Effects of the Global Economic Crisis: Examining the Impact on HIV and AIDS Funding

funding hiv/aids economic crisis
Wednesday, 2 December, 2009 - 09:38

The global economic crisis is a reality NGOs face today. The crisis has dire consequences for HIV and AIDS funding. These effects are felt particularly in sub-Saharan Africa, which has the highest levels of HIV and AIDS infection in the world, with approximately 25 million (more than 60 percent of global infections). It has forced international donors to direct more funds to lower income countries to help them strengthen their health system programmes and to extend their focus to include other health issues. In South Africa, companies are likely to cut their HIV/AIDS prevention programmes and this has already left many NGOs with no choice but to suspend some of their projects

The global response to the HIV/AIDS epidemic has been unparalleled. Between 2007 and 2008, funding increased from US$11.3 billion to US$ 13.7 billion globally (UNAIDS, Fact Sheet AIDS Funding 2008-09). However, the global economic crisis is having dire consequences for HIV and AIDS funding. These effects are felt particularly in sub-Saharan Africa, which has the highest levels of HIV and AIDS infection in the world, with approximately 25 million people infected. This amounts to more than 60 percent of global infections (Joint Action for Results UNAIDS Outcome Framework). Across the board, HIV/AIDS programmes in Africa are extensively funded by Western donors (UNAIDS and The World Bank, ‘The Global Economic Crisis and HIV Prevention and Treatment Programmes: Vulnerabilities and Impact’).

According to a report released in June 2009 by UNAIDS and the World Bank, entitled ‘The Global Economic Crisis and HIV Prevention and Treatment Programmes: Vulnerabilities and Impact,’ the global economic crisis was expected to significantly disrupt HIV and AIDS prevention and treatment programmes over the course of 2009. The report specifically warned of the consequences of funding cuts. Amongst these consequences were increased mortality and morbidity, unplanned interruptions and curtailed access to treatment, increased risk of HIV transmission, higher future financial costs, an increased burden on health systems and a reversal of economic and social development gains. A survey of countries representing approximately 60 percent of people on antiretrovirals (ARVs) globally found that by the end of 2009, treatment programmes in more than a third of these countries would be directly affected by budget shortfalls, due to the downturn.

In light of the above, this brief will examine the effect that the economic crisis has had on two of the primary HIV and AIDS aid organisations, namely the United States President’s Emergency Plan for AIDS Relief (PEPFAR) and the Global Fund to Fight AIDS, Tuberculosis and Malaria. The brief will also scrutinise the impact that funding cuts have already had on various countries around the African continent.

‘Power-houses’ in HIV/AIDS funding falling short of commitments:


PEPFAR was launched in 2003 by former United States President George W. Bush to combat the global HIV and AIDS pandemic. The fund committed itself to providing US$15 billion over five years (2003-2008) in support of the fight against HIV and AIDS. In July 2008, PEPFAR was reauthorised with an impressive US$ 48 billion approved for the 2009 to 2013 financial years. After assuming office, President Barack Obama announced his Global Health Initiative, which saw PEPFAR’s budget extended to US$ 51 billion, but available over a six year period.

Critics have pointed out that these new developments are not in line with the US$48 billion that Obama promised would be rolled out by 2013, or the additional US$1 billion per year increase which he promised during his election campaign. The Global AIDS Alliance (GAA) estimated that the consequent shortfall would lead to one million people not receiving ARV treatment and 2.9 million women not receiving prevention of pregnant mother-to-child transmission (PMTCC) interventions. The GAA also estimated that 27 million people would not have access to sexually transmitted infection (STI) prevention programmes and that 1.9 million orphans and other children affected by or vulnerable to HIV and AIDS would not receive care and support services. Obama’s rationale for the change in funding roll-out centres around the fact that PEPFAR would be working with multilateral organisations such as the Global Fund and UNAIDS, and would be implementing bilateral programmes that adopt a more integrated approach to fighting diseases, improving health, and strengthening health systems.

