-                             ment systems that either (a) adhere to broadly
    tion can be an explicit part of proposals;                                   accepted good practices or (b) have a reform
•   GHPs should regularly review their work at                                   programme in place to achieve these.
    country level to see which elements could be
    handed over to government (eg procurement),                                Bilateral and multilateral partners have both
    and develop where appropriate a plan for disen-                         joint and differentiated responsibilities in contribu-
    gagement (as in the case of some GHPs working                           ting to the enabling conditions. These include:
    to eliminate specific tropical diseases);                               •    Supporting countries to ensure that health is
•   GHPs and countries should review the need for                                appropriately reflected in PRSs, sector plans,
    specific Project Management Units, with a view                               MTEFs and budgets;
    to disbandment;                                                         •    Adopting a coherent position to individual GHPs
•   Greater GHP flexibility and tailoring processes                              in their various roles as funders, GHP partners/
    to individual country needs will be helpful, but                             Board members, and when operating at country
    may also make the ground rules less clear for                                level. They should produce clear guidance for
    countries and potentially for GHP partners.                                  field staff, to be widely-publicised within their
    GHPs will need to invest in communicating                                    organisations, about their role in, and important
    proactively the scope and boundaries of flexi-                               contribution to, GHPs. Engaging substantively
    bility. They could also usefully institute some                              in GHPs will have implications for how staff
    basic service norms for day-to-day communica-                                time and effort is spent;
    tion (eg a 3-day turnaround time to respond to                          •    Seeking to ensure that no new GHP is estab-
    communications and 30 days to resolve issues).                               lished unless the value it adds is demonstrably

                     Section 3: Global Health Par tnerships   Best Practice Principles for Global Health Par tnership Activities at Country Level   11
    clear, and that continued support is dependent                      country-level mechanisms to support compliance
    on continued need;                                                  through country-specific agreements between all
•   Providing increased and urgent support for                          partners on rules of engagement.
    technical assistance for implementation. Multi-                         A practical example of the kind of agreement
    lateral agencies are themselves likely to require                   envisaged is provided by the Memorandum of
    additional support from donors in this area.                        Understanding between the Government of Uganda
    Further work is required to explore different                       and its development partners, in support of the
    models for more demand-driven technical assist-                     National Health Policy and the second Health
    ance. This should consider issues including:                        Sector Strategic Plan 2005-2010, through a sector-
    agreement on the need; identification of possible                   wide approach. It sets out the obligations of all
    sources (local, regional, international); estab-                    parties (for example, for partners to use Govern-
    lishing quality standards; agreeing on actual costs;                ment systems including the Health Management
    and determining selection procedures.                               Information System; synchronise planning, review
•   Specific consideration should be given to provid-                   and monitoring processes with those established
    ing organisational, facilitative or administrative                  to monitor the Health Sector Strategic Plan; and
    support to Country Coordination Mechanisms                          negotiate with the Ministry of Health all new health/
    (CCMs) to allow them to fulfill their oversight                     health service programmes to be implemented in
    functions adequately.                                               districts). It also details approaches, eg to procure-
•   Working with GHPs to enable them to put some                        ment and to the provision of technical assistance
    of the principles into effect, eg being subject to                  (which is to be determined on a demand-driven
    external audit when housed by a UN body.                            basis, and encourage the use of Ugandan or regional
•   As a matter of urgency, developing technical                        consultants for short-term assistance.
    guidance on health systems, including work on                           The HLF Working Group on GHPs feels that
    human resources and health financing mecha-                         no additional global mechanism for coordination
    nisms, to guide GHPs in their work on health                        or monitoring is required or appropriate. A prefer-
    systems strengthening. This could include work                      able alternative would be for a light-touch and
    by countries, GHPs and other partners to eval-                      issue-focussed forum to be held on a regular basis.
    uate alternative models to fund health systems                      Its purpose should be to provide an opportunity
    strengthening instead of individual GHP efforts.                    for key players from major GHPs, recipient gov-
    Current parallel streams of work on this topic                      ernments and donors to review principles, practice
    should be brought together.                                         and progress; and address issues of joint concern,
                                                                        including overlaps, gaps and systems issues. Ideally
iii. Future follow up of progress                                       such a discussion would take place within the
Given the need to tailor approaches to different                        wider context of taking stock of developments in
settings, these principles are primarily to be opera-                   the health sector as a whole and should be supple-
tionalised at country level, and in that context,                       mented by more informal liaison and information-
countries may wish to set their own targets and                         sharing between the 5-6 large GHPs on a regular
indicators. There is scope for the development of                       basis.




11  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
Annex 1
The Paris Declaration of Aid Effectiveness: indicators of progress and targets
To be measured nationally and monitored internationally
 Indicators                                 Targets for 2010
 Ownership
 1        Par tners have operational        At least 75% of par tner countries have operational development strategies.
          development strategies
 Alignment
 2a       Reliable public financial         Half of par tner countries move up at least one measure (i.e., 0.5 points) on the PFM/
          management (PFM) systems          CPIA (Country Policy and Institutional Assessment) scale of performance.
 2b       Reliable procurement              One-third of par tner countries move up at least one measure (i.e., from D to C, C to
          systems                           B or B to A) on the four-point scale used to assess performance for this indicator.
 3        Aid flows are aligned on          Halve the gap – halve the propor tion of aid flows to government sector not repor ted
          national priorities               on government’s budget(s) (with at least 85% repor ted on budget).
 4        Strengthen capacity by            50% of technical co-operation flows are implemented through co-ordinated programmes
          co-ordinated suppor t             consistent with national development strategies.
 5a       Use of country public finan-      For par tner countries with a             All donors use par tner countries’ PFM systems; and
          cial management systems           score of 5 or above on the                Reduce the gap by two-thirds – A two-thirds reduc-
                                            PFM/CPIA scale of perfor-                 tion in the % of aid to the public sector not using
                                            mance (see Indicator 2a).                 par tner countries’ PFM systems.
                                            For par tner countries with a             90% of donors use par tner countries’ PFM systems;
                                            score between 3.5 and 4.5 on              and
                                            the PFM/CPIA scale of perfor-             Reduce the gap by one-third – A one- third reduc-
                                            mance (see Indicator 2a).                 tion in the % of aid to the public sector not using
                                                                                      par tner countries’ PFM systems.
 5b       Use of country                    For par tner countries with a             All donors use par tner countries’ procurement
          procurement systems               score of ‘A ’ on the Procure-             systems; and
                                            ment scale of performance                 Reduce the gap by two-thirds – A two-thirds
                                            (see Indicator 2b).                       reduction in the % of aid to the public sector not
                                                                                      using par tner countries’ procurement systems.
                                            For par tner countries with a             90% of donors use par tner countries’ procurement
                                            score of ‘B’ on the Procure-              systems; and
                                            ment scale of performance                 Reduce the gap by one-third – A one- third reduc-
                                            (see Indicator 2b).                       tion in the % of aid to the public sector not using
                                                                                      par tner countries’ procurement systems.
 6        Avoiding parallel implemen-       Reduce by two-thirds the stock of parallel project implementation units (PIUs).
          tation structures
 7        Aid is more predictable           Halve the gap – halve the propor tion of aid not disbursed within the fiscal year for
                                            which it was scheduled.
 8        Aid is untied                     Continued progress over time.
 Harmonisation
 9        Use of common arrange-            66% of aid flows are provided in the context of programme-based approaches.
          ments or procedures
 10a      Missions to the field             40% of donor missions to the field are joint.
 10b      Country analytic work             66% of country analytic work is joint.
 Managing for results
 11       Results-oriented frameworks       Reduce the gap by one -third – Reduce the proportion of countries without transparent
                                            and monitorable performance assessment frameworks by one-third.
 Mutual accountability
 12       Mutual accountability             All par tner countries have mutual assessment reviews in place.



                     Section 3: Global Health Par tnerships   Best Practice Principles for Global Health Par tnership Activities at Country Level   11
Notes on the Paris Declaration:                                         3. Note on Indicator 9 – Programme based approach-
1. The targets, in accordance with the Paris Decla-                     es are defined as a way of engaging in development
ration, are: “designed to track and encourage                           cooperation based on the principles of co-ordinated
progress at the global level among the countries                        support for a locally owned programme of develop-
and agencies that have agreed to this Declaration.                      ment, such as a national development strategy, a
They are not intended to prejudge or substitute for                     sector programme, a thematic programme or a
any targets that individual partner countries may                       programme of a specific organisation. Programme-
wish to set.” They are subject only to reservations                     based approaches share the following features:
by one donor on (a) the methodology for assessing                       (a) leadership by the host country or organisation;
the quality of locally-managed procurement systems                      (b) a single comprehensive programme and budget
and (b) the quality of public financial management                          framework;
reform programmes.                                                      (c) a formalised process for donor co-ordination
2. The universe for the purpose of targeting is lim-                        and harmonisation of donor procedures for
ited to ODA eligible countries that have already                            reporting, budgeting, financial management
endorsed the Paris Declaration or will have endorsed                        and procurement;
it by 31 December 2005. The universe for the pur-                       (d) efforts to increase the use of local systems for
pose of monitoring is open to all ODA eligible coun-                        programme design and implementation, finan-
tries that have already endorsed, or will endorse in                        cial management, monitoring and evaluation.
the future, the Paris Declaration.                                         For the purpose of indicator 9, performance will
                                                                        be measured separately across the aid modalities
                                                                        that contribute to programme-based approaches.




10  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
Section 3: Global Health Par tnerships   Best Practice Principles for Global Health Par tnership Activities at Country Level   11
1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
HEALTH SYSTEMS




    4   Contents   1
                                                                                                                      8
MONITORING THE HEALTH MDGs
By Health Metrics Network, Geneva, January 2004




1. Introduction                                                             What indicators and which kinds of packaging
Health information is the foundation of public                              of information are most appropriate to raise
health. The “evidence-based” medicine revolution                            awareness and mobilize resources from consti-
of the last 30 years has had some spill-over into                           tuencies beyond health?
public health, as the disciplines of epidemiology,
demography and economics have gained promi-
nence. Yet many health systems remain woefully                          2. Increased demand for better 
inadequate on critical health information fronts.                       monitoring of results in health
    We still cannot count the dead in the vast                          The Millennium Development Goals, adopted
majority of the world’s poorest countries – para-                       unanimously by the members of the United Nations
doxically these are countries where the disease                         in 2000, set specific targets for improving income
burden is greatest. In sub-Saharan Africa fewer                         poverty, education, the status of women, health,
than ten countries have vital registration systems                      the environment, and global development coop-
that produce usable data. We still have very limited                    eration. Now widely accepted as a framework for
measures of health systems performance. The                             measuring development progress, the goals focus
considerable investments in measuring health out-                       the efforts of the world community on achieving
comes, often to monitor the effectiveness of donor-                     significant, measurable improvements in people’s
driven programs or address emergencies such as                          lives. They establish yardsticks for measuring results
the AIDS epidemic, too often do not add to or                           – not just for developing countries, but also for high
strengthen national health information systems.                         income countries that help to fund development
                                                                        agencies and for the multilateral institutions that
Little investment has been made to date in a defini-
                                                                        help countries implement these programs.
tive solution to meeting the demand for better health
                                                                            Health is prominently represented in the MDGs,
information – by strengthening systems that meet
                                                                        with four of the goals calling for monitoring of pro-
the local and national, as well global, needs for evi-
                                                                        gress towards improving the health and survival of
dence to inform decision making.
                                                                        mothers and children, and reduced prevalence and
    Monitoring of policies and actions, and building
                                                                        mortality from leading communicable diseases.
country capacity in health information systems, are
                                                                        The health MDGs represent long-term goals, to be
two initiatives for addressing the gap between the
                                                                        achieved over a 25 year period. Annual changes in
demand for health information and the information
                                                                        the outcomes will necessarily be small, and will be
available. There are, however, many unresolved
                                                                        difficult to monitor given the weakness of current
issues:
                                                                        health information systems. At present, donors,
•   What needs to be done to change the behaviour                       international agencies, and countries can expect only
    of donors and countries to better respond to                        occasional, incomplete, and usually imprecise snap-
    local, national and global information needs?                       shots of country progress towards the goals, with
    How can the Health Metrics Network contribute                       much of the progress assessment heavily dependent
    most effectively to improving the availability                      on modelling rather than on empirical evidence.
    and use of sound health information?                                    Increasingly, international assistance in health is
•   Which specific government policies are most                         linked to effective use of available resources. Perfor-
    important for monitoring, and what are the                          mance-based monitoring involves reporting on
    best ways to collect the information?                               intended results and progress towards achieving
•   What specific leading indicators should be                          them. It requires that clear, achievable objectives
    monitored as determinants of long-term goals?                       that are within the control of a program or ministry,

1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
are set and agreed on by all stakeholders, with suffi-          mation systems, build national capacity and
cient resources available to deliver the results. It            improve the utilization of health information.
also requires the selection of indicators to monitor
performance, and an agreed plan for when, how
and by whom the indicators will be generated and            3. Building health information  
used. Performance-based monitoring cannot be                systems: the Health Metrics Network
based on outcome or impact indicators because of            The increased demand for health information calls
the long-term nature of such changes and the                for an investment in building sustainable country
measurement challenges.                                     health information systems. A health information
    Performance-based monitoring can only be                system refers to the integrated effort to collect, pro-
achieved if programs routinely and accurately track         cess, and report health information to influence
policies, inputs, actions, and outputs related to the       policy making, interventions, and research. Health
interventions. This inevitably entails increasing           information systems include several subsystems:
resources devoted to monitoring.
    The importance of health outcomes in the MDGs,          •   disease and risk factor surveillance and outbreak
                                                                notification
and the increasing attention paid to performance,
have created a growing demand for high quality              •   population and facility-based surveys
health information. Linking performance with                •   registration of vital events, including causes of
                                                                death
donor assistance will require that country health
information systems are able to use standardized            •   data collected from patient and service records
definitions of health indicators and to ensure the          •   administrative data on budget, human resources,
                                                                supplies, etc.
consistent application of methodologies. There is
currently, however, a remarkable disconnect between         •   modelling and estimates.
the demand for high quality health information                  Improvement in health information systems is
and the ability of country systems to respond to            needed at local, national and international levels, and
the demand. To address this challenge, two initia-          more integration between these levels is required
tives to improve the availability, quality and use of       to deal with global health threats, such as the AIDS
health information are under way.                           epidemic, and to make the best use of the growth
                                                            of knowledge in health. Innovative approaches are
•   Monitoring of the policies and actions of devel-
                                                            now becoming available that will permit better
    oping and developed countries for achieving the
    MDGs is a key element of an overall monitor-            measurement of health status through technology
    ing framework. The Global Monitoring report             development, better recording of vital events,
    to the Development Committee is planned as an           through sentinel sites, and better data availability at
    annual update of trends in policies and actions         sub-national levels through a district data initiative;
    that contribute to development outcomes,                these and other innovations have the potential to
    including health. As part of this, monitoring           improve the information situation rapidly if applied
    and projection of trends in leading indicators          in coherent ways by all stakeholders.
    needs to be expanded beyond the list of indica-             Reforms of health information systems need to
    tors included in the current MDG framework,             be based on a national plan with a policy framework,
    to include availability, access and utilization rates   core indicators, and data collection, analysis and
    of interventions for which there is widespread          dissemination strategies. Such nationally developed
    agreement about their effectiveness;                    strategic plans should be specific about how the
•   To improve the capacity of countries in the area        different tools and methods will be applied and
    of health statistics, an alliance of countries and      complement each other, how health information
    international partners has been formed. The             needs are met at the sub-national, national and
    Health Metrics Network aims to bring together           global levels, and what kind of investments are
    countries, donors and international agencies to         needed. The latter include human resources, infra-
    pool resources and address the paucity of infor-        structure (technology, laboratories, etc.), and opera-
    mation collectively. With the assistance of the         tional budgets for health data collection efforts.
    Network, countries will develop national plans          National bodies with participation of stakeholders
    for improving health information, mobilize              of different levels of users and technical experts
    resources from partners, invest in health infor-        need to guide and oversee the implementation of

                                                                  Section 4: Health Systems   Monitoring the Health MDGs   1
the national plans. International investors in health                   actions are assessed, is essential. Efforts to strengthen
information should buy into and support the coun-                       the World Bank’s Country Policy and Institutional
try strategies.                                                         Assessment (CPIA) methodology and its application,
    In July 2003, a group of national and global health                 including the use of more transparent indicators
and development partners – countries, international                     and more extensive discussion of country ratings
agencies, bilateral and multilateral donors, founda-                    with governments, are already underway. Increased
tions and technical experts – came together and                         robustness, transparency, and disclosure of the CPIA
agreed on a simple proposition: meeting the health                      ratings would enhance the usefulness of these key
challenges of the 21st century requires much better                     policy metrics for global monitoring carried out
health information than is currently available. In                      by the World Bank and its partners.
response, the Health Metrics Network (HMN) was                              With good policies and institutions, increasing
established that involves a wide range of stakeholders                  the share of GDP devoted to health could make a
in health information. The HMN is based on the                          difference between making enough progress to meet
premise that the complexity of the health informa-                      the MDGs and missing the targets. But aggregate
tion field – multiple actors, types, sources, users and                 public health expenditure indicators by themselves
uses of information – requires a collaborative and                      provide little information regarding the particular
inclusive response. A partnership or network permits                    expenditure patterns, such as geographic allocation,
the involvement of different actors according to their                  specific targeting and specific public expenditure
needs and capacities, at the same time providing                        management practices that are important for such
overall coherence and links across levels and among                     expenditures to have an impact on outcomes. A
partners. (See Annex A for update on activities.)                       priority for improving monitoring of policies related
                                                                        to health spending consists of implementing national
                                                                        health accounts (NHA), as an important tool for
. Monitoring of policies and actions                                   assessing the adequacy and quality of health expen-
for achieving the MDGs                                                  ditures, including their overall level, composition,
At its April 2003 meeting, the Development Com-                         and management. NHA will also identify the sources
mittee reaffirmed its commitment to regular mon-                        of financial flows, including from central governments
itoring of the policies and actions of developing                       to sub-national units, and from donors to recipient
and developed countries and development agencies                        countries. When fully implemented, NHA will en-
for achieving the Millennium Development Goals                          able policy-relevant tabulations of the distribution
and related outcomes. For developing countries, it                      of health expenditures among population sub-groups
highlighted three key areas for attention:                              and by intervention. New tools are available to
                                                                        assist countries to implement and sustain NHA.
•   strengthening the rule of law and infrastructure
                                                                            More efforts are needed to develop an agreed
    to improve the environment for private sector
    activity;                                                           set of reliable and transparent indicators of the
                                                                        performance of health systems. While the CPIA
•   improving the quality of governance and
                                                                        includes an assessment of overall public sector
    strengthening capacity in the public sector; and
                                                                        management and institutions, as well as policies for
•   increasing the effectiveness of the delivery of
                                                                        social inclusion and equity (including some infor-
    human development and related services to
    poor people.                                                        mation on access to and quality of health services),
                                                                        there is a need to develop additional health-sector
    For developed countries, the paper emphasized                       specific governance indicators. Such indicators
two priority areas for action: increased market access                  would provide information on how efficiently
for developing country exports, including the reduc-                    health systems use resources to improve health,
tion of domestic subsidies in agriculture, and more                     identify key constraints to improved performance,
and better aid, including adequate support for global                   and how equitable systems operate.
programs on education, HIV/AIDS, and water, and
implementation of harmonized and related good-
practice approaches to development assistance.                          5. Monitoring intermediate indicators
    Monitoring of government policies and actions                       Measurement of health indicators has improved
will require timely and robust indicators. And while                    substantially over the past decade; many countries
full objectivity will be unlikely to be achieved, a                     have conducted health and demographic household
high degree of transparency in how policies and                         surveys and surveillance of HIV/AIDS through

1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
antenatal testing is carried out in virtually all severely                       program development and implementation as well.
affected countries. Compared with 1990, there are                                But international initiatives, such as the MDGs and
now significantly more countries for which we can                                programs targeting specific diseases, tend to focus
more confidently report on levels and trends in                                  on data for disease-specific indicators and do not
childhood mortality or malnutrition. By contrast,                                necessarily translate into building information sys-
in other areas, such as maternal and reproductive                                tems that meet country and international needs in
health or surveillance of most communicable dis-                                 both the short and long run. All too frequently, the
eases, data are much less available and frequently of                            demand for health information is accompanied by
poor quality. Overall, a much greater international                              the implementation of population-based surveys
effort is needed to address the monitoring and                                   which bring major benefits in terms of data but
evaluation challenges presented by the MDGs,                                     remain resource intensive, have long intervals
Poverty Reduction Strategy Papers, or the Global                                 between surveys, and are not appropriate for sup-
Fund against AIDS, TB and Malaria. Sound health                                  plying all information needs which may be better
information is not only needed to report on these                                met using other approaches such as vital registers
international initiatives, but is essential for sound                            or routine service statistics. Moreover, surveys often



Table 1 Effective interventions for reducing illness, deaths and malnutrition
 MDG              Preventive interventions                                              Treatment interventions
 indicator
 Child            Breastfeeding. Hand-washing, safe disposal of stool,                  Case management with: Oral rehydration therapy for
 mor tality       latrine use and safe preparation of weaning foods. Use                diarrhoea; antibiotics for pneumonia, dysentery and
                  of insecticide-treated nets. Complementary feeding.                   sepsis; and, antimalarials for malaria. Newborn resusci-
                  Immunization. Micronutrient supplementation (zinc and                 tation and management of hypothermia. Breastfeeding,
                  vitamin A). Antenatal care, including steroids & tetanus              complementary feeding during illness, and micronutrient
                  toxoid. Antimalarial intermittent preventive treatment                supplementation (zinc and vitamin A).
                  in pregnancy. Newborn temperature management;
                  Nevirapine and replacement feeding; Antibiotics for
                  premature rupture of membranes; Clean and safe
                  delivery including management of pregnancy-related
                  complications such as eclampsia and obstructed labour.

