Mismanagement of donor aid: Fears of funding cuts intensified

Wednesday, 11 February, 2009 - 09:20

While it seems there is a light at the end of the tunnel, countries are slowly beginning to respond to the reductions in funding. Monitoring systems are being implemented rapidly, and countries are being urged to utilise and manage their funds wisely, or risk losing out on further aid.

On 26 January 2009, senior World Bank official Julian Schweitzer stated that the global economic crisis could result in tens of thousands of preventable deaths if countries do not defend programmes aimed at the poor. The statement was made during an Action for Global Health meeting that was organised to discuss the eminent downturn in donor support for global health programmes. Schweitzer urged donors to support initiatives, such as direct payouts to low-income countries, so as to reduce the potentially harsh impact of the economic crises on health services. This call echoed the words of United Nations Secretary-General Ban Ki-moon last October, when he expressed concern over the crisis of global finances and the dire impact it will have on reaching the Millennium Development Goals (MDGs), particularly in developing nations.

The World Bank has estimated that due to financial pressures on donor agencies, about 100 million people face poverty because of escalating food and energy prices. The Group of 24 (G24) developing nations stated towards the close of 2008 that part of the problem is that wealthy nations are not meeting aid pledges. G24 chair, Jean-Claude Masangu Mulongo, Governor of the Central Bank of the Democratic Republic of Congo, stressed that, "developed countries have the means to deal with the problem, but we who are developing countries, or emerging countries, could collapse under the weight of such a crisis". The head of the United Nations' AIDS agency (UNAIDS), Peter Piot, recently commented that millions of people with HIV & AIDS face death if donors cut funding even for six months due to the current financial crisis. The fear of possible funding cuts for developing nations have reverberated across the African continent, and concerns were deepened further when Microsoft founder, Bill Gates, and other experts, warned that the global financial crisis could last up to three years. The effects of the current financial turmoil have already been felt in Africa, and the need for donor support is intensifying.

Increased demand necessitates increased commitment

The increased demand for funding is being felt across the continent, where food shortages and rising costs are leaving millions of people starving and desperate for support. These food shortages have marked negative repercussions on people living with HIV, effecting HIV treatment practices, and many people on antiretrovirals (ARVs) being forced to take their medication on empty stomachs. People living with HIV & AIDS, AIDS activists, non-governmental organisations (NGOs) and many others around the world are calling out for increased financial support in a time of desperation.

The African Continent has been assured, however, that the support will continue. President Barack Obama has made it quite clear that US financial aid to Africa will continue, and commitments will be met, despite the current financial crises both globally and within the US. This message has been relayed to countries across the continent, amidst fears that HIV & AIDS efforts will be severely affected by a reduction in funding. In January this year, during the launch of the expanded Coptic Hope Centre for infectious disease, US Ambassador to Kenya, Michael Ranneberger, stressed “that the enormous support the US is providing to fight AIDS will continue”. The Global Fund and PEPFAR have displayed similar re-affirmations of commitments, with significantly increased funding to low-income nations predominantly in Africa towards the end of last year. The Executive Director of the Global Fund, Michel Krazatchkine, quite rightly stated there is an increase in demand for funding, which requires a transformed resource mobilisation effort.

Despite these reassuring words, many organisations around the Africa are now preparing themselves for financial cuts, and are expanding on ways to show that they are spending money more effectively. Accountability for the use of donor funds has become increasingly essential, with various cases of fund mismanagement across the continent placing added pressure on HIV & AIDS initiatives.

Clamping down on fund misuse

While there has been much debate over the possible effect that the financial crisis may have on donor funding for Africa, funds that are being distributed throughout the continent continue to be mismanaged. In Kenya last year, several AIDS NGOs and the Ministries of Public Health and Medical Services were investigated for failure to account for approximately US$ 166 million of the US$ 512 million donated by the Global Fund over the past six years. That is more than 30% of the Global Fund aid the country received in that period. Similarly, on 24 January 2009, a Nigerian NGO, Children Rights Network (CHRINET), called for an investigation into the alleged misappropriation of US$ 2 billion worth of funding for HIV & AIDS. Concerns have also been raised about the misuse of funds in Ghana, where budget and planning officers recently expressed concern that funds are not being used for their intended purposes. Last year, Uganda experienced significant cuts in funding, specifically from the Global Fund, largely due to the suspension that the Fund imposed on Uganda more than three years ago, for mismanagement of grants. The suspension occurred in August 2005, following a Global Fund audit that indicated that the Ministry of Health had misused US$ 1.6 million.

The Reserve Bank of Zimbabwe (RBZ) has also come under fire for diverting funds, US$ 7.3 million meant for disease programmes. Irate activists have said the Bank’s actions were ‘unforgivable’ and put HIV-positive Zimbabwean’s lives at risk, in a time when they are most in need. President of the Zimbabwe HIV & AIDS Activists Union, Bernard Nyathi, stressed that the Global Fund should no longer channel donor funding through government. The Fund has since stated that money provided to Zimbabwe will be dependent on future behaviours and agreements, specifically referring to the fact that the funds should be channelled without interference from government. The Fund’s Michel Kazatchkine also announced recently that the organisation has placed all funds under its administration in Zimbabwe under the additional safeguard policy (ASP) in order to insure that the money is only used for the specific purpose that is was granted for.

South Africa also affected by funding cuts, but ready to assist Africa

South Africa has been found guilty of a different kind of funding mismanagement. In December it was announced that 13 South African HIV & AIDS organisations did not receive their share of the US$ 3.9 million allocated to them by the Global Fund. According to the Fund, the delay was due to the Health Department’s slow and inefficient disbursing systems, even though the Department was repeatedly advised to allocate full-time staff to deal with the allocation of funds. In the Free State Province of South Africa, the substandard management of funds led to ‘cost containment measures’, meaning that 31 hospitals were forced to postpone emergency surgery and refuse new AIDS patients for antiretroviral (ARV) treatment.

It would seem though that there is a light at the end of the tunnel, as countries are slowly beginning to respond to the reductions in funding. In addition, monitoring systems are being implemented rapidly, and countries are being urged to utilise and manage their funds wisely, or risk losing out on further aid. These kinds of monitoring systems are going to be critical in the future, if African countries hope to continue to receive international donor support. Another encouraging step was taken in January this year, with the Global Fund announcing that South Africa’s Standard Bank will provide free advisory assistance to select countries receiving funding to fight HIV and other diseases. Initiatives of this kind are going to be crucial, and the management of funds will be imperative, in a time where the need for support is paramount and donor budgets are limited.

This Briefing Paper is designed to provide accurate and authoritative information on the subject matter covered. It is provided with the understanding that the publication is not intended to provide implicit legal, accounting, investment, or other professional advice. The information, research and opinions provided are collated and formulated via Consultancy Africa Intelligence (Pty) Ltd Associates throughout the African Continent, understanding and knowledge of issues dealt with, as well as from a variety of open sources, including, but not limited to, audio, visual and print media. A full listing of the open sources utilised in part can be seen on our website.

While Consultancy Africa Intelligence (Pty) Ltd. believes that the information and opinions contained herein are reliable, it does not make any warranties, express or implied, and assumes no liability for reliance on or use of the information or opinions contained herein. Furthermore, Consultancy Africa Intelligence (Pty) Ltd indemnifies itself from unforeseen errors due to certain sources being gathered from third parties.

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