2004 Report on the global AIDS epidemic
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Financing the response to AIDS |
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Ensuring there are adequate funds to mount an effective global response to the AIDS epidemic has proven difficult. However, in recent years, there has been an unprecedented increase in global financial resources. In 1996, when UNAIDS was launched, available AIDS funding in low- and middle-income countries totalled US$ 300 million. This amount represented contributions by bilateral donors, international nongovernmental organizations (NGOs), and the UN system, notably the World Bank.
By 2002, this amount had jumped to US$ 1.7 billion. By 2003, an estimated US$ 4.7 billion was available for the AIDS response that year. The latter figure also includes the steadily increasing funding that comes from country governments, and from the ‘out-of-pocket’ spending by directly affected individuals and families. Yet, this amount is less than half of what is required by 2005, and only a quarter of what will be required by 2007 to mount a comprehensive response to AIDS in low- and middle-income countries.
At the same time, even though more and more money has become available to respond to AIDS, in many heavily affected countries it is clear there are serious bottlenecks to spending it effectively. These blockages include lack of human and institutional capacity, the persistent negative effects of stigma and discrimination, shortfalls in political commitment, slow transfer of funds from national to local and community levels, inadequate accounting and auditing mechanisms, and inconsistent bureaucratic funding processes of the global donor community.
The ongoing funding shortage, and structural and policy deficiencies, are primarily responsible for the still inadequate AIDS response. Less than 20% of people in low- and middle-income countries who need prevention programmes have access to them; funds are not channelled to those who can use them most effectively in the AIDS response; and only 7% of people in these countries who need antiretroviral treatment receive it. For instance, only 3% of those who need treatment in sub-Saharan Africa can obtain it.
These experiences carry one crucial message for the world: increase resources to match the need and remove the bottlenecks, or the AIDS epidemic will not be reversed and stopped.
AIDS spending in the Latin America and Caribbean region looks large compared to that of sub-Saharan Africa, but it is small compared to spending in the United States of America. In 2000, the United States Government spent US$ 10.8 billion domestically on AIDS, which represents over US$ 13 000 per person living with HIV; per person spending rises to over US$ 30 000 when private expenditure is added (WHO, 2000; WHO, 2001). A check on the credibility of this seemingly high spending level is provided by an analysis of spending on AIDS patients in the United States, which projected that expenditure would average almost US$ 36 000 per patient (Graydon, 2000).
Progress update on the global response to the AIDS epidemic, 2004Finances for the AIDS response still fall far short of the amount needed
Source: Progress report on the global response to the HIV/AIDS epidemic, UNAIDS 2003; Coverage of selected services for HIV/AIDS prevention and care in low- and middle-income countries in 2003, UNAIDS/USAID/WHO/CDC and the Policy Project,2004; IAVI and the Alliance for Microbicide Development at the UNAIDS Consortium on Resource Tracking Meeting, 2004. |
In fact, all evidence points to enormous global disparities in AIDS spending:
UNAIDS estimates that US$ 12 billion will need to be spent annually on AIDS in low- and middle-income countries by 2005—a figure that is expected to rise to US$ 20 billion annually by 2007 (see Figure 35) (Hankins et al., 2004). The good news is that global AIDS spending in these countries increased more than ninefold between 1996 and 2002. The challenge now is to more than double current spending within just two years, and to maintain high levels of commitment over the long term (UNAIDS, 2003a).
The global resources needed by 2005 and 2007 for a comprehensive response have been estimated for each of 135 low- and middle-income countries. Such a response would include 19 prevention activities, six treatment and care services, and three types of orphan support. HIV prevalence and other epidemiological data determine the size and characteristics of the target population for each service, and help set realistic goals for coverage.
HIV prevention activities
AIDS treatment and care activities
Orphan support
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Estimating global resourcesUNAIDS, in partnership with the Futures Group and with support from the Inter-American Development Bank, the World Bank and the Asian Development Bank, organized nine regional and subregional workshops between January 2002 and April 2004 to train country teams in the methodology and models used to estimate required resources. Seventy-eight country teams at these workshops, which included over 155 specialists, provided country-specific estimates of unit costs and population sizes for key populations at higher risk of HIV exposure. Together, country specialists and UNAIDS experts estimated resource needs, revealing spending gaps and helping set new priorities. |
Except for in-service training of teachers and health personnel, along with some laboratory strengthening, these estimated figures do not include resources for further building human resource capacity or strengthening infrastructure required to deliver the services. Thus the country estimates, when combined, give a global figure that represents the minimum required to achieve the goals agreed at the 2001 UN General Assembly Special Session on HIV/AIDS (UNAIDS, 2003a).