 Maternal         Family planning: contraceptives. Maternal nutrition and               Safe delivery with skilled bir th attendance; Essential/
 mor tality       micronutrient supplementation. Prevention and treat-                  Emergency obstetric care; Post par tum and post abor-
                  ment of STI and HIV. Prevention and treatment of                      tion care.
                  malaria and other infections. Antenatal care.

 Nutrition        Exclusive breastfeeding-6 months. Appropriate comple-                 Appropriate feeding of sick child and ORT. Control
                  mentary child feeding 6-24 months. Iron and folic acid                and timely treatment of infectious and parasitic
                  supplementation of children. Improved hygiene and                     diseases. Treatment and monitoring of severely mal-
                  sanitation. Dietary intake- pregnant and lactating women.             nourished children. High dose treatment of clinical
                  Micronutrient supplementation for prevention of vitamin               signs of vitamin A deficiency
                  A deficiency and anaemia in mothers and children.
                  Anthelminthic treatment in school aged children

 HIV/AIDS         Safe sex, including condom use Unused needles by                      Treatment of oppor tunistic infections. Cotrimoxazole
                  drug users. Treatment of STIs. Safe, screened blood                   prophylaxis. Highly active anti-retroviral therapy. Pallia-
                  supplies. Universal precautions including safe injections.            tive care.
                  Anti-retrovirals in pregnancy to prevent maternal to
                  child transmission and after occupational exposure.

 TB               Directly observed treatment of infectious cases to                    Directly observed treatment to cure, including early
                  prevent transmission and emergence of drug resistant                  identification of TB symptomatic cases.
                  strains & treatment of contacts. BCG immunization.

 Malaria          Use of insecticide-treated nets. Indoor residual spraying             Rapid detection and early treatment of uncomplicated
                  (in epidemic-prone areas). Intermittent presumptive                   cases. Treatment of complicated cases (e.g., cerebral
                  treatment of pregnant women.                                          malaria and severe anaemia).

NB: The underlined interventions have corresponding indicators for use in the monitoring of MDGs



                                                                                          Section 4: Health Systems   Monitoring the Health MDGs   1
Table 2 Examples of intermediate or proxy indicators
 Millennium Development Health and Nutrition Targets                          Recommended options: Examples of intermediate or
                                                                              “proxy” indicators
 Target: Halve, between 1990 and 2015 the propor tion of                      •      Prevalence of underweight children under five
 people who suffer from hunger                                                •      Propor tion of infants under six months who are exclu-
                                                                                     sively breastfed
                                                                              •      Propor tion of children 6 – 59 months who received one
                                                                                     dose of vitamin A in the past six months

 Target: Reduce by two-thirds, between 1990 and 2015, the                     •      Propor tion of 1 year old children immunized against
 under-five mor tality rate                                                          measles
                                                                              •      Propor tion of children with diarrhoea in the past two
                                                                                     weeks who received ORT
                                                                              •      Propor tion of children with fast or difficult breathing in
                                                                                     the past two weeks who received an appropriate antibiotic

 Target: Reduce by three-quar ters, between1990 and 2015,                     •      Percentage of pregnant women with any antenatal care
 the maternal mor tality ratio                                                •      Percentage of bir ths with skilled bir th attendant and/or
                                                                                     institutional delivery
                                                                              •      Contraceptive prevalence rate

 Target: Have halted by 2015, and begun to reverse, the spread                •      Percent of persons using a condom at last higher risk sex
 of HIV/AIDS                                                                  •      Percent of sexually transmitted infection clients who are
                                                                                     appropriately diagnosed and treated
                                                                              •      Percent of HIV-positive women receiving antiretroviral
                                                                                     treatment during pregnancy

 Target” Have halted by 2015, and begun to revere the                         •      Percent of patients with uncomplicated malaria who re-
 incidence of malaria and other major diseases                                       ceived treatment within 24 hours of onset of symptoms
                                                                              •      Percent of children/ pregnant women sleeping under
                                                                                     insecticide treated nets
                                                                              •      Proportion of women receiving antenatal care who receive
                                                                                     at least two or three intermittent preventive malaria treat-
                                                                                     ments during pregnancy
                                                                              •      Percent of registered new smear positive TB cases in a
                                                                                     cohor t that were successfully treated
                                                                              •      Percent of estimated new smear positive TB cases that
                                                                                     were registered under DOTS approach

For a complete list of recommended core intermediate and optional indicators, see report Health, Nutrition, and Population Development Goals. Measuring
Progress Using the Poverty Reduction Strategy Framework, November 2001




produce national level data of limited use for inform-                            outcomes that can only show minimal improvements
ing program implementation.                                                       on a yearly basis, and can lead to the mistaken
   Furthermore, the health MDGs are reported as                                   conclusion that there is minimal return on invest-
national averages and do not provide information                                  ment. The need for timely information to monitor
on whether progress has been made in reducing                                     progress on global initiatives requires that additional
inequity in health within countries. Many countries                               attention be paid to “upstream” or “leading” indi-
are unable to report MDGs or other development                                    cators of future trends in MDGs and other outcomes.
indicators by key dimensions of equity, such as                                   What is needed is a set of easily understandable
poverty, gender, geographic residence and ethnicity.                              and verifiable near-term performance metrics that
Much more needs to be done to incorporate equity                                  can inspire increased attention and be used as a
measures in health information systems, which                                     basis for decisions on resource allocation. Indicators
should lead to much greater ability to monitor the                                of government policies and actions are by them-
equity dimension of MDGs.                                                         selves not sufficient to show whether interventions
   Strengthening country health information systems                               are effectively reaching households that need them.
will take time, and more accurate and detailed infor-                                Intermediate – or proxy - indicators measure
mation will not be available in the early stages of                               changes in coverage or use of interventions known
the reform. MDG health targets are longer-term                                    to have an impact on health outcomes. Table 1

1  High Level Forum on the Health Millennium Development Goals          Selected Papers 2003–2005
shows available preventive and treatment interven-        ners at the World Bank in 2001, a first attempt was
tions for the health-related MDGs. Such interven-         made to identify a limited set of indicators as the
tions can then be transformed into indicators of          most appropriate proxies for short-term monitoring
coverage and utilization by measuring the number          of the MDGs (Table 2). These proxy indicators are
of people who are in need of the intervention, and        generally more amenable to measurement through
those who actually receive them. Such indicators          regular surveys or routine data collection systems
include immunization coverage, use of child and           than long-term goals. They are sensitive to change
maternal health services, and individual or house-        and affected by implementing effective policies,
hold behaviour. Given the range of health issues          and measures developed for them can show change
that affect countries in different regions and at dif-    in the short to medium term. Most importantly,
ferent stages of the health transition, it is essential   they provide information that is relevant for the
that a set of indicators be used to capture such          management of health programs. The Health
variation. Single indicators, or indices constructed      Metrics Network can provide a platform to reach
from a set of indicators, cannot be relevant globally,    consensus around a core set of proxy indicators
and do not give information on where or how to            for tracking progress in relation to key health goals
intervene. At a consultation of development part-         and targets.




                                                                Section 4: Health Systems   Monitoring the Health MDGs   1
Annex A                                                                     use of data for resource allocation and to improve
Health Metrics Network:                                                     the use of existing data to inform major planning
Update on activities, June 00                                             cycles within countries. Priorities include the
The formal launch of Health Metrics Network                                 harmonization of tools and methods, enhancing
(HMN) took place in May 2005 and was accompa-                               In-country or regional capacity in data analysis,
nied by the first call for proposals from low and                           synthesis and use, mapping of currently available
middle income countries where the need to improve                           tools, development of better methods and tools
health information to support decision-making is                            for data synthesis and analysis on trends, burden
most acute. The support is mainly catalytic in                              of disease and resource allocation and translat-
nature, intended to facilitate the assessment of the                        ing of results for specific target audiences
current health information system and to enable
stakeholder involvement and consensus-building                          HMN research and development initiatives
around a long-term national plan.                                       •   Health Systems Metrics – In the context of the
   Since then, a series of inter-country regional                           increasing role of Global Health Partnerships
workshops has brought together health informa-                              (GHPs) and multi- and bilateral agencies there
tion and statistical constituencies to encourage the                        was agreement on the need to improve moni-
development of a shared diagnosis of health infor-                          toring health systems and that a small number
mation system strengths and weaknesses and a                                of core indicators and associated measurement
shared vision for moving forward.                                           strategies for health system monitoring should
   In October 2005, a total of 41 countries were                            be identified.
recommended to receive support from HMN.                                •   Significant efforts are also focusing on developing
                                                                            a strategy to increase low income countries’
HMN tools for country support                                               capacities to monitor vital events or “count the
In addition to the technical support being provided                         dead”. HMN convened the Monitoring of Vital
directly to countries, the HMN Secretariat is devel-                        Events (MoVE) working group whose strategy
oping a series of mechanisms and tools by which                             includes advocacy efforts, coupled with strong
                                                                            technical advances (including data collection in
countries can access technical support. These include;
                                                                            countries and innovative ways of making the
•   HMN Framework – provides the conceptual                                 best use of incomplete data sets, verbal autopsy
    and technical framework and standards guiding                           tools etc).
    the strengthening of the country health infor-
    mation systems.                                                     HMN collaboration with partners
•   HMN Assessment Tool – to help countries                             The Health Metrics Network is collaborating with
    identify priorities for strategic planning and                      partners including UN agencies, donors and GHPs
    monitor progress in strengthening health infor-                     such as the Global Fund and GAVI to help strengthen
    mation systems.                                                     health system metrics and increase focus on the
•   Group Builder – which helps those organizing                        monitoring and evaluation of grants and support
    an assessment to form several groups of inform-                     increasing efforts towards harmonization and align-
    ants and divide the assessment items among                          ment of development aid in the context of national
    those groups                                                        health systems development.
•   Guidelines for Strategic Planning Tool – to                             PARIS21 partners and HMN are currently work-
    assist with the development of an integrated                        ing together to produce a guide to integrating the
    and strategic HIS strengthening plan, including                     needs of sectoral information systems into national
    costing                                                             statistical capacity building programs.
•   Country Log Book – which contains information                           The HMN Secretariat is involved in MAPS Steer-
    related to surveys, vital registration, surveillance,               ing Committee and the HMN Technical Advisory
    routine HIS, and population health research-                        Group (TAG) was invited to participate in MAPS.
    related activities carried out in countries from                        HMN has also teamed up with the World Bank
    1994 to the present. The database also contains                     International Household Survey and shares the data-
    information on censuses carried out over the                        base of existing and planned country household sur-
    last 30 years (1974- present).                                      veys. In addition, the IHSN Microdata Management
•   SAUCE (Synthesis, Analysis and use of Country                       Toolkit provides free software enabling countries
    Evidence) – designed to enhance appropriate                         to bring together data from different sources and

10  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
generate analyses and reports thereon. HMN is         forward by HMN and WHO supporting the strength-
working with IHSN to promote the Toolkit as a         ening of health information systems.
key element of a national data repository to which        The second call for proposals was announced on
all relevant stakeholders can have access.            1 June 2006.
                                                          For further information on the Health Metrics
Advocacy and communications                           Network please contact;
The HMN is keeping interested partners informed          Health Metrics Network Secretariat
and increasing partnerships and information sharing      World Health Organization
through a regular newsletter, website and other          Avenue Appia 20, 1211 Geneva 27
web-based tools that enable effective collaboration      Switzerland
across organizational and geographic boundaries.
    On 30 May 2006, the World Health Assembly           Or visit the website http://www.who.int/health
(118th Session) passed a resolution (EB118.R4) put    metrics/en/




                                                           Section 4: Health Systems   Monitoring the Health MDGs   11
                                                                                                                      9
TRACKING RESOURCES FOR GLOBAL HEALTH:
PROGRESS TOWARD A POLICY RESPONSIVE SYSTEM
By Global Health Resource Tracking Working Group, Abuja, December 2004




1. Introduction                                                         . Resource tracking and the health MDGs
In January 2004, at the first meeting of the High-                      It is widely agreed that accelerating progress towards
Level Forum on the Health Millennium Development                        the achievement of the health-related MDGs will
Goals (HLF), the shortcomings in the international                      require both a large increase in the financial resources
community’s current ability to monitor resource                         dedicated to the health sector in developing coun-
flows in global health were observed. The need to                       tries, and improved effectiveness in the use of
improve the availability of information on resource                     resources. Developing policies that result in more
flows was identified as a priority for action, and the                  funding and better use of financial resources, in
World Bank and the World Health Organization                            turn, requires a supportive information base – one
(WHO), in collaboration with the Organization of                        that provides data about the availability and use of
Economic Development and Cooperation (OECD),                            funding in a way that is detailed, timely and credible.
were asked to assess the “feasibility of improving                      A core information base would greatly facilitate
the tracking of financial investments in the health                     efforts in generating and maintaining political will,
sector at national level, from domestic and external                    developing appropriate policies, and holding respon-
sources, using national health accounts and other                       sible parties accountable for fulfilling their financial
financial flows data”1.                                                 commitments.
    This paper is a response to that request and is
organized as follows: First, it identifies key links
between resource tracking and making progress                           . Information for policymaking
towards meeting the health Millennium Develop-                          At international and country levels, many public
ment Goals (MDGs). Second, it lays out the specific                     and private actors in global health have an interest
ways in which information on resource flows, includ-                    in knowing how much funding is available and how
ing data on both commitments and disbursements,                         it is used (see Box 1).
can inform policymaking, and indicates the type                              Key decisions – from setting advocacy priorities
of information required to each policy use. Third,                      to designing and monitoring health sector reforms
it highlights major sources of data on resource flows                   – depend in part on the availability of specific types
that are currently available, and identifies major                      of information on funding. These are described
gaps relative to policy needs. Fourth, it briefly                       below:
summarizes the major gaps in the available data,                        •   Resource mobilization – Advocates for more
relative to policy needs. Finally, it identifies a set of                   resources for health generally require prospec-
key issues that need to be addressed to develop an                          tive information about donor and public sector
appropriate strategy to fill these gaps.                                    funding commitments and recent budget execu-
    Much of the work in this area is being under-                           tion, particularly from donor and lending agencies.
taken by the “Global Health Resource Tracking                               Greater predictability in aid flows is required.
Working Group”. The Working Group is led by                             •   Resource allocation – Those responsible for
the Global Health Policy Research Network (PRN)                             ensuring that health resources are allocated in
of the Center for Global Development (CGD), and                             ways that correspond to priority health programs,
benefits from the participation of a wide range of                          including priorities established in Poverty
representatives from the official and non-government                        Reduction Strategies, require prospective infor-
sectors2. Members of the HLF Secretariat from the                           mation about donor and public sector funding
World Bank and WHO have also been substantively                             commitments and recent budget execution.
involved in the initiative.                                                 These stakeholders may include representatives

1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
Box 1 Potential users of information on resource flows
 Technical Agents – epidemiologists, policy analysts and economists within the Ministry of Health, national research institu-
 tions and international organizations. These users will be interested in access to primary data on resource flows primarily to
 examine questions of the allocation of resources across program areas.

 Donors – representatives of UN Agencies and development banks, and key bilateral donors. Donors generally are interested
 in spending trends by governments and other donor agencies; additionality; and allocation across sectors and programs.

 Public sector administrators in developing countries – mostly from the Ministry of Health, the Ministry of Finance,
 the Ministry of Planning and the president’s or prime minister’s office. Government officials generally look at spending trends;
 efficiency issues; recurrent costs associated with new investments; and the predictability of funding. Prospective information
 (commitments) is of special interest.

 Interest groups/advocacy groups – NGOs providing global health care services and community organizations. These
 groups usually look at spending trends relative to estimates of resource requirements. They attempt to hold donors and gov-
 ernments accountable to rhetorical commitments.

 Politicians – (in both developed and developing countries) ministers and deputy ministers, members of Parliament, members
 of the cabinet, the president and the prime minister. This group is generally concerned with the “big picture” information and
 comparisons, often inter-regional comparisons and/or spending trends in overall spending. They are often concerned with waste
 and misuse of funds.




    from donor and lending agencies, country-level                       of equity and efficiency and design of financing
    executive and/or legislative staff, and civil society                strategies, the highest priority need is for detailed
    watchdog organizations.                                              information on public and private expenditures
•   Fiscal planning and donor coordination – Decision                    broken down program and geographic area. Inter-
    makers seeking to minimize duplication of                            national comparability across countries, policy-
    effort and optimize complementarities need                           relevant categorization, and inclusion of all sources
    prospective information about donor and pub-                         of funding are essential.
    lic sector funding commitments.
•   Measurement of efficiency and equity – Analysts
                                                                         . Current sources of data on financial
    and policymakers working to improve the per-
    formance of the health sector often seek to
                                                                         flows in global health
                                                                         Several organizations have developed health resource
    understand (a) the relationship between health
                                                                         data collection systems to assist in the guidance of
    system inputs and outputs or outcomes; and
                                                                         policy making and/or advocacy efforts for major
    (b) the distribution of health sector resources
                                                                         donors (bilateral and multilateral) and for recipients
    by sub-population (e.g., by income quintile).
                                                                         of official development assistance. Some of these
    Information is required about recent public and
                                                                         are listed below.
    private expenditures by program and geographic
    area, including expenditures that are financed by
    donor and lending agencies. Complementary
                                                                         a. Information on bilateral and multilateral
    information also is required about health outputs
                                                                         institutions’ commitments
                                                                         The Organization for Economic Co-operation and
    and outcomes, by sub-population.
                                                                         Development’s Development Assistance Committee
•   Design of financing strategies – Analysts and
                                                                         (OECD/DAC) operates the Creditor Reporting
    policymakers seeking to design sustainable, fair,
                                                                         System (CRS), an online database that presents the
    health financing strategies also require an equally
                                                                         official statistics for the financial flows of official
    detailed level of information about recent pro-
                                                                         development assistance (ODA) and official aid (OA)
    gram expenditure. This will help to prioritize
                                                                         of DAC members. CRS, which depends on informa-
    health in national development plans and budgets.
                                                                         tion reported periodically by members according
   In short, for the purposes of resource mobiliza-                      to an established common format and definitions,
tion, resource allocation and donor coordination,                        provides textual and numerical information on
the highest priority information needs are for donor                     individual transactions. The purpose is to help
commitments and disbursements, public sector                             identify long-term trends in aid flows. The main
budgets and disbursements, and private sector                            users of the database are DAC members who can
expenditures. For the purposes of measurement                            analyze where aid goes, what purpose it serves and

                              Section 4: Health Systems   Tracking Resources for Global Health: Progress Toward a Policy Responsive System   1
what policies it supports. Policy analysts in both                      measure a nation’s total health expenditure patterns,
industrialized and developing countries also use the                    including public, private, and donor spending.
data. Data are available at both the level of individual                NHA provides health expenditure information on
projects or in aggregate tabular form. In general,                      sources and uses of funds, and can also track public
data are presented according to the date when the                       budgets in its resource cost matrix. NHA metho-
commitment is made, and do not show the alloca-                         dology has been applied in a large number of
tion of funding over multi-year periods. Data on                        developing countries, but in many cases has been a
aid activities financed from multilateral institutions’                 one-time exercise and is not part of an on-going
regular budgets are included in the database to                         system of expenditure analysis.
improve the system’s capacity for sector and geo-                           The World Health Organization compiles and
graphical analysis. The financing of specific projects                  reports a five year series on estimated health
facilitated by multilateral institutions (non-core or                   expenditure for all its member states (currently 192)
extra-budgetary funding) is classified as bilateral.                    annually in its World Health Report. This includes
                                                                        estimates of total health expenditures, government
b. Information on bilateral and multilateral                            health expenditures, expenditures on private pre-
institutions’ commitments and disbursements for                         paid plans for health and social health insurance,
specific programs                                                       as well as private out-of-pocket spending. Informa-
UNAIDS, UNFPA and the Netherlands Interdisci-                           tion is also presented on the external resources
plinary Demographic Institute have undertaken                           used in the country for health, derived from the
exercises to measure the funds that are committed                       OECD/DAC Creditor Reporting System (see
and made available for specific disease programs                        http://www.who.int/nha/country/en/).
and/or interventions (i.e., HIV/AIDS and repro-
ductive health). The StopTB and Roll Back Malaria                       e. Information on public and private expenditures
partnerships are starting to undertake similar work.                    on specific health programs at the country level
The Global Forum on Health Research routinely                           Special satellite versions of national health accounts
estimates spending on research and development                          have been used to assess expenditures on AIDS. In
in health. In general, these initiatives are based on                   addition, the Global Alliance on Vaccines and Immu-
specialized data collection at the global level, with                   nization (GAVI) has undertaken financial sustain-
a relatively high degree of detail. However, they are                   ability planning work in several dozen countries;
hindered by underlying constraints in donors’ and                       the plans include a detailed examination of public
governments’ ability to report detailed information.                    (government and donor) expenditures on immuni-
                                                                        zation program-specific activities. These initiatives
c. Information on budgetary commitments for                             tend to be one-time efforts, and only in selected
health at the country level                                             countries. They are limited for some policy uses
To varying degrees, all governments publish budget                      because they present information in programmatic
information, including allocations to the health                        categories, rather than budgetary line items.
sector and actual expenditures. This information is
often used as the basis of World Bank Public Expen-                     f. Information on public expenditures on specific
diture Reviews, some of which have a special focus                      services at the local level
on the health sector. In general, this information is                   The World Bank has pioneered Public Expenditure
compiled in budgetary categories such as capital                        Tracking Surveys, which attempt to track to the
investments, personnel expenditures, and trans-                         micro level the public spending on core services,
portation and other recurrent costs, which do not                       such as schools and health clinics. These have been
correspond to programmatic categories such as                           used in a few countries.
“immunization program,” or “HIV/AIDS prevention.”

