Health is no longer seen solely as a product of development, but is now also understood to be one of the keys to economic growth. Good health can be a major source of economic and social development. The rapid transition out of poverty of Pacific rim countries was aided by an increase in life expectancy of some 18 years, which resulted in a huge increase in productivity. Conversely, the economic and social impact of bad health can be devastating.
The Commission on Macroeconomics and Health (CMH) estimated that the economies of certain sub-Saharan countries would shrink by 20 per cent as a result of HIV and AIDS. The potential impact of a global pandemic such as avian or swine flu could result in millions of deaths and a further downturn in global economic growth. Even the minor outbreak of SARS in 2004, which was insignificant in terms of population health, was estimated to have resulted in a loss of US$ 15 billion to the global economy. In poor countries, a lack of equitable access to health and care means that the poorest pay a higher percentage of their resources for health. This both limits development and is corrosive to society. There are warnings that HIV and AIDS could destabilize the South Asian region and contribute to an increase in failing states.
European donors, including the European Community, have repeatedly acknowledged the importance of health for development and have made a number of political commitments to health in international cooperation. Internationally, all 27 EU member states are signatories to the United Nations Millennium Declaration made in 2000.
At EU level, the main legal instruments governing the EU’s relations with resource-poor countries are the Cotonou Agreement and the Development Co-operation Instrument (DCI). The DCI provides the overall legal framework for Community policies in the field of development cooperation. Adopted in December 2006, the DCI incorporates both thematic and geographic regulations, including several that deal explicitly with the EU’s support to the health sector. Article 5 obliges the EU to focus on increasing access to and provision of health services, with a central focus on the health-related Millennium Development Goals. The Cotonou Agreement includes specific commitments to improving health systems, basic healthcare, reproductive healthcare and family planning, preventing female genital mutilation, and fighting HIV and AIDS.
In addition to its legal instruments, the EC has recently developed several policy instruments that aim to improve coordination and harmonization for aid effectiveness among European donors. These include the strategic theme Investing in People, and the European Consensus on Development.
European Development Funding for Health
The European Union has made a commitment to increase levels of official development assistance (ODA) to meet the 0.7 per cent target for aid as a proportion of gross national product; aid is now more commonly compared to gross national income (GNI) by 2015. This target, which was first agreed by the UN in 1970, has so far only been reached by five countries. In June 2005, the Council agreed a new intermediate target for the EU of reaching ODA levels of 0.56 per cent of GNI in 2010. Furthermore, “in a declaration on the occasion of the agreement of the DCI, the Commission committed itself to ensure that by 2009, 20% of funds under the geographic programmes covered by the DCI would be allocated to basic health and basic and secondary education.
Despite these commitments, European aid (from the EU and its member states) fell from 0.43 per cent ODA/GNI in 2006 to just 0.40 per cent ODA/GNI in 2007. European aid still accounted for 64 per cent of all ODA – about US$ 61.5 billion – but, in real terms, total European ODA decreased by 1.6 billion euros. Further available figures suggest that, in 2007, European ODA allocated to health decreased by 10 per cent compared with 2006 to US$ 2.6 billion – just 5-6 per cent of European ODA commitments. At first glance, it appears that EU health aid grew substantially from 1996 to 2006; however, as a proportion, health allocations fell from 7 per cent in 1996-97 to 5 per cent in 2005-06. Moreover, only one-third of these commitments for health were actually disbursed during this period. ODA in 2008 increased further, in most cases, but not at a rate that would inspire confidence in meeting the 2010 or 2015 commitments.
These developments have placed even greater emphasis on the importance of aid effectiveness. A 2008 audit report of the EC’s development assistance to health services in the priority region of sub-Saharan Africa found that: “Overall, EC funding to the health sector has not increased since 2000 as a proportion of its total development assistance despite the Commission’s MDG commitments and the health crisis in sub-Saharan Africa. The Commission contributed significant funding to help launch the Global Fund but has not given the same attention to strengthening health systems although this was intended to be its priority (paragraphs 8 to 17). The Commission has had insufficient health expertise to ensure the most effective use of health funding (paragraphs 18 to 20).”
In its conclusions, the report recommends that the European Commission should:
- consider increasing its aid to the health sector during the tenth EDF midterm review to support its commitment to the health MDGs
- review how its assistance to the health sector is distributed to ensure it is primarily directed to its policy priority of health systems support
- ensure each delegation has adequate health expertise either in the delegation or through drawing on the resources of other partners
- make more use of sector budget support in the health sector and focus its general budget support more on improving health services
- continue to use projects, especially for support to policy development and capacity-building, pilot interventions and assistance to poorer regions
- work more closely with the Global Fund in beneficiary countries
- establish clearer guidance on when each instrument should be utilized and how they can best be used in combination, as the Commission has not paid sufficient attention to ensuring the different aid instruments are used together coherently. When choosing which instruments to use, it could also take more account of the situation in individual countries, in particular whether they had a well-defined health sector policy.