At the UN General Assembly in September 2003, the Director-General of the World Health Organization (WHO) and the Executive Director of UNAIDS called the lack of access to HIV treatment a ‘global health emergency’. At that time, only 400 000 of the five to six million HIV-positive people in low- and middle-income countries who needed antiretroviral therapy were receiving it. Moreover, the slow delivery rate meant no more than one million were likely to be on treatment by 2005.
To triple this number to three million on antiretroviral therapy by the end of 2005, WHO and UNAIDS called for an international effort to build on the vision and solid foundations laid by pioneering low- and middle-income country programmes. To achieve the ‘3 by 5’ target, US$ 5.5 billion is needed in 2004–2005—about 80% of the funds required globally for treatment and care in 2004–2005 (see ‘Treatment’ chapter) (Gutiérrez et al., 2004).
This amount covers direct support to the treatment programme, including:
As of early 2004, national governments; the Global Fund to Fight AIDS, Tuberculosis and Malaria; the World Bank; the United States President’s Emergency Plan for AIDS Relief, and other bilateral donors and foundations had pledged just over US$ 2 billion to scale up antiretroviral treatment access in 34 of the hardest-hit countries by the end of 2005, leaving a shortfall of US$ 3.5 billion.
However, there are huge country-level variations: some countries already have the funds to cover their proposed treatment targets, while others have large funding gaps. Further work is required to estimate the long-term costs of antiretroviral therapy, as well as the direct and indirect benefits of investing in treatment scale up, and to determine mechanisms for ensuring sustainability.
In comparison, for all low- and middle-income countries, based on 2002 spending, the annual prevention funding gap is an estimated US$ 3.8 billion for 2005 alone (Global HIV Prevention Working Group, 2003).
Paying for antiretrovirals: lack of equity“I can take these tablets, because on the salary I earn as a judge, I am able to afford their cost … In this I exist as a living embodiment of the inequity of drug availability and access in Africa … My presence here embodies the injustices of AIDS in Africa because, on a continent in which 290 million Africans survive on less than one US dollar a day, I can afford monthly medication costs of about US$ 400 per month. Amidst the poverty of Africa, I stand before you because I am able to purchase health and vigour. I am here because I can afford to pay for life itself.” - Mr Justice Edwin Cameron, High Court of Johannesburg, South Africa |
Five funding streams constitute the flow of resources needed to mount a comprehensive response to the epidemic in low- and middle-income countries: domestic spending, bilateral funding, UN-system support (including the World Bank), the Global Fund, and the private sector, including foundations. Two-thirds of global funding for 2005 and subsequent years is expected to come from the international community. Most of this money will be spent to meet the needs of the poorest and worst-affected countries of Asia and sub-Saharan Africa. Those countries will rely on external donors to meet up to 80% of their needs. Elsewhere, the major share of AIDS resources is expected to come from domestic sources, including national governments, civil society, the business sector, and out-of-pocket expenditures by affected individuals and families.
UNAIDS estimates that total domestic government spending on AIDS programmes in 2002 by 58 low- and middle-income countries reporting data for three years was about US$ 995 million—twice the amount documented in 1999 (UNAIDS, 2003c). A number of countries have increased their AIDS spending, sometimes dramatically.
For example, South Africa has the largest number of HIV-positive people in the world, and has raised AIDS spending in the national budget for 2003–2004 by 86% in nominal terms over the previous financial year (Hickey, 2004). Its provinces have also increased the proportion of discretionary health funds they spend on AIDS from 0.74% in the 2002–2003 budget to 1.22% in 2003–2004 (Hickey, 2003). China, too, has significantly increased AIDS spending. In 2001, China committed approximately US$ 300 million to dealing with the epidemic. In 2003, this rose to US$ 1.2 billion (UN/MOH China, 2003).
In Eastern Europe and Central Asia, it would take only 2–3% of total projected 2007 regional health expenditures to meet the coverage targets set for HIV prevention and treatment and care activities for that year. Although countries have embarked on radically reforming their health systems, roughly eight out of every ten dollars spent on health is currently absorbed by a legacy of the past—an expensive and crumbling hospital-based system. This leaves few resources for prevention activities to address any disease. As things stand now, to reach the 2007 AIDS spending targets, these countries would have to increase their currently allocated funds by around 30% each year (The Futures Group, 2003).
The Global HIV Prevention Working Group estimates countries in North Africa and the Middle East need to spend about 10 times their 2002 spending to tackle the epidemic (Global HIV Prevention Working Group, 2003).
By 2000, the Latin America and Caribbean region raised 98% of its AIDS funds from domestic sources, and prospects look good for the region to pay its own way through to 2007. It would take just 1% of total health spending to meet 2007 coverage targets for HIV prevention and care. However, the region’s poorest countries are likely to need substantial external donor support (Inter-American Development Bank, 2003).
