A new article published in The Lancet by Chunling Lu with Chris Murray, Dean Jamison and others, has caused quite a stir in development circles. They use data on health aid and government spending on health to estimate that for every $1 given in health aid, the recipient government shifts between 43 cents and $1.14 of their own spending to other priorities. (If the aid goes to NGOs, by contrast, government health spending appears to increase.)
Even if the quantitative analysis is correct (which is by no means certain, given huge gaps in information), it is far from clear that this is a problem that needs to be solved. Furthermore, of the five recommendations in the paper, three are irresponsible sectoral special pleading which deserve to be rapidly dismissed.
This story has spilled over into the mainstream press (for example, in The New York Times) as a result of a sensationalist AP story headed “Health Aid Made Some Countries Cut Budgets“. The story breathlessly reveals:
After getting millions of dollars to fight AIDS, some African countries responded by slashing their health budgets, new research says. For years, the international community has forked over billions in health aid, believing the donations supplemented health budgets in poor countries. It now turns out development money prompted some governments to spend on entirely different things. … “When an aid official thinks he is helping a low-income African patient avoid charges at a health clinic, in reality, he is paying for a shopping trip to Paris for a government minister and his wife,” said Philip Stevens, of the London-based think tank International Policy Network.
The language used by the authors is less inflammatory, but the opening sentence makes it clear they think there is a problem:
Government spending on health from domestic sources is an important indicator of a government’s commitment to the health of its people, and is essential for the sustainability of health programmes.
As summarized in their press release, the authors make five recommendations to deal with this alleged problem:
- adoption of a clear set of reporting standards for government health spending as source and spending in other health-related sectors
- establishment of collaborative targets to maintain or increase the share of government expenditures going to health
- investment in developing countries’ capacity to effectively receive and spend health aid
- careful assessment of the risks and benefits of expanded health aid to non-governmental sectors
- study of the use of global price subsidies or product transfers as mechanisms for health aid
The first recommendation is fine: I’m all for the adoption of reporting standards for spending by donors and by governments, and for those standards to specify the source as well as the destination of all spending. (The authors may not be aware of the progress that is being made globally on this under the International Aid Transparency Initiative). It is also hard to be against investing in the capacity of developing countries to receive and spend health aid, though I wonder what this means in practice. The other three recommendations are irresponsible, for reasons we shall come to below.
Let’s start with the problem we are trying to solve. It is far from clear that the behaviour of developing countries described in the paper is anything we should be concerned about. Of course health advocates who earn their living from health spending in developing countries are up in arms at the news that their various wheezes to capture a big chunk of available development finance and redirect it to their cause may not have been a complete success. But those of us who take a more objective view of the relative priorities of different types of development spending can be more sanguine.
There are at least four reasons why the findings of the paper should not be a cause for concern.
First, it suggests that governments are reprioritising their spending in the light of the aid they are receiving. I think this is a good thing. Exercises to find out what poor people actually care about, such as Voices of the Poor, routinely find that the poor place put a lot of value on security (of person and property), but this does not usually excite people who work in development. Donors find it more attractive to finance health services than to pay for essential services such as a national statistical office or the efficient functioning of courts. If we are willing to pick up the bill for health care then it is not only reasonable but desirable that developing countries should use the fiscal space we have created to invest more in important national priorities that don’t happen to be of interest to their donors.
Second, increases in aid for health may well come at the expense of other forms of aid which developing countries are right to try to offset. (I say “may well” because of course we don’t know what would have happened to total aid if health aid had not increased so rapidly.) Donor fads come and go: this year it is agriculture. When developing countries see health aid rising, but the donors losing interest in infrastructure, the most sensible thing they can do is make an offsetting shift in their own budget allocations. When the donor pendulum swings back again, recipient countries will have to make the corresponding shift in the opposite direction.
Third, as eloquently pointed out by Sridhar and Woods in the Lancet, the desire to force changes in the spending priorities of recipient countries runs directly contrary to the evidence about what makes aid effective, and a series of international agreements, especially the Paris Declaration (2005) and Accra Agenda for Action (2008). In the face of evidence that aid is most effective when there is ownership by the recipient country, donors and multilateral agencies committed themselves to align their aid with the systems and priorities of recipient countries. It is not OK for health sector lobbyists to ignore this because they don’t like the priorities actually chosen by developing countries.
Fourth and finally, we say that we want to see capable, accountable and responsive states in developing countries. Making, passing and executing budgets is the very heart of a capable and accountable state. That is why in the UK, as in many other western-style democracies, a government which cannot pass its budget (“carry supply”) is deemed to be unable to govern. If resource allocation priorities are determined elsewhere, then the government is one in name only. We cannot expect governments to be accountable to their citizens for decisions that they have not made. If we want accountable states rather than puppet client states, we should rejoice, not complain, when they demonstrate a willingness to make choices of their own.
Sectoral advocates may say that we should not accept the priorities determined by developing countries, especially in countries in which there are weaknesses in democratic accountability or technical ability to execute budgets. They might say that the government represents the interests of an elite, not the majority of the country’s poor. Of course that may be true in some countries: but there is no reason to think that donors’ priorities, also driven by vocal lobby groups and vested interests, reflect the real needs of a country or its poorest people. We should avoid getting into the situation in which well-heeled foreign academics and lobbyists from international NGOs with no accountability to people in developing countries are treated as a more representative voice of the poor than their own government.
What is most shocking about this paper is that it betrays a combination of ignorance of, or indifference to, decades of experience about what works in development. The three most egregiously inappropriate recommendations amount to setting input targets, bypassing government by using NGOs, and giving aid in kind rather than in cash. The paper’s authors should pause to reflect on the fact that progressive development thinking has fought a long, slow, painful campaign to shift away from exactly this kind of aid, and for very good reasons. Aid that leads to long-term, sustainable change must be based on real ownership of the developing country and help build rather than undermine or marginalise national institutions.
To be fair to the authors, the press release is quite measured, and it begins by highlighting the commitment to health by developing country governments. It also highlights the most important and sensible of their recommendations, the need for greater transparency. But the paper also irresponsibly creates the impression, amplified by the Associated Press, that health aid has somehow been wasted, and that donors should try to address this in ways that would be a couple of steps backwards on the long slow road to more effective aid.