Since the start of the decade, the amount of government-to-government foreign aid specifically for health has increased dramatically. Approximately 10 per cent of Africa’s health care expenditure is now financed directly by aid.

However, it is becoming increasingly clear that this extra spending is having very little effect on health in the poorest parts of the world. Very little progress has been made towards achieving the health-related Millennium Development Goals, and far too many people still pay out of pocket for health care.

Part of this failure lies in the current model of official foreign aid, in which the governments of rich countries hand large sums of money to governments in poor countries, in the hope that it will be effectively spent. Unfortunately, corruption and other forms of mismanagement mean that very little of this money actually makes it to patient care.

Instead of continuing the failing strategy of subsidising government provision of health services, donors should consider radical new approaches. For instance, there currently exists vast capacity within the private sector, which could be effectively harnessed to work for the poorest.

Some donors have experimented with contracting the private sector to provide health services and private insurance. Where this has happened, the quality and quantity of health services have increased. Donors should therefore encourage far greater use of the private sector, which would allow government to focus on its strengths, such as standard setting.

Published in association with

Alternate Solution Institute, Pakistan

Cathay Institute for Public Affairs, China

Imani, Centre for Policy and Education, Ghana

Initiative for Public Policy Analysis, Nigeria

Institute for Free Enterprise, Germany

International Policy Network, United Kingdom

Liberty Institute, India

Medicine and Liberty, Switzerland

Minimal Government, Philippines