A Comparative Analysis of the Financing of HIV/AIDS Programmes docx

Table 1: Total and Public Health Expenditure in Botswana 1990–2000 8Table 2: Core Expenditure on HIV/AIDS Programs in Botswana 1999/01–2002/03, in current US$ 9Table 3: Sources of Fundin

A Comparative Analysis

of the Financing of HIV/AIDS Programmes

in Botswana, Lesotho, Mozambique, South Africa, Swaziland and Zimbabwe

O C T O B E R 2 0 0 3

Prepared for the Social Aspects of HIV/AIDS and Health Research Programme of the Human Sciences Research Council

by Dr H Gayle Martin Funded by the WK Kellogg Foundation

Financing Mechanisms 11Lesotho 15

Level of Expenditure 15Sources of Financing 18Financing Mechanisms 18Mozambique 21Level of Expenditure 21Functional Classification of HIV/AIDS Expenditures 25Sources of Financing 25

Financing Mechanisms 26South Africa 27Level of Expenditure 27Sources of Financing 28Financing Mechanisms 29Swaziland 33

Level of Expenditure 33Functional Classification of HIV/AIDS Expenditures 37Sources of Financing 37

Financing Mechanisms 38Zimbabwe 41

Level of Expenditure 41Sources of Financing 42Financing Mechanisms 42

Comparative Analysis 43

Health Expenditure 43Government Expenditure on HIV/AIDS 45Expenditure on HIV/AIDS by External Sources 47Total Expenditure on HIV/AIDS 49

Conclusion 51

Special Resource Mobilisation Strategies 51

Do Increased Resources mean Increased Inefficiency? 51Sustainability 51

Appendices 53

Appendix A: Selected Indicators by Country 53Appendix B: HIV/AIDS Indicators by Country 57Appendix C: Terms of Reference 58

Table 1: Total and Public Health Expenditure in Botswana (1990–2000) 8Table 2: Core Expenditure on HIV/AIDS Programs in Botswana (1999/01–2002/03, in

current US$) 9Table 3: Sources of Funding for HIV/AIDS programmes in Botswana (2000) 10Table 4: Expenditure on HIV/AIDS in Botswana (2001/02) 10

Table 5: Functional Classification of Government of Botswana HIV/AIDS Expenditure

(2002/03) by Financing Mechanism 13Table 6: Global Fund Award to Botswana 13Table 7: Total and Public Health Expenditure in Lesotho (1990–2000) 15Table 8: Government of Lesotho funding for HIV/AIDS, Tuberculosis and Malaria in

(2001/02) 16Table 9: Expenditure on HIV/AIDS in Lesotho (2001/02) 16Table 10: External Sources of Funding for HIV/AIDS programmes in Lesotho (2000) 17Table 11: Global Fund Award to Lesotho 19

Table 12: Total and Public Health Expenditure in Mozambique (1990–2000) 21Table 13: Government of Mozambique funding for HIV/AIDS, Tuberculosis

and Malaria (2001) 22Table 14: External Sources of Funding for HIV/AIDS programmes in Mozambique

(2000) 23Table 15: Expenditure on HIV/AIDS in Mozambique (2001) 25Table 16: Sources of Government Revenue in Mozambique (1999–2000) 26Table 17: Global Fund Award to Mozambique 26

Table 18: Public Health Expenditure in South Africa (constant US$, 1999/00) 27Table 19: Expenditure on HIV/AIDS in South Africa (2001/02) 28

Table 20: Breakdown of Conditional Grant for National Integrated Plan Funds by

Department and Function in South Africa (in current US$) 30Table 21: Summary of the Goals and Objectives of HIV/AIDS Control in the

Departments of Health, Social Development and Education in South Africa 31

Table 22: Global Fund Award to South Africa 32Table 23: Total and Public Health Expenditure in Swaziland (1990–2000) 33Table 24: Government of Swaziland funding for HIV/AIDS, Tuberculosis and Malaria

(2001/02) 34Table 25: Government of Swaziland Non-Health Sector Funding to Government

Institutions for HIV/AIDS-related Interventions (2001/02) 34Table 26: Swaziland NGOs involved in AIDS Interventions by

Funding Status (2001/02) 35Table 27: External Sources of Funding for HIV/AIDS for Swaziland (2001) 36Table 28: Expenditure on HIV/AIDS in Swaziland (2001/02) 37

Table 29: Functional Classification of Ministry of Health and Social Welfare HIV/AIDS

Expenditures in Swaziland (2001/02) 38Table 30: Global Fund Award to Swaziland 39Table 31: Total and Public Health Expenditure in Zimbabwe (1990–2000) 41Table 32: Global Fund Award to Zimbabwe 42

Table 33: Summary of Expenditure on HIV/AIDS by Country (2000/01, US$) 46Table 34: Summary of Expenditure on HIV/AIDS by Country

Figure 1: Total health expenditure (US$) per capita) in the six countries viiFigure 2: Health expenditure in the six countries as a percentage of government

expenditure (2001/02) viiiFigure 3: Total HIV/AIDS expenditure (US$ millions) ixFigure 4: Total HIV/AIDS expenditure (US$) ixFigure 5: Change in Life Expectancy in Botswana (1970–2000) 7Figure 6: Financial Flows for HIV/AIDS Expenditure in Botswana 12Figure 7: Financial Flows for HIV/AIDS Expenditure in Lesotho 19Figure 8: Sources of Health Financing in Mozambique (1997) 22Figure 9: The Flow of Resources for HIV/AIDS to the Provincial Level in

South Africa 29Figure 10: Total Health Expenditure (A) as a Percentage of GDP and (B) Per Capita

(US$) for 1990–2000 By Country 44Figure 11: Health Expenditure as a percentage of government expenditure

by Country 45Figure 12: Government expenditure on HIV/AIDS per capita and per PLWHA (2001) 47Figure 13: Expenditure on HIV/AIDS as a percentage of GDP (2001) 48

