Where will the money come from? Alternative mechanisms to HIV donor funding

Abstract

Background: Donor funding for HIV programs has flattened out in recent years, which limits the ability of HIV programs worldwide to achieve universal access and sustain current progress. This study examines alternative mechanisms for resource mobilization.

Methods: Potential non-donor funding sources for national HIV responses in low- and middle-income countries were explored through literature review and Global Fund documentation, including data from 17 countries. We identified the source, financing agent, magnitude of resources, frequency of availability, as well as enabling and risk factors.

Results: Four non-donor funding sources for HIV programs were identified: earmarked levy for HIV from country budgets; risk-pooling schemes such as health insurance; debt conversion, in which the creditor country reduces the debt of the debtor country and allocates at least a part of that reduction to health; and concessionary loans from international development banks, which unlike grants, must be repaid. The first two are recurring sources of funding, while the latter two are usually one-time sources, and, if very large, might negatively affect the debtor country's economy. Insurance schemes in five African countries covered less than 6.1% of the HIV expenditure, while social health insurance in four Latin American countries covered 8-11% of the HIV expenditure; in Colombia and Chile, it covered 69% and 60%, respectively. Most low-income countries will find concessionary loans hard to repay, as their HIV programs cost 0.5-4% of GDP. Even in a middle-income country like India, a US$255 million concessionary loan to be repaid over 25 years provided only 7.8% of a 5-year HIV budget. Earmarked levies provided only 15% of the annual HIV funding needs in Zimbabwe and Kenya. Debt conversion provided the same share in Indonesia, but in Pakistan it was much higher - the equivalent of 45% of the annual cost of the national HIV program.

Conclusions: Domestic sources of funding are important alternatives to consider and might be able to replace donor HIV funding in specific country contexts, coupled with effective prioritization and efficiency measures. Successful resource mobilization design and implementation require close collaboration with other sectors, particularly with the Ministry of Finance, to make sure that the new financing mechanism is fully synchronized with economic growth and that HIV investments yield returns in the form of higher social benefits.

Figure 1

Magnitude of strategies that countries are using to finance HIV programs. The examples of risk-pooling schemes from Africa include HIV expenditures of both private firms and private health insurance, and as such the share of health insurance alone is lower.