The Global Fund

The Global Fund to Fight AIDS, Tuberculosis and Malaria was established in 2002 to prevent and treat these three profound health concerns. The Global Fund collaborates with governments, civil society, the private sector and affected communities to combat the disease. It also works closely with other bilateral and multilateral organisations to further supplement existing efforts. Since its inception, the Fund has approved US$15.6 billion to fund 572 programmes in 140 countries. Fifty-seven percent of the fund’s money is channelled to sub-Saharan Africa. The Fund was however also not immune to the effects of the economic crisis. This became evident in a meeting held in November 2008 where the Global Fund’s Board made several important decisions to deal with the shortfall in available resources.

Among the changes to funding which had to be made was that all grants approved for funding in Round 8 would have to be decreased by 10 percent. Round 9 was to be postponed by six months and to be the only round in 2009. Additionally, Phase II (years 3 through 5) of existing and future grants would be decreased by 25 percent. Currently, the Global Fund requires US$170 million to cover its 2008 programme commitments. The Fund further faces a US$ 4 billion shortfall in meeting its goals up to 2010. In an interview on April 20, 2009, Professor Michel Kazatchkine, head of the Global Fund, admitted that, “For the first time, the demand for funds in 2009 has exceeded the funds we have available.” He added that Round 10 funding will have to be suspended from 2010 to 2011 to replenish funds .

African countries negatively affected by the global economic crisis


Botswana's presidential spokesperson, Jeff Ramsay, recently announced that the country’s government will not be able to include new patients in its free ARV treatment programme from 2016 onwards, because it does not have sufficient funds to expand the programme. Botswana's government has warned that it may have to cut or completely withdraw its HIV and AIDS funding, despite the rising number of people needing treatment, as the global economic crisis takes a toll on the vitally important diamond-mining sector. The government is the main financier of the national HIV and AIDS response, contributing up to 80 percent of the budget, with donors making up the remainder. Lydia Mafhoko-Ditsa, the HIV and AIDS programme manager at the United Nations Development Programme (UNDP) in Botswana, has suggested that a potential solution to prevent a future funding shortfall might be to follow the example of Zimbabwe and Zambia: both countries have introduced an AIDS levy that channels a certain percentage of taxes into the national HIV and AIDS response.


In Malawi, delays in funding disbursements from the Global Fund have already caused worrying shortages in ARV supplies. As a result, ARV stocks are running dangerously low in several health facilities. In order to avoid further ruptures, the Ministry of Health, with the help of Médécins Sans Frontières (MSF) and other NGOs, is currently re-distributing ARV supplies to different districts. MSF has also had to buy additional backup stocks, to ensure a steady supply for patients in its projects. For now, MSF is able to start new patients on treatment, but there is a risk that this will have to slow down. On a positive note, however, the World Bank has pledged US$30 million to support Malawi in its fight against HIV and AIDS. The US has also confirmed that it will double its financial support to Malawi to US$45 million through PEPFAR.

South Africa

In South Africa, the government budget for health has been substantially cut due to the financial crisis. This has seen a US$123 million shortfall in the country’s public sector ARV programme. Furthermore, large private firms, especially mining companies, are likely to cut their HIV and AIDS prevention programmes. This will affect thousands of employees and their families. The Treatment Action Campaign (TAC), one of South Africa’s main HIV/AIDS activist groups, which provides ARVs, counselling and HIV testing, was only able to secure US$7 million of the necessary US$8.1 million for its national programme. Consequently, it had to close down six of its provincial offices. This resulted from the decision by international donors to direct more funds to lower income countries and to focus more on strengthening health system programmes, thereby extending their focus to include other health issues in addition to HIV and AIDS. Severe ARV shortages have caused many clinics to stop enrolling patients into ARV programmes and the waiting lists are growing day by day.


Swaziland is the country with the highest HIV prevalence globally, with 26.1 percent of its adult population being HIV-positive. It is also largely dependent on external donors for funding of its ARV programmes. During the 5th IAS Conference on HIV Pathogenesis, Treatment and Prevention, which was held in Cape Town, South Africa in July 2009, the Swaziland government revealed that it had to lower its 2011 treatment coverage target from 60 to 50 percent because of dwindling support from external donors. NGOs in the country are also suffering as a result of funding cuts from various donors. Swaziland National Network of People Living with HIV/AIDS, an NGO that receives its funding from the Global Fund through the National Emergency Response Council on HIV and AIDS, had its budget reduced from US$130 000 in 2008 to US$100 000 in 2009. Another recipient of Global Fund support, The National TB Programme, has had its five-year budget of US$13 million reduced by 10 percent. On a positive note, however, PEPFAR has pledged US $30 million to the country’s fight against HIV and AIDS.


