Public and private donor financing for health in developing countries

Abstract

Among the many variables that influence the outcome of national health status in both developed and developing countries, the availability and efficiency of financing is critical. For 148 developing countries, annual public and private expenditures from domestic sources (1983) were estimated to be approximately $100 billion. For the United States alone, annual public and private costs for medical care are almost five times larger ($478 billion, 1988). In contrast to domestic expenditures, the total flow of donor assistance for health in 1986 was estimated to be $4 billion, approximately 5% of total current domestic expenditures by developing countries. Direct donor assistance for development purposes by the United States Government approximates 0.5% of the US federal budget (1988). Approximately 10% of all United States development assistance is allocated for health, nutrition, and population planning purposes. While the total health sector contribution is on the order of $500 million annually, the US contribution represents about 13% of health contributions by all external donors. In sub-Saharan Africa, all donor health allocations only reach 3.4% of total development assistance. While available data suggest that private and voluntary organizations contribute approximately 20% of total global health assistance, data reporting methods from private agencies are not sufficiently specific to provide accurate global estimates. Clearly, developing countries as a whole are dependent on the efficient use of their own resources because external financing remains a small fraction of total domestic financing. Nevertheless, improvement in health sector performance often depends on the sharing of western experience and technology, services available through external donor cooperation. In this effort, the available supply of donor financing for health is not restricted entirely by donor policy, but also by the official demand for external financing as submitted by developing countries. In perspective, the supply of financing for health greatly exceeds the receipt of well-articulated and officially approved proposals from developing countries. The major constraints that produce this imbalance are unfamiliarity of ministries of health with potential donor sources; passive approaches to external financing; unfamiliarity with proposal preparation; increasing competition within developing countries by competing sectors, such as industry and agriculture; limited numbers of trained personnel; and absence of an international system which is able to support developing countries in mobilizing external financing. Tested solutions to these issues have been applied in one geographic region.(ABSTRACT TRUNCATED AT 400 WORDS)

PIP: Public and private domestic expenditures for health in a total 148 developing countries for 1983, were estimated to be $100 billion. 1986 external donor health expenditures totalled $4 billion, a small percentage of overall health expenditure for developing countries. U.S. direct donor assistance for development was 0.5% of the federal budget for 1988, with approximately 10% of all U.S. development assistance allocated for health, nutrition, and population planning. As such, the U.S. accounts for 13% of total health contributions from external donors to developing countries. Approximate at best, private and volunteer organizations are estimated to contribute 20% of all such health assistance. Developing countries are therefore required to efficiently use their own resources in the provision of national health services. Technical assistance and donor experience also counting as external assistance, the overall supply of health financing is far greater than developing country demand in the form of well-articulated, officially approved proposals. Reasons for this imbalance include health ministry unfamiliarity with potential donor sources, passive approaches to external financing, unfamiliarity with proposal preparation, increasing competition from other sectors of developing nations, limited numbers of trained personnel, and lack of an international system of support to mobilize financing. The paper discusses 6 years of Pan American Health Organization interventions for resource mobilization in Latin America and the Caribbean, and suggests World Health Organization regional extension backed by U.S. encouragement and support.