My perspective on the impact of the aid freeze on the health sector in a low-income setting

 My perspective on the impact of the aid freeze on the health sector in a low-income setting

The recent aid freeze by the American Government has caused chaos, panic, and uncertainty across the world. Millions of beneficiaries, hundreds of recipient governments, and thousands of non-governmental organizations (NGOs) and civil society organizations (CSOs) have experienced loss of funding and support. Understanding the extent of those losses and the relative impacts on these different recipient groups is crucial in order to call for the right action. Having heard many policy experts, government leaders, and advocates express concern for beneficiaries in poor countries, I provide my perspective of what the loss for beneficiaries and recipient governments may have been particularly in the health sector.

From the beneficiary's perspective, the primary impact of aid cuts would be the reduction in donor-funded direct service provision and the necessary resources for care and treatment. This raises two crucial questions: first, what portion of the frozen aid was allocated to direct service provision and associated health systems strengthening? Second, what percentage of the funding for service delivery went to interventions that were cost-effective, aligned with the disease burden, and prioritized by the recipient country’s government? This proportion would constitute the cost that must be counted as the true impact of the aid freeze for beneficiaries. Of course, one could go further to ask whether the cost-effective interventions were delivered using a cost-effective, patient-centered, and aligned delivery platform.

From a recipient government’s perspective, how could the loss of this aid be measured? We need to understand how much funding aligned with country priorities. Evidence from my country, Malawi, presents an intriguing case. The 2024 Harmonized Health Facility Assessment revealed that only 2.7% of health facilities had the necessary basic equipment, 43.4% had basic consumables, 27.1% possessed all tracer laboratory diagnostic capacity items, and 50.1% had essential medicines. However, simultaneously, significant funding had been allocated toward largely ineffective in-service training, fragmented and duplicative supervision efforts, and uncoordinated digital health and monitoring systems, totaling about $45 million. If aid funds continue to be directed toward such inefficiencies, the impact of their withdrawal on Governments may be less significant than thought. However, if these funds were reallocated to address the identified gaps in health systems and commodities, their freeze would be deeply concerning.

An analysis of aid expenditure reveals significant inefficiencies beyond service delivery efforts. In Malawi, for instance, National Health Accounts data show that 27% of health sector funding is allocated to governance and administration instead of direct service provision (not all governance and administration may be unproductive, however). This indicates that administrative structures, coordination mechanisms, and transaction costs consume a significant portion of aid before it reaches the intended beneficiaries. Given this allocation and preceding arguments, it could be argued that the direct beneficiaries and recipient governments may not be the biggest losers in the current aid freeze. Rather, the primary burden may rest on intermediary organizations that have historically depended on donor funding for operational sustainability.

While the sudden nature of these reductions is disruptive, resulting in significant setbacks for health outcomes, a critical question arises: would the system have reformed without such a shock, and would it even be allowed to reform now? The incentives for change within the development assistance model have historically been weak, as entrenched interests, persistent power imbalances, and inefficient practices have endured for decades. I advocate for this aid freeze to signify a turning point in how aid is delivered and received. There have been calls for structural reform of the global development assistance framework, particularly in the health sector, with the Lusaka Agenda being the latest of such https://futureofghis.org/final-outputs/lusaka-agenda/. Now is the moment to expedite the implementation of the Lusaka Agenda.

 In conclusion, while concerns about the withdrawal of service delivery resources are valid, it is essential to distinguish between effective and ineffective aid-funded interventions. How much donor funding has been allocated to high-impact interventions, and how much has been spent on donor-driven initiatives that yield minimal impact? Moreover, the methods used to deliver these interventions must be examined. Were they implemented through cost-effective, integrated platforms led by recipient governments and technical experts, or through largely donor-led, expensive vertical programs?

 

The views expressed in this article are personal and do not represent the position of the Ministry of Health, Malawi.