Approximately 96 percent of Uganda’s ARV programmes are funded by European and US donors. Of these, the two major contributors are the Global Fund and PEPFAR. An accredited Ugandan doctor, who was quoted in the media on condition of anonymity, has commented that the economic crisis has forced some donors to reduce funding, hence financially affecting local organisations that cater for people living with HIV and AIDS. Dr. Kihumuro Apuuli, the director general of the Uganda AIDS Commission (UAC), has also stated that the future may be quite bleak if the economic crisis continues, and has called for the creation of an HIV and AIDS ‘trust fund’. This comes amidst rumours that PEPFAR is considering withdrawing its funding to the country. Apuuli said: “We need to start a trust fund for HIV and AIDS in the country such that tomorrow, when Global Fund and Americans pull out, we can have a fallback position.”


Despite PEPFAR providing US$313.4 million in 2008 to the Tanzanian government, it had to cut its HIV and AIDS budget by 25 percent for the 2009-10 financial year. This will affect over 70 percent of people on ARV treatment in the next 12 months. Many organisations have commented that they have not received any funding since April 2009, hampering their HIV and AIDS, TB and malaria initiatives.

The way forward

Despite countries being adversely affected by reductions in donor funding, all is not lost, as there are numerous measures that can be implemented to mitigate the effects of the economic crisis. The report ‘The Global Economic Crisis and HIV Prevention and Treatment Programmes: Vulnerabilities and Impact’ makes various constructive suggestions to address the current financial turmoil.

It suggests that funding gaps and consequent treatment interruptions need to be addressed. In order to prevent treatment interruptions, countries with a high reliance on external funding should identify probable cash-flow interruptions and work with international partners to provide bridge financing. This can be can be done by implementing an early warning system by which treatment interruptions can be tracked, as well as devising a mechanism by which countries can have access to short-term emergency ARVs. ARV Access for Africa (AA4A) is an example of an organisation that provides emergency ARVs which it can mobilise within 24 hours and can reach 80 percent of sub-Saharan Africa destinations within one week.

One of the most important recommendations that the report makes is to strengthen programme efficiency and cost-effectiveness. This entails countries having to closely scrutinise their HIV and AIDS programmes and identify where efficiency gains and/or savings could be made. Where budget cuts are unavoidable, countries need to identify areas where funding cuts would have the least impact. A report summarising the findings of the 5th Meeting of the UNAIDS Programme Coordinating Board, also recommended that countries should seek greater efficiencies in existing programmes, by lowering the costs of inputs and reducing waste and avoiding duplication in funding support to programmes. The recent increase in the availability of generic ARV medication can do a great deal to lesson financial burden of patented ARV medication. Furthermore, countries should focus on evidence-based, result-driven programmes, instead of spending money on ineffective and inefficient interventions. Urgent attention should also be given to curbing the rampant misappropriation of donor funds. Countries such as Zambia, Mauritania and Uganda have seen donors withholding support as a result of misappropriation of funds.

The UNAIDS and the World Bank report also highlights the importance of not neglecting complementary inputs and interventions. This refers to maintaining funding for other critical areas such as salaries, drugs to treat opportunistic infections, STIs and TB. It should also be acknowledged that if well implemented, legal and social programmes that reduce stigma and discrimination represent good value for money. PEPFAR’s new broader approach, which includes implementing policies and practices to optimise effectiveness of resources in key areas, such as health workforce expansion, gender equity, protection of the rights of orphans, and effective HIV and AIDS counselling and testing is a good example of how this can be realised.

- Hilda Hecker is a Research Analyst in the HIV & AIDS Unit at Consultancy Africa Intelligence hiv.aids@consultancyafrica.com.

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