Seminar on the new aid architecture in health: the way forward

World Bank-IMF annual meetings 2007

23 October 2007 | Minutes

World Bank video link

This session considered the roles of bilateral and multilateral players, trends in health financing and absorptive capacity. Lamentably no one from the IMF was at the session to contribute to the debate or comment on the macro-economic implications of scaling up, or expanding expenditure into social sectors. A major assertion from the discussion was that effective and integrated national systems and governance are key.

More funding and broader commitment for health is being scaled up both from traditional sources of finance and many new ones. Bilateral donors are increasing their funding, particularly for “health systems” to complement the major contributions to individual disease initiatives that have dominated funding in recent years (eg HIV/AIDS, malaria, immunisations). Major investment from philanthropic institutions such as the Bill and Melinda Gates and Clinton Foundations, and soon the Google Foundation, are taking hold. Traditional multilateral investments continue. These have implications for recipient countries and for their health sectors.

Panelists were Richard Carey, Director, Development Co-operation Directorate, OECD; Suma Chakrabati, Permanent Secretary, Department for International Development (DFID), United Kingdom; Huot Eng, Secretary of State, Ministry of Health, Cambodia. It was moderated by Donald Kaberuka, President, African Development Bank.

Donald Kaberuka

  • There are vertical and single purpose funds. Many new sources are vertical but our problems are horizontal. How can we reconcile this?

Huot Eng

  • Between 1998-2007 the Cambodian economy has grown, poverty has been reduced and there have been measurable improvements in social indicators such as education, health, water and sanitation.
  • In health in particular, gains include a reduction in infant and child mortality, a reduction in HIV/AIDS and improved contraception.
  • Key concerns in health are: low wages, financial barriers to public sector services, dependence on aid flows.
  • When compared to other sectors such as water and sanitation, power and electricity and tourism, health fares badly in terms of sector fragmentation of aid.
  • Key challenges are the policy implementation gap – that financial flows are not aligned with policy and strategy; and fragmentation – many projects, many donors, many management systems.

Suma Chakrabati

  • For DFID health MDGs are the most off-track. There is a herd mentality, and lots of initiatives, but also high transaction costs. We need to harmonise and put the emphasis at a country level.
  • Also need to consider incentives within organisations – are staff who push on harmonisation rewarded?
  • The Paris declaration was a commitment but also a compromise. Why has there been such slow progress on health?

Richard Carey

  • Scaling up in health through a variety of different vehicles has increased the scale of the coordination problem. Developing countries are having to manage aid supply issues. The real way to resolve the problem would be for the supply industry to ally with the national health plan.
  • We have to help partner countries build capacity to manage the donor industry.
  • How to adapt behaviour so that vertical funds will address horizontal problems?
  • Progress needs to be made by Accra 2008. A major problem on supply side and demand side.

Donald Kaberuka pointed to the importance to harmonise and work through national systems, but if the national system is weak, the chances of getting results are limited.

Suma Chakrabati stated that the problem is not necessarily that donors are bad, but rather that accountability is strong. Donors have to account for their spending to tax payers and parliamentarians in their home country. The diversion of skilled health workers into vertically funded donor projects such as in Malawi is also an issue as this by-passes national structures. Programmes are also being designed with ‘appraisal optimism’.

One participant stated that he co-chairs a task force, and has been tasked with the role of massively scaling up health workers and keeping them in country. Other comments from the floor raised questions on: inflation, in instances where different donors are bidding up pay rates; training where there is a lot of scattered in-service training.

Nancy Dubosse from Afrodad referred to the macro-economic impact that the PRGF has on health services, especially HIV/AIDS. The resource envelope for health and education is grossly underfunded and fiscal space is severely restricted. Governments are handicapped and forced to take on non-concessional loans.

Fraser Reilly-King of Canadian NGO Halifax Initiative questioned the perceived wisdom of accountability to the tax payer and suggested that tax payers are rarely aware of exactly how their governments are spending aid money. He suggested it was more a question of the particular department or donor striving to justify itself, and secure the same budget for the next financial year. A better way forward would be for harmonisation both between and within donors.

Another comment from the floor pointed to the scaling up of aid from philantrophic groups and private donors. Suma Chakrabati acknowledged this point and cautioned that many philantrophic organisations are not aware of the issues and are not keen to dialogue with DAC. There is also competition between donors.

Donald Kaberuka: If resources bypass the ministry of finance it gets complicated. More can be achieved by working through national systems.

Suma Chakrabati: in the area of education we have done better with the FTI (Fast Track Initiative). We want to see multilaterals spend our money better such as per the suggestion by Douglas Alexander on global funds. We also need to persuade supporters of global funds to be effective, advocates need to consider this.

Richard Carey concluded that aid architecture needs better governance.