Figure 14: Expenditure on HIV/AIDS (2001/02, current US$) 48Figure 15: Share of Government and External Sources of HIV/AIDS Financing 49Figure 16: Infant Mortality Rate per 1,000 live births (1970–2000) 53

Figure 17: Maternal Mortality Ratio per million live births (1994–2000) 53Figure 18: Life Expectancy (1970–2000) 54

Figure 19: Population Growth (1970–2000) 54Figure 20: Gross National Product (per capita, current US$) 55Figure 21: Economic Growth (per capita) 55

Figure 22: Human Development Index (1975–2001) 56Figure 23: HIV Infection rates for Adults and Children 57Figure 24: People Living with HIV/AIDS 57

Botswana, Lesotho, Mozambique, South Africa, Swaziland and Zimbabwe comprise 12 percent of the population in the sub-Saharan African region and account for 33 per cent ofthe total HIV/AIDS burden in the region Among these six countries, four have adult HIVinfection rates of above 30 per cent and all but one have rates above 20 per cent.

Mozambique has the lowest adult HIV prevalence – 12 per cent Because of the relativelylarge population sizes in South Africa and Zimbabwe, these two countries account foreighty per cent of the infected adults in these six countries

It is within the context of this HIV/AIDS burden that this comparative analysis aims toassess the readiness and ability of the countries to respond to the HIV/AIDS epidemic

The key issues that are addressed in this analysis are:

• Is the allocation to health, as a per cent of total government expenditure, sufficient?

• Is enough allocated to deal with HIV/AIDS, given the magnitude of the problem?

Data limitations made it nearlyimpossible to evaluate HIV/AIDSexpenditure allocation – in terms ofeconomic classification (capital andrecurrent) or functional classification(prevention, care and support, andtreatment) The allocation of HIV/AIDSfunds by activity is therefore, generally,not addressed in the report

Another data limitation was the paucity

of information on household (andbusiness) expenditure on HIV/AIDS

Estimates from Latin American andCaribbean countries found that averageannual expenditure by people livingwith HIV/AIDS (PLWHA) was US$1,000,while an assessment in Rwanda reported US$25 per PLWHA Even at the latter level, it isclear that significant amounts of household resources are devoted to HIV/AIDS, resulting

in a combination of transient and permanent impacts on household welfare Oneparticular outcome is an increase in the number of households falling below the povertyline While not addressed in this report, this household-level outcome has severalsecondary consequences that also need to be considered – for example, increasing thedemand for government assistance in the form of poverty alleviation

The financing of HIV/AIDS programmes

Among the six countries, total health expenditure ranges from a high of US$255 percapita in South Africa to a low of US$9 per capita in Mozambique During the 1990s totalhealth expenditure increased in all these countries except for South Africa The largestincrease was in Botswana where total health expenditure increased by 115 per centbetween 1990 and 2000 Estimates of the minimum level of spending on essential or basichealth services range from a low of US$12 (in the World Development Report 1993) toUS$34 (by the Macroeconomic Commission on Health in 2001) Four of the six countrieshave expenditures in excess of these levels, although two countries, Lesotho andMozambique, have per capita expenditures of well below US$34, and in the case ofMozambique, below US$12

Is the allocation to health, as a per cent

of total government expenditure,sufficient? Except for South Africa andZimbabwe, none of the countries fulfilledtheir commitment made in Abuja in April

2001 to allocate 15 per cent ofgovernment expenditure to health

Botswana comes closest among theremaining countries, spending ten percent of government expenditure onhealth The other countries spend abouthalf of the 15 per cent target It shouldhowever be noted that this data is for theyears 2001 and 2002 When viewedagainst the background of increasingallocations to the health sector over time, it is likely that Botswana and Swaziland willmeet the target However, the constrained macroeconomic environment in Mozambiqueand Lesotho suggests less optimism for reaching the targeted 15 per cent

Aggregate government expenditure on HIV/AIDS in these southern African countries isnearly US$70 million annually There is great variation in the level of expenditure onHIV/AIDS by individual countries Government expenditure on HIV/AIDS ranges from ahigh of US$33 million in South Africa to a low of US$0.8 million in Lesotho Per capitaexpenditure on HIV/AIDS shows similar variation – on the high end is Botswana withUS$30 per capita, which is almost 30 times the level of expenditure in the other countries.All the other countries fall below US$1.50 per capita The median per capita HIV/AIDSexpenditure for the six countries is US$1 If one considers only the HIV infectedpopulation, then Botswana spends $51 per PLWHA The HIV/AIDS expenditure inBotswana is also the highest when measured as a percentage of GDP – the government

of Botswana spends one per cent of GDP on HIV/AIDS

External sources – bilateral donors, multilateral donors (including the UN agencies),business and NGOs – account for a total of US$180 million expenditure on HIV/AIDS inthese six countries This translates into a per capita expenditure of US$2 and expenditure

of US$19 per PLWHA The highest level of donor assistance, in absolute terms, is inBotswana where US$96 million was spent in 2001 This is equal to US$60 per capita andUS$291 per PLWHA With the exception of South Africa, expenditures on HIV/AIDS in

Figure 2: Health expenditure in the six countries

as a percentage of government expenditure (2001/02)

Executive summary

these countries are financed mainly byexternal sources In Mozambique, Lesothoand Swaziland more than eighty per cent

of total HIV/AIDS spending is funded byexternal sources The allocations from theGlobal Fund to Fight AIDS, Tuberculosisand Malaria to these countries will add anadditional US$479 million over the totalperiod of the allocations, and US$192 overthe first two years of each award