In Africa, at the 2001 Abuja summit meeting of the Organization of African Unity, countries pledged to gradually increase their health spending to 15% of their national budgets. If this target were to be met by 2007, it would take about 3% of 2007 health spending to tackle AIDS in the region. However, in Africa, as everywhere, AIDS is just one of many competing priorities, and health spending fluctuates yearly. So far, only a few countries (Chad, the Central African Republic, Mozambique, Uganda and the United Republic of Tanzania) have met the 15% target at any point.
In many African countries, foreign aid supports the national budget, so health allocations do not necessarily represent funds raised exclusively from domestic sources. For example, a Human Sciences Research Council report states more than half of government AIDS spending in Mozambique comes from external sources (Martin, 2003).
In the final analysis, relying on external financial support for AIDS activities raises the issue of long-term sustainability—an especially important consideration for antiretroviral treatment programmes.
Only a handful of countries, mostly in Latin America, have systematically collected information on out-of-pocket AIDS spending. But this information offers only a glimpse of the whole picture, and suggests massive amounts of money are spent by individual households on their own HIV-related health care. In 2002, in 14 Latin American countries, out-of-pocket spending accounted for between 17% and 24% of total AIDS spending (see Figure 38). In parts of Africa, this figure is estimated to be much higher, even though total expenditure falls far short of countries’ estimated needs.
In every resource-poor country that has a generalized epidemic, out-of-pocket expenses represent a substantial share of total health expenditures on AIDS, ranging from 41% in Kenya (2002), to 93% in Rwanda (1998). These figures provide alarming evidence of the financial burden of AIDS on households. In Kenya, households with at least one HIV-positive person spend four times more on health care than unaffected households. In Rwanda, 66% of households received assistance from their church or family, 18% borrowed from family or friends, and 5% sold assets to cope with HIV-related expenditures.
The personal cost of treatment: Rebecca’s storyRebecca lives in Kampala, Uganda, with 12 members of her extended family. In 1992, after many months of illness, her husband died of AIDS. She nursed him throughout and did not realize that he had AIDS because he denied it. But when her young son Julius got sick with tuberculosis, she and he were tested for HIV and discovered they were both infected. In 2001, Rebecca became very sick, and her family persuaded the doctors to put her on antiretrovirals; they had already lost four family members to AIDS. Paying for the drugs is a struggle. A British woman heard of Rebecca through an NGO, and helps by sending donations whenever she can. But Rebecca still lives with chronic uncertainty as the bills keep coming. One of her recent pharmaceutical receipts is for 376 950 Ugandan shillings (US$ 190). In addition to the drugs, she has to pay 10 000 shillings (US$ 5) for each consultation, and 50 000 shillings (US$ 25) for a CD4 count test. Travel to and from the clinic costs her 3000 shillings (US$ 1.50). Julius is not yet on antiretrovirals, but requires opportunistic infection treatment from time to time, and this, too, costs money. The large family currently survives on the wages of Rebecca’s brother, who is a driver, and her sister, who is a teacher. Two other married sisters living elsewhere also contribute (UNAIDS, 2003b). |
Average figures mask inequities in expenditure patterns among population groups. In Rwanda, estimates of out-of-pocket expenditures on HIV and AIDS show that the wealthiest 20% of the population spend 13 times more than the poorest 20%, and men spend 2.6 times more than women. In Kenya, the wealthiest 20% of the population spend 10 times more than the poorest. These differences are reflected in wide disparities in treatment and care access.
In 2003, AIDS out-of-pocket spending is likely to have exceeded US$ 1 billion worldwide (UNAIDS, 2003a). Regional differences in the proportion of health-care resource needs met through out-of-pocket spending appear inversely related to government health-care expenditure. This means individual households are likely to pay out of their own pockets when public-health-sector infrastructure is weak.
In 2003, high-income countries were projected to spend about US$ 3.6 billion to help low- and middle income countries tackle AIDS—20% more than 2002. In early 2003, President George W. Bush proposed that the United States commit US$ 15 billion to respond to AIDS in low- and middle-income countries over a five-year period to 2008. About US$ 9 billion of this is new money and is earmarked for 12 African countries, plus Guyana and Haiti. The rest will support ongoing AIDS activities in other low- and middle-income countries. One billion US dollars of the new money has been pledged to the Global Fund. The US President’s Emergency Plan began spending the money in 2004, and allocated US$ 2.4 billion for the first year.