                                                                        . Gaps
d. Information on retrospective public, private                         Relative to what is needed for many policy and plan-
and externally funded expenditures on health at                         ning purposes, the following gaps can be identified:
the country level
One of the tools currently used to collect core in-                     •   No on-going system provides comprehensive
formation is the National Health Accounts (NHA),                            information about donor commitments and
an internationally accepted methodology used to                             disbursements and national government budget

1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    allocations and actual expenditures by program-                        could facilitate this process. If not, the feasibility,
    matic category relevant to the health MDGs.                            cost and benefit of special exercises would need
    Such information, disaggregated for example                            to be considered.
    into immunization, diarrhoeal disease control,                    •    Cost: There is a never-ending demand for data,
    and other categories, would prove valuable for                         and capacity is limited. The costs of data collec-
    the purposes of resource mobilization, resource                        tion and dissemination should be assessed relative
    allocation and donor coordination. This deficit                        to the benefits for policymaking.
    has led to multiple interest groups conducting                    •    Not a one­size­fits­all approach: Countries vary
    or commissioning special studies, which them-                          widely in their ability and willingness to prepare
    selves are limited by incomplete information.                          and report on budgets and budget execution.
•   Across many data sources gaps exist in country                         Similarly, development agencies reporting on
    coverage, comprehensiveness and detail, and                            donor commitments and disbursements may
    timeliness. In addition, data collection often is                      have different internal information systems and
    based on a questionnaire-style approach, which                         willingness to share information. Any attempts
    may result in problems with accuracy and con-                          to improve systems must realistically take into
    sistency across countries and institutions, as well                    account these varying starting conditions.
    as being an excessive burden on data reporters                    •    Importance of private flows: Multiple types of
    at agencies and within developing country                              private flows – from out-of-pocket spending to
    governments.                                                           pharmaceutical sector contributions – are impor-
                                                                           tant to a full understanding of financing. In par-
•   Data on private sector contributions and expen-
                                                                           ticular, establishing a way to value the in-kind
    ditures, including those from household, corpo-
    rate and foundation sources, is severely limited.                      contributions of the pharmaceutical sector is
                                                                           becoming an increasingly important task, but is
                                                                           quite difficult to obtain.
. Key issues                                                         •    Focus on collective action: The provision of infor-
Several key issues must be addressed in any effort                         mation is a public good. It is unrealistic to expect
to improve tracking of financial resources in global                       that independent actions of individual agencies
health. These include:                                                     or governments will provide the optimal supply
                                                                           of information. Some type of collective action
•   Building on existing budgeting and monitoring systems                  is therefore required that includes the necessary
    and analytic frameworks: To the extent possible,                       funding and governance mechanisms consistent
    new efforts should build on and strengthen                             with the concept of a public good.
    existing systems in a sustainable way, ensuring
    that they are better articulated with each other.
•   Level of detail, or “granularity”: There are strong               . Global Health Resource Tracking
    demands to disaggregate information into dis-                     Working Group
    ease, intervention and other detailed categories.                 In an effort to improve the information base for
    There also are demands for information about                      policymaking, the Global Health Policy Research
    expenditures at sub-national levels. It is important              Network (PRN) of the Center for Global Develop-
    to consider whether this could be done using                      ment (CGD) has convened the Global Health
    routinely generated information in international                  Resource Tracking Working Group. The World
    agencies and/or governments and whether                           Bank, WHO and the OECD are involved in support-
    recent developments in information technology                     ing and contributing to this Working Group.




                           Section 4: Health Systems   Tracking Resources for Global Health: Progress Toward a Policy Responsive System   1
                                                                                                                10
FOLLOWING THE MONEY: RECOMMENDATIONS
FOR GLOBAL HEALTH RESOURCE TRACKING
By Global Health Resource Tracking Working Group, Paris, November 2005




1. Introduction                                                         to achieve both near- and long-term health goals.
Lack of information on health sector financing                          Lack of credible estimates of donor commitments
means people in developing countries are missing                        and actual funds available to global health programs
opportunities, through improved policymaking, to                        greatly impedes planning and advocacy efforts.
get more health for the money spent. At a global                           Data systems and access to information lag
level, donors lack the information needed for effec-                    behind the rhetoric of greater transparency and
tive coordination, and it is not possible to know if                    accountability in international agencies. For many
they are effectively realizing their commitments to                     health areas, both funders and observers find it
provide more financing to help more countries                           impossible to know whether the development com-
meet the Health Millennium Development Goals.                           munity is living up to its commitments to provide
This report calls for actions that would create a                       greater and more effective transfers of development
more coordinated and policy-responsive system to                        assistance.
track financial flows in global health at both global                      These problems can be solved. The combination
and country levels. These actions include strength-                     of political commitment, methodological advances
ening government budgetary and financial systems                        and modern information technologies could pro-
in the developing world; institutionalizing national                    duce a step-change in collection and dissemination
health accounts as the framework to track resources                     of information about resources within the health
spent on health; and providing more timely, predic-                     (and other) sectors.
table and forward-looking data on external assistance
to the health sector.
    Good planning and policymaking in the health                        . The problem
sector require timely, accurate information about                       Despite progress toward greater availability of data
spending on inputs and services as well as funding                      and analyses on public sector health budgets and
in the near- and medium-term. Mobilizing resources                      expenditures, information about health sector
to accelerate progress toward the Millennium                            resource flows resembles a poorly sewn patchwork
Development Goals depends on an ability to deter-                       quilt, with many essential pieces missing. These
mine how funds are allocated and measuring the                          are major weaknesses at the country level and the
results that are achieved. While some routine data                      global level:
are available on total health expenditure (divided
into public and private spending) for most countries,                   a. Weak country-level information systems
more timely, complete and detailed data are required                    •   National Health Accounting (NHA) exercises,
for policymaking. In many developing countries,                             many supported by donors, have not yet realized
neither government agencies nor development                                 the method’s potential. Few countries have been
agencies have routine access to such information                            able to integrate the collection and use of data on
at a level of detail that is useful for answering key                       public and private expenditures into the routine
policy questions. This information gap contributes                          business of policymaking and program imple-
to governments using incremental, rather than stra-                         mentation. Such institutionalization is hampered
tegic, approaches to health sector budgeting and                            by lack of resources, lack of in-country capacity,
so missing opportunities to get more health for the                         and lack of coordination among donor agencies.
money.                                                                      In addition, decision makers often do not fully
    At the global level, donor agencies, aid analysts                       appreciate the utility of NHA for policymaking.
and advocates use “best guesses” about how much                         •   The source data for expenditure tracking exercises
funding is available relative to what would be required                     suffer from problems of timeliness, comprehen-

1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    siveness and accuracy. Few low- and middle-                     diseases (called “sub-accounts”) have provided infor-
    income countries adhere to sound public finan-                  mation that is valuable for both donor and national
    cial management and reporting practices.                        policymaking.
•   Despite the fact that private spending can account                  At the global level, the WHO NHA database
    for half or more of all health expenditures, infor-             publishes information for its member states annu-
    mation on private spending is hard to obtain.                   ally on indicators of health expenditures including
    Surveys that seek to capture information on                     external flows spent in the country for its member
    household spending tend to be expensive, infre-                 states annually. These indicators are produced by
    quent and subject to significant measurement                    accessing publicly available figures on spending in
    error.                                                          general, including those on health. However, these
•   Lack of information about spending on services                  indicators are at the macro level and do not routinely
    and programs concerns donors that are shifting                  report on subaccounts. In addition, improvements
    to sectoral and general budget support. Without                 have been made in the OECD/DAC’s ability to
    such data it is impossible to know whether                      capture both disbursements and commitments of
    spending patterns are consistent with Poverty                   external resources on aid activities.
    Reduction Strategies and commitments to greater,                    Major problems remain, however. Efforts to
    more equitable and more effective social sector                 increase information about financial flows in global
    investments.                                                    health have been undertaken in a relatively unco-
                                                                    ordinated manner, and some of these efforts have
b. Limited global-level information systems                         given limited attention to the quality of the primary
•   Detailed information about how much donors                      data sources. At the country level, much of the
                                                                    primary data from the public financial management
    are committing and spending on priority health
    programs in specific countries is available mainly              system is of inadequate quality. Among organiza-
    retrospectively, through cumbersome question-                   tions working on national health accounts, there
    naire-based exercises. Timely information is                    has been only limited success to date in generating
    not readily available on domestic financing of                  national-level demand for and institutionalization
    health in developing countries. This lack of data               of expenditure tracking; and sub-accounts exercises
    significantly impedes the work of advocacy groups               often are not well integrated into a broader NHA
    seeking to mobilize resources and monitor the                   framework.
    gap between available and needed resources;                         At the global level, organizations interested in
    and of officials in donor agencies who wish to                  the flow of donor funds have launched a veritable
    understand the broader landscape of spending                    barrage of efforts to collect data from donor agen-
    on global health so that they can better allocate               cies about individual health conditions and inter-
    resources.                                                      ventions – from AIDS to malaria to tuberculosis to
•   The OECD/DAC Creditor Reporting System                          immunization to health R&D to reproductive
                                                                    health to child health. This trend risks overworking
    was not designed for sector-level policymaking
    and so cannot respond to increasing demands                     and exhausting the patience of those who are faced
    for more timely and detailed information about                  with an onslaught of data requests, degrading the
    donors' spending by type of health program.                     quality of all data collection and confusing policy
    More flexible use of data resident in agency                    audiences who may be unfamiliar with the poten-
    financial and activity management information                   tial shortcomings and unofficial nature of the data.
    systems might improve timeliness and disaggre-                  Moreover, major sources of resource transfers,
    gation into policy-relevant categories.                         including private charities and the pharmaceutical
                                                                    sector, are not included in most data collection
                                                                    efforts.
. The response so far
For country-level expenditure tracking, major
advances have been made in the development of                       4. Toward a solution
proven national health accounting methods that                      The Global Health Resource Tracking Working
permit cross-national comparisons and inform                        Group sought to identify ways to accelerate pro-
major health financing and policy questions. Track-                 gress toward a coherent, effective resource tracking
ing exercises focused on AIDS and other specific                    system. This document summarizes core recommen-

                              Section 4: Health Systems   Following the Money: Recommendations for Global Health Resource Tracking   1
dations about actions the international community                       accuracy and comprehensiveness of data reporting
should support to improve in resource tracking.                         can be increased and time lags reduced. The use of
The full working group report, to be finalized by                       unobtrusive measures, such as data-mining and data-
early 2006, will include more detailed information                      weaving, have the potential to yield more detailed
about how these actions might be undertaken                             information.
through public, private and academic institutions.
                                                                        iv. Think long­term
   Several core principles underlie the recommen-
                                                                        Although there are some immediate ways to make
dations:
                                                                        progress, development of a functional, policy-
i. Place the highest priority on responding to needs                    responsive integrated system to track resources is
of in­country decision makers                                           a long-term proposition. It will require not only a
Ensuring that the data in-country decision makers                       resource commitment, but the patience to work
require for sound policymaking are available, with                      within a common framework of action that will
the timeliness and in the form that corresponds to                      allow consistent information to flow from different
the countries’ budget and policy constructs, merits                     information systems and be widely available.
the largest investments. At the country level, there
is need to build on existing assets, systems and
resources, and strengthen these to more effectively
                                                                        . Specific recommendations
respond to local needs. Moreover, the Paris Decla-                      Recommendation 1: Support improvements in
ration on Aid Effectiveness commits donors to rely                      the ability of developing country governments
increasingly on countries’ public financial manage-                     to develop sound budgets and report on their
ments systems to monitor and report on their aid                        execution
flows, including for the results that they help to                      a) Reinforcing political commitment at the country
achieve.                                                                   level, donors and technical agencies should sup-
                                                                           port the strengthening (and where needed re-
ii. Coordinate, collaborate and do no harm                                 building) of budgetary processes so that they
Donor and other international agencies can advance                         become more policy based and, hence, fully
the cause of better information systems in part                            engage political leadership. In particular, donors
simply by not making a bad situation worse. This                           should support and use the Medium-Term
means, for example, fighting the temptation to                             Expenditure Framework mechanism to:
create duplicative data collection efforts to expedi-
tiously respond to short-term information needs,                            •   Effectively link policy making, planning and
                                                                                budgeting
and to instead build on existing systems. It also
means finding ways for multi-agency collaboration
                                                                            •   Strengthen a medium-term perspective to
                                                                                budgeting
and coordination in the methods used and additional
support for institutions with the mandate for data
                                                                            •   Build links between inputs and outputs

collection, analysis and dissemination. It further
                                                                            •   Develop budget processes, systems, structures
                                                                                and data that link inputs to results through
means, however, sensitivity to the reality that with-                           the budget cycle
out additional resources, these institutions can only
be tasked to undertake a small marginal effort with-                    b) Donors and technical agencies should support
out degrading the quality of their work as a whole.                        developing countries with a unified approach to
Finally, it means that these institutions themselves                       public expenditure management reform, taking
must become more quickly responsive to new in-                             as the point of departure the Performance
formation needs.                                                           Measurement Framework for Public Financial
                                                                           Management of the Public Expenditure and
iii. Make the best use of modern information                               Financial Accountability (PEFA) Program. Of
management technology                                                      the 28 indicators in the High-Level Performance
Management and activity information systems                                Indicator Set, particular attention should be paid
both in some donor agencies and in some middle-                            to the credibility of the budget (budget estimates
income countries are structured to permit auto-                            to actual expenditure); budget transparency;
mated collection and reporting of policy-relevant                          political engagement in budget decision making;
information. As such systems are replaced and                              the quality and timeliness of in-year budget
upgraded, with improved search functions, the                              reports; and the effectiveness of external audit.

1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
c) In keeping with the Paris Declaration on Aid                        should clarify and reiterate their support for
   Effectiveness, donors should seek means to:                         tracking of health expenditures within the NHA
                                                                       framework that is responsive to country needs
   •   Provide complete and forward-looking finan-
                                                                       and permits cross-national comparisons. Efforts
       cial information for budgeting and reporting
                                                                       to develop disease-specific spending assessments
       on projects and programs and budget support
                                                                       or “sub-accounts” should support the broader
       being supported in a country
                                                                       agenda of creating the capacity, demand and
   •   Manage aid through national processes of
                                                                       methods for national health accounting in addi-
       policy, planning and budgeting
                                                                       tion to responding to the countries’ needs for
d) As national financial management systems are                        timely and policy-relevant disaggregated infor-
    being strengthened, donors should work with                        mation.
    relevant ministries to support the tagging of                   b) Donors and technical agencies should support
    expenditure, including through “virtual poverty                    the integration and institutionalization of health
    funds” to help focus on the role of the budget                     expenditure information into national and sub-
    in supporting poverty reduction.                                   national policymaking by:
e) The work of strengthening national financial
    management systems should be closely coordi-                        •   Working with in-country partners to identify
                                                                            an institutional “home” for NHA to move it
    nated with the institutionalization of National                         from a “project activity” to a routine function
    Health Accounts at the country level. This will                         of the government. Countries should be
    involve constructing explicit linkages between                          encouraged to start with basic information
    budget and NHA expenditure classifications,                             under the NHA framework and expand
    assuring that data collected on a “routine basis”                       gradually as the needs for policy arise.
    for expenditure reporting are also used for NHA
    and that financial management systems are
                                                                        •   Using resources from the Health Metrics
                                                                            Network and other sources to support the
    responsive to the needs of NHA.                                         development of capacity (including expertise
f ) Donor and technical agencies should coordinate                          in health management information systems
    to assure that NHA is integrated into and builds                        and financial/accounting systems) to track
    on ongoing efforts including among others the                           and report on financial resource flows.
    Health Metrics Network, Virtual Poverty Funds,
    MTEF, and PEFA. For example, in the prepara-
                                                                        •   Ensuring that technical assistance for health
                                                                            accounting includes expertise in health man-
    tion of Public Expenditure Reviews, the World                           agement information systems and financial/
    Bank and its partners should make use of existing                       accounting systems.
    National Health Accounts data or, when NHA
    data are unavailable, support the collection of
                                                                        •   Strengthening capacity development (train-
                                                                            ing) within the institutions responsible for
    data using the standard methods.                                        undertaking health accounting exercises, as
g) Donors should explore ways to support local                              well as disease-specific resource tracking,
    civil society organizations to build their capacity                     both at national and state/provincial levels.
    to analyze budgets and monitor their implemen-
    tation. This “watchdog” function can be an
                                                                        •   Working to integrate health accounting
                                                                            classification into improvements in public
    extraordinarily effective means of stimulating                          budgeting and expenditure tracking systems.
    and reinforcing good budgeting and expenditure
    tracking practices within the public sector. In
                                                                        •   Designing and monitoring surveys to track
                                                                            expenditures on health from all government
    addition, donors should support the selective use                       authorities (including ministries other than
    of methods to track expenditures to the facility                        health), non-governmental organizations and
    level, to enhance accountability of the public                          private and public corporate sector spending.
    purse.
                                                                        •   Using data on health expenditures in strategic
                                                                            planning exercises, including joint activities
Recommendation 2: Support the integration and                               between donors and government ministries
institutionalization of National Health Accounts                            (e.g., Poverty Reduction Strategies, sector-
into policymaking in developing countries                                   wide planning exercises, and others).
a) Donor and technical agencies should cease to                         •   Providing or helping to mobilize sustained
   compete and reduce the confusion about different                         funding for regional networks and institutions
   methods for tracking health expenditures. They                           that offer regional and local expertise, encour-

                              Section 4: Health Systems   Following the Money: Recommendations for Global Health Resource Tracking   1
        aging these networks and institutions to pro-                        practices. The survey would describe and analyze
        vide opportunities for professional exchange                         individual agencies’ budget frameworks, timing
        on methodological questions, as well as                              of finance-related decisions, type(s) of aid trans-
        sharing of experiences about communication                           ferred, sector and sub-sectoral priorities and
        of analytic work to policymakers and how                             data breakdowns, use of policy markers, inte-
        information on health expenditures has been                          gration of information technologies, use of
        used for policymaking.                                               commercial information technology applications,
                                                                             and so forth.
Recommendation 3: Improve data on private                               c)   The survey should investigate a method to “map”
spending                                                                     or “crosswalk” the within-agency classification
a) Donors and technical agencies should provide                              system to policy-relevant categories in a way
   technical and financial support to adapt routine                          that permits valid comparisons. Public and/or
   household surveys so that they capture infor-                             private donors should support refinement of
   mation about private health expenditures and                              such a map for its application across sectors, and
   utilization of health services. This would include                        the development of automated tools (informa-
   the development and/or refinement of methods                              tion systems) to do the mapping on a periodic
   so that cross-nationally comparable spending                              and frequent basis, as data are provided by the
   estimates can be generated, potentially with                              donor agencies (e.g. quarterly).
   coordination through the International House-                        d)   The findings from this survey could form the
   hold Survey Network, housed at the World Bank.                            basis for a sequenced enhancement of the
   Support should also be expanded for ongoing                               reporting of donor commitments and disburse-
   work in select environments to improve trans-                             ments to be forward-looking and more timely
   actional data collection from service providers                           to support improved predictability, as called for
   and insurers.                                                             in the Paris Declaration.
b) A valuation roadmap for in-kind contributions by                     e)   Subject to available funding, the OECD/DAC
   pharmaceutical companies should be developed,                             should be supported to develop the capability
   and should include concessional commodity                                 to be a portal for public access to detailed and
   sales, voluntary licensing, transfer of manufac-                          frequently updated data on donor commitments
   turing, R&D, M&E or other technological know-                             and disbursements. Data would be required not
   how; and commodity and service donations.                                 only from OECD/DAC member countries, but
                                                                             also for tracking the bilateral flows from non
                                                                             member countries and flows from private foun-
Recommendation 4: Support and refine global-
                                                                             dations and other agencies.
level information systems
                                                                        f)   Dependable financial support should be pro-
a) Donors and technical agencies that have pro-
                                                                             vided to WHO and other relevant agencies as
   moted and/or provided financial support for
                                                                             appropriate for the collection, validation, com-
   single-disease tracking surveys of donors should
                                                                             pilation and timely electronic dissemination of
   avoid continuing the proliferation of such activi-
                                                                             a basic set of indicators of health expenditures
   ties and adopt a more coordinated approach
                                                                             in countries. Within this context, coordinated
   ensuring adequate response to the evolving
                                                                             efforts should be made to routinely update har-
   needs of high quality, pertinent and policy-
                                                                             monized methodological norms and provision
   relevant information. They should aim to draw
                                                                             of technical assistance where necessary to ensure
   on agency classification systems to define policy-
                                                                             comparability of these estimates.
   relevant categories that respond to the majority
   of requests to major donor agencies for their                            This document was prepared by the Global
   spending on health by sub-sector, while recog-                       Health Resource Tracking Working Group, which
   nizing that as more donors move to sector-wide                       was convened by the Global Health Policy Research
   and general budget support such detailed infor-                      Network, a program of the Center for Global
   mation is becoming less available. Nevertheless,                     Development www.cgdev.org
   the prospects for more timely data on planned and                        For more information or to request a copy of the
   actual flows to the overall health sector are good.                  final working group report, please contact Ruth Lev-
b) The OECD/DAC should build on the Working                             ine, Director of Programs and Senior Fellow at the
   Group’s background analysis to expand the sur-                       Center for Global Development rlevine@cgdev.org,
   vey of donor agencies’ accounting and reporting                      202.416.0707.