Total spending in these countries(government- and donor-financed butexcluding household out-of-pocketspending and the Global Fund allocations)amounts to approximately US$250 millionfor the year 2001, or to US$3 per capitaand US$27 per PLWHA In the literature,the reported HIV/AIDS spending per capita(excluding out-of-pocket spending) forsub-Saharan Africa is US$0.3 per capita andUS$8 per PLWHA Regardless of themeasure, total expenditure on HIV/AIDS inthese six countries is higher than theregional average Specifically, per capitaHIV/AIDS expenditure is ten times higherand expenditure per PLWHA is more thanthree times higher than in the sub-SaharanAfrica region This is consistent with thehigher burden of HIV/AIDS in Botswana,Lesotho, Mozambique, South Africa,Swaziland and Zimbabwe These countriesaccount for a third of PLWHA in sub-Saharan Africa compared to a tenth of theregion’s population

The high level of financing in Botswana, from domestic and external sources, makes thiscountry somewhat of an outlier Botswana spends US$71 per capita and US$343 perPLWHA However, despite this relatively high level of financing, the total spending onHIV/AIDS is substantially lower than the average HIV/AIDS expenditure in countries ofthe Latin American and Caribbean region

Is enough allocated to deal with HIV/AIDS given the magnitude of the problem? In theliterature it has been estimated that sub-Saharan Africa requires US$4.6 billion annually forprevention, care and support, and treatment (including anti-retroviral therapy) Given thatthese six countries account for a third of the HIV/AIDS burden in the region, it can beargued that a third of this estimate are the required annual resources for HIV/AIDSinterventions This figure exceeds the current total HIV/AIDS expenditure that is at onequarter of US$1 billion

Figure 4: Total per capita HIV/AIDS expenditure (US$)

The financing of HIV/AIDS programmes

The gravity of the HIV/AIDS situation in these six countries calls for prioritisation,protection and targeting of HIV/AIDS spending What is the appropriate institutionalfunding mechanism for responding to this call? A detailed assessment of the experiences

of, for example, Zimbabwe (with the earmarking of three per cent wage tax for HIV/AIDSexpenditures), Lesotho (with the allocation of two per cent of all sectoral budgets toHIV/AIDS) and South Africa (with the introduction of a conditional grant for HIV/AIDS),

is required in order to make specific recommendations However, preliminary evidencesuggests that the experiences of Zimbabwe and South Africa have generally been positive,although Lesotho has had less success Some of these experiences are shared in thereport

A further important resource mobilisation strategy is the Global Fund It will be important

to share lessons and experiences before and after countries embark on the Global Fundprocess The seriousness of the HIV/AIDS situation does not allow for each country toreplicate the learning curves It is, furthermore, important that the increased allocationswhich the various international resource mobilisation initiatives aim to effect, are notaccompanied by increased inefficiency in budget management and budget execution Thiswould be a tragic outcome given the unprecedented level of commitment and focus onresource mobilisation for HIV/AIDS

Extensive planning and consultation processes have preceded the Global Fundallocations HIV/AIDS has stressed the capacity of the health sectors in the six countries.The ability to absorb the vastly increased resources will be a critical determinant ofwhether the increased resources will be translated into increased outputs and, ultimately,into improved outcomes Importantly, as the experience in Botswana has demonstrated,human resource capacity constraints may severely limit the response to HIV/AIDS in spite

of high level of financial resources

The Abuja Declaration showed developing countries’ commitment to making their ownresources available to meet the enormous challenge posed by HIV/AIDS It is importantthat the gains made by the commitment in Abuja are not reversed by the nearly US$500million Global Fund allocations made to these six countries This will be an importantissue to monitor – specifically, to what extent does the Global Fund crowd-outgovernment expenditure, displacing rather than adding to the resources for health andHIV/AIDS

This report is the product of contributions from various research teams I would like toacknowledge them and their contributions to making this monograph possible The datacollection was completed because of the joint efforts of research teams in Botswana,Lesotho, Mozambique, South Africa, Swaziland and Zimbabwe The team leaders were:

• Professor Sheila Tlou – Botswana

• Efua Dorkenoo – South Africa

The Departments of Treasury/Finance and the Departments of Health in the six countriesplayed an important role in the provision of information, without which this report wouldnot have been possible We sincerely appreciate their collaboration

The role of Dr Gayle Martin in analysing the data, synthesizing information, oftenaugmenting this with insights gleaned from other sources, and then writing it all up, ismuch appreciated

The editorial and production work of HSRC Publishers will not go unnoticed Theyworked under extreme time pressure and managed to get the report completed within thegiven time frame

Finally, the financial contribution of the WK Kellogg Foundation, and the support ofBishop Malusi Mpumlwana and Mrs Vuyo Mahlati, who offered constant encouragementand support throughout the project, is highly valued

The Social Aspects of HIV/AIDS and Health Research Programme of the Human SciencesResearch Council takes responsibility for the content of this report because it wasresponsible for conceiving the idea and ensuring that it was successfully carried out andcompleted

ANC Ante-natal clinic

Early in the twenty-first century governments and world leaders made severalunprecedented, high-level commitments to fight HIV/AIDS One of the commitmentsmade by all governments during the Special Session of the United Nations General

Assembly on HIV/AIDS in June 2001 in the Declaration of Commitment was to ‘secure

more resources to fight HIV/AIDS increasing annual spending to US$7-10 billion in and middle-income countries’ The Abuja Declaration, made by African leaders in April

low-2001 stated: ‘We commit ourselves to take all necessary measures to ensure that the needed

resources are made available from all sources, and that they are efficiently and effectively utilised We pledge to set a target of allocating at least 15 per cent of our annual budget to the improvement of the health sector We undertake to mobilise all the human, material and financial resources required to provide care and support and quality treatment to our populations infected with HIV/AIDS, tuberculosis and other related infections.’ Thiscommitment was endorsed at the UNGASS and world leaders from developed countriesalso committed to assist African leaders in their efforts to realise the funding targets set inthe Abuja Declaration