The benefit of investing early to avoid higher costs later is particularly obvious in the case of AIDS. Most industrialized countries will need to propose bold increases in their direct assistance to poorer countries for HIV and AIDS programmes. For maximum impact, these must be additional resources, and not funds diverted from other priority development programmes aimed at reaching the Millennium Development Goals.
Forty years ago, the Organisation for Economic Co-operation and Development (OECD) called for high-income countries to contribute at least 0.7% of their gross national product to official development assistance. This move was subsequently adopted by UN Member States. However, only five countries have met this target: Denmark, Luxembourg, the Netherlands, Norway and Sweden. There has been renewed global commitment to work in partnership to achieve the Millennium Development Goals, and to overcome conditions fuelling the AIDS epidemic, such as poverty, hunger and inequality. However, the shortfall in resources remains significant.
The 2002 Monterrey Conference on Financing for Development marked a new step towards international burden-sharing to meet key global development challenges. Participating countries made pledges that would translate into an increased official development assistance resource flow from US$ 58 billion in 2002, to US$ 75 billion in 2006 (or from 0.23% to 0.29% of gross national income, which is the total domestic and foreign income claimed by the residents of the economy). This would provide significant additional funds, but it still falls abysmally short of the 0.7% commitment.
All stakeholders need to continue exploring innovative ways of raising domestic and international resources to deal with shared concerns about the developmental, economic, social and political impact of AIDS. In the most-affected countries, AIDS has taken its toll on essential development resources and capacities. However, investing in HIV prevention, AIDS treatment, and impact mitigation has proven to be good development practice and, in some countries, an imperative of national survival.
Effectively using increased official development assistance resources calls for all involved to fully recognize the developmental dimensions of AIDS, as well as the AIDS dimension of development. UNAIDS supports the need to strengthen national capacity to move towards AIDS-sensitive budgeting and to use funds efficiently and effectively. It also supports donor efforts to harmonize practices to reduce transaction costs. Regular development work forms the basis for virtually all HIV interventions: addressing poverty and inequity; strengthening physical infrastructure; and building capacity.
Twenty-nine UN agencies are engaged in the AIDS response, nine of which are UNAIDS Cosponsors (see ‘Overcoming AIDS’ chapter). Cosponsors devote funding to AIDS and participate in the Unified Budget and Workplan of UNAIDS.
Among UN-system funding sources, the World Bank is the biggest source of AIDS funding for low-income countries. World Bank loans for HIV can be considerable, as in the cases of Brazil and India. They are considered to be domestic resources, since countries must pay them back.
World Bank grants are direct multilateral contributions to meet resource needs for a comprehensive AIDS approach. Since September 2002, International Development Association countries have received these grants. These are relatively poor countries (with less than US$ 86 in gross national income per capita per year) that need concessional resources, and have implemented social polices that promote growth and reduce poverty.
Through its Multi-Country AIDS Programme, the World Bank has approved US$ 1 billion in grants or interest-free loans to support AIDS programmes in sub-Saharan Africa. The Programme began in 2000 as the first phase of a long-term commitment to directly finance AIDS initiatives. It finds new and imaginative ways to get funds to front-line implementers. It especially emphasizes community projects and a minimum of bureaucratic hurdles. By January 2004, US$ 822.3 million had been committed to 24 countries in the region; US$ 170.6 million had been disbursed. The Programme has committed a further US$ 16.6 million to subregional and cross-border projects.
In the Caribbean, the Bank has started a similar initiative in which US$ 155 million will be disbursed in the form of five-year loans. By January 2004, more than US$ 85 million had been committed to five countries, of which nearly US$ 10.5 million had been disbursed (World Bank, 2003). In 2003, the World Bank approved a US $100 million loan to Brazil for responding to AIDS and sexually transmitted infections, bringing the Bank’s commitment to Brazil’s epidemic to US$ 430 million. The Government of Brazil is also contributing US$ 100 million.
In addition to its Multi-Country AIDS Programme, the Bank helps finance a wide variety of AIDS programmes in 25 countries; commitments for 2003 alone amounted to just over US$ 213 million. Most of this money is given as a loan rather than a grant.
In January 2002, the Global Fund to Fight AIDS, Tuberculosis and Malaria was set up as a partnership between governments, civil society and the private sector. Its mandate is to provide new money and create new ways to disburse funds to fight the three diseases that, between them, kill more than six million people every year.
By the end of 2003, the Global Fund had approved 227 grants totalling US$ 2.1 billion in 124 countries and had already disbursed US$ 232 million (Global Fund, 2004). About 60% of these funds are earmarked for AIDS programmes, 23% go to malaria, and 17% to tuberculosis. All low- and middle-income countries have benefited, but, to date, sub-Saharan Africa has received 60% of the grant money. This region has the greatest disease burden and the scarcest resources.