10  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
                                                                                                                    11
IMPROVING HEALTH WORKFORCE PERFORMANCE
By Peter Sandiford, Geneva, January 2004




1. Introduction                                              programmes frequently “poach” staff robbing
Scaling up interventions to meet the Millennium              governments, administrations and services of their
Development Goals depends on effective health                most talented and skilled employees. If they are
services delivery systems. The availability of health        prepared to change these practices, disease specific
workers, their skills, attitudes, motivation and             programmes could make a significant contribution
behaviour are all key to a well-functioning health           to the development of workforce capacity and
service delivery system.                                     performance.
    Evidence suggests that in many poor countries                The development of an effective health work-
the number of health workers is grossly insufficient         force requires country specific solutions built on
for the implementation of priority interventions             sound situational analysis. In countries where the
according to needs. Paradoxically, countries, which          health workforce is in crisis, urgent action plans are
face the highest disease burden, are those with the          needed to identify interventions that can resolve
lowest numbers of health staff per population. Most          key constraints in the short to mid-term. Mid-term
are low-income countries in sub-Saharan Africa,              strategies must comprehensively address short-
where the HIV/AIDS epidemic has driven health                comings of health workforce performance. They
services into collapse by greatly increasing work-           need to address the human resource implications
loads and by hitting health workers. Furthermore,            of ongoing health and public sector reform pro-
emigration of qualified health personnel is another          grammes and lay out interventions and policies
key factor in the weakening of health service deliv-         that can be mainstreamed in sector and country-
ery systems. If the situation is not rapidly addressed,      wide development strategies such as Poverty
the consequences will be grave. Additional funds             Reduction Strategies. They must assess the cost and
raised for the scaling up of priority interventions          fiscal implications and reconcile them with public
will not be disbursed, significant health improve-           expenditure frameworks. Parallel investments are
ments will remain out of reach, and governments              needed to build the institutions and capacity required
and donors will not be able to translate their com-          to implement such strategies and monitor and
mitment to the MDGs into reality.                            evaluate their impact.
    The policies and practices of health development             A paradigm shift is required from governments,
partners are of utmost importance. Too often, they           development partners, and other stakeholders.
have contributed to the neglect of health workforce          Investing in the workforce can require substantial
issues. The primary focus of donors has tradition-           increases in recurrent expenditure on health, but it
ally been on the projects/programmes they have               can also bring much needed benefits. Governments
funded and not on ensuring that health systems               and development partners alike face a challenge to
are strong enough to address the needs of popula-            mobilize the required financial and political resources.
tions. As sector support remains unpredictable and           If solutions are at odds with public expenditure and
usually precludes funding for worker compensation,           macroeconomic frameworks, alternatives need to
the ability of governments to invest in their health         be considered.
workforce is limited. Preference is often given to               The Joint Learning Initiative on Human Resources
disease specific programmes that are not well inte-          for Health launched by the Rockefeller Foundation
grated in health delivery systems. Such programs             and supported by many important donors and
and initiatives contribute little to the building of a       technical agencies is compiling and summarizing
motivated and appropriately skilled workforce and            the current knowledge base. Substantial and critical
any training activities are limited to the relatively        information gaps will remain, and continued global
small number of program staff. In addition, these            learning, with a focus at the country level, will be

                                                          Section 4: Health Systems   Improving Health Workforce Performance   11
important for the development of innovative and                         ful impact on the working conditions of health
improved strategies, policies and practices. Such a                     workers and often leads them to resign. It deters
learning agenda would include the development                           students from enrolling in training programs for
and application of standardized diagnostic tools,                       health professionals and further destabilizes the
the monitoring and evaluation of the impact of                          balance between intake and loss of personnel.
policies and practices and selected operational                             Low staff per population ratios and high vacancy
research to fill the most critical information gaps.                    rates are the result of an insufficient supply of
   Today, the health workforce performance is a                         health workers and inadequate resources to attract
binding constraint for accelerated progress towards                     and retain them in service. Emigration is a key
MDGs in most poor countries. It is time to take                         source of workforce attrition in low-income coun-
action. The World Bank and the World Health                             tries. Health workers with internationally accepted
Organization, and their partners, are committed to                      degrees are attracted to positions in industrialised
a participatory process that will result in a global                    countries by better remuneration, career opportu-
action plan to address key health workforce issues.                     nities and active recruitment campaigns. In Zambia,
This will require the mandate, the participation                        of the more than 600 doctors that have trained
and the financial commitment of all health devel-                       since independence, only 50 remain in the country
opment partners.                                                        and in Ghana more than 50% of physicians who
                                                                        trained during the 1980s now practice abroad5&6.
                                                                        The UN Conference on Trade and Development
. Improvement in health workforce                                      estimated that 56% of all migrating physicians
performance is critical to achieve the                                  flow from developing to industrialized countries,
health related MDGs                                                     while only 11% flow in the opposite direction. The
The number of health workers in a country is the                        imbalance was even greater for nurses7.
main indicator of its capacity to deliver services and                      The effectiveness of the workforce, however,
varies substantially among countries. In Monaco,                        depends mostly on the productivity, quality and
for example, the number of physicians per 100,000                       deployment of an adequate number of health
population is 664 compared to just 2.3 in Liberia1.                     workers. Inappropriate health worker behaviour,
While the optimal number of health workers per                          resulting from low motivation and inadequate
population is unknown, it is evident that in many                       training, can cause significant service inefficiencies.
poor countries the number is grossly insufficient                       For example, absenteeism rates in public facilities
for the widespread implementation of a minimum                          are reported at 29% in Peru, 35% in Bangladesh and
of lifesaving interventions. The Ministry of Health                     43% in India8&9. Studies from Tanzania and Chad
of Botswana estimates that achieving universal                          indicate that staff in public facilities spend only
coverage of anti-retroviral treatment alone would                       55% to 60% of their time on tasks they are trained
require doubling the current nurse workforce, tri-                      to perform. Quality is often woefully inadequate. In
pling the number of physicians, and quintupling                         Burundi in 1992, only 2% of children with diarrhoea
the number of pharmacists2. Recent research shows                       taken to a health facility were correctly diagnosed.
that the workforce needs to triple in Tanzania and                      In the same facilities, only 13% of children who were
more than quadruple in Chad to deliver priority                         correctly diagnosed with diarrhoea were correctly
interventions at the national level by 20153. In 1998,                  re-hydrated10. A common cause of insufficient
the vacancy rate for public facility physicians was                     quality is the substitution of skilled with unskilled
43% in Ghana and 36% in Malawi. Lesotho reported                        labour. According to national staffing norms, Tan-
the public sector nurse vacancy rate at 48% in 1998,                    zania has an excess of 5,000 unskilled health workers
and Malawi at 50% in 20014.                                             and a shortage of 8,000 health professionals. One
    Ironically, the countries with the highest disease                  interpretation of these findings is that an unskilled
burden are also those with the lowest numbers of                        worker performs every fourth task that requires a
staff per population ratios. Most of them are low-                      skilled health professional.
income countries in sub-Saharan Africa, where the                           Access to services can be significantly limited
HIV/AIDS epidemic has led health service delivery                       by the uneven deployment of health workers. In
systems to collapse due to its impact on health work-                   Nicaragua, approximately 50% of the country’s
force performance. The epidemic increases the need                      health workforce is concentrated in the capital
for services and health workers, while causing death                    Managua where only 20% of the population resides.
and disability within the labour force. It has a harm-                  In Tanzania, the nurse per 100,000-population ratio

1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
in the urban districts of Dar es Salaam is 160, which       The performance of the health workforce needs to
is sufficient to meet the demand for primary, sec-          be understood as the aggregate outcome of worker
ondary and tertiary care, including care of patients        choices. Solutions to workforce issues have to
after neuro-surgical interventions. However, some           identify and address the factors that determine the
districts have less than 6 nurses per 100,000, which        choices and behaviour of health workers, such as
is insufficient to deal with the daily number of            their needs, values and expectations. It is important
new malaria cases. In Zimbabwe, whole districts             also that health workers play an active role in the
are left with only one physician and in Indonesia           development of policies, which will affect the envi-
vacancy rates in public health centre in remote             ronment in which they are expected to work.
areas reach 60%.
    While workforces in many countries are in a
critical condition, some improvements in quality,           . The current knowledge base allows
productivity and deployment of health workers               for action on key workforce performance
could significantly improve service delivery and            issues
thus accelerate progress towards the MDGs. With-            These are new challenges, but the current knowl-
out addressing these issues however, additional funds       edge base provides sufficient evidence to guide
raised for the scaling up of priority interventions         governments and stakeholders in the development
will not be disbursed, significant health improve-          of action plans that will address key workforce
ments will remain out of reach, and governments             issues. Interventions in a few key areas could lead
and donors will not be able to translate their com-         to significant improvements.
mitment to the MDGs into reality.                               In countries with significant shortages, the supply
                                                            of health workers must be increased. Investment
                                                            in training can expand health worker supply in the
. Changing realities generate new                          mid-term. The liberalization of immigration and
challenges and call for new approaches                      incentives to attract foreign workers can mitigate
Two decades ago, human resource development                 shortages in the short-term. While supply is being
was straightforward in most developing countries.           increased, losses must also be reduced. For example,
Governments simply needed to produce sufficient             investments in the well-being of health workers in
health workers to meet the needs of expanding               countries substantially affected by the HIV/AIDS
public health services. Today however, a range of           epidemic can mitigate the losses due to ill health
diverse private providers exist and people seek care        and death. New positions must be created and
from public, private for-profit and a wide variety of       incentives provided that attract and retain health
not-for-profit providers, such as non-governmental,         workers in service. Policies and practices must also
community and faith-based organizations. Each               ensure the adequate quality, productivity and deploy-
mode of provision represents an alternative job             ment of the health workforce.
opportunity for health workers, with varying sala-               Differentials in compensation, working condi-
ries, benefits, career opportunities, and working and       tions and associated living conditions determine in
living conditions. At the same time, the Internet           which sector, at what level of care and where health
has increased access to information about employ-           workers seek employment. Improved incentive
ment opportunities nationally and internationally           packages can retain staff in the public sector and in
and even in different labour markets.                       the country and can attract staff into primary care
    Faced with these changes, governments are               services or rural areas. The introduction of an addi-
now required to assume a fundamentally different            tional duty hour allowance in Ghana, for example,
role in the development of human resources for              fostered overall job satisfaction and attracted physi-
health. With the emergence of complex health                cians from the private to the public sector. In Thai-
labour markets, governments now face the challenge          land, generous research funding and monetary
of ensuring that the level of employment and the            incentives reduced the ‘brain drain’ of medical
distribution of the workforce are coherent with health      professionals.
sector objectives. An unregulated health labour                 Under some remuneration packages, the final
market is not efficient and government intervention         income level depends on the behaviour of health
is justified and required.                                  workers. There is evidence that performance related
    The labour market perspective has changed the           pay, such as fee-for-service, increases the productivity
basic approach to human resources development.              of physicians, but that they also tend to create

                                                         Section 4: Health Systems   Improving Health Workforce Performance   1
demand for unnecessary services. In Brazil during                            In countries with limited access to public services,
the 1990s, for example, delivery services were re-                      governments must engage the whole sector in the
imbursed on a fee-for-service basis. When the fees                      provision of priority services. This includes contract-
for a caesarean section substantially exceeded the                      ing private providers and mobilizing community and
fees paid for a normal delivery, the incidence of                       civil society organizations. With such a sector-wide
caesarean sections increased far beyond justified                       approach, government regulation of the private
levels. This suggests that new incentives should be                     sector becomes even more important to ensure
introduced with care.                                                   service quality.
    Strengthening leadership, management, super-                             Although current understanding of the situation
vision and accountability can enhance health worker                     is sufficient to initiate action, further research is
motivation and performance. Health workers in                           needed as significant information gaps remain. For
India value challenging work, recognition by supe-                      example, although we are beginning to understand
riors and sufficient time for their personal life as                    the factors that contribute to job satisfaction, we
much as good remuneration. In Bolivia and Vietnam,                      know little about the responsiveness of health
community monitoring of health services has been                        workers to changes in incentive schemes. There is
shown to help ensure that health workers meet                           little evidence that performance management sys-
the needs of the community, thus improving the                          tems affect service quality or health outcomes or
availability and quality of services.                                   that efficiency gains exceed the costs of setting up
    The content of education and training programs                      and running such systems. Investment in research
is critical for performance. The quality of curricula                   is required to fill information gaps and to strengthen
determines whether health workers are prepared                          systems that monitor and evaluate country action
for the tasks and challenges they face and thus are                     plans and their impact. Systems must be developed
primary determinants of service quality. Also, grad-                    that can disseminate and use findings in order to
uates who received extensive training in family                         ensure a continuous improvement in policies and
medicine are more likely to settle and practice in                      practices.
remote areas. As training is clearly valued by health
workers, improving access to continuous education                       . The sustained commitment of all
programs improves not only service quality, but                         stakeholders is essential
increases job satisfaction.                                             Policies initiated outside the health sector can have
    Where there are shortages of health staff, alter-                   a tremendous effect on the health workforce. Unfor-
native modes of service delivery can ease the strain                    tunately, the impact is often not in line with health
on the health workforce. Changes in technology                          sector objectives. In Tanzania, during the 1990s,
can allow for the substitution of higher skilled                        the public sector employment freeze and retrench-
with lower skilled staff in the provision of clinical                   ment actions under the structural adjustment pro-
services. Algorithms to diagnose and treat child-                       gramme effectively pruned the workforce of staff
hood illnesses or sexually transmitted infections                       deemed irrelevant for service provision. At the same
enable nurses and midwives to deliver services                          time, however, the size of essential cadres shrank
traditionally provided by physicians. Standardized,                     in relation to the population size and to increasing
population based services such as vector control,                       health needs, leaving a workforce that was over-
immunization, vitamin A supplementation, ante-                          worked, demotivated and grossly insufficient for
natal care and oral re-hydration can be delivered                       scaling up priority interventions. As the wage bill
through health workers with limited training at the                     typically consumes 60 to 80% of recurrent expendi-
community level. In 1987, the local authority of                        ture on health in poor countries, mobilizing addi-
Ceará in north-east Brazil, started to recruit, train                   tional resources for investment in the workforce is
and deploy community health agents. Within a few                        potentially at odds with prevailing public expenditure
years, agents were visiting 850,000 families per month                  and macroeconomic policy frameworks. To turn
and some of the significant decreases in infant mor-                    the tide in countries with substantial shortages, it
tality could be attributed to the services provided                     will be critical to consider alternative expenditure
by them. Some interventions lend themselves to                          frameworks and budget neutral sources of funding
provision outside the health sector. Condoms and                        such as debt relief.
insecticide-treated nets have been successfully mar-                        Similarly, reforms and policies driven by sector
keted through retail systems in various countries.                      objectives need to recognize their potential impact

1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
on the workforce. In 2002 in Bolivia, the transfer of         countries, assisted by Pan-American Health Organi-
contracts from the central to local government as             zation (PAHO), have established Observatories of
part of a process of decentralization met the stiff           Human Resources. These facilitate knowledge
resistance of public health workers in Bolivia. Health        sharing and dialogue among all stakeholders. They
services remained paralyzed during strikes that lasted        foster the recognition of workforce issues in the
almost two months and was only resolved by the                wider policy context, promote broad consensus and
government abandoning the transfer of contracts.              ensure political feasibility.
    Policies and practices of health development                  A comprehensive approach and sustained com-
partners can also have a considerable impact on the           mitment are vital to bring about improvements.
workforce. As sector support remains unpredictable            Causes of poor workforce performance are inter-
and precludes funding for compensation, the ability           connected and single interventions will have only a
of governments to invest in the workforce is limited.         limited impact. Low motivation and morale in the
Payment of high per-diems to ensure their attend-             public sector can be the result of various unmet
ance at workshops and seminars has created a busi-            expectations, such as low remuneration, poor
ness that distracts managers and staff from service           working conditions and lack of access to education.
priorities and discourages those without the oppor-           It discourages graduates from enrolling in training
tunities to benefit. Policies of development partners         institutions for health professions; it encourages
often favour disease specific programs that are not           absenteeism and health workers to leave the public
well integrated in national health delivery services.         sector and seek work in the private sector or in
Such programs and initiatives contribute little to the        other professions or to leave the country to work
building of a motivated and appropriately skilled             abroad. Significant changes as a result of interven-
workforce. Training activities are limited to the             tions to address workforce shortcomings will unfold
relatively small number of programme staff. “Poach-           only over the mid-term rather than the short-term.
ing” of staff robs governments, administrations and           Increases in training capacity or improvements in
services from their most talented and skilled employ-         training curricula, for example, will not result in
ees. In some instances, vertical programs even par-           increased supply or the availability of better skilled
alyze regular service provision, such as in Madagascar        staff until after the length of the training period.
where national immunization days leave rural health           Only a comprehensive approach sustained over
facilities completely void of staff. With a few changes,      years will produce tangible improvements. Such an
disease specific programs could make a significant            approach requires continued financial and political
contribution to the development of workforce capa-            commitment of all stakeholders.
city and performance. For example, programmes
currently being launched that aim to scale up anti-
retroviral treatment in poor countries will create a          . A call to action for governments and
substantial increase in demand for health labour and          donors
therefore a need to invest in training to prevent the         While the focus on improving health service work-
draining of staff from regular services and other             force capacity must be at the country level, actions
initiatives. If implemented in an integrated way,             at the global level are also needed to facilitate and
and articulated with pre-service education, the               enhance national efforts and to address issues that
required training of staff can have a tremendously            are beyond the control of individual countries.
positive impact on other services to patients at risk             There is a need for a paradigm shift among
or infected with HIV. The programmes provide the              governments, development partners, and other
opportunity to introduce alternative delivery mod-            stakeholders. Priorities, policies and practices must
els into the public sector, for example, new business         be re-evaluated and amended so that they do not
and management models, the contracting of private             undermine but contribute to the development of
providers, and the use of community resources.                effective workforces. Improving the health work-
    With such a wide range of policies and practices          force performance will require significant investment
affecting the workforce, only an alliance of govern-          and increases in recurrent expenditure on health.
ments, development partners and other relevant                Governments and development partners alike face
stakeholders in health, education, public service             the challenge of mobilizing the required resources.
reform and finance can create an environment that             If solutions are at odds with public expenditure and
is conducive to improvements. Models of good                  macroeconomic frameworks, alternatives need to
practice are emerging from Latin America where 17             be considered.

                                                           Section 4: Health Systems   Improving Health Workforce Performance   1
    Mitigation of the effects of international migra-                   stantial and critical information gaps remain. Con-
tion of qualified health workers from poor countries                    tinued global learning with a focus at the country
are largely beyond the control of individual govern-                    level will be important for the development of
ments and require global action. Guidelines for                         innovative and improved strategies, policies and
international recruitment must be developed, strength-                  practices. Such a learning agenda needs to include
ened and then enforced. Compensation, working                           the development and application of standardized
conditions and training capacities in countries                         diagnostic tools, the monitoring and evaluation of
with substantial inflows need to be improved to                         the impact of policies and practices and selected
augment the local supply of health workers. The                         operational research to fill most critical information
newly established UN Commission for Migration                           gaps.
should be able to play a critical role in monitoring                        Today, health workforce issues are a binding
international migration in health and the develop-                      constraint for accelerated progress towards MDGs
ment of solutions to adverse effects.                                   in most poor countries. The World Bank, the World
    The Joint Learning Initiative on Human Resources                    Health Organization and their partners are com-
for Health launched by the Rockefeller Foundation                       mitted to a participatory process that will result in
and supported by many important donors and                              a global action plan to address key issues over the
technical agencies is compiling and summarizing                         next twelve to eighteen months. This, however, will
the current knowledge base on health workforce                          require the assent, the participation and the finan-
performance and its determinants. However, sub-                         cial commitment of all health development partners.




