ArticlesAbsorptive capacity and disbursements by the Global Fund to Fight AIDS, Tuberculosis and Malaria: analysis of grant implementation
Introduction
The Global Fund to Fight AIDS, Tuberculosis and Malaria (referred to hereafter as the Global Fund) is a major financing institution launched in 2002 to attract and rapidly disburse funds to fight these diseases.1 By the end of 2005, after 3 years of full operation, it had already made US$4·4 billion in commitments, accounting for about a tenth of all donations for development assistance for health in that period (Michaud CM, unpublished).2 The Global Fund has approved 322 grants in 128 countries and has already disbursed US$1·8 billion. Income per person and disease burden are the only criteria for country eligibility for funds. Grants are, in principle, provided solely on the merit of proposals submitted.
During negotiations to create the Global Fund, considerable debate took place about the capacity of developing countries, particularly low-income nations, to spend substantial new resources for health effectively. Continued growth of new sources of development assistance for health—such as the President's Emergency Plan for AIDS Relief (PEPFAR),3 the International Financing Facility for Immunization,4 and many global-health initiatives (eg, the Global Alliance for Vaccines and Immunization [GAVI], the Roll Back Malaria partnership, the Stop TB partnership)—have only contributed to this debate.5, 6, 7, 8 The Commission on Macroeconomics and Health argued that “all countries can absorb substantial increases in assistance if directed towards health” and that “almost all programs funded by the Global Fund to Fight AIDS, Tuberculosis and Malaria are too small”.9 Sceptics, particularly from other sectors and Ministries of Finance, believe that additional resources cannot be effectively used by the poorest countries to increase delivery of health programmes.
This issue is often referred to as absorptive capacity, a term defined by marginal returns on aid falling below some minimum threshold.10 Constraints to use of external resources can include macroeconomic, institutional, social, cultural, and political factors, and physical and human resources.11 The debate about absorptive capacity is part of broad published work on the effectiveness of aid to promote economic growth. Some researchers have argued that financial support has little effect in countries with poor governance and poor policies.12, 13, 14, 15 Although this idea is disputed,16, 17 many large donors are focusing efforts on nations with good governance, economic policies, and institutional development. For example, the Millennium Challenge Account selects eligible regions on the basis of levels of income and 16 indicators of country commitments to “ruling justly, investing in their people and encouraging economic freedom”.18
The core issue for health is that, sometimes, countries in greatest need for expanded health programmes are the poorest, with bad governance and weak institutional development. Experience of the Global Fund provides an important opportunity to study if these factors are major obstacles to the expansion of health-sector aid. This knowledge from the past 3 years is sufficient to examine the capacity of countries to make use of grants. Disbursement of funds or grant implementation is a necessary, but not sufficient, criterion for having an effect. Investigation of achievements made by Global Fund grants, in terms of expanded intervention delivery to people in need, cannot be done with currently available data. Several assessments of grants from the Global Fund have been published that have elucidated obstacles and constraints to Fund operations.19, 20, 21, 22, 23 Here, we aim to take advantage of extensive quantitative data for grant disbursement available in the public domain to investigate the determinants of absorptive capacity in developing countries.
Section snippets
Methods
We obtained data from the Global Fund's website. The Global Fund has had five funding rounds to date. Grants are, in principle, for 5 years, with an initial commitment for 2 years (phase one). Funds can be provided for a second phase (for 3 years) after a performance assessment at the end of phase one. The Global Fund gives resources to a principal recipient, which is a local entity nominated by the country's coordinating mechanism and confirmed by the Fund. These recipients can be government
Results
Figure 1 presents data for cumulative disbursement by disease area per quarter in phase one: grants in rounds 1 and 2 are included because they have payments over eight quarters. Tuberculosis disbursements have been higher than those for HIV/AIDS and malaria programmes since the sixth quarter. Malaria implementation was highest in the early quarters whereas HIV/AIDS grants were used the least in all quarters. Overall, by quarter 8, use of grants for disease programmes was 64–69%.
Figure 2 shows
Discussion
In published work on aid effectiveness, researchers have argued that governance matters: countries with good governance and political stability are better able to use development assistance to foster economic growth. We have shown that implementation of grants from the Global Fund is strongly related to political stability. This result accords with the experience of most health practitioners and raises important questions about how grant implementation can be maintained or improved in unstable
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