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Budget Briefs

An exploratory analysis of HIV and AIDS donor funding in South Africa

Budget Brief No. 155

Nhlanhla Ndlovu1
Contact: nhlanhla@idasact.org.za

IDASA

SARPN acknowledges permission from IDASA's Budget Information Service to post this report.
IDASA website: www.idasa.org.za
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Executive summary

Funding of HIV and AIDS interventions has been increasing over the years, both in the public sector and in donor assistance. Donor funding for HIV and AIDS in South Africa is channelled through bilateral aid to government departments and direct funding to NGOs from international aid agencies. However, funding to NGOs is particularly difficult to track because there is no centralised reporting mechanism in place for all international aid to the NGO sector.

To monitor donor financial commitments for HIV and AIDS in South Africa, the national Department of Health (DOH), through funding from the United Nations Development Programme (UNDP) and the United Nations Theme Group on HIV and AIDS (UNTG), has developed a database referred to as a ‘Donor Matrix’. The Donor Matrix is aimed at monitoring donor funding for health services by listing donor funds in a form of commitments, disbursements, objectives, activities and implementing bodies. However it is difficult to compare donor efforts against government initiatives since donor information is based on financial commitments, not actual allocations or disbursements, and is often reported over multiple years.

The Organisation for Economic Cooperation and Development conducted a detailed analysis of HIV and AIDS foreign aid commitments to developing countries for 2000 to 2002.2 The analysis indicated that South Africa was amongst the top five countries that received the largest shares in total HIV and AIDS commitments. Of the total HIV and AIDS commitments, Zimbabwe, Kenya, Nigeria and South Africa received 18%, 11%, 13%, and 8% respectively. According to the OECD 2000 – 2002 report, the 8% for HIV and AIDS to South Africa formed 99% of health-related donor aid in the country.

Using this OECD data to compare public-sector [or government earmarked] HIV and AIDS funds with donor funds for 2000-2002, government budgets increased by 99% in nominal terms from 2001 to 2002, while donor funds simultaneously increased by 101%. In proportional terms (in the context of progress in public sector budgeting), donor funding as a share of total earmarked HIV and AIDS spending fell slightly from 44% in 2000 to 40% in 2002. From a regional perspective, however, other countries are relying more on donor sources for HIV and AIDS funds than on domestic revenue. For example, in 2001, 90% of HIV and AIDS funding in Mozambique came from external bilateral and multilateral donors.3

DOH’s donor matrix indicates that the US government will provide, via various agencies, the largest amount of donor funds for HIV and AIDS programmes in South Africa amounting to $126.4 million (R886 million) over a six-year period (2001-2006).

With regard to the Global Fund for AIDS, Tuberculosis and Malaria (GFATM), 55% ($35,509,531) of the total approved grants ($65,030,986) to South Africa had been disbursed as of end of April 2005. The total includes funds allocated to KwaZulu-Natal ($26,741,529 for round 1), two approved projects for loveLife ($12,000,000 and $2,354,000 for round 1), the Western Cape government ($15,521,456 for round 3), and the National Department of Health ($8,414,000 for round 2).

Reportedly spending of bilateral donor funds for HIV and AIDS is slow as compared to spending of government funds. There are two main reasons for this. Firstly, it is reported that donor funding is provided as ring-fenced resources which are made available for very specific purposes and objectives. Typically ring-fenced or earmarked funds come with strict conditions to be satisfied when spending the money. Although earmarked funding is beneficial in ensuring that new and critical projects are funded, donor funds may hinder or clash with national government priorities, leading to decreased flexibility for implementers when spending on vital local priorities.

Secondly, spending of donor funds is slowed by a weak health system and insufficient capacity of the government to use the money. Increased government and donor allocations for HIV and AIDS without improved capacity to spend, challenges the overall strength of the health system. Given that provision of HIV and AIDS services in the public sector depends on the overall ability of the health sector to provide all health services, absorption capacity is increasingly becoming the issue for HIV and AIDS spending in South Africa, rather than availability of resources. For this reason the donor community should be able to invest in capacity building in the government system to ensure that the resources they inject into the government are utilised effectively and efficiently.


Footnotes:

  1. The author would like to sincerely thank Ms. Nelly Malefetse, Director: International Health Liaison, and Dr. Rose Mulumba, Director: HIV/AIDS, both from the National Department of Health, for their invaluable input towards this Budget Brief. I would also like to thank Alison Hickey, Manager: AIDS Budget Unit – Idasa, for reviewing this brief.
  2. UNAIDS/OECD. Analysis of Aid in Support of HIV/AIDS Control. July 2004.
  3. Guthrie, G. and Hickey, A. Eds. 2004. Funding the Fight: Budgeting for HIV and AIDS in Developing Countries. AIDS Budget Unit – Idasa. Page 80.


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