Improving effectiveness of aid for health

In Africa aid makes up an average 10% of national health spending, or 20% if South Africa is excluded. Aid covers more than half of all health expenditures in countries such as Burkina Faso, Chad, Guinea-Bissau, Mozambique and Tanzania. In these countries donors finance an important share of recurrent costs, as well as investment items. In Mozambique, for example, aid accounted for more than half of recurrent spending in 1991 and for 90% of capital expenditures for health. Even when aid amounts to 2% or less of total health spending, as in the other developing regions, improvements in its use would still be an important catalyst for reform.

The World Bank increasingly stresses policy reform in its lending for health, which has grown nearly fourfold in recent years. For some donors, adjustment of priorities would mean spending less on hospitals, sophisticated medical equipment and training for medical specialists – during 1988-90 Japan spent more than 33% of its bilateral assistance for health on construction of hospitals, France spend 25% and Germany and Italy spent nearly 15% each. Within the domain of public health and essential clinical care, several areas of intervention deserve greater attention from donors, because they have substantial externalities or economies of scale. The efficiency of aid for health can also be greatly enhanced through better coordination of donor projects and policies. The dangers of lack of coordination are fragmentation and conflicting activities. In one West African country, for example, three different cost recovery policies, each sponsored by a different donor agency, were being applied in separate regions of the country. Coordination can be enhanced by the national government itself, as is the case in Zimbabwe, or by the formation of donor consortia or review groups, as in Mozambique and Senegal.