By January 2004, almost US$ 5 billion had been pledged up to 2008 and beyond; US$ 2.1 billion had been actually paid into the Global Fund’s bank account. In 2004, the Global Fund was due to receive another US$ 1.2 billion of the money pledged—around US$ 400 million less than it predicted would be needed to cover its commitments for the year (Global Fund, 2004a). The immediate shortfall will have to be resolved by high-income countries.
In the long run, the Global Fund is also looking to increase donations from private sector foundations and individuals to help meet its needs (Cashel and Rivers, 2003). Currently, only 2% of its funds come from the private sector; the remaining 98% are pledged by governments (Global Fund, 2003).
However, money from all sources is coming in very slowly. To help ease the uncertainty under which the Fund operates, 100 NGOs around the world started the ‘Fund the Fund’ coalition, a campaign for regular and committed Global Fund supporters. From 2004, the Global Fund will conduct one round of grant proposals annually, subject to funding availability.
The concept of ‘additionality’ is the Fund’s key principle. This means its resources complement, but never replace, budgeted funding. It implies that donations are expected to be new money, not funds diverted from existing aid budgets. At the country level, donations should add to whatever has been budgeted from other sources, not used to release earmarked AIDS funds for spending on other priorities. However, this principle has not always been honoured. Sometimes, Global Fund contributions have been taken out of development assistance budgets, or have been considered by a number of African countries to be within expenditure allocations.
A 2002 survey of top United States grant-providers by Funders Concerned about AIDS affords a snapshot of foundation contributions (see Figure 43). The figures include donations to domestic and international programmes, but roughly 63% of the money from the top 10 foundations is spent abroad. Available data suggest the 2002 commitment is significantly less than in 2001—the year that saw the highest-ever commitment from international foundations. But donations are frequently intended to cover several years, so it is difficult to identify exactly what is spent in any one period.
In 2002, selected international NGOs contributed an estimated US$ 95.5 million to the AIDS response. These funds come from charity donations, private households, foundations (other than the top United States grant-providers) and governments.
In countries where HIV prevalence is high, some industries are experiencing a haemorrhaging of labour and skills, as workers succumb to AIDS and drop out of employment or die. Many businesses, too, find themselves burdened with rising costs for health care, pensions and training new staff.
About 4% of global AIDS resource needs are for workplace activities. Here, too, it is difficult to assess the level of commitment because information on social spending by companies is not systematically reported. However, a recent UNAIDS-supported survey by the United Nations Research Institute for Social Development suggested 21% of the top transnational corporations have workplace AIDS programmes of some kind. Both the Global Business Coalition on HIV/AIDS and the Global Health Initiative of the World Economic Forum encourage greater private sector involvement in responding to the epidemic (see ‘National Responses’ and ‘Treatment’ chapters). Between them, they have more than 150 members (UNAIDS, 2003c; Global Business Coalition on HIV/AIDS, 2001).
Private funding alone cannot advance research to develop prevention technologies, such as vaccines and microbicides. Such products will need to be priced so that people around the world with little disposable income can afford them. Up-front public investment is required to develop these products and ensure there are markets for the developed goods.
Products such as vaccines and microbicides are excellent examples of ‘global public goods’—i.e., goods that benefit others beyond those who use them directly. Therefore, global public goods can be judged to be highly eligible for public support to complement private investment. In the case of HIV-prevention technologies, each prevented infection cuts off a potential chain of infections resulting from the primary infection.
The major public partners currently funding clinical trials research in low- and middle-income countries include the National Institutes for Health (United States of America), the Medical Research Council (the United Kingdom), the Agence nationale de recherches sur le sida (France), and the European and Developing Countries Clinical Trials Partnership.
Despite many challenges in gathering the data, the International AIDS Vaccine Initiative has established roughly how much is spent globally on researching and developing AIDS vaccines. For 2002, the latest year of its analysis, the preliminary estimate is US$ 540–570 million—an increase of around US$ 100 million on its 2001 estimate. Of this, the private sector’s share is less than one-quarter; the pharmaceutical industry contributes 14%, and the biotechnology industry 7%.
According to the International AIDS Vaccine Initiative, public sector investment in vaccine research looks set to expand. However, overall funding is not keeping up with the challenges. The Initiative forecasts that investment by innovator drug companies and the biotechnology industry will decline as costs of research and development rise, the US economy struggles, and biotechnology companies have difficulty raising new venture capital (International AIDS Vaccine Initiative, 2003).
Research funding for developing microbicides is tracked by the Alliance for Microbicide Development. The microbicide field differs from others addressing neglected public-health technologies. This is because virtually all the product developers are small biotechnology companies, non-profit organizations, and academic institutions with limited funding and capacity.
