Some thoughts on funding
200. It is clear from all that has gone before in
this Report that the HIV/AIDS epidemic is not something which
will simply go away when enough money is spent on it. But we should
not then conclude that funding is irrelevant. The requirements
of information and education, primary health care and STD treatment,
basic palliative care and impact mitigation all require sums beyond
the means of most developing countries if unassisted by donors.
A number of funding issues have been brought to our attention
during the course of this inquiry. We will consider how funding
for HIV/AIDS is estimated; whether levels of funding are adequate;
which bodies should provide funds, in what form and to whom.
201. To discuss funding of HIV/AIDS work we must
first know how much is being spent and by whom. This is not, however,
as straightforward a question as it might first appear. We can
take as an example the various figures provided by DFID in response
to questions as to its levels of expenditure on the epidemic.
In oral evidence Dr Julian Lob-Levyt said, "At the moment
the Government is committed to spending £100 million [over
the next three years] on HIV/AIDS. We shall vastly exceed that
commitment actually. At present we are spending between £20
and £30 million per year, but that spend is on a very steep
rise, as a number of pledges are being transmitted, not least
of which is the International Partnership Against Aids in Africa".
This was elaborated on in a supplementary memorandum, "Current
spending is running at £20-30 million over the past four
years. Anticipated to rise to over £40 million 1999/2000
and increase further year on year as projects and programmes at
the early stage of development come on line".
202. By the end of the inquiry the figure for DFID
expenditure in 1999-2000 had increased to £54.8 million,
£42.8 million for 1998-99 and £41 million for 1997-98.
There had thus been a considerable increase on the £15 million
spent in 1992-93. These figures were for bilateral expenditure
and did not include support for multilateral agencies such as
UNFPA, UNICEF and UNAIDS working on HIV/AIDS and sexual and reproductive
health. The figures do appear to vary and expand over time
thus in answer to a parliamentary question on 8 January 2001 DFID
claimed to have spent in the previous year "over £84
million on bilateral HIV/AIDS related work the bulk in
203. It is important to note that these figures include
"work in broader sexual and reproductive health which is
targeted towards HIV/AIDS prevention".
In an answer to a parliamentary question the Secretary of State
pointed out that "In many cases it is not practical to distinguish
between the sexual and the reproductive health/family planning
elements. There is also often no clear distinction between assisting
with work in HIV/AIDS and in other sexual health issues".
The figures also include non-health activities where "HIV/AIDS
is flagged as a significant element, for example in education
and prevention, and so on".
Clare Short warned, "The more we mainstream our efforts the
less we will be able to measure separately because it will be
mainstreamed right through our programme".
204. It is obviously the case that there are many
facets of developmental expenditure which could have an impact
on HIV/AIDS. We are worried, however, at the apparent flexibility
within DFID as to what constitutes HIV/AIDS expenditure. In particular,
we do not believe that sexual and reproductive health should per
se be considered spending on HIV/AIDS. It is of course true,
as we have maintained above, that a comprehensive provision of
sexual and reproductive health services would have an enormous
impact on HIV/AIDS. But it is not automatic. To give just one
example, the social marketing of condoms as part of a reproductive
health programme will have a different design from a social marketing
programme designed to reduce HIV/AIDS and STDs. We request
assurance from DFID that sexual and reproductive health expenditure
is only accounted for as an aspect of HIV/AIDS spending when HIV/AIDS
is explicitly and specifically addressed in the programme design.
205. Dr Peter Piot of UNAIDS confirmed that it was
difficult to ascertain the amount being spent globally on HIV/AIDS.
UNAIDS was attempting to collect figures so as to have a global
view of "who is contributing what, so we have a base line".
It was not an easy task. They were taking a "double approach",
gathering information from donors and from the recipient countries
themselves "You will see that it does not match,
even for the same donor".
There were some "major discrepancies".
It is an obvious matter of concern when donor commitments are
not realised on the ground, or at least when donors and recipients
differ as to what is being spent on HIV/AIDS.