- make greater efforts to contribute to the development of well-defined health sector policies in beneficiary countries
Thus European performance in delivering aid, and particularly aid for health, has not lived up to the commitments of the EU or its member states. This can be said to show stagnation in European health aid.
More on European Development Cooperation and Global Health
Further Definitions
Investing in People:
Article 12 of the DCI sets out the thematic strategy Investing in People. This strategy identifies four broad areas for EC action: health, education, gender equality, and other aspects of human and social development. The health pillar of the strategy, titled ‘good health for all’ further identifies fours health priorities the EU will focus on:
1. Tackling major poverty-related diseases;
2. Taking actions in support of sexual and reproductive health and rights;
3. Addressing the human resources crisis in healthcare;
4. Ensuring a balanced approach between prevention, treatment and care.
European Consensus on Development:
In 2006 DG Dev published the European Consensus on Development, a comprehensive document that “provides, for the first time, a common vision that guides the actions of the EU, both at its Member States and Community levels, in development cooperation”. The Consensus gives high priority to health acknowledging that “combating poverty will only be successful if equal importance is given to investing in people (first and foremost in health and education…)”. The Consensus aligns EU development objectives with global health priorities by setting out the pursuit of the MDGs as the overarching objective of EU development cooperation and including very clear commitments to promote sexual and reproductive health and rights, tackle HIV/AIDS, tuberculosis and malaria, address the human resource crisis of health providers, address fair financing for health and strengthening health systems, and make medicines more affordable for the poor. In addition to these specific commitments on health, the European Consensus also ensures that the EC will mainstream the fight against HIV/AIDS in all of its activities.
Aid Effectiveness:
2008 was a crucial year for development and the credibility of Europe as a donor. There were several stocktaking meetings including the Third High-Level Forum on Aid Effectiveness which follows up on the OECD initiated Paris Declaration on a Aid Effectiveness, the Doha Conference on financing for development which is a follow-up to the Monterrey Declaration of 2002, and United Nations High-Level meeting to boost international resolve to achieve the MDGs. Europe appears to lead efforts to reform the international aid architecture and accomplish the MDGs-90% of all pledged aid increases to meet these international priorities have come from Europe. However, as noted above, recent years have seen a wavering in Europe’s follow-up to commitments. There has also been a retreat from multilateralism back to a preference for bilateral action and a tendency to create new “instruments” and “tools” rather than to use and improve existing ones. This trend runs contrary to what the Commission has aimed to accomplish with the formulation of policies to improve coordination, complementarities, and consensus in European development cooperation.
ODA in 2008:
Net ODA (after taking off loan repayments) amounted to $ 135 billion. While the US is the largest single country ODA donor providing $26 billion in 2008, this represented only 0.18% of their GDP. Moreover the largest US aid donations go to Israel, Egypt and Pakistan for the purchase of US arms and equipment. ODA provided by European Countries amounted to $77billion of which $13.4 billion was channelled through the European Commission. The largest recipients of European aid have been potential future members of the EU such as Bulgaria, Romania, Turkey and Croatia.
Five European Countries:
Five European Countries have reached the 0.7% target: Sweden, Luxembourg, Denmark, Norway and the Netherlands already give more than 0.7% of their GDP as ODA, the average for European Countries is 0.43%. To put these figures in context in 2008 remittances from overseas workers mostly to low income countries amounted to about $200 billion and total net investment from the private sector was $335 billion in 2007. It is thought that increases in ODA of about 10% were more than offset by reductions in remittances and net private investment in 2008.
Stagnation in Health Aid:
The cause of the stagnation in the proportion of health aid allocation can be traced to new legislation underpinning the financial perspective (2007 – 2013). Under the previous financial perspective (2000 – 2006), the EC’s funding for health was divided into separate budget lines. The EC Regulation on aid to fight poverty diseases (HIV/AIDS, malaria and tuberculosis) in developing countries included a financial envelope of €351 million for the period 2003 – 2006. The EC Regulation on aid for policies and actions on reproductive and sexual health and rights in developing countries included a financial envelope of €73.95 million for the period 2003 – 2006. The EC Regulation on promoting gender equality in development cooperation included €9 million for the period 2004 – 2006. Collectively, the budget lines combined contributed approximately around a €110 million a year to health. The once separate budget lines for health have now all been amalgamated under the thematic strategy Investing in People, which has a smaller overall budget and covers many more issues than health, including education, gender equality, culture and employment. For example, the 2007 annual EU budget divided the overall human and social development budget into four separate lines corresponding to the thematic pillars of Investing in People: health, education, gender equality and other aspects of human and social development. The total budget for human and social development of €110.445 million was divided among the four areas as follows: health (€62 million), education (€22 million), gender equality (€6.6 million) and other aspects of human and social development (€19.845 million). However, while the overall budget allocations are set until 2013, there is no protection or “ring fencing” of allocation to specific sectors, so it is possible health aid could rise just a well as it might continue to fall.