1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
                                                                                                                         12
WORKING TOGETHER TO TACKLE THE CRISIS
IN HUMAN RESOURCES FOR HEALTH
By Lincoln Chen, Tim Evans, Sigrun Møgedal and Francis Omaswa, Paris, November 2005




1. Introduction                                                     based action, and also firm in their view that pro-
This paper summarizes the rapidly accumulating                      gress depended in part on significant international
evidence and growing recognition of the crisis in                   response. In support of this approach, a rapidly
human resources for health (HRH), especially in                     assembled Oslo Consultation in February 2005
sub-Saharan Africa. The nature of the crisis is briefly             engaged key stakeholders in order to achieve con-
outlined, drawing attention to escalating activities,               sensus behind a “common global platform of action.”
demand and momentum emerging from Africa and                        A Transitional Working Group (TWG) was estab-
other countries calling for appropriate and effective               lished to broaden the consultation process, to pro-
global and regional support. There is a clear need                  mote interim actions, and to develop an action plan.
for quality technical work, stronger regional cooper-               At the third High-Level Forum in Paris in November
ation, harmonization of health systems and global                   2005, the TWG reported on progress and discussed
initiatives, and for sound fiscal and migration policies.           ways to advance collaboration in order to overcome
Underscored is the growing gap between energetic                    the crisis in HRH.
yet isolated and fragmented country efforts and                         Whether viewed from the perspective of a patient
appropriate and effective external reinforcement.                   who is ill and in need of urgent care but who is denied
    In an inherently complex field with weak data,                  access to essential services due to the absence of a
an underdeveloped evidence base and isolated and                    health worker, or whether viewed from the perspec-
fragmented activities, the necessity for multi-sectoral             tive of an over-stretched health worker who is inad-
policy development is acute. Building on ongoing                    equately equipped, bringing barely poverty-level
collaboration among stakeholders, catalysed by                      wages back to her family, the problems in HRH are
the High-Level Forum, the Oslo Consultation, the                    longstanding exacerbated by fresh forces taking on
Joint Learning Initiative ( JLI), the WHO and the                   new forms. In the poorest countries of sub-Saharan
World Bank, bilateral and nongovernmental bodies,                   Africa, HIV/AIDS is a “triple threat” – it generates
and regional networks, a global alliance is emerging,               huge work burdens, it has a direct impact upon the
not as a separate new organization but an alliance                  lives of health workers through personal or family
built on collaborative linkages across existing and                 illness, and it places stress upon the workforces as
new actors. Energized by key leaders with agile                     workers become terminal care providers rather than
operations based in existing institutions, it is antici-            healers. Unrelenting demand for skilled workers in
pated that this alliance would be open to the co-equal              an expanding global labour market has provided
participation of all actors. A concrete set of deliver-             fertile ground for the acceleration of the migration
ables for this alliance over the next several years is              of professionals from rural to urban areas, from
proposed within a vision and mission on how to                      the public to the private sector, and from many of
tackle the crisis in HRH for advancing global health                the hardest-pressed countries to greener pastures.
equity.                                                             And the past two decades of “structural adjustment”
                                                                    and “health sector reform” have paid insufficient
                                                                    attention to health workers who were often seen
. Dynamic contexts                                                 as fiscal liabilities rather than core assets of health
At the first High-Level Forum in Geneva in January                  systems. Health care is fundamentally a “service
2004, the imperative of overcoming the crisis in                    industry” that by necessity relies on a motivated,
HRH in order to achieving the health-MDGs was                       skilled, and supported workforce.
acknowledged. By the second High-Level Forum                            These developments are among the reasons
in Abuja in December 2004, African leaders were                     why the World Health Assembly in both 2004 and
unified in their support for country-led and country-               2005 passed resolutions, at the initiative of African

                                     Section 4: Health Systems   Working Together to Tackle the Crisis in Human Resources for Health   1
Graph 1 Workforce and health outcomes                                        and more drugs will be useless or even wasted with-
Mortality (per 1,000, log)                                                   out dramatic improvements in the human infrastruc-
8
                             Maternal
                                                                             ture that enables effective health action.
7                                                                                Since High-Level Forum I, policy momentum
6
                             Infant                                          for tackling the crisis has been steadily building at
5
                                                                             nearly all major international events. The momen-
4
3
                                                                             tum, predominately technical and programmatic,
                             Under 5
2                                                                            has also reached the highest political levels. HRH
1                                                                            was identified as a key priority by African Heads
      0              1                2             3           4   5        of State in Abuja in January 2005, and the recent
                             Density (workers per 1,000, log)                African Union meeting of health ministers in
Source: Anand & Baernighausen (2004) in JLI (2004)                           Gaborone in October echoed these priorities. Glo-
                                                                             bally, the UK Africa Commission devoted a major
                                                                             share of its health recommendations to strength-
ministers of health, to address HRH. The case was
                                                                             ening the workforce in health systems. The same
well advanced by the report of the JLI, a coalition
                                                                             political priority to HRH was echoed at the G8
of more than 100 global health leaders comprising
                                                                             Summit in Gleneagles in 2005 and reaffirmed at the
practitioners and scholars from both the South and
                                                                             September UN Summit for the MDGs.
North. With the scaling up of the AIDS response
                                                                                 Public attention in Northern countries has been
and a host of categorical programmes, managing
                                                                             further fueled by the media, and by NGO advocacy
HRH is central to addressing the additional and
                                                                             campaigns. The BBC, the New York Times, and
often competing demands on health workers for
                                                                             the Guardian all have extensively featured the
different tasks and between their frequently joint
                                                                             human resources in health crisis in Africa. Non-
roles as public and private sector providers. Human
                                                                             governmental organizations have been successful
resources are demonstrably linked to health systems
                                                                             in bringing the workforce crisis into public focus
outputs and health outcomes (Graph 1). Staff costs
                                                                             and into policy formulation in the US congress, UK
are often the largest share of health budget that is
                                                                             parliament, and other legislative bodies. Professional
the least strategically planned and managed. The
                                                                             groups have also been active, with major coverage
workforce is the catalytic lever for driving the per-
                                                                             by leading medical journals like the Lancet and the
formance of health systems and priority programmes.
                                                                             British Medical Journal. Indeed, among the most
Although water, sanitation, nutrition, and other
                                                                             active advocates for correcting the unfairness of
investments are equally important, a motivated
                                                                             migration depletion from the poorest countries has
and skilled workforce is critical for reducing maternal
                                                                             been the British Medical Association.
and child mortality, for managing HIV/AIDS, TB
                                                                                 It should be recognized that the crisis in HRH
and malaria, as well as for the provision of essential
                                                                             will not simply “fade away.” Gross under-produc-
preventive, diagnostic and curative services. Stated
                                                                             tion of skilled workers is apparent in many of the
simply, there are no short-cuts around the issue of
                                                                             countries hardest hit by the HIV/AIDS epidemic.
human resources for achieving the health MDGs.
                                                                             Even in well-endowed countries, escalating demand
    Countries differ greatly in their human resource
                                                                             for skilled workers and aging populations means
endowments. Yet as underscored by the JLI report,
all countries confront a common set of challenges
– severe shortages, maldistribution of workers,
                                                                             Graph 2 Health workforce by region*
inappropriate skill-mixes, negative working condi-
                                                                             12.5 per 1,000 pop.
tions, and huge knowledge gaps. Over 600 million
sub-Saharan African people are served by fewer than                          10

one skilled worker per 1000 population and less than                         7.5
100,000 doctors in total (Graph 2). The JLI estimates                        5
that a density of 2.5 health workers per 1000 is nec-
                                                                             2.5
essary to hit key milestones such as 80% coverage of
immunizations and skilled birth attendance. To reach                         Sub-Saharan   Asia    South &    Global   Middle   Western    North    Europe
these MDG targets, Africa would need to triple the                              Africa              Central             East    Pacific   America
                                                                                                   America
number in its workforce – more than 1 million addi-                          * Combined physicians, nurses, midwives per 1,000 population
tional skilled workers. Simply pouring in more money                         Source: JLI (2004) compiled with WHO estimates of health personnel 2004



1  High Level Forum on the Health Millennium Development Goals        Selected Papers 2003–2005
accelerating importation in an increasingly porous                      a. Tools, guidelines, and best practices
global labour market. Few countries, rich or poor,                      HRH is an underdeveloped field where established
have strong human resource planning and imple-                          norms, guidelines, and best practices have yet to
mentation capacity to correct deficiencies that have                    be clearly established. As a consequence, most
been decades in the making. Not only is urgent                          country activities are being launched without a
action necessary but at least a decade of sustained                     strong evidence base of what works, why, and how.
investments will be needed to build a robust human                      WHO and its regional offices have been playing
infrastructure for most national health systems.                        increasingly critical roles in normative standard
                                                                        setting and technical excellence. But, more techni-
                                                                        cal support to fledgling national programmes that
. Escalating activities, demand, and                                   would benefit from improved information, stand-
momentum                                                                ards, and knowledge must be forthcoming. Core
Country activities “to train, retain, and sustain”                      indicators of HRH must be developed, and all HRH
national workforces are increasing, and a number                        policies and interventions must be monitored and
of countries have undertaken innovative actions.                        linked to health systems outputs. In some fields,
African countries have initiated many situation                         technical expertise already exists within Africa, in
assessments, research and studies, planning and                         both the public and the private sector, and these
policy development, and know-how transfers. Ghana,                      regional resources need to be galvanized in support
for example, has been leading the way through an                        of national processes with appropriate international
additional duty allowance and financial and non-                        supplementation. Throughout, a culture of “learn-
salary incentives for rural postings – to such a scale                  ing communities” must be built and strengthened
that these allowances now constitute nearly 40-50%                      to actively engage in the trial-and-error of improv-
of the salary bill in the public sector. Malawi has been                ing HRH planning and management.
making major efforts to strengthen its national work-
force through major adjustments of compensation                         b. Regional and global cooperation
and work systems. Ethiopia is training more than                        Demand for country support is increasing exponen-
20,000 community health workers to extend basic                         tially, especially in Africa. The potential for sharing
services into rural areas. While detailed specifica-                    technical and institutional resources within regions
tion is difficult, some generic patterns are emerging                   is important even whilst additional capacity is being
(Box 1).                                                                mobilized. For example WHO is proposing “The
    Novel activities in countries are generating                        Connection,” an open network to mobilize techni-
growing demand for appropriate and effective                            cal expertise and to develop indicators, tools, and
regional and international support. Among the                           guidelines in support of country activities. Collab-
key areas of reinforcement are: (1) developing and                      oration and linkages among key technical groups
sharing tools, guidelines, and best practices for                       around the world are being fostered, including
strategic planning and management; (2) strength-                        Liverpool Management Science for Health, the US
ening regional and global cooperation to achieve                        Center for Disease Control, and various bilateral
scale and impact; (3) relying on human resources                        technical activities. A regional network of agencies
to strengthen health systems and to harmonize                           sharing capacity and expertise in support of coher-
global initiatives; and (4) developing supportive                       ent and coordinated regional action has already
fiscal space and migration policies. These support                      been fostered through the Pan American Health
requirements are discussed in turn.                                     Organization (PAHO). New regional initiatives are


Box 1 Recent initiatives in human resources for health and underdeveloped areas
 Some recent initiatives                                              Some underdeveloped areas
 •   Effor ts at retention through salary, benefit, extra-duty        •     Little mobilization of pre-service training
     allowances                                                       •     Skill-mix deficiencies are rarely addressed
 •   Incentive payments for rural hardship postings                   •     Data deficiency and weak monitoring and evaluation
 •   Outsourcing and new contractual arrangements                     •     Few new policies and regulations
 •   Expanding more flexible private systems                          •     Infrequent engagement of stakeholders



                                         Section 4: Health Systems   Working Together to Tackle the Crisis in Human Resources for Health   1
emerging in Africa sparked by the NEPAD/WHO/                            reform, and the implications of decentralization
ACOSHED Conference on Human Resources held                              will all be critical in the formulation of country
in Brazzaville in July 2005 and in Asia sponsored by                    responses. So too, ultimately, will be improved
the Thai Ministry of Public Health workshop held                        management of international migration. Migration
in Bangkok in August 2005. In Africa, the need to map                   policies are indicated for both sending countries and
the current situation and to collate and disseminate                    receiving countries. The former must make a real
existing lessons on good practice has been realized.                    commitment to broaden and retain professionals
A strong case has been made for an African regional                     through stronger education, retention, and produc-
observatory on HRH.                                                     tivity strategies that expand the pool of appropriate
                                                                        personnel who are able to achieve employment and
c. Health systems and global initiatives                                work in positive work environments. The latter
Global initiatives have played an important role                        must dampen the demand for the consumption of
not only through the resources mobilized but also                       imported skilled workers through self-sufficiency
in focusing international attention on critical issues                  in production. Unethical recruitment practices must
and accelerating progress towards the MDGs.                             be curtailed. Official Development Assistance (ODA)
However, there is now a need to ensure that these                       investments can play a critical role by earmarking
resources effectively complement and build health                       significant external support for pre-service educa-
systems which are necessary for sustainability and                      tion and creating a healthy working environment
for addressing the full range of essential health needs                 in the poorest countries. Research will be essential
of a population. Productive dialogue with the lead-                     for improving understanding and to support policy
ership of the global initiatives has highlighted con-                   dialogue on these complex and politically conten-
siderable willingness and commitment to harmonize                       tious phenomena.
behind national priorities. It is agreed that the co-
operative arrangements between global initiatives
and national plans of action should be designed to                      . Working together
complement and strengthen – not duplicate or com-                       In the same way that human resources represent the
pete with − health systems. The bulk of external                        cement of the health system, essential for holding
financing should flow directly into countries in                        the various components together, coordinated
support of national plans for health systems and                        action addressing the HRH crisis can effectively link
priority programmes. While not a panacea, effec-                        and strengthen joint work between existing global
tive HRH management is critical for improving                           initiatives. HRH provides a common unifying theme.
the efficiency and impact of these investments.                         Addressing the crisis in HRH requires a modality
Getting the right workers into the right place at                       to accelerate more effective action − for without
the right time doing the right things is absolutely                     greater cohesion there are real risks of fragmenta-
fundamental to health results. HRH, moreover,                           tion, competition, duplication, and insufficiency.
offers a powerful advocacy focus for highlighting                       This is already becoming evident among the many
fiscal space exceptionality, managing migration and                     new independent initiatives, often donor driven, that
harmonizing public-private dynamics. Most impor-                        are neither well aligned with country priorities nor
tantly, HRH operates as the common “currency” to                        the investment policies of others.
bring harmony among health systems and priority                             Extensive consultations over the past year have
disease programs. Ultimately, the priority that                         emphatically endorsed the imperative of stronger
countries accord to the training, deployment and                        cooperation to pursue a “country-led framework”
tasks assigned to workers is where health systems                       to accelerate national planning and management.
and global initiatives come together.                                   As an underdeveloped, multi-sectoral field beyond
                                                                        the purview of any single actor, a global platform
d. Fiscal and migration policies                                        is necessary to bring together stakeholders for
Critical to country level HRH action are policies                       HRH promotion, learning, policy dialogue, and
on fiscal space to ensure sustainable financing in                      programme collaboration. A cooperative alliance
support of the health sector. This will be essential                    should aim at strengthening national action while
before ministries of finance will agree to take on the                  promoting political commitment, within countries
financial commitment of an expansion and improve-                       and internationally, to enable all to benefit from
ment in the employment terms of the health work-                        the global public good of better management of
force. Policies on labour markets, public sector                        HRH knowledge, labour markets, and fiscal policies.

10  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    The goal of a stakeholder alliance is to advance                 the countries themselves escalating upwards to the
global health equity through overcoming work-                        regions and globally underscore the unique “window
force constraints and capitalizing on the power of                   of opportunity” for timely, coherent, and effective
workers to accelerate health progress. A platform                    action now. Driven by country-led and country-
would not be a new, independent global entity, but                   based processes, global and regional reinforcement
rather the consolidation of actors already working                   can help realize the vision of universal access to
together in support of country and regional activi-                  essential services where every person – irrespective
ties − filling in obvious gaps in the global institutional           of nationality, race, gender, income, religion, and
architecture. The platform would be the political                    ethnicity − has access to a motivated, skilled, sup-
articulation of global commitment to address an                      ported health worker who is equipped to help people
issue which is, in part, the product of global labour                to realize their full health potential.
market failures. The political imperative is to ensure                   The stakeholder alliance will be part of a global
that stated commitments to ensure that globaliza-                    plan of action embedded in a global social move-
tion works for the poor are translated into effective                ment on HRH. Crystallized in the World Health
action. The alliance is the network of actors who                    Report 2006 on HRH (complemented by World
will support and take forward this political priority.               Health Day and the World Health Assembly of 2006),
    The alliance should be a mission-driven, 10-year                 a decade of sustained action on HRH to strengthen
time-limited partnership of key stakeholders aimed                   health systems and global initiatives will be neces-
at strengthening health systems and priority pro-                    sary to move the vision to reality.
grammes. Guided by a small group of leaders, the                         In pursuit of the vision and mission a global plan
alliance would be operationalized by an agile staff                  of action is now in place comprising a series of
hosted in an existing organization. The alliance                     specific deliverables and targets over the coming 1-2
would be open to and inclusive of major stakeholders                 years1:
– governments, academia, educational institutions,
NGOs, and professional bodies. Its primary func-                     •   At least a dozen countries with sound national
tions should be global promotion and learning and                        strategic HRH plans under implementation
catalytic seed support to countries through small                        and harmonized with stakeholders and allied
grants linked to technical support. More specific                        activities.
activities would include fact finding, sharing of                    •   Global focal point for information, knowledge,
information and knowledge, advocacy, coordina-                           exchange and sharing of lessons learned.
tion, monitoring and evaluation, and support to                      •   Open global forum, probably biennially, for all
country work. All these activities would aim to                          HRH stakeholders to report on progress, share
strengthen systems development, harmonization,                           lessons, strengthen cooperation, and create a
and aid effectiveness. Acting as a broker and catalyst,                  community of HRH practice.
the alliance will not build itself but rather strengthen             •   Promotion and advocacy to ensure that HRH
the capacity of its membership. Ad hoc task forces,                      retains high political visibility and funding
situated in membership bases, will be mandated to                        priority.
tackle key challenges like international migration,                  •   Networking and promotion of engagement
fiscal space, and knowledge priorities.                                  among southern and northern leaders in some
                                                                         key domains like medical migration and fiscal
                                                                         space.
. Launching the vision and mission                                  •   Mobilizing around the global platform, as the
Of the several themes addressed by the High-Level                        basis for harmonized international action to
Forum, few have been as consistently and energe-                         energize the World Health Report 2006 and cham-
tically vetted and supported as the crisis in HRH.                       pion an agenda for an HRH decade of action
Growing activities, demand, and momentum from                            2006-2015.