206. The mainstreaming and integration of HIV/AIDS
into development work also meant that funds were more difficult
to track. In their memoranda to the Committee UNAIDS expanded
on the difficulties they face in assessing the level and flow
of international resources for the response to HIV/AIDS. UNAIDS
states, "Although the UNAIDS secretariat has made significant
progress in establishing sustainable processes for the monitoring
of donor country resource flows to HIV/AIDS ... some key issues
remain. For example, several major DAC members including France
and the European Commission continue to have major difficulties
in the reporting of their official development assistance allocated
207. Not only is it unclear how much is being spent
on HIV/AIDS, information is also out of date. UNAIDS told us,
"Because of administrative differences among the DAC member
countries, including differences in fiscal years, there is a significant
delay in reporting. It is only possible to report on donor country
HIV/AIDS expenditures almost 2 years late (i.e reporting on 1998
data in mid 2000)".
208. The UNAIDS secretariat is collaborating with
UNFPA and the Netherlands Interdisciplinary Demographic Institute
(NIDI) to collect information on official development assistance
disbursed to HIV/AIDS by donor countries. UNAIDS is also working
to collect and improve information on resources from UNAIDS cosponsors
and from national governments.
UNAIDS plans to convene a meeting of donor country representatives
"to agree on a common methodology for reporting on HIV/AIDS
components within integrated development projects and HIV/AIDS
allocations within sector wide approaches and common basket funding
The example of DFID shows the confusions that can arise even within
one department where there is no agreed system for assessing HIV/AIDS
209. Does it matter? We believe it does, for three
reasons. First, without accurate information on funds globally
dedicated to HIV/AIDS we cannot know whether sufficient sums are
being spent to finance the necessary interventions. Nor can we
know whether these costs are being appropriately shared. As UNAIDS
put it, "What we are trying to do now is try to see what
is the base line and then target who does not pay enough".
Secondly, at a national level it is difficult to see how effective
national strategies can be designed in ignorance of the current
level and breakdown of HIV/AIDS-related expenditure. Thirdly,
and as importantly, uncertainty as to what constitutes HIV/AIDS
expenditure is to an extent uncertainty as to whether and how
expenditure has an impact on HIV/AIDS. The problems in assessing
HIV/AIDS expenditure reveal a wider difficulty in knowing and
agreeing on effective interventions.
210. We recommend that UNAIDS and donors reach
agreement as soon as possible on how to calculate levels of expenditure
on HIV/AIDS. We would expect such an agreed basis for calculation
to specify, on the basis of research, the conditions necessary
for mainstreamed interventions to have a real impact on HIV/AIDS.
211. Despite the difficulties in assessing levels
of expenditure, UNAIDS has published information on amounts committed
over time to HIV/AIDS. UNAIDS tracked HIV/AIDS funding from 10
major donors from 1987 to 1998 and discovered that it increased
from about US$ 59 million in 1987 to US$ 293 million in 1998.
This fivefold increase is obviously encouraging, particularly
when seen in the context of a decline during the same period of
overall levels of ODA.
212. Further scrutiny, however, demonstrates the
inadequacy even of this increased funding. UNAIDS state, "Unfortunately,
as spectacular as this increase appears, it has not kept pace
with the spread of the epidemic or even the most basic
requirements for HIV programmes of the most affected countries.
During the same period, the number of infections has risen from
4 million to 34 million, a figure that continues to grow given
the more than 5 million new infections annually. Furthermore,
increases in donor support had begun to level off between 1996
and 1998, and it remains less than just 1 per cent of donor countries'
total annual ODA budgets. Against the backdrop of soaring infection
rates, this trend is of critical concern".
The point is starkly made in the UNAIDS publication 'Level and
flow of national and international resources for the response
to HIV/AIDS, 1996-97' where it calculates that "ODA funding
per person living with HIV has therefore peaked in 1988 at approximately
US$ 22 per person for the 10 ODA agencies included [in their survey].
It has since steadily dropped to its 1997 rate of under US$ 9
per person living with HIV".
That figure might be a somewhat crude assessment of effectiveness
of expenditure but it does show that donor funding for HIV/AIDS
is not matching the scale of the crisis.
213. How much money is necessary? UNAIDS have estimated
a cost of US$ 1.5 billion, excluding anti-retrovirals, for an
adequate response to HIV/AIDS in sub-Saharan Africa, "which
includes youth-focussed interventions, interventions focussed
on sexual behaviour, public sector condom provision, condom social
marketing, strengthening services to treat sexually transmitted
infections, voluntary counselling and testing, workplace interventions,
strengthening blood transfusion services, the prevention of mother-to-child
transmission, and mass media and capacity building".
