Social services

Background

The World Bank and health

1 April 2008 | Inside the institutions


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In the last five years the global system for channelling development finance to the health sector has changed radically. According to the World Bank, assistance for health has shot up from $6 billion to $14 billion, most of which is being provided by new players such as the Global Fund for AIDS, Tuberculosis and Malaria (GFATM), new bilateral funds and private actors like the Bill and Melinda Gates Foundation. This has caused the Bank to seriously re-examine its role in health finance.

The World Bank puts its work on health and health systems together with its work on nutrition, population and family planning issues. This has meant that work on all health issues have sometimes gotten bogged down in differences over politically sensitive topics such as reproductive rights. Work that affects public health is also carried out in other parts of the Bank, for example water and sanitation. Health is one of the core areas of work needed to achieve the Millennium Development Goals.

The health, nutrition and population (HNP) unit sits within the Human Development network of the Bank. The strategy for the unit was rewritten in 2006 and 2007 and finally agreed by the board end April 2007 after controversy over the support to reproductive rights (see Update 56). The new strategy has four overarching objectives: improve the level and distribution of key health outcomes, outputs, and system performance; prevent poverty-related illnesses; improve financial sustainability in the health sector; and improve governance, accountability and transparency in the health sector.

The strategy seeks to address three main challenges facing work in health: the need to ensure that financing creates tangible results on the ground; the need to strengthen health systems; and the need to reduce duplication and increase coherence of health financing given the increase in actors on the international health scene. The Bank believes its greatest comparative advantages in undertaking health work are in health system strengthening and inter-sectoral approaches to country assistance as well as macroeconomic policies and capacity to enable large scale implementation.

A count of World Bank professional staff working in the sector in mid-2006 showed that health was the fourth biggest area with 206 people. This is only behind economic policy (349), rural development (309) and the environment (255). However this is 23 per cent below the HNP’s peak staffing level in 1998.

Over the course of the previous strategy (1997-2007) the World Bank funded more than 500 projects with a health component in over 100 countries.  That meant $15 billion in commitments though just over $12 billion actually disbursed. At the end of the 2006 fiscal year the portfolio of active projects totalled $7 billion, a decrease from the 2001 high of $9.5 billion. In fiscal year 2007, World Bank combined lent 11 per cent of its total portfolio to projects with health and other social sector components. This $2.75 billion is a 20 per cent decline from peak lending in 2003. In IDA countries, health sector lending was 16 per cent of the total.

In terms of regional breakdown, in 2007, South Asia accounted for 44 per cent of new commitments with health components while Latin America and the Caribbean was 32 per cent and the African region was 14 per cent. The largest theme in 2007 was health systems lending (27 per cent of new commitments). This is followed by injuries and non-communicable diseases – including a variety of work from tobacco control to road safety and indoor air pollution projects – at 17 per cent and child health at 14 per cent.

The new HNP strategy recognises that the World Bank’s health work has been comparatively ineffective. The HNP lending portfolio had the lowest performance of all sectors for five years in a row from 2001 to 2006. Only 66 per cent of completed HNP projects between 1997 and 2006 were rated ‘satisfactory’ or better. A planned 2008 evaluation of health sector work by the Independent Evaluation Group (IEG) will be a key method for remedying these problems.

The Bank’s direct HNP work may be suffering from declining staff and lending, but the HNP team also serves as the secretariat for a burgeoning number of trust funds related to health. Sixteen such trust funds, with governance and allocation rules set by donors, are hosted by the HNP unit, not to mention regional and country-specific trust funds that also finance the health sector. Donors have committed $275 million for the 16 funds, such as Human Resources for Health Capacity Building and the Global Program to Eradicate Polio.

The World Bank’s private sector arm, the International Finance Corporation (IFC) has also increased its work in the sector. According the IFC health strategy: “the reliance solely on the public sector to address these major challenges appears to be no longer a viable or sustainable option in the long term because of fiscal constraints. Moreover, in some countries, these fiscal constraints are compounded by the poor quality, ineffectiveness, and inefficiency of existing health systems.” From 2000 to 2007, the IFC provided $536 million in financing to 47 private health care projects in 25 countries. However in December the IFC announced plans to manage a new $1 billion fund for private health care providers and private health care systems in Africa (see Update 59).