Botswana, Lesotho, Mozambique, South Africa, Swaziland and Zimbabwe comprise 1.3per cent of the world’s population and account for 23.3 per cent of the total HIV/AIDSburden Similarly, 12.1 per cent of the sub-Saharan Africa population reside in thesecountries, yet they account for 32.5 per cent of the people living with HIV/AIDS (PLWHA)

on the sub-continent

It is therefore appropriate that an assessment of the extent to which the commitmentmade in Abuja has been translated to action focuses on these countries The datacollected in this study were used to assess the extent to which each of the six countriesallocated resources to back up their political commitment to HIV/AIDS The data wascollected to fulfil one of the Kellogg Foundation’s terms of reference for the study, to findout how HIV/AIDS programs are financed

The report proceeds with a description of the methodology used in the compilation ofthis report In addition to describing the method of data collection, the limitations andchallenges are identified Then brief synopses of each country are presented, highlightingthe economic context, the level of financing, the sources and mechanisms of financing ofhealthcare and HIV/AIDS expenditures This is followed by a comparative analysis of thefinancial dimension of HIV/AIDS programs and interventions across the six countries Thereport concludes with some of the critical issues and implications of the findings of thecomparative analysis

For reference, selected health and economic indicators for the six countries are presented

in Appendix A In Appendix B the HIV/AIDS indicators for these countries are listed

Lastly, the terms of reference are included in Appendix C

The financing of HIV/AIDS programmes

The purpose of this study was to identify the sources and quantities of the funds availablefor health expenditure and, more specifically, for HIV/AIDS programmes in the sixcountries The study sought to identify the different sources of funds for HIV/AIDSinterventions that are available to the Ministry of Finance/National Treasury Thesesources have been dis-aggregated as far as the data would allow The purpose of thestudy was, however, not to scrutinise the allocation criteria but to quantify the allocationfor health and HIV/AIDS

None of the countries studied have undertaken a ‘National HIV/AIDS Accounts’, as hasbeen done in other countries such as: Rwanda, Argentina, Brazil, and other LatinAmerican and Caribbean countries The data are therefore largely incomplete Forexample, private/household expenditures on HIV/AIDS have been completely omitted,despite several studies indicating that households of PLWHA contribute substantially toHIV/AIDS expenditures For example, a study in twelve Latin American and Caribbeancountries found that average expenditure by PLWHA was US$1,000, ranging from overUS$3,000 (in Uruguay) to US$125 (in Guatemala) An assessment in Rwanda reportedUS$25 per PLWHA spent on HIV/AIDS-related expenditures If the latter amount wereextrapolated to the six countries, the level of aggregate household expenditure onHIV/AIDS would be over US$200 million, if one only considers expenditure by adultswith HIV/AIDS This estimate would have to be verified in a purposively sampledhousehold survey and facility-based (private and public) survey in a multi-country setting

The high level of out-of-pocket healthcare spending that households already incursupports the importance of household expenditure on HIV/AIDS For example, a NationalHealth Accounts assessment in Mozambique found that 20 per cent of total healthexpenditures were borne by households (see Figure 8)

Due to the data limitations, the emphasis in this report is therefore on expenditures bygovernments and external sources of funding, such as bilateral and multilateral donorpartners, foundations and the business community It is, however, important to rememberthat all these resources ultimately come from households – from taxpayers in low-,middle- and high-income countries, as well as from consumers of businesses in thedeveloped and developing world

Definition of HIV/AIDS Expenditures

The definition proposed in the HIV/AIDS Survey Indicators Database is: ‘The amount ofmoney allocated in national accounts for spending on HIV/AIDS prevention and careprogrammes, per adult aged 15–49.’ The definition suggests that the per capita estimatesshould use only adults aged 15–49 years However, the comparison studies, reported byUNAIDS and others, used total population and not only the sexually active population asthe definition from the HIV/AIDS Survey Indicators Database suggests In this report, two

definitions of HIV/AIDS expenditures are used Core HIV/AIDS expenditures are

expenditures allocated to dedicated HIV/AIDS programmes, such as IEC (information,education and communication), distribution of condoms, VCT (voluntary counselling and

testing), HBC (home-based care) etc Expanded HIV/AIDS expenditures include the core

expenditures as well as healthcare expenses incurred in facility-based care and treatment

of opportunistic infections in general health facilities Expanded HIV/AIDS expendituresare reported for two countries, Botswana and South Africa

The financing of HIV/AIDS programmes

The expenditures have been reported in US$ to facilitate cross-country comparison InTable 34 a summary table is presented in international dollars (PPP$), allowing forpurchasing power parity Purchasing power parity takes into account variances indomestic purchasing power of a given level of expenditure However, it makes theassumption that prices in the health sector follow the same structure as the broadereconomy, which is not always the case Variance in domestic and international purchasingpower is especially of concern for non-tradable inputs, for example, domestically

provided labour inputs (which often account for up to 80 per cent in the health sector).Where goods are purchased from international markets (for example, imported drugs,imported medical supplies, and international consultants) the conversion to internationaldollars does not make sense This would be the case for donor financing and some ofdomestic funding This would suggest using PPP$ for government funding and US$ fordonor funding However, this approach would provide internally inconsistent, aggregateestimates of expenditure, and for this reason the reporting and analysis are done in US$,while the purchasing power parity conversion is done for mainly for completeness

Data Collection

The key sources of information were Ministries of Finance/National Treasuries, Ministries

of Planning, Ministries of Health, Tax Offices, National Income Accounts and NationalHealth Accounts, income/employment and household surveys as well as any specialresearch studies An important source of information was the submissions by four of thecountries (Botswana, Lesotho, Mozambique and Swaziland) to the Global Fund Extensiveuse was also made of the reports by multilateral agencies: UNAIDS, UNDP, World Bankand IMF