Clare Short had a slightly different perspective on the funding
issue, emphasising that "the major barrier to more effective
action ... has been the unwillingness of African governments to
She went on, "so when people splash around numbers and say
US$ 2 billion is needed, that sounds all very well and it sounds
as though the only problem we have got is that miserable, rich
donors will not provide the money. That is just untrue".
She said she was glad no target amount or fund had been announced
at the G7 in Okinawa, "I really get fed up with demands for
a fund as a cheapskate way of pretending action is being taken".
214. The figures both on the decline in ODA overall
to sub-Saharan Africa and of spending per HIV-positive person
make appalling reading. We seem as far away as ever from the UN
target of 0.7 per cent of donor countries' GNP being spent on
development assistance. And we must add that the 0.7 per cent
target was agreed to in an AIDS-free world. We share the Secretary
of State's cynicism over headline-grabbing announcements of cash.
But this fact at least is clear not enough money is actually
being spent in the response to HIV/AIDS. It is often difficult
to spend wisely and effectively, that is true. Donors must as
a matter of urgency devise ways of spending significant sums in
less than perfect environments, at the same time strengthening
national governments' policy frameworks. We believe this
should be a priority for the International Partnership Against
AIDS in Africa.
215. The World Bank has committed US$500 million
for a three-year HIV/AIDS programme for Africa. Some witnesses,
however, expressed worries over the interventions of the World
Bank on HIV/AIDS. Alan Whiteside had concerns "that the Bank
particularly is putting large sums of money into stuff called
HIV/AIDS without necessarily having strategic or technical resources
either to inform the allocation decisions or to support the implementation
of those activities ... When the Bank starts loaning to governments
which do not have technical capacity, the question of how to support
implementation responsibly is incredibly important, and the Bank
is not well structured to address that".
He did, however, say that the Bank did have a very important role
as "the one institution which has real money outside of governments".
Clare Short also gave a warning with regard to the significant
headline funds which the World Bank is now announcing as at the
disposal of governments in the fight against HIV/AIDS. She reminded
the Committee that governments "have to borrow from the World
She expanded on these concerns in evidence given to the Committee
on the 2000 Annual Meetings of the IMF and World Bank. She expressed
then some scepticism over the establishment by the World Bank
of a separate fund for HIV/AIDS, which tended to create its own
imperatives from dispersal "that are not always the same
as how you get things moving in a country".
216. The response of the World Bank and the IMF to
HIV/AIDS cannot be confined to the provision of funds but must
affect all aspects of their policies. Criticisms in the past of
structural adjustment programmes, and the introduction of the
HIPC initiative, have resulted in a more poverty-focussed approach
from the IFIs to structural adjustment. To qualify for HIPC relief
countries now must develop, in consultation with a range of interested
parties, a Poverty Reduction Strategy Paper (PRSP), which is a
requirement for the provision of funds through the Poverty Reduction
and Growth Facility (PRGF), the successor to the ESAF (Enhanced
Structural Adjustment Facility). Any poverty reduction strategy
for countries with significant HIV/AIDS prevalence must include
a clear and credible strategy on HIV/AIDS.
217. The leverage provided by the HIPC initiative
could be an important impetus to effective HIV/AIDS interventions
in developing countries. The PRSP approach is something the Committee
has advocated since its inception and we are glad to see it introduced.
In such PRSPs there is an expectation, where relevant, that the
country include discussion of HIV/AIDS. Clare Short said, "absolutely
HIV should be there. It is a development challenge to countries
and it should be part of the programme".
James Wolfensohn pointed out that "The PRSP is a document
of the Government, not of us, and in some countries the priorities
change. In the case of Africa, at the moment, with 23 million
cases of AIDS, the notion of having social programmes without
dealing with the question of AIDS becomes an impossibility".
We welcome the introduction of Poverty Reduction Strategy Papers
and in particular the insistence that HIV/AIDS is included in
the strategies of all countries affected by the epidemic. The
PRSP process requires adequate consultation with civil society.
As we have discussed elsewhere in this Report, community groups
and people living with HIV/AIDS are an essential element in an
effective response to the epidemic. Therefore, every PRSP should
have been preceded by consultations with community groups and
NGOs working on HIV/AIDS, and, most importantly, with people living
with the disease. Any strategy, to be acceptable, must take account
of their views and include community participation.
