1 Financing Health Findings from a Ghana field study Development Finance Architecture Paris 3 July 2006 Denis Drechsler Economist OECD Development Centre

2Context Scaled-up aid, especially to health (MDGs 4-6) Aid effectiveness agenda New sources of finance (e.g. remittances, private investment) New actors (e.g. global funds, foundations) New financing mechanisms (e.g. shift to budget support)

3 1 Resource Tracking at the Country Level Assessment of Financing Channels for Health 2 (c) Other Private Flows (especially remittances) 3 Towards a Health Financing System? (a) Official Development Assistance (b) Foreign Direct Investment and Commercial Loans

4 ODA by far the single most important inflow to Ghana… Source: Own illustration; based on World Development Indicators (2006).

5 …but less significant than other private transfers combined. Source: Own illustration; based on Bank of Ghana (2006) and World Development Indicators.

6 1 Resource Tracking at the Country Level Assessment of Financing Channels for Health 2 (c) Other Private Flows (especially remittances) 3 Towards a Health Financing System? (a) Official Development Assistance Foreign Direct Investment and Commercial Loans (b) Foreign Direct Investment and Commercial Loans

7 Official Development Assistance Source: Own illustration; based on OECD (2006).

8 ODA: Where do the Funds Come From? Bilaterals: UK, USA, NL, Austria, Spain, Japan, Denmark Multilaterals: IDA, AfDF, UNFPA, UNICEF, UNAIDS Global Funds: GFATM, (GAVI) With various interests and strategies Budget Support: UK, IDA Sector Support: Netherlands, Denmark, EU Project Support: USA, Japan, UNFPA, UNICEF 17 major donors operating in the health sector of Ghana Source: Own illustration; based on OECD (2006).

9 Foreign Direct Investment and Commercial Bank Loans FDI is low: 132 million USD in 2005 Mainly in mining and manufacturing sectors, not in health Commercial bank loans have some significance, especially for the health sector Loans do not cover recurrent costs, but are used for investments in health infrastructure Between 2002 and 2005, loans constituted around % of health sector budget

10Remittances Significant source of household income, especially considering informal channels and in-country transfers Studies indicate that flows are anti-cyclical and can reduce income volatility (e.g. Quartey, Blankson 2004) Partly used to cover health care expenditure, but difficult to have exact breakdown (USAID, 2005) Estimations range from $82m (World Bank) to $1,250m (Bank of Ghana).

11 Other Private Sources Foundations: e.g. Gates (through other NGOs), Rockefeller (sexual and reproductive health), Carter (Guinea Worm Initiative)… Pharmaceutical Industry: e.g. Pfizer (Diflucan Program, Trachoma Initiative), GlaxoSmithKline (African Malaria Partnership)… NGOs (more than 400): e.g. ChristianAid, Plan Ghana, CARE (mostly funded by bi- and multilaterals)… Private Donations: e.g. to the MoH (estimated at 1.6 mio. USD in 2005); to Christian health facilities (estimated at 130 ths. USD in 2005)…

12 1 Resource Tracking at the Country Level Assessment of Financing Channels for Health 2 (c) Other Private Flows (especially remittances) 3 Towards a Health Financing System? (a) (a) Official Development Assistance (b) Foreign Direct Investment

13 Bi- and multilaterals Government of Ghana Private Households Ministry of Health Ministry of Finance 3 main sources of health financing… HEALTH SECTOR 44% 27.2% 13.6% Source: Own illustration.

14 Internally genera- ted funds (13.6%) Bi- and multilaterals Government of Ghana Private Households Ministry of Health Ministry of Finance (59.2%) Health Fund (14.9%) & MoH Programme Support (12.3%) Fin. Credits (15%) HPIC (0.2%) Budget Support 44% …using diverse channels… HEALTH SECTOR Project Support Other private expenditure Source: Own illustration.

15 Internally genera- ted funds (13.6%) Bi- and multilaterals Government of Ghana Private Households Ministry of Health Ministry of Finance (59.2%) Health Fund (14.9%) & MoH Programme Support (12.3%) Fin. Credits (15%) HPIC (0.2%) Budget Support 44% …and new actors emerging HEALTH SECTOR Project Support Other private expenditure Global FundsFoundations Pharma Industry NGOs (e.g. CHAG) Source: Own illustration.

16 How do Global Programmes fit in? Significant new sources of development finance to address crucial problems –GFATM: $30m approved for Rounds 1,2,4 –GAVI: $36m disbursed (2000 – 2005) –EFA-FTI: $8m in 2005; $11m in 2006; $11m in 2007 But there are also risks involved –Distortion of priorities (e.g. from Malaria to HIV/AIDS; from land degradation to climate change) –Duplication or even weakening of existing co-ordination mechanisms (e.g. CCM of GFATM; ICC of GAVI)

17 How do Global Programmes fit in? Added value depends on: –A priori alignment with country priorities and strategies (e.g. EFA-FTI) –Consideration for existing co-ordination mechanisms (both cross-sectoral and government-donor) –Effective harmonisation amongst donors (e.g. mosquito bed nets) It does not depend on: –Institutional presence at country level –“Branding” at country level

18 General Co-ordination and Alignment “Development partner coordination in Ghana is strong” (WB Country Brief, 2005) Multitude of meetings and co-ordination mechanisms (e.g. bi-annual health summit, Consultative Group meeting, monthly (sometimes weekly) informal meetings among donors, various result matrices…) However, donor activities are not streamlined (e.g. shift to budget support, sharing of information) … and co-ordination not inclusive (e.g. omission of important actors) Co-ordination among ministries and national agencies remains weak (e.g. MoF – MoH; GAC - MoH)

19 Conclusions / Outlook Pursue harmonisation and alignment Include all relevant actors in policy dialogue (CCM praised for inclusion of civil society) Improve country-level information (financial and sector-specific data collection systems) Improve the means of measuring and integrating private sources Strengthen country capacity to monitor and oversee sector programmes

20 Thank you for your attention!