Of the 40 potential microbicides being developed in 2004, only one had a major pharmaceutical company sponsor (Tibotec, a Johnson and Johnson company) which is working with the International Partnership for Microbicides. In 2003, almost US$ 79 million was committed to microbicide research, with over half coming from the United States, and the remainder from philanthropic organizations and other bilateral donors and multilateral agencies.
To get ahead of the epidemic, resources need to be delivered to where they are most needed and used in a ‘smarter’ way—more efficiently and effectively. But getting a clear picture of where AIDS funds are going, and how they are being spent, is tantamount to a forensic exercise—a matter of digging around in the financial records of government departments, institutes and organizations searching for information that is specific to AIDS. Keeping systematic records of financial in- and out-flows is vitally important for planning purposes. But tracking AIDS resources is currently a low priority in most-affected areas, and is poorly developed, or not done at all.
Since 1998, UNAIDS has been collecting critical data on the sources of funding and how funds are applied in responding to AIDS. The key to encouraging a regular and assured flow of funds from all sources is information which demonstrates that resources are being used efficiently, and are achieving results. In 2002, as part of this effort, UNAIDS established a Global Resource Tracking Consortium for AIDS, composed of international experts in this field. The Consortium:
At the same time, UNAIDS has called for increased country and global focus and investment to monitor the implementation and impact of prevention, treatment and mitigation programmes. Within this advocacy role, UNAIDS works closely with international partners to identify, harmonize and consistently measure the most useful information. It also works with countries to develop Country Response Information Systems to monitor progress. The 2001 UN Declaration of Commitment on HIV/AIDS stimulated the global community to monitor and compare progress across regions and in individual countries. Linking impact with cost will become an ever more important tool as we learn how financial resources can best be spent.
SIDALAC, the regional AIDS initiative for Latin America and the Caribbean, and Abt Associates—Partners for Health Reform, facilitate decision-making by tracking resources spent in countries to prevent HIV spread and to treat HIV-related disease. In South Africa, the Institute for Democracy is working to encourage similar processes in the African region, and has undertaken a comparative analysis of budgets and tracking of AIDS funds in five African and five Latin American countries. The project trains local NGOs to independently monitor public expenditure on AIDS.
Countries encounter significant problems when trying to scale up the response to HIV. There are many factors that limit programming capacity in low- and middle-income countries. These can be grouped into three broad categories of problems: overwhelming and competing demands for scarce resources; the struggle to overcome stigma and discrimination; and poor coordination among both domestic and external partners.
Clearly, the scale of the new financing needed for a comprehensive response to the HIV epidemic will require a very significant increase in current levels of domestic spending in affected countries. In many of these countries, it is very likely that scaling up AIDS expenditure will encounter capacity problems.
As Dr Ndwapi Ndwapi, head of the antiretroviral programme at Botswana’s Princess Marina Hospital has said, “Many think that accessing the funds to put the plan into action is the biggest challenge. But once you have the money, you suddenly find there are seemingly insurmountable challenges. The gross inefficiencies in the system, that have been a problem for some time, become so apparent when you try to ask the system to do something this big … like putting 100 000 people on treatment” (IRIN, 2004).
Many African countries have seen improvements in economic growth and health provision, but many face a growing human and institutional capacity crisis that hinders their ability to implement their development strategies and programmes to make progress on important development goals.
The health and education sectors face shortages in personnel, a weak institutional environment, and problems with recruiting and deploying staff to rural areas. Wealthier countries are attracting qualified and experienced workers from poorer nations, which makes their capacity problems worse (see ‘National Responses’ chapter). In addition to this, a decade of cutbacks in social spending under structural- adjustment programmes has reduced the number of social sector staff, leaving these sectors unable to respond rapidly to the demands of AIDS. The resulting high workload for existing personnel has meant poor working conditions leading to low staff morale.
Most African countries need more human capacity in every sector—public, private, and in civil society. Building this capacity in Africa is now almost universally seen as a prerequisite for meeting the Millennium Development Goals in general, and for overcoming AIDS in particular.
The extent of human capacity problems critically depends on the way in which funds are allocated, both between countries and within countries. An equitable strategy would direct expenditure towards identified funding gaps – i.e., it would be needs-based. Currently, there is a temptation to direct funding primarily to countries perceived as having greater capacity to spend the money in the short term. But this would leave out some countries that are most needy precisely because of the greater impact of AIDS. A more equitable strategy is to address capacity problems in the countries with greatest need through targeted investments in both human capital and physical infrastructure.
If funding is targeted towards overcoming capacity constraints in the most needy countries, it will yield long-term tangible and sustainable benefits for the well-being of partner countries.
