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Expenditure bottlenecks are costing lives

Long standing practices and
bureaucratic assumptions on what constitutes proper foreign aid disbursement is restricting access to lifesaving resources and costing lives.

As Reuters recently reported (27 Feb. 2006, “Africa
struggles to spend AIDS billions

Like many HIV-positive Tanzanians, Bayona had angry words
for TACAIDS, Tanzania’s
official AIDS control organisation and a key link between foreign donors and
local AIDS groups. “They spend a lot of money, but we don’t see any of
it,” she said. “The programme is only interested in ARVs, workshops
and seminars. Officials get cars, we don’t get anything.” TACAIDS’
information chief Fatma Mwassa conceded Tanzania was finding it was hard to
spend its AIDS money, but said the problem was due to donor requirements
limiting the types of expenditures and groups which can receive AIDS grants.
“We don’t have enough capacity in Tanzania,” Mwassa said.
“We are trying to switch to a more holistic approach, not only medical,
but it will take time.” Peter Piot, executive director of the United
Nations’ AIDS agency UNAIDS, said the disconnect between how AIDS funding is
structured and basic needs like free HIV tests or bicycles for health workers
was a growing concern. “It is hard to make the machine work,” he
said. “Donors say you can’t buy things like bicycles. They see that as
leakage,” he said. “We see this in many, many countries. These
bottlenecks are everywhere.” Bayona, whose two brothers are also
HIV-positive and who supports more than a dozen dependents, said she worried
that for many Africans the bottlenecks could prove deadly.

There are alternative strategies.  Unlike input-based support, where a donor
pours money into developing country governments or provides budget support to
non-governmental organizations, output-based aid (OBA) is a financing mechanism
to subsidize a specified output.  Rather
than stipulate the type and quantity of line items for bicycles and
Land Cruisers, for instance, OBA systems reimburse health providers for
contractually delivered package of services at verifiable quality standards to
targeted populations.  How the provider
spends their profits is up to the provider.

As Potts and Janisch noted in The Lancet (15 Oct
2005, “Smart
aid – the role of output-based assistance”

OBA is not suitable for every aspect of foreign aid, but it
can overcome some valid criticisms. Recent analyses show that the poorest
economic quintiles in 44 developing countries, when they do get health care,
get it mainly from private-sector providers, and OBA provides a simple way to
support private as well as public-health facilities (see also Prata et al 2005 [abstract][full article, PDF]). Competition for clients improves quality of
care, and a cashflow direct to providers (including front-line workers in
government services) devolves financial decisions to the lowest appropriate
level. Most importantly, in many input-based projects, 20% or less of the money
allocated actually reaches the poor. OBA can reverse this equation.

Although nutured for the past 10 years at the World Bank and DfID as a finance mechanism for infrastructure development, recent
global increases in health service expenditures for developing regions
underscore the importance of similarly transparent and flexible mechanisms for health services.  KfW (Kredit fuer Wiederaufbau, Entwicklungsbank – German
Development Bank
) is financing two innovative health service projects
in East Africa.  Although a small STD treatment pilot
was run in Managua in the late 1990s (see Borghi et al 2005 [abstract]) these two projects
in Kenya and Uganda are the first at district scale in more than 25 years.  South Korea and Taiwan had national family planning voucher programs in the 1970s but only recently have those lessons begun to be discussed in the context of ramping up new voucher programs.  (The complete proceedings of a June 2005 planning
conference in Frankfurt are available here, detailing Kenya and Uganda projects’ scope and evaluation strategy.

Later this year, NGOs, FBOs, and local entrepreneurs will
sell vouchers at a steep discount to individuals seeking access to reproductive
and sexual health services.  Voucher
holders will be able to access services at a network of private, public and
not-for-profit sites.  Each of the
projects will deliver tens of thousands of vouchers the first year and soon expand to other services – possibly to include HIV prevention and treatment. 

I look forward to a time when donors will not be worried whether the local clinic is buying a bicycle but rather focused on measured improvements to the public’s health.

NOTE: I have been involved in planning the evaluations of the East Africa OBA projects and will have more to add on this topic in the coming months.

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