Trends and Gaps in Development Assistance for Health
Despite a decline in overall official development assistance in the 1990s, DAH rose in real terms and as a proportion of official development assistance (table 13.1). New funding sources became available in 2000-2, including the Global Fund to Fight AIDS, Tuberculosis, and Malaria and special U.S. financing for HIV/AIDS, plus rapid growth in grant awards from the Bill & Melinda Gates Foundation and in World Bank International Development Association (IDA) grants. Commitments from all external sources, including foundations, rose from an annual average of US$6.7 billion in 1997-99 to about US$9.3 billion in 2002.
[Table .]
Total DAH is the sum of external financing for health from several different sources: bilateral agencies as reported through the creditor reporting system of the Organisation for Economic Co-operation and Development (OECD); multilateral agencies, including the United Nations (UN) system—especially the World Health Organization (WHO), the United Nations Children's Fund, the United Nations Population Fund, and the global and regional development banks; the European Union; philanthropic organizations; and the Global Fund to Fight AIDS, Tuberculosis, and Malaria. Because no central repository of data on all the sources of DAH is currently available and comprehensive information is not published on any regular basis, painstaking and time-consuming efforts are required to assemble accurate, comparable data about all these sources.
After a long period of decline in official development assistance (grants from bilateral government channels and UN agencies plus net flows from development banks) during the 1990s, the OECD reported a real increase of 7 percent from 2001 to 2002 and a further increase of 4 percent from 2002 to 2003. Those increases took official development assistance to an all-time high, in both nominal and real terms, of US$68.5 billion. As a percentage of gross national income, this represents an increase from the all-time low of 0.22 percent recorded during most years from 1997 to 2001 to about 0.25 percent in 2003, still well below the target of 0.7 percent set by the OECD's member states in 1970. Only five countries—Denmark, Luxembourg, the Netherlands, Norway, and Sweden—currently achieve this target, and six others have now set prospective dates for its achievement—namely, Belgium (2010), Finland (2010), France (2012), Ireland (2007), Spain (2012), and the United Kingdom (2013).
Bilateral assistance for health rose from an annual average of US$2.2 billion (3.8 percent of the total) during 1997-99 to US$2.9 billion (6.8 percent) in 2002. Among the bilateral arrangements, the United States accounted for about 40 percent of the total, even though as a percentage of gross domestic product (GDP), its allocation to international development was among the lowest of all the high-income countries.
Within the UN system, DAH rose from an average of US$1.6 billion per year during 1997-99 to US$2 billion in 2002. Commitments from the development banks remained stationary at about US$1.4 billion. However, changes in accounting by the World Bank to include financing for health activities contained in projects managed by other sectors (such as urban, water and sanitation, transportation, and social development), suggest that its new commitments for health actually rose from about US$1 billion in 2001 to US$1.3 billion in 2002 and US$1.7 billion in 2003.
In the future, consensus will need to be reached on whether allocations by the multilateral development banks to projects in other sectors or to projects that are classified as multisectoral—especially broad budget support to governments, which may be specifically tied to domestic spending and policy reforms in health—should be counted as DAH. Another issue in DAH accounting involves distinguishing between allocations for health from the multilateral banks that take different forms—namely, outright grants (a recent innovation for the World Bank and the regional banks); subsidized loans for the poorest countries, which at the World Bank are IDA credits; and loans for the middle-income developing countries that reflect the actual costs of borrowing by the development banks. For example, of the US$1.7 billion in World Bank commitments for health in 2003, about US$1 billion took the form of IDA credits, and most of the rest was in the form of loans that reflected the costs of borrowing. Because the face value of the financial commitment can be considered to be reduced by repayments in the case of subsidized and market rate loans, some argue that the net financial value of such loans, rather than their face value, should be used in calculating DAH. This calculation further complicates the task of monitoring DAH.
Despite these various cautions and qualifications, it is clear that DAH has grown in recent years. This upward trend has been driven by several factors, including (a) donors' increasing attention to the challenges presented by the Millennium Development Goals (MDGs), which are heavily centered on maternal and child health and control of communicable diseases; (b) strong global mobilization to confront the AIDS pandemic in developing countries since 1998-99, especially in Africa; and (c) donors' expanding interest in research and development (R&D) in relation to new health technologies to address the major diseases prevalent in poor countries. In contrast, external funding for health system development, human resources, and noncommunicable diseases has increased more slowly.
In terms of the areas that have benefited from the growing volume of DAH, three stand out: HIV/AIDS, immunization, and new health product development. According to Michaud (2003), in 2002 about US$900 million in DAH was for HIV/AIDS, followed by US$210 million for tuberculosis (TB), and US$160 million for malaria control. The Joint United Nations Programme on HIV/AIDS (UNAIDS) also reports a substantial rise in external financing for AIDS prevention, treatment, and social mitigation activities over the past four years (UNAIDS 2004). Most of the increase in assistance for immunization has taken place through the Global Alliance for Vaccines and Immunization (GAVI), which has amassed commitments of about US$1.3 billion to finance the expansion of existing childhood immunization programs and the accelerated introduction of hepatitis B and Haemophilus influenzae type B vaccines. Assistance for health technologies directed at diseases that are prevalent in the developing world has been channeled through new public-private partnerships. Examples include the International AIDS Vaccine Initiative (IAVI), the Medicines for Malaria Venture, and the International Partnership for Microbicides. Estimates indicate that the 10 largest public-private partnerships have raised more than US$1 billion over the past five years (IPPPH 2004).