It is an unfortunate reality that budgeting procedures too often may mean that new funds for HIV and AIDS can draw resources away from other activities, either at country level, or at donor level. Therefore, all parties need to commit themselves to the principle that additional funding for HIV and AIDS is to be used for additional spending, otherwise displacement is inevitable to the detriment of overall development.
Public expenditure ceilings are limits to expenditure within different sectors of an economy. In the 1970s and 1980s, caps on social spending, in particular, were a principal feature of structural adjustment programmes called for by the International Monetary Fund and the World Bank as a condition for concessional borrowing of money by low- and middle-income countries. Caps were considered a necessary discipline to mend ailing economies, promote growth and ease poverty in the long run by curbing inflation. But when they were seen to intensify the hardship of the poor, they came under intense criticism and were dropped as a specific condition for financial assistance.
Nevertheless they exist de facto in many countries as a by-product of Medium Term Expenditure Frameworks. These frameworks are countries’ detailed financial plans, required to show the Fund and World Bank that they can balance their books and keep the macroeconomy on track. They are often included in, or referred to, by Poverty Reduction Strategy Papers, which are the basis on which public debt relief is granted and much foreign aid is given. Low- and middle-income country governments are caught in conflicting pressures. They are exhorted to limit social spending in order to avoid damaging inflationary consequences, and yet are expected to ignore such pressures in the case of Global Fund or other earmarked money.
It is time to radically rethink how best to fund comprehensive country HIV programming. International financial institutions need to create mechanisms that alleviate countries’ debt-service payments so they can devote additional resources to their AIDS response. The short-term inflationary effects of increased and additional resources applied in tackling the HIV epidemic pale in comparison with what will be the long-term effects of half-hearted responses on the economies of hard-hit countries. AIDS is an exceptional disease; it requires an exceptional response.
The problem of stigma and discrimination has long been recognized as a constraint to identifying who needs prevention, care or treatment services. Most people infected with HIV are not aware of their HIV status. Social stigma inhibits people from wanting to know their status and it prevents them from acting on prevention messages for fear of being identified as HIV positive. Countries such as Botswana, which introduced a programme of free treatment, found initially that fewer people than expected came forward for treatment services.
Further, stigma acts as a constraint on funds getting to where they are needed. Data from Latin America, the Caribbean, and Eastern Europe suggest that public attitudes and legal constraints may hinder activity-funding from being channelled to people working with stigmatized groups. This compounds the major hurdle of proposal writing experienced by community groups that have little knowledge or experience of how the system works. This hurdle is made worse when donors keep changing their rules and demands.
Such groups often have difficulty, too, in meeting requirements for accounting and record keeping, and many lack the capacity to efficiently use the money that comes their way. It is also true that major donors are rarely geared up to disburse the kind of tiny sums that are all that are required, or can be managed, by very many people on the front line of the epidemic—the woman running a home for a few of her neighbours’ orphaned children; the man offering apprenticeships to youngsters who have had to drop out of school; or the hairdresser wanting to print leaflets on HIV to hand out in her salon.
The problems of stigma and social attitudes can be overcome. Concerted efforts in Brazil have clearly shown that a sustained campaign of access to treatment can reduce stigma by providing people with hope. The experience of Uganda further shows that stigma can be reduced by committed leadership. These are vital components of a strategy to increase programming capacity.
Tracking resource flows is critical to understanding how resources are being used, and for identifying key blockages. Blockages can occur when the responsibility for disbursing AIDS funds rests with a department that lacks financial and programme management skills, or which is understaffed and overworked and where AIDS comes up against competing priorities. Substantial delays can result if there are no clear plans for AIDS activities or financing mechanisms in place, or no one detailed or trained to take special responsibility for AIDS (Hickey et al., 2003).
Problems with administrative capacity can also be donor-created or exacerbated, particularly when governments and donors do not work effectively to harmonize their support to the greatest extent possible. Minimizing duplication in fiduciary arrangements, monitoring procedures and reporting mechanisms, as well as conducting joint country missions can streamline funding and reporting flows, and enhance country capacity to use funds in the most effective and timely way possible.
The problem of donor-driven agendas“In AIDS as elsewhere, program managers are often little more than data processors for donors, spending obscene amounts of time trying to satisfy dozens of duplicative reporting requirements, and hosting repetitive review missions month after month. Donor-driven agendas are raising transaction costs and reducing programme effectiveness. It is a bit rich for donors to complain of absorptive capacity when they are the ones absorbing much of it.” -Dr Peter Piot, Executive Director, UNAIDS |
Lack of harmonization among donors at country levels means that resources are wasted and people who need help do not receive it. In effect, lack of harmonization kills people.