During the data collection the assumption was made that in each country the Ministries ofFinance/National Treasuries are directly responsible for distributing funds to the varioussectors and would therefore be one of the best sources of expenditure information Theoriginal intention was to divide the sources into:

• public sources (tax and compulsory heath insurance contributions)

• private sources (private health insurance, private individuals and or employers,charitable organisations and user fees, for example, for health services)

• sources of external co-operation (official or unofficial multilateral/bilateralorganisations or countries respectively)

However, the data only allowed for the identification of the first and third categories.Information was also collected from the Ministries of Health on all health-related financesreceived from Ministries of Finance/National Treasuries, as well as from other ministries.Donations from other countries, local or international businesses, organisations, or privateindividuals (in the form of grants or loans) were divided into external co-operation andcharity The first category refers to the finances that the Ministry of Health receivesthrough bilateral or multilateral agreements via the Ministry of Finance/National Treasury.The second category refers to allocations from businesses, individuals, NGOs, trusts ormissions within the country directly to the Ministry of Health In the reporting of the data

in this report, this separation was not possible and aggregate figures for external sourceswere reported

Ministry of Health officials were asked to allocate spending, using various criteria, intodifferent activities and pregrammes to enable a functional classification of HIV/AIDSexpenditures The main categories of uses of HIV/AIDS expenditures included:

• information education and communication

• voluntary counselling and testing

• prevention of mother-to-child transmission

Limitations and Challenges

Discrepancies have been noted in data obtained from different sources This illustrates the difficulties encountered in collecting the data The experience from other studiesassessing HIV/AIDS expenditures showed that questionnaires to government institutionsand HIV/AIDS co-ordinating structures are an inefficient data collection tool This wasalso the experience in this study

The limitation of data from special studies is that different definitions may be used in thevariables that are reported, or they are not sufficiently dis-aggregated for the purpose athand The lack of information about households’ out-of-pocket expenditure was a furtherlimitation

For these reasons, the reported data should be taken as an indication of expenditures onHIV/AIDS, and an effort should be made to have the various governments and externalpartners verify the data captured in this report Input by donors would be especiallypertinent to minimise the potential for double counting of donor inputs For example,

UN agencies often implement bilateral donor-funded activities and a simple aggregation

of donor expenditures, as was done in this report, will likely suffer from some degree ofdouble counting of donor inputs In future, National HIV/AIDS Accounts would be able

to address the assumptions made in the data just mentioned, as well as data omissionsencountered in this study

The financing of HIV/AIDS programmes

Lesotho is a low-income country with a per capita GDP of US$530 in 2001, similar to theaverage for the sub-Saharan Africa region The country has a population of 2.2 millionpeople, most of whom are rural residents (about 80 per cent), and half of whom livebelow the poverty line The average real per capita growth for the 1990s was 2.1 per cent(Figure 21 in Appendix A) In 1998 Lesotho experienced economic contraction, but hassince had positive economic growth The government of Lesotho has limited control overmonetary policy (given that the Maloti is pegged to the South African Rand), and

therefore fiscal measures are the most important means whereby government managesthe economy This has important implications for future government-financed HIV/AIDSexpenditure

The country ranks 137th out of 174 in the Human Development Index (HDI=0.510)(Figure 22 in Appendix A) Life expectancy has dropped by more than ten years duringthe 1990s: from 56.0 years in 1991 to 43.3 in 2001 (Figure 18 in Appendix A) This haslargely been ascribed to HIV/AIDS The adult HIV prevalence is 34 per cent which,second to Botswana, is among the highest in the world (Figure 23 and Figure 24 inAppendix B) It is projected that Lesotho will experience an annual loss of GDP growthdue to HIV/AIDS of 0.6 per cent point in 2001 and a loss of 2.7 per cent points by 2015

Level of ExpenditureHealth expenditure

Total health expenditure in Lesotho averaged at about six per cent of GDP for the pasttwo decades Public health spending increased from a low of 2.6 per cent in 1990 to 5.2 per cent of GDP in 2000 (Table 7) Per capita spending at US$28 is slightly above themean per capita health expenditure of low-income countries ($21)

As alluded to earlier, the HIV/AIDS expenditure for Lesotho needs to be viewed withinthe context of macroeconomic concerns, given the lack of government control overmonetary policy Government will likely place strong emphasis on containment of publicexpenditure to address the macroeconomic challenges While health sector allocationshave not come under threat, it is unlikely that the health budget will show significant realincreases (from government sources) in the medium term

Government Financed HIV/AIDS Expenditure

In 2001/02 the government of Lesotho spent US$0.8 million on HIV/AIDS programmesand a further US$0.2 million on tuberculosis and malaria (Table 8) These expenditures

Source: World Bank, 2003

The financing of HIV/AIDS programmes

have been channelled mainly through the Ministry of Health and Social Welfare Thebudgetary HIV/AIDS allocation channelled through the Lesotho AIDS Programme Co-ordinating Authority (LAPCA) for 2001/02 was US$60,754 and US$97,345 for 2002/03

Government-financed per capita spending on HIV/AIDS is US$0.40 per capita, US$2.34per PLWHA and, in total, accounts for 0.07 per cent of GDP (Table 8)

Externally Financed HIV/AIDS Expenditure

Table 10 shows the external sources of HIV/AIDS financing in Lesotho It is estimated thatLesotho receives annual external funding for HIV/AIDS of US$5.3 million This convertsinto US$2.61 per capita and US$14.73 per PLWHA

16

©HSRC 2003

Table 8: Government of Lesotho funding for HIV/AIDS, tuberculosis and malaria in (2001/02)

Source: Government of Lesotho, 2002

Table 9: Expenditure on HIV/AIDS in Lesotho (2001/02)

Table 10: External sources of funding for HIV/AIDS programmes in Lesotho (2000)