                                      Section 4: Health Systems   Working Together to Tackle the Crisis in Human Resources for Health   11
Human resources developments in WHO/African region in 2004 and 2005
Highlights of achievements
 Activity                                                          Countries - Institutions    Outcomes
 Suppor ted development of situation analysis on HRH               Burkina Faso                Situation analysis
 Development of motivation and incentive plan                                                  Plan available
                                                                                               Incentive and motivation plan available

 Suppor ted in depth situation analysis for HRH and devel-         Botswana                    Situation analysis plan available
 opment of an emergency plan for HRH                                                           Emergency HRH plan available

 Situation analysis of HRH                                         Cape Verde                  Situation analysis plan available
 Finalization and adoption of its HRH policy and plan                                          HRH policy and plan available

 Development of HRH plan                                           Central Africa Republic     HRH plan available

 Suppor ted external evaluation of college of medicine             Chad                        Repor t available

 Pedagogic training of trainers of faculty of nursing and          Comoros0000000              Repor ts available
 midwifery

 Pedagogic training of trainers of faculty of health sciences      CONGO (Brazzaville)         Trainers more able to design and
                                                                                               implant training sessions

 Situation analysis on HRH                                         Ethiopia                    Situation analysis plan available

 Suppor ted two nursing and midwifery leaders in how to            Guinea                      Collaborative activity with JHPIEGO
 conduct internal and external evaluations of nursing and                                      and Division of Reproductive and
 midwifery training and programmes in order to improve                                         Family Health and is ongoing
 maternal and child health

 Suppor ted two nursing and midwifery leaders in how to            Gambia                      Collaborative activity with JHPIEGO
 conduct internal and external evaluations of nursing and                                      and Division of Reproductive and
 midwifery training and programmes in order to improve                                         Family Health and is ongoing
 maternal and child health

 Reviewed nursing and midwifery training and programmes            Ghana                       Repor t available
 Suppor ted one nursing and midwifery leader in how to                                         Collaborative activity with JHPIEGO
 conduct internal and external evaluations of nursing and                                      and Division of Reproductive and
 midwifery training and programmes in order to improve                                         Family Health and is ongoing
 maternal and child health

 Suppor ted two nursing and midwifery leaders in how to            Liberia                     Collaborative activity with JHPIEGO
 conduct internal and external evaluations of nursing and                                      and Division of Reproductive and
 midwifery training and programmes in order to improve                                         Family Health and is ongoing
 maternal and child health

 Suppor ted situation analysis of HRH                              Malawi                      Situation analysis repor ts available
 Review of pre-service nursing and midwifery; medical and                                      Evaluation repor ts available
 health sciences training and programmes                                                       Repor t available
 Documentation of promising practice in community-oriented                                     Collaborative activity with JHPIEGO
 curriculum for medical education                                                              and Division of Reproductive and
 Suppor ted three nursing and midwifery leaders in how to                                      Family Health and is ongoing
 conduct internal and external evaluations of nursing and
 midwifery training and programmes in order to improve
 maternal and child health

 Suppor ted situation analysis of HRH                              Mali                        Situation analysis repor t available

 Suppor ted situation analysis of HRH                              Mauritania                  Situation analysis repor t available

 Suppor ted in designing the HRH system                            Mauritius                   Par t of the reform process which
                                                                                               are ongoing in the country

 Suppor ted drafting of HRH plan                                   Mozambique                  HRH draft plan available



1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
Activity                                                           Countries - Institutions      Outcomes
Documented innovative approaches and promising practices           Namibia                       Collaborative activity with SARA and
in management of health workforce                                                                Capacity Building projects. Repor t
                                                                                                 available

Suppor ted situation analysis of HRH                               Niger                         Situation analysis repor t available

Suppor ted two nursing and midwifery leaders in how to             Nigeria                       Collaborative activity with JHPIEGO
conduct internal and external evaluations of nursing and                                         and Division of Reproductive and
midwifery training and programmes in order to improve                                            Family Health and is ongoing
maternal and child health

Trained nurses and midwives in pedagogics                          Rwanda                        Repor ts available
Trained post graduate students in anaesthesiology
Reviewed one nursing and midwifery training and programme
in Kigali

Suppor ted two nursing and midwifery leaders in how to             Sierra Leone                  Activity ongoing
conduct internal and external evaluations of nursing and
midwifery training and programmes

Reviewed nursing and midwifery training and programme              South Africa                  Draft repor t available
of one institution (Kwazulu Natal)

Situation analysis of HRH and development of a draft HRH           Swaziland                     Documents available in Swaziland
Policy

Drafting of HRH plan                                               Tanzania                      Data available for reforms
Reviewed one nursing and midwifery training and pro-
grammes (Muhimbili)
Documented promising practices on utilization of Assistant
Medical Officers and Clinical Officers
Suppor ted three nursing and midwifery leaders in how to
conduct internal and external evaluations of nursing and
midwifery training and programmes

Documented promising practices on reversing the internal           Uganda                        Repor t available
migration of health workers from private to public sector

Suppor ted to propose a new structure of HRH depar t-              Zimbabwe                      Repor t available
ment and some follow-up steps to reviewing the HRH
policy and strategy

Collection of data on HRH                                          From all 46 Member            To assist countries with evidence
                                                                   States                        based decision-making on HRH and
                                                                                                 to contribute towards establishment
                                                                                                 of HRH Observatory

Additional activities not country specific

Development of Strategy paper in collaboration with HQ
on HRH crisis in Africa for the Second High-Level Forum
(HLF) for the Millennium Development Goals (MGDs) in
2004 which discussed the critical shor tage of HRH and
urged for rapid action to address the crisis

AFRO actively participated in the HRH Global Consultation                                           Repor ts available
in Oslo in February 2005 which endorsed the need for
coherent response to the HRH crisis among other things

AFRO organized and implemented AFRO/HQ Internal                                                     Repor t available
Consultation Meeting in Brazzaville, Congo from 21-31
March 2005 as a follow-up to the above meetings. The aim
of the meeting was to explore ways of taking the HRH
agenda forward in the African region and to agree on a
joint plan of work with HQ



                                       Section 4: Health Systems    Working Together to Tackle the Crisis in Human Resources for Health   1
 Activity                                                          Countries - Institutions    Outcomes
 Regional Consultative Meeting jointly hosted by WHO,                                            Repor t available
 New Par tnership for African Development (NEPAD) and
 ACOSHED in Brazzaville in July 2005 to discuss appropriate
 ways and means to increase collaboration and harmonize
 suppor t to countries so as to facilitate the development of
 HRH at country level

 A Consultative Meeting for deans of colleges of medicine                                        Draft repor t available
 from 33 countries was organized in Brazzaville, Congo from
 27-30 September 2005 to discuss ways of strengthening
 the role of colleges of medicine in production of health
 workers in the WHO African region

 Advocacy activities on migration of health workers. Focus                                       Relevant documents available
 in this area has been on a number of advocacy activities
 through making a case in a number of international
 (Geneva, June 2004) and Regional Global Commission of
 International Migration (February 2005) and the contribu-
 tion to the AU Migration Policy Framework document in
 April 2004. Members States were briefed through progress
 reports presented at the World Health Assembly in Geneva
 (May 2005) and the Regional Committee Meeting in
 Maputo (August 2005). Joint activities with HQ, IOM on
 monitoring the trends on migration of health workers and
 interactions with the Diaspora organizations (Cape Verde,
 Guinea Bissau) are ongoing.




1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
Section 4: Health Systems   Working Together to Tackle the Crisis in Human Resources for Health   1
1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
HEALTH IN FRAGILE STATES




                 5Contents   1
                                                                                                                    13
HEALTH IN FRAGILE STATES:
AN OVERVIEW NOTE
By Andrew Cassels, Paris, November 2005




1. Introduction                                                         comes − whether they are groups within the country
Progress in achieving the Millennium Development                        concerned or outside actors. It is intended as a pre-
Goals (MDGs) requires that more attention be                            cursor to the development of more comprehensive
paid to the situation of countries in which − often,                    guidance.
but not exclusively, as a result of prolonged conflict
− governments cannot, or will not provide the
stewardship needed to ensure equitable access to                        . Background
the essential services needed to help people survive                    The HLF in Abuja recognized that “lack of progress
risks to their health.                                                  in health in fragile states is undermining global progress
    Circumstances in such countries, and therefore                      on the health, and non­health Millennium Development
definitions and terminology, vary. The dynamic                          Goals” and that it is essential to “find more effective
between stability and conflict is in itself, fragile.                   ways of achieving the health MDGs in these countries”.
Nevertheless, these countries tend to receive less                          While much of the focus of work in the interim
aid per capita (40% by some definitions) than other                     has been on post-conflict societies, there remains a
low-income states. Moreover, aid is more volatile,                      concern for those countries which, although stable,
more fragmented and more poorly coordinated;                            have governments which are failing to make progress
compounding the difficulties of overcoming their                        in relation to their obligation to provide essential
serious development challenges.                                         services, particularly for poor people.
    Supporting these countries is difficult: it is costly,                  As in other aspects of the HLF agenda − notably
and is regarded by potential donors as very high risk.                  fiscal space and aid effectiveness − many of the issues
However, the costs of doing nothing or indeed of                        are not specific to health. However, in all these
failing to be effective, in both human and security                     cases, a focus on health emerges as being fruitful.
terms are rapidly being realized. The issue of devel-                   Health provides a way of testing and putting into
opment − and especially health development − in                         practice generic principles (such as the Principles
“fragile states” is thus gaining political prominence.                  for Good International Engagement in Fragile States −
                                                                        see below). Moreover, health is a necessity and
 Fragile states can be characterised as those countries                 likely to be seen as a priority, irrespective of other
 where there is a lack of political commitment and/or weak              political differences. There is indeed some evidence
 capacity to develop and implement pro-poor policies,                   that progress made in health − in new states like
 suffering from violent conflict and/or weak governance.                Timor-Leste − provides an example of what is
     Around 50 states can be defined as “fragile”.                      possible in other sectors. Lastly, ensuring better
                                                                        health outcomes which depends on several levels
   Blueprints in these situations are of little use. At                 of service provision and influences outside of
the same time, not everything can be dependent on                       direct health care provision, merits more detailed
context. All those involved − but particularly donors                   consideration in its own right.
− need the confidence provided by some form of                              To ensure synergy between different interna-
guidance which at a minimum outlines some of                            tional processes, the work commissioned by the
the choices they will inevitably face. In this respect,                 HLF has fed into the work-stream on Service
there are some lessons that can be learnt from expe-                    Delivery of the OECD/DAC Fragile States Group
rience − albeit lessons that will still require careful                 (FSG), which is currently engaged in looking at
judgement in their application.                                         better ways of supporting service delivery in
   This note proposes a broad framework to be                           health, security and justice, water supply and
applied by all those working to improve health out-                     education.

1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
 Fragile states account for :                                             public good of greater security. Moreover, there is
                                                                          no doubt that lack of progress in fragile states will
 •     1
           /3 of the people living in absolute pover ty
                                                                          affect progress towards the health MDGs at the
 •     60% of disease epidemics
                                                                          global level.
 •     1
           /3 of maternal deaths
                                                                              Whatever the specific national circumstances,
 •     1
           /3 of people living with HIV/AIDS in developing
                                                                          interventions in fragile states will have two objec-
       countries
                                                                          tives: addressing basic health needs and building
 •     ½ of children dying before 5
                                                                          more lasting institutions.
 •     1
           /3 of those without safe drinking water
 •     1 in 3 of their population is malnourished                         •    In the immediate post-conflict situation, the
 •     A malarial death rate 13 x higher than other                            threats to life and health will be immediate and
       developing countries                                                    the challenge will be to keep health, humanitar-
                                                                               ian and development action at the heart of peace
                                                                               and transition programmes.
. Principles for good international                                      •    In more stable situations, addressing basic
engagement                                                                     needs may focus on achieving specific health
In January 2005, a major conference on fragile                                 outcomes − such as immunity to vaccine-pre-
states, sponsored by DFID, DAC, UNDP and the                                   ventable diseases. Such programmes, vigorously
World Bank, produced a strong consensus around                                 pursued through separate vertical programmes,
the Principles for Good International Engagement in                            can however undermine the establishment of a
Fragile States.                                                                more broad-based and sustainable health system
    The principles include:                                                    capable of addressing a range of health needs.

•    taking context as the starting point                                 •    Building stable systems for governance is essen-
                                                                               tial as an end in its own right and a major con-
•    moving from reaction to prevention
                                                                               tribution to overall state-building. Without
•    focusing on state-building as the central objective
                                                                               oversight capacity in the health system, key
•    aligning with local priorities and/or systems
                                                                               institutions will remain weak and outcomes will
•    recognizing the political-security-development
                                                                               not be delivered equitably. At the same time,
     nexus
                                                                               building effective institutions takes time, energy
•    promoting coherence between government
                                                                               and patience.
     agencies
•    agreeing on practical coordination mechanisms                        •    In the meantime, civil society, with the support
     between international actors                                              of outsiders, will continue to play a key role –
                                                                               not just in provision, but also in co-ordination
•    avoiding activities that undermine national
                                                                               and in political action, by standing up for the
     institution-building: do no harm
                                                                               rights of disempowered groups in society, for
•    mixing and sequencing aid instruments to fit
                                                                               example. Investment which builds the capacity
     the context
                                                                               of civil society therefore also has a prominent
•    acting fast . . .
                                                                               place in overall strategy.
•    . . . but staying engaged long enough to give
     success a chance                                                     •    While state-building remains the lynch pin of
                                                                               much post-conflict work, it is important to re-
•    avoiding pockets of exclusion: aid orphans.
                                                                               member that there are several states − referred
   Under the umbrella of the OECD/DAC (FSG),                                   to somewhat misleadingly as “fragile” − where
these principles are used as a framework for action                            a stable ruling elite constitutes a major impedi-
and currently being piloted in a number of countries1.                         ment to development. Investment in civil society
The full text is provided at Annex 1.                                          groups may be the only viable option for exter-
                                                                               nal agencies in these circumstances.
. Health care in fragile states:                                             The key point then is that in most fragile states,
managing competing objectives                                             there will be a continuing dynamic between reduc-
Broadly speaking the rationale for greater and more                       ing immediate vulnerability; achieving specific
coherent investment in fragile states rests in the                        health outcomes; building a more lasting and equi-
potential pay-offs in terms of better individual and                      table health system; and building the capacity of
community livelihoods and the global (or regional)                        civil society.

                                                             Section 5: Health in Fragile States   Health in Fragile States: An Overview Note   1
    Rapid progress in one area will usually mean                        . Alignment is a pre­requisite for
trade-offs in another. Health sector development                        success, but not easily achieved
and humanitarian issues may take a back seat in the                     It is usually the case in post-conflict situations that
face of military and political initiatives to secure                    no one actor has the power to force alignment or
peace and stability. Many individual organizations                      to require that different actors harmonize their
are set up to champion and pursue particular direc-                     operations. Leadership always needs to be negotiated
tions − working with civil society or mounting                          and earned. Coordination is time intensive; “meet-
primary health care outreach programmes, for                            ing fatigue” and frustration are almost inevitable.
example. Others will focus more on longer-term                          Mistrust between the many actors is deep seated,
capacity-building. Negotiating a balance takes place                    and incentives to bypass coordination structures
in an unstable environment, where lack of trust,                        are high.
long-standing grievances and where the potential                             Nevertheless, some form of coalition to establish
for destructive behaviour is at its greatest.                           basic agreement on what can and should be done
                                                                        is essential. Thus while the transaction costs of
                                                                        establishing and sustaining coordination mecha-
5. The importance of context:                                           nisms may be high, the price of not doing so − in
incentives and intelligence                                             terms of wasted resources and ultimately human
The background paper prepared for the HLF                               lives − is much greater.
synthesizes experience from many countries. One                              In the more stable, non-post-conflict fragile-state
theme dominates the analysis: the importance of                         environment, alignment poses its own challenges.
knowing the context and understanding the incen-                        If the established government is reluctant to engage
tives facing all parties.                                               on issues relating to health and poverty reduction,
    Conflict breeds lack of trust, lack of long-term                    alternative coordination mechanisms may be needed.
vision and short-term decision-making. In many                          The structure set up by the UN, in collaboration
post-conflict situations, former enemies are required                   with a range of partners, to address HIV/AIDS, TB
to work with each other. Even in stable but difficult                   and malaria in Myanmar is one such example.
aid environments, where it is hard to access the                             In both sets of circumstances, planning for better
political space needed to engage higher levels of                       health outcomes needs to be underpinned by nego-
governments, understanding what might persuade                          tiated agreements designed to standardize operations.
key figures to invest in health is critical.                            The idea of “shadow alignment” – using structures,
    Understanding the incentives facing donors is                       institutions or systems that are compatible with the
equally important. Their constituencies may be                          existing or potential organization of the state − is
suspicious in settings where checks and balances                        common to the relief and development effort in
on spending are weak or non-existent, as is the case                    general. Agreement on essential drug lists, treatment
in many post-conflict environments. Even where                          guidelines and planning criteria for investment in the
systems are in place, domestic political opinion in                     health care network are examples of ways in which
donor countries about the nature of some govern-                        shadow alignment should operate for health, in the
ments may influence the availability of humanitarian                    absence of standards determined by the state.
versus development aid. On the other side of the
coin, donors that are prepared to invest in fragile
communities may be less preoccupied with meas-                          . Inclusive planning instruments
uring impact and seeking attribution.                                   Planning for the health sector − particularly in
    True understanding is likely to come from the                       post-conflict environments − cannot take place in
merging of many pieces of knowledge held by a                           isolation. It must take into account the interaction
broad range of actors. While it is necessary to start                   with other aspects of development. Equally, it must
with a rough and ready situation analysis, the pro-                     recognize the legitimacy of different strategic
cess of identifying key problems and constraints and                    objectives: longer-term institution-building as well
intelligence gathering, will necessarily be iterative.                  as meeting immediate health needs. Actions to
Given the importance of building or rebuilding                          address the latter must be designed with care so as
stewardship and governance functions, a careful                         not to undermine longer term efforts.
analysis of institutional capacity is particularly                          Recent experience argues that a planning matrix
important.                                                              for health should be an integral part of comprehen-

10  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
sive planning, embedded within an overall Transitional                  the need to secure safe and dependable hospitals
Result Matrix. The advantage of these instruments                       (reducing vulnerability);
is to force consideration of synergy and interaction               •    defining an ideal basic package of interventions
and, in addition, to specify results within an overall                  and services compared to an absolute minimum
development strategy, but within a relatively short                     that can be provided within existing resource
time horizon.                                                           constraints;
                                                                   •    facilitating and encouraging spontaneous local
                                                                        initiatives while thinking carefully about which
8. Strategic choices in the health                                      are genuinely amenable for replication and ex-
sector                                                                  pansion;
Having considered process and instruments, it is                   •    acknowledging that while the state − or in some
useful to outline some of the key strategic choices                     cases a body acting in its place − has to assume
to be made in the health sector. The focus in this                      responsibility for stewardship, the provision of
section is very much on post-conflict environments.                     services will fall to a variety of public, private
   The background paper sets out a comprehensive                        and voluntary providers. The objective of build-
synthesis of experience. In essence, the need is to                     ing effective public sector institutions should
identify and prioritize constraints: what needs to                      not be equated with working towards exclusive
be done now? What would be better left till later?                      public sector service provision.
What are the costs and benefits of delays? What
                                                                       Limiting the number of priorities, and setting
changes now would help underpin peace?
                                                                   realistic targets will be at the heart of the process.
   In this process, it is essential that constraints are
                                                                   Without necessarily recommending widespread
analysed in terms of:
                                                                   contracting between partners, careful specification
•   those that existed pre-conflict − where solutions              of responsibilities will be a key part of building
    must take into account forces that created prob-               effective working relationships. Maintaining coali-
    lems resulting in inequity or inefficiency in the              tions and sustaining peace may sometimes require
    first place. Failure to at least try to correct systemic       that it will be necessary to accept second, third or
    distortions may mean that other interventions                  fourth best solutions.
    fail to fulfil their potential;
•   those that have their origins within the conflict
                                                                   9. The importance of sustainable  
    or its sequelae − the difficulty of former enemies
    working together, returnees taking key positions,              finance
    the need to demobilize former combatants,                      If it is hard to get stable governments to scale up
    inequitable distribution of resources, etc. Solu-              in the face of unpredictable aid, it will be even
    tions in this case need to be embedded in the                  harder to persuade fragile governments to do so.
    broader process of peace building;                             All the arguments raised on the issue of fiscal space
                                                                   therefore apply here. In addition, given the difficul-
•   those that have arisen from the destruction and
                                                                   ties of making long-term commitments and the
    disruption of health systems and services, both in
    terms of loss of physical assets and human re-                 perceived risks of investment in fragile states expe-
    sources. Solutions in this case need to utilize local          rienced by bilateral donors, there is a key role for
    knowledge of how to build up from a low base.                  institutions such as the European Commission and
                                                                   the World Bank.
   The basic building blocks of health system                          Two other issues in relation to the quantum of
development − stewardship, human resources,                        financing for health in fragile states need to be
health facilities, equipment and drugs, financial                  highlighted.
resources and management systems − provide an
overall guide for what needs to be addressed. How-                 •    Simultaneously addressing humanitarian and
                                                                        development needs in countries in transition is
ever, the need to gain broad support for action,
                                                                        expensive because of the additional cost of
including from those outside the formal health
                                                                        reconstruction on top of the basic cost of main-
sector, is likely to mean that several other key issues
                                                                        taining an effective health care service. Recog-
will have to be negotiated. These include:
                                                                        nizing total potential cost does not preclude
•   the level of effort to be invested in outreach                      sequencing aid in line with the development of
    services (specific health impact) compared with                     the systems needed to absorb and use it effectively.

                                                      Section 5: Health in Fragile States   Health in Fragile States: An Overview Note   11
•   Current evidence suggests that many fragile                         many donors to be politically and financially risky.
    states fall within the group of “aid orphans” −                     The health sector, including HIV and AIDS, is an
    those countries that are relatively neglected by                    important entry point in some fragile states because
    the international community. Moreover, aid allo-                    of the spill-over effects of disease epidemics. An
    cations swayed by geopolitical and media con-                       exploration into what opportunities exist for more
    cerns result in financial allocation having little                  sustained investment in health sector interventions
    relationship with population needs. External aid                    in fragile states is warranted.
    for health care in countries emerging from con-
    flict varies between US$ 60 per capita per year                     b. Coordination and harmonization
    in Kosovo, US$ 36 in Timor-Leste and less than                      Donor harmonization is a particular challenge in
    US$ 3 in the Democratic Republic of Congo.                          fragile states because of the multiplicity of global
                                                                        funding instruments and multilateral and bilateral
                                                                        actors in the sector. Sector-wide and systems-building
10. The humanitarian­development                                        approaches are therefore much more difficult to
funding dichotomy                                                       implement.
The intention of humanitarian aid − funding for
people-focused survival and basic needs programmes,
is highly desirable. Rapid access to funds without a                    c. Alignment
prolonged process of appraisal is also critical. The                    In a number of fragile states, bilateral agencies
short time-scale (six months or one year) makes                         cannot align behind government priorities because
sense from the “do not let the emergency drag on”                       the state is an unwilling partner in poverty reduction.
viewpoint. However, an exclusive focus on human-                        In these circumstances it may be necessary for
itarian funding fails to take into account the reality                  stewardship of the health sector to reside outside
that in many countries humanitarian needs con-                          the state. The limitations of stewardship outside
tinue for a much longer period because the political                    the state, the comparative advantage of different
and institutional environment for development does                      multilateral agencies to fulfil this function, and the
not materialize. It is equally the case that develop-                   appropriate frameworks for operating at the sectoral
ment processes (often under way before the outbreak                     level require further analysis.
of conflict) need to be reinvigorated and financed
as soon as possible − not awaiting a discrete develop-                  d. Predictable financing for health in fragile
ment phase commencing only after the completion                         states
of humanitarian work.                                                   Most fragile states are under-aided. Moreover, the
    The dichotomy not only represents a failure to                      aid they do receive tends to be highly volatile. One
recognize the realities of fragile states, it also has                  of the major challenges is to find ways to fund re-
practical consequences in creating a funding hiatus                     current expenditure for health workers in order to
for organizations that work across the spectrum of                      decrease the costs of accessing health care for the
humanitarian and development activities. In terms                       poor. It will be important to relate the ongoing
of the objectives outlined in point 3 above, it is also                 work on predictability to fragile states, and to con-
likely that a reliance on humanitarian funding will                     sider what instruments exist for supporting health
favour funding for short-term results over institu-                     in the medium to long term.
tion building.
    The need for instruments that will more effec-                      e. Managing the humanitarian-development transition
tively link humanitarian relief with development is                     It is evident that a number of significant problems
a longstanding issue. However, it is one where action                   arise from the way that the transition from relief
by key agencies could make a significant difference.                    to development is currently financed and managed.
                                                                        While there are significant advantages in maintain-
                                                                        ing rapidly accessed, short-term humanitarian funds,
11. Points for further consideration                                    a new series of bridging instruments explicitly
a. The case for investment in fragile states                            designed for the tough job of supporting transition
Despite a growing recognition of the humanitarian                       from conflict into recovery are needed. This propo-
and security benefits of working more effectively                       sal has broader relevance, but the need for simulta-
both in post-conflict and other difficult environments,                 neous work on relief and development is particularly
investment in fragile states is still perceived by                      acute in health.