Applying the ‘Three Ones’ principles (see ‘National Responses’ chapter) will result in adaptations that are appropriate to each country, situation and institution. These principles are fully compatible with the Rome Declaration on Harmonization of 25 February, 2003 and the work on aid effectiveness and donor practices of the Development Assistance Committee of the Organisation for Economic Co-operation and Development. Inherent to these principles is a shared vision of the urgent need to respond to AIDS in an exceptional way, which supports inclusive national ownership and clearly defined accountability.
All domestic or international funding entities have a common goal. It is to ensure their funds are used effectively—to make the greatest possible difference in the everyday lives of people who need HIV prevention, treatment and care services, and of people who also need measures to reduce the impact of AIDS on their lives. However, in reality, most funding efforts confront bottlenecks at different levels.
But there are many examples of efforts to streamline procedures, remove barriers and facilitate funding flows to the programming level. Both the World Bank’s Multi-Country AIDS Programme and the more recent Global Fund to Fight AIDS, Tuberculosis and Malaria have given a good deal of thought to how they fund activities, and to easing or bypassing common blockages in the pipelines. The World Bank has pioneered new ways of channelling money swiftly to the front line, with 40% to 60% of grants currently going directly to the community (Cashel, 2003).
The Bank emphasizes giving support to a wide range of participants at all levels in order to implement national action plans, and to create ‘financial plumbing systems’ to deliver funding quickly and efficiently. Countries applying to the Global Fund have set up Country Coordinating Mechanisms composed of representatives of interest groups from all levels of society under government leadership. The Mechanisms shape grant applications, make an initial selection of projects and programmes, and put forward proposals to the Fund. Monies are sent directly to a ‘Principal Recipient’ responsible for accounting and reporting to the Fund, and for disbursing money to organizations doing the work on the front line. The Principal Recipient is key to facilitating the efficient flow of funds.
The challenge for governments is to streamline official channels by identifying the bottlenecks, and investing in the administrative and programming capacity needed to use resources more effectively. Important steps in this regard include the fact that key stakeholders now recognize the importance of the ‘Three Ones’, and also that countries are moving towards better national programme coordination.
More than one-third of the world’s HIV infected people—or 14 million—live in countries classified by the World Bank as heavily burdened by debt. In 2002, the 42 poorest and most indebted countries—34 in sub-Saharan Africa—together owed US$ 213 billion (Hardstaff, 2003). Many of these countries regularly pay out more to rich world creditors to service their debts than they receive in foreign aid. In fact, debt repayments take a larger slice of their budgets than public health (Boyce, 2002; Oxfam, 2002).
A question of priorities: the cost of servicing debt
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Countries with AIDS components in their Poverty Reduction Strategy Papers include Burkina Faso, Cameroon, Guinea, Malawi, Mozambique, Uganda and Zambia. Debt relief may be a useful mechanism for programming funds within existing expenditure frameworks. However, it is usually counted as part of official development assistance at its full nominal value, and therefore is often not additional. Debt relief cannot play a meaningful role in reducing the funding gap for AIDS unless it is genuinely additional to existing levels of foreign aid.
Turning the tide of the epidemic in low- and middle-income countries means mobilizing adequate funds to mount a comprehensive response to HIV. It means enhancing country capacity to determine resource needs in prevention, treatment and care, and impact alleviation. It means close and accurate resource tracking at country level and globally to monitor the gap between funds and resource needs. Civil society organizations, especially at the grassroots level where needs are the greatest, require support to access and effectively use funds. In addition, the global community needs to invest in the global public goods that new prevention technologies represent.
Turning the tide also demands more concerted and more effective action on a much larger scale than is currently the case. Donors need to assess carefully their fair share of contributions to the global HIV response. The international community needs to determine the relative importance and complementarity of the major funding streams available for channelling resources. There should also be agreement on respective national and international responsibilities for financing various aspects of the response. International financial institutions should think broadly and creatively about mechanisms to place more funds in the hands of countries now facing large debt-service payments. At the same time, action on AIDS should not further increase debt burdens.
The need to act quickly against an epidemic that is still outstripping the global response means that everyone must ‘learn by doing’. Certain critical elements must not get lost in the shuffle of urgent action, including the need to document learning so that others can take advantage of it, and ensuring that procedures are in place to facilitate fine-tuning of working methods.
Advocacy is crucial to ensure that adequate and sustainable financial resources are mobilized to scale up the AIDS response. But success depends on demonstrating that programming capacity issues can be creatively overcome, monies can be effectively used, the epidemic can be slowed, the quality of life of millions of people currently living with HIV substantially improved, and the impact on households, communities and countries alleviated. Future challenges include:
