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A paradox - too little money but too many donors

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Mozambique is known as a 'donor darling', in that there are lots of agencies that flock to work here, which is a reflection of both the level of need and on good performance by the government improving the enabling environment for development. There is openness on the budget, and strengthened public financial management which allows a number of agencies to provide money directly into the governments own budget, rather than financing projects or non government organisations (NGOs)  (although there also remains a lot of funding for projects and NGOs). There is also a good working relationship with Ministries, such as the the Ministries of Health and Education, which allows financing directly into the accounts of these Ministries to achieve clearly defined and measurable objectives.

Whilst being a donor darling brings the benefit of increased funding, it also brings the challenge of coordinating large numbers of donors. This pie chart (click to enlarge) shows the number of donors in Mozambique supporting the health sector through a common bank account in the Ministry of Health called PROSAUDE. Funding in 2008 from donors is $147 million, this is about the same as the funds provided by government, so the total funding managed by the Ministry for health is about in 2008 is about $300m. For a population of 20 million, this works out at roughly $15 per capita.

It can be seen from the Chart that one of the biggest donors is the Global Fund to Fight HIV/AIDS, TB and Malaria (GFATM), which provides about a third of the funding available to the Ministry of Health. The GFATM funding is significant and very much welcomed, although the process of applying for and reporting on funding has added an extra layer of reporting for the government which is already producing progress reports for the many other partners through against an agreed set of performance indicators.

Keeping 26 funding agencies happy, with regular reporting on performance and expenditure has huge administrative costs for Ministries of Health in poorly resourced countries, and one of the things that we have been working on in Mozambique is the development of a common framework for reporting and measuring progress, with a single set of indicators that all donors can buy into.

That's all I have time for now, but in my next post, I will try to illustrate some of the consequences of donor money not arriving regularly as planned, for delivering health services.

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  1. Comment by Paul C posted on

    Mozambique presents an interesting case study of the real problem in the field: donor co-ordination. It's increasingly clear that donors co-ordinating and co-ordinating donors is actually critical to successful relief and development. What's the government's attitude to this problem? If they demand co-ordination mandate over the donors it's unlikely to affect their funding, given that they're a donor darling - so have they, and if not, why not?

  2. Comment by Tony Pipa posted on

    With fully half of the funding coming from external sources, what is the exit strategy of the donors? That is, how will what they're making available now for this program ever be borne by the country itself? Donor coordination is not just about the funding itself being aligned to work most effectively, nor just about the country having to build the capacity to respond to all the different donor demands (not unlike a successful NGO having to respond to multiple foundations and large donors) - but it's that once all that money is thrown together, the best intentions of each individual donor is overwhelmed by the effects of the aggregate.

  3. Comment by Neil Squires posted on

    Hi Paul. The Ministry of Health in Mozambique has been the champion of developing the coordination mechanisms here - it is a so called 'Sector Wide Approach', which brings together donors who can privide support directly to the budget with those donors who support projects, in order to try to ensure that all aid is backing nationally defined priorities and strategies. For this to work, it needs good cooperation on both sides, and it needs a Ministry of Health with a clear vision. Mozambique knows what it wants, and that had helped it to drive forward the coordination agenda. However, money talks, and donors which bring lots of money can end up setting priorities unless there is a particular effort to work jointly. The development partners here have organised themselves in to 10 working groups which have a government person as chair and a development partner as co-chair, dealing with issues such as drug procurement, infrastructure, the major diseases etc. Some of these working groups work well, others could be improved. Government is sensitive to being too critical of its development partners - but I think everyone appreciates when government is absolutely clear about what it wants.

  4. Comment by Neil Squires posted on

    Hi Tony. Mozambique is in quite a fortunate position in terms of the potential future sustainability of programmes being developed now, in that it has a growing economy. Outside of Asia, Mozambique has one of the fastest growing economies in the World at about 7% per year, although it starts from a very low base, so it will take time. Economic projections show, that if the mineral wealth and agricultural potential that Mozambique has are appropriately used, then the GNP could increase sufficiently to allow Mozambique to become indpendent of donor financing by 2023. Given this economic growth, in my view, it makes it all the more important to invest now in building a solid foundation for equitable provision of essential services such as health and education - making sure that enough teachers and health workers are trained so that by the time Mozambique is economically independent, it has a well trained workforce that it can draw upon to continue its development. The real challenge will be whether we can support Mozambique sufficiently now, when the external support is needed, so that poverty reduction objectives can really be achieved and the benefits shared by all, once national income increases in future years.

  5. Comment by Egidio vaz posted on

    I should have read this before I wrote something similar! Very good discussion. I might come back soon.
    Happy new year for all.