1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
Annex 1                                                          ponent of a healthy state. State-building in the
Principles for good international                                most fragile countries is about depth, not breadth
engagement in fragile states                                     – international engagement should maintain a
The long-term vision for international engagement                tight focus on improving governance and capacity
in fragile states is to help national reformers to               in the most basic security, justice, economic and
build legitimate, effective and resilient state institu-         service delivery functions.
tions. Realization of this objective requires taking
account of and acting according to the following                 4. Align with local priorities and/or systems
principles:                                                      Where governments demonstrate political will to
                                                                 foster their countries’ development but lack capacity,
1. Take context as the starting point                            international actors should fully align assistance
All fragile states require sustained international               behind government strategies. Where alignment
engagement, but analysis and action must be cali-                behind government-led strategies is not possible
brated to particular country circumstances. It is                due to particularly weak governance, international
particularly important to recognize different con-               actors should nevertheless consult with a range of
straints of capacity and political will and the different        national stakeholders in the partner country, and
needs of: (i) countries recovering from conflict,                seek opportunities for partial alignment at the sec-
political crisis or poor governance; (ii) those facing           toral or regional level. Another approach is to use
declining governance environments, and; (iii) those              ‘shadow alignment’ – which helps to build the base
where the state has partially or wholly collapsed.               for fuller government ownership and alignment in
Sound political analysis is needed to adapt interna-             the future − by ensuring that donor programs com-
tional responses to country context, above and                   ply as far as possible with government procedures
beyond quantitative indicators of conflict, govern-              and systems. This can be done, for examples, by
ance or institutional strength.                                  providing information in appropriate budget years
                                                                 and classifications, or by operating within existing
2. Move from reaction to prevention                              administrative boundaries.
Action today can reduce the risk of future outbreaks
of conflict and other types of crises, and contribute            5. Recognize the political-security-development
to long-term global development and security. A                  nexus
shift from reaction to prevention should include                 The political, security, economic and social spheres
sharing risk analyses; acting rapidly where risk is              are interdependent: failure in one risks failure in
high; looking beyond quick-fix solutions to address              all others. International actors should move to
the root causes of state fragility; strengthening the            support national reformers in developing unified
capacity of regional organizations to prevent and                planning frameworks for political, security, humani-
resolve conflicts; and helping fragile states them-              tarian, economic and development activities at a
selves to establish resilient institutions which can             country level. The use of simple integrated plan-
withstand political and economic pressures.                      ning tools in fragile states, such as the transitional
                                                                 results matrix, can help set and monitor realistic
3. Focus on state-building as the central objective              priorities and improve the coherence of international
States are fragile when governments and state                    support across the political, security, economic,
structures lack capacity – or in some cases, political           development and humanitarian arenas.
will − to deliver public safety and security, good
governance and poverty reduction to their citizens.              6. Promote coherence between donor government
The long-term vision for international engagement                agencies
in these situations must focus on supporting viable              Close links on the ground between the political,
sovereign states. State-building rests on three pillars:         security, economic and social spheres also require
the capacity of state structures to perform core                 policy coherence within the administration of each
functions; their legitimacy and accountability; and              international actor. What is necessary is a whole
ability to provide an enabling environment for strong            of government approach, involving those respon-
economic performance to generate incomes,                        sible for security, political and economic affairs, as
employment and domestic revenues. Demand for                     well as those responsible for development aid and
good governance from civil society is a vital com-               humanitarian assistance. Recipient governments

                                                    Section 5: Health in Fragile States   Health in Fragile States: An Overview Note   1
too need to ensure coherence between different                          humanitarian needs. A vibrant civil society is impor-
government ministries in the priorities they convey                     tant for healthy government and may also play a
to the international community.                                         critical transitional role in providing services, par-
                                                                        ticularly when the government lacks will and/or
7. Agree on practical coordination mechanisms                           capacity.
between international actors
This can happen even in the absence of strong                           10. Act fast . . .
government leadership. In these fragile contexts, it                    Assistance to fragile states needs to be capable of
is important to work together on upstream analysis;                     flexibility at short notice to take advantage of win-
joint assessments; shared strategies; coordination                      dows of opportunity and respond to changing
of political engagement; multi-donor trust funds;                       conditions on the ground.
and practical initiatives such as the establishment
of joint donor offices and common reporting and                         11. . . . but stay engaged long enough to give
financial requirements. Wherever possible, inter-                       success a chance
national actors should work jointly with national                       Given low capacity and the extent of the challenges
reformers in government and civil society to develop                    facing fragile states, investments in development,
a shared analysis of challenges and priorities.                         diplomatic and security engagement may need to
                                                                        be of longer duration than in other low-income
8. Do no harm                                                           countries: capacity development in core institutions
International actors should especially seek to avoid                    will normally require an engagement of at least
activities which undermine national institution-                        ten years. Since volatility of engagement (not only
building, such as bypassing national budget processes                   aid volumes, but also diplomatic engagement and
or setting high salaries for local staff which under-                   field presence) is potentially destabilizing for fragile
mine recruitment and retention in national institu-                     states, international actors commit to improving
tions. Donors should work out cost norms for local                      aid predictability in these countries by developing
staff remuneration in consultation with government                      a system of mutual consultation and coordination
and other national stakeholders.                                        prior to a significant reduction in programming.

9. Mix and sequence aid instruments to fit the                          12. Avoid pockets of exclusion
context                                                                 International engagement in fragile states needs to
Fragile states require a mix of aid instrument,                         address the problems of “aid orphans” − states
including, in particular for countries in promising                     where there are no significant political barriers to
but high-risk transitions, support to recurrent financ-                 engagement but few donors are now engaged and
ing. Instruments to provide long-term support to                        aid volumes are low. To avoid an unintentional
health, education and other basic services are                          exclusionary effect of moves by many donors to
needed in countries facing stalled or deteriorating                     be more selective in the partner countries for their
governance – but careful consideration must be                          aid programmes, coordination on field presence
given to how service delivery channels are designed                     and aid flows, and mechanisms to finance promising
to avoid long-term dependence on parallel, unsus-                       developments in these countries are essential.
tainable structures while at the same time providing                    Source: OECD, Development Co-operation Directorate, DCD (2005)8/REV2,
sufficient scaling-up to meet urgent basic and                          7 April 2005




1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
                                                                                                                    14
HEALTH SERVICE DELIVERY IN
POST­CONFLICT STATES
By Enrico Pavignani, Paris, November 2005




1. Introduction                                                  to be adopted in order to inform the measures that
The international debate on the transition from                  should be taken, and those that should not, to
conflict to peace is thriving, both in academic and              boost recovery and lay the ground for development.
donor circles, thanks to the wealth of experience                The knowledge accumulated as a result of work
gathered from a variety of post-conflict recovery                undertaken in countries such as Uganda, Mozam-
processes. The recognition that conflict and post-               bique, Cambodia, East Timor, Angola, Kosovo,
conflict situations will provide a significant challenge         Afghanistan, Somalia, Sudan, DR Congo and Iraq,
to policy-makers and field practitioners for the                 synthesised in this paper, should help to equip par-
foreseeable future, has convinced concerned parties              ties involved in future post-conflict processes with
of the need to explore the field in depth, to document           principles and tools for action.
lessons learned, and to identify best practices.
    At the same time, concern about the burden
                                                                 . Post­conflict environments
that such troubled contexts may place upon the
                                                                 Sometimes, the transition from war to peace is
worldwide campaign to achieve the Millennium
                                                                 brought about by specific, tangible events, such as
Development Goals (MDGs) has grown. Donor
                                                                 a peace agreement, or the outright military victory
agencies involved in such efforts recognise the
                                                                 of one side over the other. In other cases, such as
importance of adopting approaches that are appro-
                                                                 Somalia and the DR Congo, the process evolves
priate to post-conflict environments, which help to
                                                                 slowly and erratically. No-war-no-peace lulls are
boost health service delivery and contribute to the              common in post-conflict processes. The explicit
achievement of the MDGs, without compromising                    features of a post-conflict transition may only
the long-term development of health sectors recov-               emerge later.
ering from severe crises.
    Investment in health service development in post-
conflict countries is important for several reasons.             a. Variety of post-conflict situations
First, it helps to alleviate the suffering of large war-         •   Rebel regions break away from existing states
weary populations. Second, it contributes to con-                    and attain internationally-recognized independ-
solidating the peace process. Third, it may provide                  ence, for example, Eritrea and East Timor. Some-
huge long-term returns in terms of the equity, effi-                 times, because of international sensitivities, new
ciency and effectiveness of the services provided. In                entities retain an ambiguous status, as in the case
sum, decision-makers have a precious opportunity,                    of Kosovo or Somaliland. In new states that have
which should not be missed. Given the complexity                     achieved freedom from domination by ethnic or
of the process of transition from war to peace and                   political groups, the formulation of unrealistic
the multiple constraints and conditions facing the                   development plans, perceived by both the rulers
actors involved, a sensible approach will need to                    and the ruled as part of a political dispensation,
be evolutionary, multi-faceted, context-oriented,                    is common. The provision of health services
and shaped by multiple trade-offs. As yet, no tried                  often comes under the remit of this well-meant
and trusted formula exists.                                          but usually ill-fated agenda.
    Aid agencies are committed to developing                     •   The state survives within its original borders,
shared strategic and operational approaches, along                   but a new group accedes to power as an outright
the lines laid out in the Harmonization and Align-                   victor, as in Uganda, Rwanda and Afghanistan.
ment agenda, to enhance the effectiveness of the                     An agenda for change stands a better chance of
support they provide. This document is part of                       being formulated or adopted by new rulers eager
this ongoing global effort. It reviews the principles                to affirm themselves.

                                                Section 5: Health in Fragile States   Health Service Delivery in Post-Conflict States   1
    The incumbent government survives the crisis                            standing presence in the country) may have
    and maintains its grip on the state, as in Mozam-                       been confined to secure enclaves, and thus be
    bique and Angola. Its political agenda may change                       ignorant of the conditions prevailing in large areas
    dramatically in the process, as observed in                             of the country. They are likely to be unaware
    Mozambique. The rebels who challenged the                               of the lessons learned in previous post-conflict
    government become the officially-recognized                             processes. Many insiders remain on the fringes
    civilian opposition. The continuity of rulers and                       of the aid system. Truly knowledgeable people
    civil servants may facilitate the recovery of pub-                      may be sidelined because of their political alle-
    lic health service provision. On the other hand,                        giances, or because of language barriers. Health
    entrenched distortions, archaic administrative                          care delivery systems segregated from each other
    provisions and practices, and prevailing conser-                        are often blind to developments taking place
    vatism may jeopardise attempts to reform the                            across the frontline(s), as recently witnessed in
    sector.                                                                 Sudan.
    After the failure of the state, a new government,                       At the other end of the spectrum, newcomers
    agreed upon by some parties to the conflict, tries                      may be ignorant of the context, language, culture
    to affirm itself with international support, like                       and history of the country in transition. In addi-
    in Liberia and Somalia. Its concerns are likely                         tion, they are often unaware of promising initi-
    to focus on security issues and the financing of                        atives developed at the local level in response to
    basic state functions. Health services tend to                          the disruption wrought by war. True under-
    receive only scant attention. Violence may peter                        standing is likely to come from an amalgamation
    out in parts of the country, but persist in others.                     of the many pieces of knowledge held by a broad
    The capital city and other comparatively richer                         range of actors.
    areas may enter a post-conflict period, while                           A low absorption capacity, due to weak or absent
    outlying or marginal regions remain affected by                         institutions, poor communications, a dilapidated
    endemic conflict, or suffer relapses of violence.                       skill pool, and crippled or abandoned manage-
    Furthermore, parts of the country may remain                            ment systems. Corruption is often rampant. If
    under the control of parties loosely or only                            the collapse has involved also the private sector,
    nominally linked to the central government.                             the absence of banks, auditing firms, civil works
    Complex negotiations lead to a settlement                               contractors represents an additional, severe
    between the parties, who agree on power- and                            constraint.
    wealth-sharing provisions, as seen in Sudan and                         An uncertain financial, political and administra-
    the DR Congo. This situation is one of the most                         tive future. The future fiscal position of the
    challenging for donor agencies. The chances of                          recovering state, particularly a newly emerging
    the country relapsing to war are high. The new                          one, is usually unclear. Diverging or conflicting
    government, usually embroiled in a web of                               policy statements from incumbent, transitional,
    ambiguities and trade-offs, is indecisive and lacks                     or shadow authorities are common. Commit-
    coherence and credibility. Conflicting messages                         ments to the provision of social services by
    are commonplace. The international community                            governments in charge of countries moving
    may be as fragmented and inconsistent in its                            from war to peace tend to evolve over time,
    approach to the situation as the country itself.                        according to survival imperatives and political
                                                                            expedience. Social services are unlikely to rank
b. Decision-makers face an impressive array of                              high on the agenda of rulers unsure of their
difficulties, including some or all of the following:                       tenure, but may be presented as priorities by
    A poor information base characterized by in-                            governments eager to win international recogni-
    complete and/or contradictory data. Aggregate                           tion and secure financial support. Health tends
    figures relating to resource allocation patterns                        to represent a minor concern for governments,
    are regularly lacking, incomplete or flawed. Even                       while remaining a favourite with donors.
    robust findings may be easily challenged or                             Uncertain future external support. Aid is usually
    simply ignored by parties pushing decisions in                          allocated by donors on a very uneven basis (see
    directions at odds with them.                                           the table below), and fluctuates considerably
    Most actors suffer from a knowledge gap. Insiders                       over time. Geopolitical concerns and media
    (including locals and foreigners with a long-                           coverage play a preponderant role in influencing

1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
External aid allocated to health care in transitional countries
 Country                Year         Amount per head                 Source
 Cambodia               1994         $2                              Lanjouw et al., 1999

 Mozambique             1995         $5                              Ministry of Health, 1997

 East Timor             2000         $36                             Tulloch et al., 2003

 Kosovo                 2001         $60

 Southern Sudan         2003         $7                              Health Secretariat of the New Sudan, 2004

 Somalia                2003         $5                              Somalia Aid Coordination Body, 2003

 RD Congo               2005         $2 – 3                          Banque Mondiale, 2005



   aid allocations. Furthermore allocations of                     flict recovery process, partisan manipulation of
   similar aggregate magnitudes are often given to                 most decisions is common.
   countries with very different population sizes.                 Urgent needs to be addressed, which are often
   Additionally, decisions about aid allocation are                more severe than those anticipated during war-
   often the result of opaque competition among                    time. The need to deal with previously inacces-
   recipient candidates. Favourite countries get the               sible destitute populations, epidemics, or mass
   lion’s share, at the expense of the others. Even                resettlements may become so pressing as to take
   within countries, certain sectors and geographical              precedence over long-term recovery concerns.
   areas are privileged. The presence of aid inter-
   mediaries, such as NGOs and charities, may play             c. Post-conflict transitions may also present
   an important role in channelling aid to certain             positive features:
   countries, sectors and areas.                                   A wave of enthusiasm and renewed energy,
   Peace-building taking precedence over other                     particularly when the outcome of the conflict
   competing concerns. Expectations in relation                    is clear and popular among large sectors of the
   to peace dividends may fail to take into account                population. Rapid economic growth is often
   the heavy cost of peace-building, as witnessed                  triggered by post-conflict processes. Regrettably,
   in Southern Sudan in 2003-4 (Health Secretariat                 peace processes, population movements and
   of the New Sudan, 2004). The peace process may                  economic booms can also provide a fertile soil
   require the integration of previously partitioned               for the spread of disease.
   or hostile parts of state administration, and of                More favourable international relationships,
   the respective health services. This usually bears              sometimes accompanied by high levels of direct
   heavy opportunity costs. Peace-building impera-                 foreign investment, such as in Mozambique in
   tives may create distortions that are unmanage-                 the 1990s (Pavignani and Colombo, 2001). This
   able in the long-term. For example, after the                   shift depends to a large extent on the political
   ceasefire in Angola in 2002, an already bloated                 alignment of the recovering country, on the
   health workforce expanded further to incorpo-                   macroeconomic performance of the post-con-
   rate UNITA health workers.                                      flict government, and on its capacity to interact
   Fears of relapse to war, which discourage long-                 with donors.
   term initiatives. Diffidence across the conflict                Expanded aid flows, directed to support the
   divide(s) is likely to permeate most indigenous                 peace process and the ensuing reconstruction.
   decisions, and to colour the interpretation of                  However, donor pledges are not always followed
   actions and events. Even well-intentioned donor                 up by corresponding aid allocations, particularly
   moves may be seen as partisan by distrustful                    in marginal countries. Expectations of expanded
   parties.                                                        aid flows should be always submitted to reality
   Diverging or conflicting agendas of powerful                    checks. Unfortunately, tracking aid flows is always
   players. Tensions among parties, be they humani-                challenging. Available inventories may be not be
   tarian, political, military or development actors,              adequate enough to provide guidance to decision-
   are commonplace. In the politically-charged                     makers. Only sustained expert efforts are likely
   and often ideology-laden context of a post-con-                 to yield reliable results.

