Where is the money to come lrom? The health sector has not yet begun the task of financial mobilisation. Without special efforts to accelerate the rate of financing, Health for all goals could be set at risk
by Lee M. Howard
Y
hroughout the history of WHO, the appeal for international technical and financial cooperation has been a recurrent theme. But since the 1978 Alma-Ata Conference on primary health care, joint appeals by WHO's Member States have taken on a special urgency. The challenge to greatly extend access to essential health services on a global scale carries with it an inevitable risk that national expectations may exceed the realistic potential of combined national and international financial resources. Inflation, high interest rates, and mounting external debt have often persuaded national development authorities to restrict health investments in favour of other sectors of the economy. The present climate of international economics has seldom been worse in human history ; all the more reason for paying well-informed and professional attention to financial alternatives if we wish to accelerate progress towards health. Indeed, the more dismal the scene, the greater is the need for objective knowledge about potential financial supply (both national and international) and about economically feasible demand for financial resources. World Bank data showed that 148 developing countries were collectively spending some US $26,000 million in 1980 from their official government public budget. Selected country studies ' have suggested, that these same countries may , on average, be W oRLD HEALTH,
spending as much as four times more in private than public expenditures, or a sum total of $130,000 million in public plus private expenditures. Yet external financial cooperation in health totalled only $3,900 million in 1982. This is a comparatively small external input. However it constructively ~upports health development. by
providing financing for such new efforts as planning, sector analysis, trials, training, research , and the testing of economically feasible programme alternatives for extending services on a national scale.
Sources of finance In 1984, the total flow of external financing for all development purposes was $91 ,870 million. Just over one-third ($35,750 million) is transferred in the form of grants and lowcost loans which are called "official development assistance". Most health financing is tranferred in this form. A little less than two-thirds of the total ($54,000 million) represents commercial loans from official agencies, international and private banks. Private and non-governmental organizations contributed $2,500 million. The primary source of this financing, other than private and voluntary contributions to NGOs, is the annual budget of contributing governments located primarily in Europe, North America, and the Western Pacific (Japan, Australia, and New Zealand). The respective parliaments authorise such fundings to be channelled through each government's national development cooperation agency to multilateral banks, cooperative groups such as the European Economic Community, and various agencies of the United Nations. Substantial development funding is also granted to nongovernmental agencies. 9
Preventive measures such as immunization are in the long term much cheaper than curative ones-a crucial factor to consider in the present gloomy climate of international economics. Photo WHO/L. Solmssen
May 1986
Whereds the money to come from? It is hard to arrive at an accurate
estimate of all sources for health financing . But the principal sources in 1982 for most health, population, nutrition, water supply and sanitation projects were : - The bilateral agencies. Direct government-to-government cooperation represents about one-third of all recorded concessional financing for health-some $1,300 million. Examples of such agencies are the Danish International Development Agency (DANIDA) , the Japan Overseas Economic Cooperation Fund (OECF) , and the United States Agency for International Development (USAID) . - Multilateral financing organizations, such as the World Bank, African Development Bank, Asian Development Bank , Inter-American Development Bank, and the European Economic Community. These supplied $1,160 million in healthrelated grants and loans during 1982. The loans are often negotiated at commercial rates and concentrate on capital investment ventures such as water supplies and sanitation systems. - Non-governemental sources. These accounted for 18 per cent of all health contributions and equalled the total input by United Nations health-related special agencies . An estimated five per cent of this contribution is attributable to the wellknown international foundations, while the larger proportion is administered by very large numbers of private and charitable organizations . - The United Nations organizations. Not all of the specialised agencies would prefer to be considered as financing agencies. WHO, however, representing 12 per cent of the global financial resource for health, provides a critical resource , for technical and professional cooperation. UNICEF (United Nations Children's Fund), UNFPA (United Nations Fund for Population Activities) , and UNDP (United Nations 10
Development Programme) make direct transfers to developing countries for programme operations. - Private and commercial sources. The potential for private sector cooperation at concessional rates merits increased attention . For example, the countries of Latin America, Asia (including Japan) and Africa were reported to have consumed pharmaceutical products in 1980 with a total value of $10,350 million . Drug consumption represents a high proportion of all international health costs in developing countries. Price reductions by national or international companies could be considered as one mechanism for concessional financing . Concessional pricing is already a practice among certain international companies , and this trend should be encouraged where the high-volume requirements of Health for all objectives can be met with _products of high quality and low cost. - Identifying sources. On a global scale, aside from private commercial institutions for which there is no health-specific estimate, there are over 50 official bilateral, multilateral, and UN institutions and at least 1,500 non-governmental organizations. For each country or region, the number and variety of sources will vary. Identifying and describing these sources for each recipient country represents one of the basic requisites for effective external financial planning. External financing is derived predominantly from development-related institutions, not only the bilateral organizations and banks, but the NGOs themselves. Development orientation is characteristic of almost 85 per cent of all external financing for health. This alone suggests why it is important for health authorities, national and international , to appreciate the prevailing mechanisms through which development authorities at the national level cooperate with development authorities m external financing institutions . WHO's budget represents about 12
'
per cent of total "external" financial resources even though these funds are used predominantly for technical cooperation rather than financial transfer. Given the multi-sectoral development orientation of contributing governments, it is not foreseeable that WHO itself could become a significantly larger source of external financing for health. On the other hand, since it has the largest international cadre of health professionals, WHO could play a critical role in strengthening the capabilities of health ministries and institutions to accelerate financial mobilisation for health. The major donors are global in distribution , although concentration of effort may be limited to a smaller number of countries. National development authorities, the U NDP resident representative , and the Organization for Economic Development and Cooperation in Paris are among the sources which may help to assess the potential of external organizations for cooperation in each country or region. In the WHO Region of the Americas, guidance on sources has been circulated to all ministries of health and to WHO!PAHO country representatives. Within the annual availability of external financing of general development , which at present stands at around $35,000 million, recent demand for health financing has varied between eight and ten per cent. The external financial authorities themselves indicate that health demand has by no means reached its potential limits . Nor has the health sector yet begun to organize effectively for the task of financial mobilisation . And without special efforts to accelerate the rate of financing, there is serious risk to the achievement of Health for all goals within the brief period of the next 14 years. Fortunately, financial mobilisation requires no fundamentally new strategy. It does require a working knowledge and adaptation of development financing procedures that have evolved over the past 30 years . It also calls for a level of trained professional attention and organization which is commensurate with the realistic fiscal requirements for achieving the technical programme goals. • W oRLD HEALTH,
May 1986