Foreign aid for health: Moving beyond government

As the G8 gathers in Hokkaido, leaders will pledge billions more aid for health in Africa – despite the fact that previous aid has had almost no impact.

A new paper from the Campaign for Fighting Diseases argues we should completely rethink the way aid is delivered, bypassing corrupt and inefficient government ministries and making far greater use of private organisations.

Recent years have seen massive increases in foreign aid for health, rising to 13% of total overseas aid in 2005 and accounting for over 19% of all health spending in Sub-Saharan Africa; yet in spite of this the region is making no progress towards meeting the health-related Millennium Development Goals.

Much of this failure is due to aid going directly to ministries in developing countries, who are then supposed to use the money to deliver healthcare. Mismanagement, corruption and waste ensure that very little of it reaches patients.

Instead, donors should stipulate that their funds be used to finance competitive, outcome-based contracts to deliver healthcare. Such contracts would see non-profit, private sector and government entities competing to provide health services, with continued funding contingent on actually delivering results.

Where they have been used, contracts have outperformed government provision in cost, effectiveness and equity. The government of Cambodia has been so successful with their contracting programme that it has now been extended to cover one in ten Cambodians. Six other case studies show that contracting delivers results far superior to government provision.

Report author Philip Stevens says: “The current model of health aid is not working. Competitive contracts would ensure that health services could be delivered more cheaply to those who are failed by public provision – especially the rural poor – and that taxpayers’ money is no longer wasted on unaccountable aid spending.”