G8 - An Unhealthy Dose Of Aid
IPN Critical Opinion articles
G8 meetings follow a predictable pattern. In the months beforehand, campaigners call for more aid to Africa to fight diseases of poverty such as malaria. G8 leaders make grandiose speeches, commit billions of their citizens’ money, which then pours into the coffers of African governments. The health of Africans stubbornly remains poor. Campaigners accuse the G8 of not giving enough, and so on.
In the run up to the Hokkaido summit, an international panel including former UN secretary-general Kofi Annan has already accused the G8 leaders of not giving enough aid. But subsidizing healthcare by corrupt and inefficient African governments is like setting a wolf to guard sheep. The G8 needs to adopt a radically new approach that bypasses failing bureaucracies and promotes the private sector, imitating successful schemes in Cambodia, Bolivia and India.
Money is becoming less of an issue: Aid for health has ballooned from US$2.5 billion in 2000 to US$14 billion in 2006 and rising. Even the hitherto miserly Japan this month committed US$560 million to tackling AIDS. In 12 countries in sub-Saharan Africa, more than 30 percent of total health expenditure comes from aid.
Despite this largesse, hospitals and clinics are dilapidated, medical staff are demoralized and about 60 percent of Africans have to pay for healthcare themselves. The majority of African countries are unlikely to meet the health-related Millennium Development Goals — and many are going backwards.
The current aid model is not working. As William Easterly, author of White Man’s Burden put it: “The status quo — large international bureaucracies giving aid to large national government bureaucracies — is not getting money to the poor.”
This is particularly true of the complex health sector, relying on specialized personnel and complicated technology and logistics. Even a rich country like Britain fails to manage state health services efficiently. The average African health ministry, meanwhile, struggles to provide enough PCs for its staff.
Once the donor money comes in, health ministries struggle to cope with the basics. According to the WHO, ministries lack even rudimentary data about how this money is spent, making management impossible.
This breeds corruption, from ministerial embezzlement to officials selling free drugs. According to the World Bank, corruption in health makes much aid useless.
Partly in response to the difficulties of getting health bureaucracies to convert dollars into results, donors have started favoring programs for specific diseases such as malaria and HIV/AIDS. These allow donors to demonstrate quick, measurable results but in many cases they have created more problems.
HIV/AIDS programs frequently have larger budgets than the entire national health program, sucking in valuable staff and equipment from the wider public health system. Each separate program has its own reporting and planning requirements, creating duplication and waste.
Admittedly, some donor governments have recognized these problems and have decided to subsidize basic government services directly — in Britain’s case, 50 percent of its future aid. But unless this is accompanied by major domestic reforms to eliminate corruption, this amounts to little more than blind optimism.
Seeing as G8 governments have committed themselves to keeping the aid taps open, we need to rethink entirely the way this money is spent.
According to International Finance Corporation and World Bank figures, between a third and half of the US$16.7 billion spent on health in sub-Saharan Africa in 2005 was spent in the private sector, often by the poorest people who cannot get government services. This huge capacity is ignored by donors, who for ideological reasons prefer to work directly with governments.
Donors should be embracing this massive capacity, offering competitive contracts to deliver health services. Non-profit groups, government and, crucially, the private sector should all be competing to deliver a broad set of services, such as improving maternal health. This competitive stimulus would give a powerful incentive to improve standards.
This has already happened in Cambodia, where NGOs have competed since 1999 to provide health services to the rural poor. Coverage and standards improved so rapidly the government has rolled the program out to cover one in 10 Cambodians. In 2005, The Lancet compared 10 different contracting programs around the world and found the majority out-performed the government in cost, quality and coverage, finding “improvements can be rapid” in countries as diverse as Bangladesh, Guatemala, Haiti, India, Bolivia, Madagascar and Senegal.
This process works particularly well for the rural poor, who are frequently neglected by governments. Where they were once a headache for bureaucrats in health ministries, they could suddenly become a business opportunity.
There is enough evidence that the current aid model does not work. There are also encouraging clues as to what can work. G8 leaders have committed billions of their citizens’ taxes to helping other; their duty is to ensure it is no longer wasted.