                                              Section 5: Health in Fragile States   Health Service Delivery in Post-Conflict States   1
    The establishment of a legitimate government,                       expense of development funding. Policy formula-
    endowed with political capital, and willing to                      tion becomes fragmented, detached from reality
    introduce true reforms. The ability of such gov-                    and inconclusive.
    ernments to deliver on political promises may                           The health care network contracts and decays,
    however fall short of expectations. The capacity                    while the urban and hospital biases grow. First-
    of state institutions to play their role is usually                 referral hospitals in rural areas suffer badly from
    poor or unknown. This is likely to change over                      direct violence, under-funding and neglect. Man-
    time, as institutions recover or are built anew, and                agement systems weaken and in some cases collapse.
    officials learn their business. Capacity emerges                    Special programmes expand, to become the main
    unevenly, with some sectors and bodies being                        vehicles of health service delivery. Inefficiencies
    stronger than others.                                               grow, while gaps and duplication in allocation
    The return of people, skills and resources, dis-                    worsen. Coverage shrinks. Health services become
    placed abroad during the conflict. Whereas                          commodities, affordable only by the wealthier sec-
    destitute refugees may choose to return home                        tors of the population.
    as soon as minimal security conditions allow, a                         In some cases (Cambodia, East Timor), the
    wealthy diaspora is likely to wait until domestic                   workforce contracts; in other situations (Angola,
    living standards and business opportunities have                    Sudan), it expands, through the enrolment of
    improved significantly. High expectations about                     many lesser-skilled workers. Health workers con-
    the contribution of the diaspora to the recovery                    centrate in secure areas (either in the country or
    of a war-torn country have gone unfulfilled in                      abroad). Training standards are invariably eroded.
    several occasions.                                                  Protracted periods of violence severely affect the
                                                                        skills of the workforce, which emerges from the
                                                                        crisis in very poor shape, and in need of a pro-
. Characteristics of health sectors in                                 longed rehabilitation programme (Smith, 2005).
states emerging from protracted crises                                      Recognizing that some of these problems pre-
A common mistake is to assume that most or all                          date the conflict may help to identify appropriate
of the shortcomings of the health sector emerging                       post-conflict corrective measures. In Angola, the
from protracted conflict have been caused directly                      urban and hospital bias was aggravated, but not
or indirectly by it. Insiders are particularly vulner-                  created by the war. It remains a dominant feature of
able to this misinterpretation. In fact, many of the                    that health sector, years after the end of hostilities.
weaknesses observed in post-conflict health sectors                         Health sectors respond to crisis in many ways.
pre-date the crisis. A review of the pre-war situa-                     Health service delivery fragments geographically
tion may reveal conditions similar to those found                       and along vertical lines. Because of external funding,
in other fragile states. For instance, resources were                   easy access and better security conditions, islands
insufficient to operate oversized health networks,                      of relative privilege emerge amid widespread dep-
dominated by tertiary urban hospitals. External                         rivation. Thanks to the presence of humanitarian
dependency increased as internal financing declined,                    actors, areas affected by violence may be better
due to economic crisis and to growing security                          served than other, comparatively peaceful ones.
expenses. The workforce was under-skilled and                           This was the situation in the DR Congo in 2005,
distorted in its structure. Operational inefficiencies                  where health indicators gathered in the Equateur
were severe. Ineffective, top-down, and authoritarian                   region, which had been largely spared from the war,
management systems were common. Only a limited                          were among the poorest in the country. By that same
portion of the population had access to any health                      token, refugees may have access to better health
services, and these were inappropriate in their con-                    services than people who remain in country, or
tent and of questionable quality.                                       host communities. Different systems of health
    In most cases, the conflict serves to exacerbate                    care provision may develop in partitioned settings.
the problems of an already fragile health sector.                       To get an accurate picture of how the health sector
Scarce resources contract further, or are redirected                    responds to crises, an analysis needs to highlight
towards security and logistic expenses. Dependence                      such differences rather than bury them in national
on external sources of funding increases, sometimes                     averages.
becoming absolute. Aid inflows oscillate wildly and                         Health care provision becomes deregulated, pri-
unpredictably, with severe consequences for health                      vatised (formally and informally) and commoditised.
service delivery. Humanitarian aid expands, at the                      Quality of care tends to decline even further. The

1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
share of health financing borne by households in-                the informal support received from Islamic charities
creases, particularly in those countries unable to               and diaspora members is considered as substantial.
attract considerable donor support, like Somalia and             In spite of the difficulty of tracking these resource
the DR Congo. A gap opens up between private                     flows, they should not be overlooked, as is often
health expenditure, which can become substantial,                the case.
and purchased care, which is usually poor, and often
                                                                 Government (central and local authorities). Clear lead-
dangerous. Inefficiencies grow further. Operational
                                                                 ership cannot be expected from a newly-installed,
costs skyrocket, in part also because of security con-
                                                                 insecure government. Furthermore, local rulers
cerns. Actors multiply; crisis management prevails;
                                                                 may pursue policies that bear no relation to those
action takes precedence over understanding.
                                                                 chosen by central authorities. In some cases, after
    Although the adaptive responses to crisis outlined
                                                                 a lengthy absence, exiles return to take up senior
above may contribute to the short-term survival
                                                                 positions in a new government. Some exiles, who
of the health sector, their long-term consequences
                                                                 have lost touch with the domestic developments
are often serious. Adaptive responses tend to occur
                                                                 that have taken place during the conflict, may favour
at the micro level, go undetected and only be par-
                                                                 inappropriate approaches.
tially understood. They may only become apparent
with hindsight, when it is too late to act upon them.            Rebels. During conflicts, some rebel organisations
Entrenched distortions do not heal spontaneously,                may have become involved in health service deliv-
nor can they be easily reversed once the crisis is over.         ery, and, as a result, have developed elements of a
They have to be addressed pro-actively and from a                health policy to be adopted upon their accession to
long-term perspective.                                           power. Other fighting groups, on the other hand,
    In summary, health services emerging from pro-               may not have shown any interest in social issues.
tracted periods of violence are inefficient, ineffective         In most cases, rebel health services have failed to
and inequitable. Without sustained and thorough                  live up to the inflated promises of wartime. Their
intelligence work, the contours of the main prob-                contribution to post-conflict recovery has frequently
lems may remain unrecognized. Policy discussions                 been marginal. Rebel parties may be given junior
may focus on marginal issues or on rumours, which                government posts, like that of Minister of Health,
are repeated so often in the absence of supporting               as part of the peace deal.
evidence, that they eventually come to be accepted
                                                                 UN agencies. In transitional contexts, these agencies
as facts.
                                                                 enjoy several comparative advantages, including a
    Although many of these patterns can be observed
                                                                 long-term presence in the country, a technical
in fragile but stable countries too, the intensity with
                                                                 mandate, and a relative distance from geopolitical
which they occur differs. In a stable but weak envi-
                                                                 and economic interests. On the other hand, UN
ronment, actions to palliate for such shortcomings
                                                                 agencies have often struggled to fulfil their poten-
tend to be slow and introduced incrementally, often
                                                                 tial. Among the reasons for this, under-funding and
only on the fringes of the real problems. Conversely,
                                                                 related fund-raising concerns, lack of flexibility at
in a country emerging from protracted violence,
                                                                 country level, cumbersome procedures, shortages
certain structural issues can (under favourable con-
                                                                 of skilled staff and rivalries within the UN system,
ditions) be tackled directly, with drastic measures.
                                                                 stand out as the most obvious.
                                                                 International transitional authorities and peace-
. Main actors on the health stage                               keepers. Sometimes these provisional bodies are
The transition from conflict to peace typically allows           given specific health mandates.
for an increasing number and variety of actors to
appear and to operate including:                                 Military, indigenous and foreign armies. These affect
                                                                 health care provision in several ways. Armies control
Official funding agencies, who at the start of the               the access of health service providers to contested
transition process tend to act indirectly, through               areas and to populations in need. The distribution
UN agencies and NGOs. As the recovery process                    of health services is therefore highly dependent on
moves forward, bilateral agencies and development                military decisions. Also, they provide health services
banks assume greater visibility and direct influence.            to their personnel, services which are often made
Informal funding agencies, such as charities and                 accessible to civilians. During the transition from war
private contributors. In some contexts, like Somalia,            to peace, army health workers may be discharged

                                                Section 5: Health in Fragile States   Health Service Delivery in Post-Conflict States   1
from service, thus entering the civilian health care                       Depending on their respective roles, partici-
job market.                                                             pants in post-conflict recovery processes may be
                                                                        confronted by many dilemmas that are not always
NGOs, international and local. The importance of
                                                                        explicitly formulated and discussed. Their choices
NGOs in delivering health services cannot be over-
                                                                        may depend on personal or organizational prefer-
emphasized. They represent a precious asset, to be
                                                                        ences, on the interplay of incentives, on the desire
fully exploited, as well as regulated, during the post-
                                                                        to minimize the risks at stake, or on aid fashions,
conflict transition process. A wealth of mainly
                                                                        rather than on an accurate reading of the situation,
unstructured knowledge and experience (written
                                                                        and of the true options on offer.
and oral) is usually scattered across the NGO com-
                                                                           The complexity of the situation faced by decision-
munity, waiting to be tapped. Sometimes, NGOs
                                                                        makers may have a paralysing effect, particularly
have already developed and put in place innovative
                                                                        on insiders who are fearful of inflicting further
interventions of potential interest for the whole
                                                                        damage on already fragile systems. Other players
sector, though these are not always recognized.
                                                                        may decide otherwise, and rush ahead with bold
Before importing blueprinted models from abroad,
                                                                        decisions, perhaps linked to international agendas.
these native experiences should be assessed and
                                                                        A judicious, thought-through activism seems the
supported. Protracted crises characterized by a
                                                                        wisest course of action between these two extremes.
large NGO presence, like Afghanistan, Somalia or
the DR Congo, should be seen as testing grounds
for health service provision. During periods of post-                   . Dangers and opportunities created
conflict transition the strategic and operational                       by the transition from war to peace
autonomy of NGOs is likely to shrink, as indigenous                     The defining features of a post-conflict process are
health authorities try to impose their presence and                     the political sensitivities that influence decisions,
will on health actors. In this endeavour, they often                    the opportunities for change, the rapidly evolving
find powerful allies in important financiers willing                    context, the imperative to act, and the external
to engage in the health field. The risk here is that                    support apportioned to a recovering country. A
although NGOs may maintain their role as health                         variety of decisions with far-reaching consequences
service providers, the policy discussion develops                       must be reached within a short time span. This
far from them.                                                          window of opportunity tends to close as soon as the
Special programmes, which in many cases are respon-                     country normalises, and sometimes even earlier.
sible for a large portion of health service delivery.                   Decision-makers are not allowed many second
They are usually managed and supported by tech-                         chances. Dangers and opportunities must be first
nical professionals tied to MoHs, international                         recognized for what they are, and then quickly acted
agencies and donors in complex webs. Professionals                      upon.
with a long experience of vertical programmes are
often competent, result-oriented and committed                          a. Dangers
to delivering targeted services. They may be very                       Health services may remain severely lacking in
influential. Usually, they are not interested in events                 resources to meet the requirements presented by
taking place outside their remit, or in sector-wide                     post-conflict recovery. This can be due to the mar-
discussions about service development and post-                         ginal importance of a country in donor eyes, to
conflict recovery.                                                      the state’s inability to raise revenues, or to the low
                                                                        priority given to health services by the government.
Private for-profit entrepreneurs. Their contribution
                                                                        As humanitarian operations come to an end and
to the delivery of health services usually gains in
                                                                        recovery-oriented financing is not available, or ex-
importance during conflicts. Formal and informal
                                                                        pands too slowly, a funding gap may open. This
health businesses, that are very visible in large cities
                                                                        gap may remain undetected, because of a lack of
with affluent elites, include health care facilities,
                                                                        consolidated and reliable figures about aid flows.
labs, training outlets and drug suppliers. Private
                                                                        Inadequate financing is often compounded by crip-
actors are usually excluded from the formal policy
                                                                        pled management systems, which reduce further
debate about service delivery, despite their influ-
                                                                        the amount of the funds made available to spending
ence on political decisions and on field operations.
                                                                        bodies. In the DR Congo in 2005, only a negligible
Users of health services, who through their decisions                   share of the expanded state budget reached health
influence health service provision.                                     service providers (World Bank, 2005).

10  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
    Donors may refrain from supporting a new                    prevalence. Subsequently, the infection spread rapidly
government that is unable to establish its authority.           within Mozambique. The gravity of the situation
By doing so, they are condemning it to failure for              only became clear once it was too late to act.
lack of resources, and hence of credibility. In 2005,
a circular argument frequently voiced among donors              b. Opportunities for strengthening health service
involved in Somalia stated that the new transitional            delivery
government had to show commitment and some                      Hitherto unforeseen opportunities emerge during
minimal capacity before donors would invest in it.              transition processes. Sometimes these opportunities
Unsurprisingly, the new government has so far                   are not even identified, let alone seized upon, for a
limped along, without registering much progress.                variety of reasons, including lack of flexible funds
    Crippled state institutions may be unable to                and available capacity, competing issues, poor intel-
implement chosen policies, even in the presence                 ligence, organizational rigidity and aversion to risk.
of genuine political will. Health authorities may               Situations which may give rise to valuable oppor-
lack the political clout needed to enforce unpalat-             tunities include:
able reforms. Corruption, mistrust and abuses may
obstruct policy implementation. Health services                     The collapse of an old regime and of the delivery
may remain deregulated, heavily skewed in favour                    models associated with it may encourage stake-
of curative care, privatised and commoditised as in                 holders to experiment with novel initiatives,
wartime. During the 1990’s, the Angolan MoH                         like primary health care (PHC). Local cadres
produced a set of promising recovery-oriented                       who have settled abroad or been employed in
documents, which have largely failed to translate                   the country by international agencies and
into action on the ground, because of implemen-                     NGOs may have gained exposure to new ideas,
tation constraints.                                                 approaches and delivery models, and may there-
    Proliferating ‘priorities’, imposed by influential              fore be supportive of change.
stakeholders, may spread capacity and resources                     The joint management of donor resources may
thin, and deny direction and coherence to health                    contribute to upgrading indigenous management
service delivery. Additionally, international priori-               systems, which are crucial to health service
ties, like the polio eradication campaign, may take                 recovery. This has been seen in post-conflict
precedence over indigenous ones. This situation                     Mozambique, with sector budget support (see
was recently observed in Southern Sudan.                            box).
    The right lesson may be applied to the wrong                    The collapse of the public sector may usher in
context, because it is erroneously considered similar               a new modern, lean and responsive civil service.
to the one originating the lesson, or because of an                 Conversely, where the state administration has
inadequate or flawed understanding of the context.                  survived the crisis intact, as seen in Mozambique,
Alternatively, the wrong lesson may be retained, be-                reforming it has proved elusive.
cause of ideological biases or of a distorted analysis.             The weakening of the state apparatus may offset
    Over-ambitious investment decisions may lead                    old authoritarian and corrupt habits, thereby
to unsustainable health services. Rosy forecasts of                 paving the way for the freer circulation of infor-
the level of health care provision that a country will              mation and for a participatory policy debate (as
be able to afford are common. Experience suggests                   now witnessed in the DR Congo).
that over-estimating future resource levels is a more
common mistake than under-estimating them. Try-                     Financial hardships, coupled with the collapse of
ing to rebuild the health sector along pre-conflict                 old supply channels, may provide the impetus for
lines, with a curative, high-tech orientation is an                 introducing large-scale, competitive purchasing
associated temptation. This flaw, first observed in                 of effective, low-cost generic drugs.
post-conflict Uganda (Macrae et al., 1994), is common,              The concentration in safe areas of under-utilised
particularly in well-financed recovery processes,                   health workers offers room to restructure the
such as in Angola.                                                  workforce, through a comprehensive retraining
    Critical events may unfold without attracting the               and upgrading programme. A process of this
attention of decision-makers who are too absorbed                   type took place in Mozambique towards the
by the peace process and the ensuing recovery. In                   end of the war (Pavignani and Colombo, 2001).
Mozambique in 1992-94, millions of refugees returned                The massive destruction brought about by the
home from neighbouring countries with high HIV                      war offers space for rationalizing the health net-

                                               Section 5: Health in Fragile States   Health Service Delivery in Post-Conflict States   11
    work, by downsizing tertiary hospitals (a measure                       resources in the absence of such capacity tends
    usually out of the question in peacetime) and                           to encourage further waste. By that same token,
    expanding first referral and PHC facilities. Inter-                     if the existing resources are inadequate, capacity
    national support may allow investment to be                             tends to be eroded, or inefficiently allocated.
    directed to under-served areas.                                         Capacity-building initiatives alone are likely to
                                                                            be ineffective.
                                                                            Recognising that certain structural changes
. Examples of best practice                                                caused by a deep, protracted crisis are irrevers-
a. Best practice (general)                                                  ible. For instance, after decades of deregulated
    Adopting a sector-wide appraisal of health                              privatisation, a return to the public provision of
    service delivery. To “think nationally and pro-                         most health services is probably an unrealistic
    grammatically” (Leader and Colenso, 2005), even                         option. Positive new features should be identified,
    at the height of a crisis, is paramount. Many                           rationalized and strengthened, while negative
    shortcomings observed in the delivery of health                         ones should be tackled with realism. Plans to go
    services are in fact manifestations of sector-wide                      back to a remote and often idealised past should
    distortions. In DR Congo, a lively debate around                        be considered with suspicion.
    cost-sharing schemes has been going on for                              ‘Aligning’, as far as feasible, procedures, systems
    years. No attention is being paid to present and                        and approaches. In most countries, where weak
    likely future crushing levels of under-financing,                       institutions discourage the full adoption of gov-
    which force many service providers to charge                            ernment systems, the ‘shadow’ alignment
    fees for services in order to stay afloat. The policy                   approach should be pursued (OECD, 2004). Its
    discussion would benefit from focusing on the                           potential for rationalizing the support provided
    structural obstacle of the lack of funding, and                         by donors justifies the costs incurred by partici-
    placing less onus on the side issue of cost-sharing.                    pants in pursuing it.
    Repairing pre-existing, damaged management                              Introducing aid management tools, such as
    systems whenever possible, before or instead of                         trust funds and pools, which oblige participants
    rushing to introduce new ones. “. . . institutions                      to harmonize their activities, early and on a
    that survive a war may be more resilient than                           manageable scale. Finding a trade-off between
    they appear.” (Mckechnie, 2003). To verify                              controlling the fiduciary risk inherent in these
    whether old management systems are viable in                            instruments, and setting procedures at levels
    post-conflict settings, they have to be provided                        that are attainable by indigenous institutions, is
    with resources, put in motion and thoroughly                            essential to move forward in this field.
    studied. In many instances, their strengths and                         Establishing aid coordination mechanisms, even in
    weaknesses can be recognized. Some elements                             the absence of a recognized central government.
    can be rescued and maintained after consolida-                          For example, the Somalia Aid Coordination
    tion, others must be redesigned, while some                             Body (SACB) provides a forum for participants
    flaws have to be overcome through the introduc-                         to collect and share information, respond to
    tion of new tailored components.                                        crises (like epidemics), negotiate joint actions,
    Building recovery plans on sound forecasts of                           and draw up joint funding proposals. In 2005,
    resource and capacity constraints. The objective                        the SACB gave the Somali transitional govern-
    technical difficulty of developing realistic pro-                       ment valuable opportunities to participate in
    jections may be overcome with adequate effort.                          discussions, to understand the perceptions and
    The international experience of revamping social                        goals of international players, to present their
    services after protracted periods of disruption                         incipient policy agenda and to receive relevant
    may greatly assist the planners engaged in build-                       feedback.
    ing sustainable systems.
    Although constraints imposed by resources and                       b. Best practice (health-related)
    capacity are interrelated, they should be assessed                      Starting the work on health sector recovery in
    separately, as they call for different responses.                       advance of, and at a distance from, political
    Where adequate capacity exists, increasing levels                       developments, as done in Mozambique in 1990-91
    of resources may provide substantial returns in                         (Pavignani and Colombo, 2001). A sound, well-
    the short-term. However, investing additional                           known strategic framework, endorsed by credible

1  High Level Forum on the Health Millennium Development Goals   Selected Papers 2003–2005
Sector Budget Support to recurrent provincial health expenditure in Mozambique in the 1990s
 Introduced towards the end of the war as a gap-filling measure to revive derelict health services, sector budget support evolved
 over time to play a major role in the service expansion that took place in the decade that followed. Supposed to flow through
 state financial management channels, and to be allocated according to local decision-making procedures, sector budget suppor t
 initially encountered serious problems. These were caused by the decay of state management systems, the unreliable nature of
 the information available and questionable priority-setting habits. However, the offer of unallocated fresh funds constituted a
 powerful incentive for local officials to reorganise their management systems.

 After a few years of hard work and thanks to the robust technical support provided to them by the donor, most provinces were
 able to tap these financial resources, to allocate them in meaningful ways and to account for their expenses at levels acceptable
 to the donor. Health service coverage expanded dramatically over the following years, and wide service imbalances were re-
 duced. Fur ther, the scheme forced par tners to review all the resources allocated to provinces and districts, so that the available
 budget suppor t could be directed to cover the most serious gaps. Operational efficiency improved significantly.

 Information gathered as a result of this exercise enabled an analysis of resource and output patterns at national levels, which in
 turn influenced the structure of the state budget, and the allocative decisions of some donors. As a consequence, coordination
 improved. Other donors joined the scheme, thus providing a working model for ensuing SWAp discussions. In addition, program-
 ming and accounting practices gained by managing this budget suppor t equipped the health sector to absorb the progressively
 increasing state funding.

 Most of the beneficial long-term effects of the scheme were not foreseen at the time of its launch. An almost desperate initia-
 tive, introduced in the least propitious environment, contributed beyond expectations to the recovery of the health services.
 Key factors that explain the success of this initiative include the embedding of the arrangement into indigenous systems, its
 incremental growth according to recorded progress, its ability to weather the many crises it encountered, its openness to inno-
 vation and to change, a solid understanding of local conditions, and a measure of risk-taking.




   actors, may foster the coherent and efficient re-                        Introducing measures that address deeply-rooted
   covery of health service, by shaping the decisions                       systemic distortions at the outset. Transitional
   and actions of concerned parties (particularly                           health sectors are often characterized by a lack
   of newcomers), when the country opens up                                 of funding, a bias towards tertiary hospitals and
   and health services expand.                                              curative treatment, an under-skilled and often
   Investing early in the systemic analysis of the                          bloated workforce, and perverse incentives.
   health sector and health service delivery, as in                         Without correcting or at least containing these
   the DR Congo in 2004-5 (World Bank, 2005).                               distortions, other interventions are unlikely to
   Continuous sector-wide analysis is more effective                        fulfil their potential.
   than one-off studies. An independent policy                                  For example, early investment in human re-
   analysis unit should be established as soon as                           source development is a precondition for health
   the environment allows.                                                  service recovery. Training competent and appro-
      Furthermore, health care delivery systems                             priate professionals during wartime is likely to
   developed during the conflict must be studied                            yield dividends after the end of hostilities, when
   with a view to promoting their integration. For                          health services need to suddenly expand to cover
   example, in Sudan, public provision of health                            previously inaccessible areas.
   services is prominent in areas controlled by                             Introducing rational and progressive drug man-
   Khartoum. In the Southern areas, administered                            agement systems. Devoting attention to drug
   by the SPLM, NGOs are largely responsible for                            procurement and distribution is important for
   the delivery of health care. Different working                           several reasons:
   languages, categories and job descriptions, train-                            Drugs account for a large portion of health
   ing programmes, management and contracting                                    expenditure, and for a disproportionate share
   practices, and incentives all need to be accom-                               of household health spending.
   modated within a coherent framework. This                                     The availability of drugs boosts the credibil-
   contentious, complex and slow process needs                                   ity and hence the uptake of health services.
   careful stewardship. If successful, it can serve to                           Rationalising drug procurement and distribu-
   defuse politically explosive issues and contribute                            tion is possible even in fragile environments
   positively to peace-building and reconciliation.                              (See the box on the DR Congo).

                                                       Section 5: Health in Fragile States   Health Service Delivery in Post-Conflict States   1
        The process of negotiating and putting in                           Given the evolving nature of post-conflict t