Elsevier

The Lancet

Volume 368, Issue 9534, 5–11 August 2006, Pages 483-488
The Lancet

Articles
Absorptive capacity and disbursements by the Global Fund to Fight AIDS, Tuberculosis and Malaria: analysis of grant implementation

https://doi.org/10.1016/S0140-6736(06)69156-3Get rights and content

Summary

Background

The Global Fund to Fight AIDS, Tuberculosis and Malaria was launched in 2002 to attract and rapidly disburse money to fight these diseases. However, some commentators believe that poor countries cannot effectively use such resources to increase delivery of their health programmes—referred to as a lack of absorptive capacity. We aimed to investigate the major determinants of grant implementation in developing countries.

Methods

With information available publicly on the Global Fund's website, we did random-effects analysis to investigate the effect of grant characteristics, types of primary recipient and local fund agent, and country attributes on disbursements that were made between 2003 and 2005 (phase one of Global Fund payments). To check the robustness of findings, regression results from alternative estimation methods and model specifications were also tested.

Findings

Grant characteristics—such as size of commitment, lag time between signature and first disbursement, and funding round—had significant effects on grant implementation. Enhanced political stability was associated with high use of grants. Low-income countries, and those with less-developed health systems for a given level of income, were more likely to have a higher rate of grant implementation than nations with higher incomes or more-developed health systems.

Interpretation

The higher rate of grant implementation seen in countries with low income and low health-spending lends support to proponents of major increases in health assistance for the poorest countries and argues that focusing resources on low-income nations, particularly those with political stability, will not create difficulties of absorptive capacity. Our analysis was restricted to grant implementation, which is one part of the issue of absorptive capacity. In the future, assessment of the effect of Global Fund grants on intervention coverage will be vital.

Introduction

The Global Fund to Fight AIDS, Tuberculosis and Malaria (referred to hereafter as the Global Fund) is a major financing institution launched in 2002 to attract and rapidly disburse funds to fight these diseases.1 By the end of 2005, after 3 years of full operation, it had already made US$4·4 billion in commitments, accounting for about a tenth of all donations for development assistance for health in that period (Michaud CM, unpublished).2 The Global Fund has approved 322 grants in 128 countries and has already disbursed US$1·8 billion. Income per person and disease burden are the only criteria for country eligibility for funds. Grants are, in principle, provided solely on the merit of proposals submitted.

During negotiations to create the Global Fund, considerable debate took place about the capacity of developing countries, particularly low-income nations, to spend substantial new resources for health effectively. Continued growth of new sources of development assistance for health—such as the President's Emergency Plan for AIDS Relief (PEPFAR),3 the International Financing Facility for Immunization,4 and many global-health initiatives (eg, the Global Alliance for Vaccines and Immunization [GAVI], the Roll Back Malaria partnership, the Stop TB partnership)—have only contributed to this debate.5, 6, 7, 8 The Commission on Macroeconomics and Health argued that “all countries can absorb substantial increases in assistance if directed towards health” and that “almost all programs funded by the Global Fund to Fight AIDS, Tuberculosis and Malaria are too small”.9 Sceptics, particularly from other sectors and Ministries of Finance, believe that additional resources cannot be effectively used by the poorest countries to increase delivery of health programmes.

This issue is often referred to as absorptive capacity, a term defined by marginal returns on aid falling below some minimum threshold.10 Constraints to use of external resources can include macroeconomic, institutional, social, cultural, and political factors, and physical and human resources.11 The debate about absorptive capacity is part of broad published work on the effectiveness of aid to promote economic growth. Some researchers have argued that financial support has little effect in countries with poor governance and poor policies.12, 13, 14, 15 Although this idea is disputed,16, 17 many large donors are focusing efforts on nations with good governance, economic policies, and institutional development. For example, the Millennium Challenge Account selects eligible regions on the basis of levels of income and 16 indicators of country commitments to “ruling justly, investing in their people and encouraging economic freedom”.18

The core issue for health is that, sometimes, countries in greatest need for expanded health programmes are the poorest, with bad governance and weak institutional development. Experience of the Global Fund provides an important opportunity to study if these factors are major obstacles to the expansion of health-sector aid. This knowledge from the past 3 years is sufficient to examine the capacity of countries to make use of grants. Disbursement of funds or grant implementation is a necessary, but not sufficient, criterion for having an effect. Investigation of achievements made by Global Fund grants, in terms of expanded intervention delivery to people in need, cannot be done with currently available data. Several assessments of grants from the Global Fund have been published that have elucidated obstacles and constraints to Fund operations.19, 20, 21, 22, 23 Here, we aim to take advantage of extensive quantitative data for grant disbursement available in the public domain to investigate the determinants of absorptive capacity in developing countries.

Section snippets

Methods

We obtained data from the Global Fund's website. The Global Fund has had five funding rounds to date. Grants are, in principle, for 5 years, with an initial commitment for 2 years (phase one). Funds can be provided for a second phase (for 3 years) after a performance assessment at the end of phase one. The Global Fund gives resources to a principal recipient, which is a local entity nominated by the country's coordinating mechanism and confirmed by the Fund. These recipients can be government

Results

Figure 1 presents data for cumulative disbursement by disease area per quarter in phase one: grants in rounds 1 and 2 are included because they have payments over eight quarters. Tuberculosis disbursements have been higher than those for HIV/AIDS and malaria programmes since the sixth quarter. Malaria implementation was highest in the early quarters whereas HIV/AIDS grants were used the least in all quarters. Overall, by quarter 8, use of grants for disease programmes was 64–69%.

Figure 2 shows

Discussion

In published work on aid effectiveness, researchers have argued that governance matters: countries with good governance and political stability are better able to use development assistance to foster economic growth. We have shown that implementation of grants from the Global Fund is strongly related to political stability. This result accords with the experience of most health practitioners and raises important questions about how grant implementation can be maintained or improved in unstable

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