https://dfid.blog.gov.uk/2008/11/28/delivering-better-health-services-needs-longer-term-more-predictable-financing/

Delivering better health services needs longer term, more predictable financing

Earlier today I met with Mauricio Cysne, the Country Representative of UNAIDS (Joint United Nations Programme on HIV/AIDS) here in Mozambique. Mauricio is a dynamic person, full of energy and a great networker. We discussed what to do to try to secure more Global Fund money for Mozambique. Unfortunately, Mozambique’s only got part of the funding it asked for last year, which means that from 2009 onwards there is a serious risk of the country running out of anti-retroviral and anti-malarial treatments, unless other funding sources can be identified or unless a successful bid to the Global Fund can be made.

The Global Fund has been hugely important in terms of mobilising additional funds for HIV/AIDS, TB and malaria globally, and has been a major source of funds for Mozambique, providing nearly $50m in 2007. Whilst this money is much needed and very welcome, one of the challenges that it brings is the need to produce quite detailed reports with the year when funds are provided to secure that funding. Whilst this might seem perfectly reasonable to an accountant, when you are trying to plan the delivery of services to a population of 20 million people, it can present a considerable challenge.

I like to think of this challenge in terms of my own finances. I have various expenses each year – paying my mortgage, paying off my car loan, paying electricity bills and for food. I know what my salary is and now that the money will arrive each month, I can therefore ensure that I have enough money to cover my expenses, and I can plan for any additional expenses I might have, such as a school trip expense for one of my kids. If, however my annual salary was dependent on irregular payments, which could either come at the beginning of the year, or at the end – it would be much more difficult to plan. I would have to start of just doing the absolute essential, until I had enough money to cover the larger expenses.

Well, this second scenario is pretty much the challenge that Mozambique faced with the Global Fund Money. I have mapped out when Global Fund money arrives each year, and when in each year in this image (click to enlarge).

 

There is huge variation in the volume and timing of financing. So, imagine if you were the Minister of Health, and had to plan to deliver essential health services, but also to make some large payments a couple of times of year to buy drugs or other essential supplies. If all your money arrives at the start of the year, it is not a problem. If half your money arrives at the start of the year, but you know for sure the rest will come in August – you can also plan. However, if you have no idea when the second tranche of money will arrive it is difficult to plan any activities, as you don’t want to incur a debt that you can’t afford to pay, until you know when the money will be in the bank to meet any obligations.

One of the things we are pushing the Global Fund to do for Mozambique, is to give predictable funding in any given year. It will still be possible to keep the accountants happy, demonstrating that funds have been spent well – but if money is not spent efficiently in 2008, the consequences, in terms of reduced funding should be in 2009, so at least the planned activities in 2008 can still go ahead, and there is time to correct any problems encountered. What we would love to do here is launch a lobbying campaign on the Global Fund to remove the in-year triggers for release of funds. We recognise that it is important for funding to be based on performance, but we are seriously concerned about lack of predictable funding in any given year – it can seriously undermining the planning and implementation process.

Anyone wanting to join this little campaign should let me know!

2 comments

  1. Halima

    Hi Neil

    Hope everything is well in Mozambique! Greetings from the ‘Du’ as we refer to the capital Kathmandu here.

    Interesting to read on how development partners in Mozambique are working with government to improve the efficiency and predictability of aid. I guess predictability has even more resonance now with the global economic crisis looming large.

    While browsing today I (again) came across that concept from the Centre for Global Development (Washington DC based think-tank on development) where they are piloting and advocating for an approach called ‘Cash on Delivery Aid’ [closely linked to what we might call ‘Out-Put Based Aid’] which has lots of advantages – including giving recipient countries the flexibility to use funds innovatively. In its support, CGD argue ‘donors and recipients would develop an open contract in which donors agree to pay eligible countries for progress, such as the number of students who complete primary school and take a competency test’.

    But it made me think again about the need for predictable funding per se without which health or education systems overall cannot function well. I appreciate, where possible, we should always be pushing hard for more value for our money and finding innovative ways to encourage performance is desirable. However unless there is a minimum degree of predictability (taking the analogy back to a poor family choosing to send their kids to school) there’s no way a parent will want to invest in annual cost of education if she is unsure where the money will come from the next day. The same applies to an individual choosing to spend on any long investments and governments when they finance health and education systems which are long-term investments with recurring costs.

    The jury is still out on this, I guess. The approach is being piloted mainly in education, but it actually speaks to a bigger debate about the impact of aid so really one for aid pundits everywhere.

    http://www.cgdev.org/section/initiatives/_active/codaid/faq?print=1

    Halima Begum

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  2. Neil Squires

    Hi Halima
    Just a quick response on funding by results. I don’t think anyone would disagree with the idea of rewarding good performance, but as you say, we also need to ensure that we fund for performance not just by results. One of the challenges in Mozambique has been to perform well in the health sector when funds needed for programme implmenetation may not arrive until the closing months of the financial year. We really need to achieve in year predictability of funding to allow a country to perform effectively against its annual plan. There is a real danger that late disbursement of funds and resulting poor implementation of plans is mistaken for lack of absorptive capacity, with knock on effects on future financing. We need to make sure that we judge performance on the basis of what is possible, given the timeliness or otherwise of available funding. It looks like this lesson is well understood in Nepal, lets hope it is also well understood by Washington based think tanks!

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