In terms of the sources of the expanded volume of DAH, a small number of institutions account for much of the recent increase. Among the traditional donors, these institutions include the World Bank and the governments of Canada and the United Kingdom. At the same time, as a share of GDP, contributions from Ireland, the Netherlands, Norway, and Sweden remain high. Among nontraditional sources, the Bill & Melinda Gates Foundation stands out as a major new player as of the late 1990s. With a focus on the development of new drugs, vaccines, and diagnostics for the developing world, the Gates Foundation's commitments for health started in 1998 and rose rapidly to some US$600 million in 2002, with annual commitments expected to approach US$1 billion in 2004 and beyond.
Development assistance for health is channeled to a large number of low- and middle-income developing countries, but the largest recipient region is Africa. In 2002, about 35 percent of all such assistance went to Africa, followed by Latin America and the Caribbean with around 14 percent, East Asia and South Asia with 11 percent each, and the Middle East with 7 percent. The remaining 22 percent was for global programs (Michaud 2003).
This growth in funding for the control of communicable diseases and new health technologies to address them is important, given the high burden of illness and premature death these diseases cause. Nevertheless, the focus on AIDS, TB, and malaria should be matched by similar increases in investments in broader health system improvements. Relatively little DAH is being channeled to address the serious problems of shortages in health workforces in poor countries and their low productivity or to deal with weaknesses in health management information systems, in supply chain logistics for drugs and commodities, and so on. Even though focused spending on AIDS, TB, and malaria will clearly touch on these weaknesses, it will not on its own go to the core of the problem or lead to sustainable solutions. For example, GAVI allocates resources to strengthen immunization infrastructure such as cold chains and to train health workers to deliver vaccinations more effectively. The Global Fund to Fight AIDS, Tuberculosis, and Malaria provides funds to prepare health workers to deliver and monitor compliance with antiretroviral treatments. Useful as those activities are, they will not address the underlying weaknesses in human resources for health in poor countries, such as low levels of pay, unattractive conditions of service, and uncertain prospects for career advancement.
The recent rise in DAH is encouraging, but it is still far short of the volume of external financing for health that is needed, according to recent estimates and political pronouncements. On a global level, estimates of what donors need to provide to help countries reach the MDGs for health have typically ranged from US$15 billion to US$35 billion per year. The Commission on Macroeconomics and Health suggested a figure of about US$30 billion a year. While preparing for the Monterrey Summit on Finance for Development, the World Bank calculated a funding gap of US$15 billion to US$25 billion a year (Devarajan, Miller, and Swanson 2002). For the United Nations General Assembly special session on AIDS in June 2001, UNAIDS suggested that spending on HIV/AIDS alone in the developing countries needed to rise to about US$9 billion annually by 2005, with about two-thirds of this amount to come from external sources (UNAIDS 2001). At the 2004 International AIDS Conference in Bangkok, UNAIDS raised its estimate of resources needed to more than US$15 billion a year by 2010 (UNAIDS 2004).
These global calculations have been followed by more detailed costing exercises at the country level, which hold the promise of yielding more accurate and meaningful figures than the global estimates. Donors working with government specialists in developing countries have tested a variety of methods. The UN Millennium Project has used a bottom-up approach, which is based on expanded coverage of key interventions and fixed unit costs, assuming no shared costs or benefits among different interventions, omitting the possibility of private financing, and adding a rough amount for system improvements (UN Millennium Project 2004). The World Bank has followed two other approaches. One, in India, is based on observed elasticities of change in children's health and nutrition outcomes in relation to public expenditures on health, primary education, water, and so on (World Bank 2003a). Another, in Ethiopia, Mali, and other countries, is based on detailed modeling of the costs of removing bottlenecks in health service delivery to enhance the coverage, utilization, and quality of key health interventions proven to have a positive effect on maternal and child health outcomes (Soucat and others 2003; World Bank and Ministry of Health, Ethiopia 2005).
A comparison of the Millennium Project's and the World Bank's results for East Africa is interesting. The Millennium Project calculates that nearly US$30 per capita are needed in additional spending for health, whereas the World Bank calculates that about US$4 per capita are needed for Ethiopia to reduce child and maternal death rates by 30 to 40 percent by 2015. The large difference between the two sets of results suggests that more work needs to be done to move toward consensus on the best methodology for countries to use.
Part of the difference is due to technical factors. The Millennium Project approach covers all the health MDGs, whereas the bottlenecks method has focused on the MDGs pertaining to child and maternal health only. The Millennium Project also calculates costs to achieve the MDGs in their entirety, whereas the bottlenecks method addresses incremental improvements. For example, in relation to the child mortality goal, the bottlenecks analysis for Ethiopia considers a substantial decline to be from 176 to 107 deaths per 1,000 live births, but the MDG is 59 deaths per 1,000 births. In addition, the Millennium Project multiplies additional units of service by a standard cost per unit, whereas the bottlenecks method estimates the cost of system improvements and then divides this amount by the additional services rendered to derive incremental unit costs.
The two approaches also have important differences in political philosophy. The Millennium Project approach sets high targets for DAH and health spending, which are based on full achievement of the MDGs, regardless of the starting points and gaps and without addressing the feasibility of reaching the targets. The World Bank's approach is less ambitious but may be seen as more realistic and as pointing the way to implementation based on gradual improvements—improvements that countries can pursue as additional financial resources and capacity to manage them effectively are combined on the ground.