CHAL (Christian Health NGO 134,191 3 years 44,730 Lesotho Pastoral Education Project, care and support, counselling,Association of Lesotho) prevention, income generating activities, clinical care, home-based

care, adolescent healthCARE NGO 2,000,000 3 years 666,667 IEC: Sexual Health and Rights Programme (SHARP)Lesotho National Assoc for

the Physically Disabled NGO 3,500 3 years 1,167 IEC for People with Physical DisabilitiesLesotho Red Cross Assoc NGO 78,936 3 years 26,312 Youth against HIV/AIDS

World Vision International NGO 1,500,000 3 years 500,000 Support for orphans and vulnerable children through educational

DFID Bilateral 1,500,000 3 years 500,000 Regional AIDS and agricultureKFW Bilateral 350,000 3 years 116,667 Family planning, condoms, STI drugsIreland Aid Bilateral 650,000 3 years 216,667 Bilateral support to HIV/AIDS programmeWorld Bank Multilateral 2,000,000 3 years 666,667 Multisectoral HIV/AIDS initiativesWorld Food Programme Multilateral 5,361,595 3 years 1,787,198 Mitigation of HIV/AIDS

UNFPA Multilateral 1,002,837 3 years 334,279 Population policy review, reproductive health, IEC materials

development, youth centreWHO Multilateral 858,678 3 years 286,226 Care and support, adolescent friendly health services,

IEC material developmentUNDP Multilateral 471,850 3 years 157,283 Support capacity of LAPCA to monitor implementation of

National AIDS Strategic Plan

Source: Government of Lesotho, 2002

Free download from www.hsrcpublishers.ac.za

Total HIV/AIDS expenditure

The total financial resources available for core HIV/AIDS expenditure are shown in Table

9 Core HIV/AIDS expenditure for 2001/02 was US$6.2 million or 0.5 per cent of GDP.This translates into US$3.02 per capita and US$17.07 per PLWHA Nearly 90 per cent ofthe total HIV/AIDS expenditure in Lesotho is financed from external donor sources,whereas government expenditure accounts for 14 per cent of the core total HIV/AIDSexpenditure

Sources of Financing

In Lesotho, government tax and non-tax revenue is 44.7 per cent of GDP Approximatelythree quarters of this revenue is in the form of import duties and receipts from theSouthern African Customs Union agreement Government HIV/AIDS expenditure isfinanced mainly from government revenue However, the government has an annualdeficit (-3 per cent of GDP) and therefore part of government expenditure is financedthrough loans/credits

Lesotho receives US$32 per capita in international development assistance (5.7 per cent ofGDP), which is very high compared to the mean of low-income countries (US$7 percapita, 1.3 per cent GDP) and sub-Saharan African countries (US$21 per capita, 4.1 percent GDP)

Eighty six per cent of total HIV/AIDS financing is derived from external sources, whichinclude: bilateral agencies (e.g., Ireland Aid, DFID, KFW), multilateral agencies (e.g., EU,

UN agencies, World Bank), national and international NGOs (e.g., Christian HealthAssociation, CARE, Lesotho National Association for the Physically Disabled, Lesotho RedCross Association, World Vision, Save the Children) (see Table 10)

Financing Mechanisms

Figure 7 demonstrates the flow of funds for HIV/AIDS-related activities As mentioned, thetwo main sources of funding are the Ministry of Finance and Planning and donors TheMinistry of Finance and Planning allocates resources (as part of the health budget) to theMinistry of Health and Social Welfare for HIV/AIDS interventions, which are implementedmainly by the Disease Control Unit in the ministry These interventions are implemented

in health facilities by NGOs or CBOs The Ministry of Health and Social Welfare alsoreceives donor assistance for the implementation of its HIV/AIDS programmes

Realising the magnitude of the impact of HIV/AIDS, the Ministry of Finance and Planninghas introduced a targeting strategy for HIV/AIDS expenditure that is intended to haveminimal fiscal impact For the last two financial years (2001/02 and 2002/03), the Ministry

of Finance and Planning has required that each sectoral ministry commit a minimum oftwo per cent of their respective budgets to HIV/AIDS-related activities This has beenlargely an unsuccessful tool to target multisectoral resources for HIV/AIDS Recently, thisdirective has become more explicit by dictating the line items for ministries to allocateresources to HIV/AIDS The 2002/03 national government budget is approximatelyUS$437.3 million, and through this initiative, an estimated US$7.8 million is targeted forHIV/AIDS-related activities (from the budgets of the various ministries) It should,

The financing of HIV/AIDS programmes

however, be noted that the two per cent allocated translates into five per cent of what,according to LAPCA, is required for implementation of the National AIDS Strategic Plan.

The Ministry of Finance and Planning finances the administration of LAPCA, whichorganisationally is located within the Prime Minister’s office LAPCA also receives fundsfrom external sources Given that LAPCA is not an implementing agent, it transfersresources to various actors for implementation of HIV/AIDS interventions, for example,the Ministry of Health and Social Welfare, other sectoral ministries, churches, NGOs andCBOs

The Office of the First Lady is also an important channel for government HIV/AIDSfunding In the last two financial years, 2001/02 and 2002/03, the office was allocatedapproximately US$0.1million and US$0.2million, respectively Although the mandate of

the office is not HIV/AIDS per se but ameliorating the plight of both disadvantaged

women and children, the current priority of the office is HIV/AIDS The office reports toLAPCA like other ministries

The constraints in the government of Lesotho’s ability to respond financially to the AIDScrisis are evident and a very real challenge The Global Fund will therefore be a welcomeand an important additional source of financial assistance in the fight against HIV/AIDS inLesotho Lesotho was allocated a total of US$34,312,000 for HIV/AIDS (85 per cent) andtuberculosis (15 per cent) interventions This is equal to US$16.68 per capita andUS$95.31 per PLWHA (Table 11)