218. The PRSPs are linked to the Heavily Indebted
Poor Countries (HIPC) initiative. UNAIDS point out that "Across
Africa, national governments pay out four times more in debt service
than they spend on health and education".
They conclude, "By relieving debt in the poorest countries
which, often, are the ones with the highest HIV and AIDS
figures money now exported to service debt could be reinvested
into AIDS prevention and care".
We have considered the HIPC initiative in a number of Reports
and welcomed the PRSP approach, designed to ensure that funds
released from debt servicing go into the social sectors. UNAIDS
welcomes the inclusion of HIV/AIDS in PRSPs but warns, "a
concerted effort by a coalition of interested African government
officials, civil society representatives, creditor governments,
and United Nations and multilateral agencies will be required
to ensure that debt relief is actually used to mobilize substantially
increased funding for AIDS".
We recommend that UNAIDS monitor the extent to which debt relief
results in the mobilization of resources by national government
for HIV/AIDS and reports back to the international community.
219. In the course of the inquiry it has appeared
that some countries have been unhappy about taking loans from
the World Bank to finance HIV/AIDS work. News articles quoted
the Zambian Health Minister as refusing a loan because the country
was failing to service its existing debt. Malawi had rejected
a similar loan offer. South Africa has not approached the World
Bank to finance HIV/AIDS programmes and it appeared that at present
they have no plans to do so. Given the burden of unpayable debt
and the possible costs associated with tackling HIV/AIDS, it is
perhaps not surprising that there is some reluctance to receive
World Bank funds on loan terms, however concessional.
220. In evidence to the Committee on the Annual Meetings
of the IMF and the World Bank, James Wolfensohn, President of
the World Bank, said that the Bank saw prevention as the most
immediate priority for funding and they were "trying to raise
money for grants; and some grants are coming, DFID itself is providing
some grants in terms of AIDS. The next level is IDA lending. IDA
lending is 30-year lending at no cost, at no interest; so, essentially,
two-thirds of that is a grant, if you present value its value.
And the third is to borrow at interest".
He told us that he was trying to maximise the amount of money
made available on either grant or IDA terms, "and there is
a move now to try to convert some of the IDA lending to grants".
He was very keen to see some IDA loans converted into grants but
pointed out that there would be implications for IDA donors, such
as the United Kingdom. The donor countries would need to contribute
more to IDA in the future to compensate for the loss of funds
previously due to come back in repayments. He did not, however,
think that terms of repayment were an urgent issue much
more important was simply having the money available to ensure
"the survivability of those countries". He thought that
"the restriction on AIDS fighting is not money, the restriction
is will and organisation".
221. There were four conditions for World Bank assistance
"that they should have a participatory approach to
HIV/AIDS ..; that there should be a coordinating body in the country,
which includes both Government and people that are involved; that
the Government commits to quick implementation, including channelling
grant funds directly to communities, civil society and the private
sector; and the use of community-based organisations and NGOs
to implement the programmes".
222. Clare Short, in giving evidence on the Annual
Meetings of the IMF and the World Bank, warned that many developing
countries had problems in debt management.
She was asked whether it was appropriate to provide funds for
HIV/AIDS on a loan basis since there would not in the immediate
future be a resulting income stream to service the debt. She responded,
"It is more than a question of income stream which
is a very important question it is also a question of
foreign currency debt".
Loans were increasingly provided for social development rather
than the traditional infrastructure projects, but such lending
did not provide as readily a foreign currency income stream to
repay the debt. She warned, however, against moving to a position
where all such funds were on grant terms since that would "slash
resources that are available".
Borrowing for social development was acceptable as long as the
country was considering its overall borrowing capacity and managing
its debts properly.
223. Clearly, as the Secretary of State and Tony
Faint said, there is the potential for significant sums lent on
concessional terms to be effectively used if the country concerned
has control of its finances and its debt. We do, however, have
concerns at IDA lending to finance the attack on HIV/AIDS in sub-Saharan
Africa. The debt management capacity of many of these countries
remains weak and it would be unforgiveable for the donor response
to HIV/AIDS to result in an increase in their unsustainable debt
burden. We must also take into account the fact that the full
impact of the AIDS epidemic has yet to be felt, whatever advances
might be made in the future in prevention. In other words, we
question whether we should be lending into a future cataclysm,
with all its effects on the civil service, infrastructure and
economy of the country. We would encourage the World Bank and
donors to ensure that as much as possible of the US$500 million
committed by the World Bank to HIV/AIDS in sub-Saharan Africa
is in grant rather than loan form.