Figure 7: Financial flows for HIV/AIDS expenditure in Lesotho

Table 11: Global Fund award to Lesotho

The financing of HIV/AIDS programmes

Mozambique is one of the poorest countries of the world Globally, it has one of thehighest infant mortality rates (130 per 1000 live births) and maternal mortality ratios (980 per 100,000) (Figure 16 and Figure 17 in Appendix A) After many years of war anddevastation, the economy has recovered significantly, but the floods in 2000 curtailed thisrecovery (Figure 21 in Appendix A) Between 1997 and 2000, average per capita income

in the economy increased from US$196 to US$ 224 (at 2000 prices), a real annual growthrate of about five per cent Given the population of 17.7 million people this translatesinto a per capita GDP of US$220

Level of ExpenditureHealth expenditure

Between 1997 and 2000 total public expenditure on health grew much faster than GDP,from US$4.6 per capita to US$7.5, in constant 2000 prices Total health expenditure in

2000 was US$9 per capita (Table 12), among the lowest worldwide Since 1999, theproportion of domestic resources allocated to the Ministry of Heath increased fromUS$116.3 million in 1999 to US$135.0 million in 2001, an annual average growth rate of

16 per cent over this period

The sources of health expenditure are shown in Figure 8 External finance accounts forthe largest share (52 per cent) of the total health budget There was an increase inexternal finance to the health sector over the period 1997–2001 External finance takes theform of grants or loans These are provided and managed through different financialmechanisms Sector loans are managed by the sector, and are usually provided by themultilateral agencies and by the development banks

There has been an overall expansion of government expenditure during the late 1990s,coupled with the conclusion of agreements on Heavily Indebted Poor Countries (HIPC)debt relief As part of this agreement, the government pledged to increase its spending onhealth As a result, the share of total government expenditure allocated to the health rosefrom 7.7 per cent in 1999 to 8.8 per cent in 2000 During this period the GDP also grewsubstantially which is why government health expenditure, measured as a proportion ofGDP, decreased from 3.7 per cent in 1990 to 2.7 per cent in 2000 (Table 12)

Government Financed HIV/AIDS Expenditure

Table 13 shows that the government of Mozambique spent US$16.0 million on HIV/AIDS

in 2001, which amounts to 0.4 per cent of GDP In per capita terms, US$0.9 per capita

Source: World Bank, 2003

The financing of HIV/AIDS programmes

and US$14.58 per PLWHA were spent in 2001 Of the total government expenditure onHIV/AIDS, US$10.2 million came from the health budget This is up from US$3.3 million

in 1999

Externally Financed HIV/AIDS Expenditure

In 2001 Mozambique received external funding for HIV/AIDS of approximately US$73.3million (Table 14) This is equal to US$4.14 per capita and US$66.64 per PLWHA Externalsources account for 82 per cent of total HIV/AIDS expenditures in Mozambique

Total HIV/AIDS expenditure

Table 15 shows the total financial resources available for core HIV/AIDS expenditure inMozambique Total expenditure for HIV/AIDS in 2001 was US$89.4 million or 2.40 per

Source: Chao and Kostermans, 2002

Table 13: Government of Mozambique funding for HIV/AIDS, tuberculosis and malaria (2001)

Table 14: External sources of funding for HIV/AIDS programmes in Mozambique (2001)

Belgium Bilateral 2,400,000 3 years 800,000 HIV activitiesDenmark Bilateral 11,000,000 3 years 3,666,667 Medicines for opportunistic infectionsFrance Bilateral 1,090,000 3 years 363,333 Reproductive health, gender and family education;

research in malaria; primary health care and trainingGermany Bilateral 7,130,000 3 years 2,376,667 Support to national STI/AIDS programme Laboratory

strengthening, computing of blood banksNetherlands Bilateral 917,000 3 years 305,667 Support national aids programme, capacity building in

management, prevention and control of STI/HIV/AIDS

in central region, support in the implementation of the national strategic plan

Portugal Bilateral 1,120,000 3 years 373,333 Social marketing of condoms, sectoral support

through medicine supplySpain Bilateral 4,300,000 3 years 1,433,333 Sanitary support, training and peer education

programme, professional training on antiretroviral therapeutic

Ireland Bilateral 17,750,000 3 years 5,916,667 Implementation of a VCT, capacity building at

district levelItaly Bilateral 18,763,000 3 years 6,254,333 NAC common fund and capacity building, support to

be incorporated in ongoing activities (health, education and agricultural)

UK Bilateral 63,500,000 5 years 12,700,000 Support the epidemiological and microbiological

programme for communicable diseasesFinland Bilateral 3,709,000 4 years 927,250 Condom procurement, 4 multisectoral community

based project aimed at supporting diagnosis, treatment, prevention of malaria and HIV/AIDS

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The financing of HIV/AIDS programmes

EU Multilateral 40,810,000 5 years 8,162,000 Support to pharmaceutical pool for distribution of

condoms, disposable materials, antibiotics and HIV test kits

UNDP Multilateral 9,000,000 5 years 1,800,000 Prevention for vulnerable groups(miners, refugees,

truck drivers, etc, policy/advocacy, production of educational material, radio/TV broadcast

UNFPA Multilateral 2,600,000 5 years 520,000 HIV support in current country programmeUNICEF Multilateral 25,000,000 5 years 5,000,000 HIV support in current country programmeUNESCO Multilateral 3,500,000 5 years 700,000 HIV support in current country programmeWHO Multilateral 840,000 1 year 840,000 HIV support in current country programmeWFP Multilateral 8,500,000 5 years 1,700,000 Vector control & experts, protection, epidemics, health

education, case management, financesUNIDO Multilateral 100,000 5 years 20,000 HIV support in current country programmeUSAID Bilateral 9,450,000 1 year 9,450,000 Procurement of condoms, support to NGOsWorld Bank Multilateral 50,000,000 5 years 10,000,000 Community initiatives, capacity building, develop

private sector, support to NAC and MOH

Government of Mozambique, 2002

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cent of GDP This translates into US$5.05 per capita and US$81.22 per PLWHA Thegovernment of Mozambique funds less than twenty per cent of total HIV/AIDS spending

on HIV/AIDS

Functional Classification of HIV/AIDS Expenditures

In the year 2000, the expenditure on VCT accounted for 55 per cent of total expenditure on HIV/AIDS programmes The expenditure on information, education and communication (IEC) activities accounted for 22 per cent in the same year There has been a shift in the distribution of resources among different activities since 1999