224. Jeff O'Malley pointed out that the World Bank
had come to the issue of HIV/AIDS only recently. Whilst this new
commitment to fight HIV/AIDS was welcome, he was concerned that
the Bank "is putting large sums of money into stuff called
HIV/AIDS without necessarily having strategic or technical resources
either to inform the allocation decisions or to support the implementation
of those activities".
We are concerned that funding of HIV/AIDS is done responsibly
and recommend that UNAIDS be closely involved in the provision
of technical advice to the World Bank in its funding decisions.
225. Witnesses also stressed the responsibility of
national governments to fund the response to HIV/AIDS. Jeff O'
Malley said, "I agree with what the Secretary of State said
in South Africa. Most of the resources for the response to HIV/AIDS
anywhere have to come from local communities and countries in
most of the world. The overall scale of development assistance
... is so small in comparison to development challenges in the
world that we should not lull ourselves into thinking that a doubling
or tripling of international development assistance for AIDS will
solve the problem
226. Dr Peter Piot agreed, "we need an enormous
increase in resources for basic prevention, for basic care. A
major part of that has to come from the governments of the countries
that are affected. If something is about survival or national
security that is where the money has to come from. They are struggling
A study of the breakdown of HIV/AIDS funding in 1996 suggests
that "The proportion of total funds contributed by the national
government was much higher in those countries of Eastern Europe
(79%) and Latin America (67%) included in the study than in those
countries from sub-Saharan Africa (9%) and the Caribbean (8%)".
227. UNAIDS statistics suggest that many developing
country governments have some way to go before they dedicate adequate
funds either to the health sector or to HIV/AIDS. The study admitted
that there a number of problems in such country-specific data
in that it did not include cross-sectoral work and tended not
to count in work in care and support. UNAIDS concluded, "The
limited information on resources allocated to care is one of the
weaknesses of this study ... national resource allocations are
Nevertheless, even when such reservations are fully noted, the
UNAIDS statistics suggest that some countries with high degrees
of prevalence are not as yet spending enough on HIV/AIDS. UNAIDS
notes that there are variations in the ability of countries to
finance a response but maintains that some of the differences
in expenditure have no obvious reason, "For example, in sub-Saharan
Africa, where the epidemic is the most severe, there are large
differences in funding for countries with similar epidemics. Nigeria
has over twice as many people infected with HIV/AIDS as Uganda
(although with a lower prevalence of HIV/AIDS), yet Nigeria reported
spending less than US$ 2 million in 1996, compared to the US$
37 million reported by Uganda".
We are concerned that certain countries are not as yet spending
enough of their own resources in the fight against HIV/AIDS. Dependence
solely on donors not only limits the resources available but also
demonstrates the lack of real national commitment to halting the
228. One further aspect of funding must be considered
that is, what are the appropriate channels for HIV/AIDS
expenditure. Throughout the inquiry we received a considerable
amount of evidence on the need for effective action against HIV/AIDS
to involve community mobilisation. Jeff O'Malley said, "many
of the crucial parts of an effective response to AIDS cannot be
implemented by governments ... A lot of the work has to happen
outside government. Relatively few governments effectively move
money from themselves out to the community sector or the private
sector. In a number of countries where there have been fairly
successful responses, the governments have encouraged separate
streams of funding to support community action and private sector
action on AIDS parallel to government".
He gave India as an example of a country not always successful
in getting money to flow to grassroots activity. Jeff O'Malley
pointed out that such non-governmental work was particularly important
amongst stigmatised groups such as injecting drug users. He was
concerned that DFID still viewed 'civil society' as an amorphous
mass, not distinguishing the different roles that the various
parts of civil society could usefully play in combatting the epidemic.
We recommend that DFID inform us of how they plan to encourage
community involvement in the prevention of HIV/AIDS and in the
care of those who are HIV-positive. We are particularly interested
in how much DFID expenditure is directed at such community activity,
how long-term and sustained such expenditure is, and what technical
assistance is given to national governments in the funding of
a community response and its replication nationwide.