In 2001 spending on IEC accounted for 68 per cent of total expenditure on HIV/AIDSprogrammes This suggests that much more attention is being given by the country toraise awareness of the different population age groups in order to prevent HIV/AIDS

Sources of Financing

Domestic public funding resources includes tax and non-tax revenue as well as domesticfinancing (borrowing) Forty per cent of government expenditure in 2000 was financedfrom domestic revenue and 58 per cent was financed from external sources (Table 16)

Domestic revenue is 13 per cent of GDP, by far the lowest for the six countries

As mentioned before, external sources for HIV/AIDS expenditure account for more thaneighty per cent of HIV/AIDS expenditure These resources are from a variety of bilateraland multilateral institutions and organisations, as outlined in Table 14

The financing of HIV/AIDS programmes

Financing Mechanisms

Government funds for HIV/AIDS are provided through the state budget The budget flowsdirectly from central treasury to central agencies (e.g., Ministry of Health and MaputoCentral Hospital) and, through the provincial directorates of finance, to provincialadministration and from these to the district administration and/or health facilities

Financing of HIV/AIDS is mainly supported by conditional grants that especially targetHIV/AIDS expenditures As a proportion of total grants managed by the health sector,these conditional grants increased from 5.59 per cent in 1999 to 12.21 per cent in 2001

Table 17 shows the Global Fund award to Mozambique and the breakdown forHIV/AIDS, malaria and tuberculosis interventions Mozambique was awarded a total ofUS$155,735,362 from the Global Fund Seventy per cent of this allocation is for HIV/AIDS(US$109,338,584), nearly twenty per cent is for malaria (US$28,205,783), and about tenper cent is for tuberculosis interventions (US$18,190,995) The allocation for HIV/AIDStranslates into a total per capita allocation of US$5.86 and US$99.40 per PLWHA

Tax and non-tax revenues 590.3 44 14 625.2 39 13

Total budget resources 1,337.6 100 33 1,617.1 100 34

Source: Government of Mozambique, 2001

Table 17: Global Fund award to Mozambique

South Africa

South Africa has a population of 44 million people and a GDP of US$130 billion Based

on its per capita GDP of US$3,160 South Africa is ranked as a lower-middle incomecountry The Human Development Index for South Africa (0.677) ranks alongsideParaguay and Sri Lanka, which have per capita incomes of $2,000 and $800, respectively

This is much lower than South Africa’s per capita GDP, which is in excess of $3,000

The country has an adult HIV prevalence rate of 20.1 per cent for individuals aged 15–49years (Figure 23 in Appendix B) It is estimated that approximately 4.7 million adults areinfected with HIV, accounting for more than half of the infected adults in the six countries(Figure 24 in Appendix B) An analysis of the macroeconomic impact of the epidemicsuggests that over the 1997–2010 simulation-period:

• GDP growth rates in the AIDS/non-AIDS scenarios diverge to a maximum differential

of 2.6 percentage points

• GDP in 2010 will be 17 per cent lower in the ‘AIDS’ scenario

While some of this decline is due to the lower population associated with the ‘AIDS’

scenario, per capita GDP is projected to drop by around eight per cent It is furtherestimated that the second largest impact on the economy will be via the impact onincreased public health expenditures The projected impact on the health sector, due toincreased demand for healthcare, will be greatest for the public health sector, withHIV/AIDS-related utilisation requirements increasing more than three-fold between 2000and 2010

Level of ExpenditureHealth Expenditure

South Africa spends 3 per cent of GDP and just over 15 per cent of governmentexpenditure on healthcare (Table 18) Government health expenditure accounts for 45 per

27

©HSRC 2003

Table 18: Public health expenditure in South Africa (constant US$, 1999/00)

1996/97 1997/98 Percentage 1998/99 Percentage Percentage

1997/98

Government health expenditure (US$) 7,193.4 7,608.4 5.8 7,585.4 -0.3 5.4Health expenditure as

a percentage of GDP 4.2 4.3 1.3 4.1 -4.1 -2.8Government

expenditure (US$) 47,402.9 48,601.8 2.5 217.1 3.0 5.6Government expenditure

as a percentage of GDP 27.9 27.4 -1.8 27.2 -0.9 -2.7Health expenditure as a

The financing of HIV/AIDS programmes

cent of the total health spending, and the remainder is financed from private sources(health insurance and out-of-pocket expenditure) Total health spending equals 7.5 percent of GDP

Government Financed HIV/AIDS Expenditure

South Africa spends a total of US$33.3 million on HIV/AIDS programmes (coreexpenditure) This translates into $0.78 per capita or US$6.65 per PLWHA This level offinancing has steadily increased over the years, and in recent years dedicated financingmechanisms for HIV/AIDS expenditures (for example, conditional grants) have beendevised to ensure prioritisation and protection of HIV/AIDS spending Discussions areunderway to consider public financing of antiretroviral therapy

of international development assistance among the six countries External sources ofhealth financing account for less than one per cent of revenue for the public healthsector

Examples of external sources for HIV/AIDS are: bilateral donors (e.g., USAID, DFID),multilateral donors (e.g., EU), business (e.g., Telkom), and foundations (e.g., KaiserFamily Foundation)