Financing the Response to AIDS in Low- and Middle-Income Countries: International Assistance from Donor Governments in 2014
As world leaders meet to discuss the future of financing for development and to endorse new Sustainable Development Goals (SDGs) in the post-MDG era, the global community is taking stock of the progress made as well as the work that remains to be done, including in addressing the HIV epidemic. Since the establishment of the MDGs in 2000, through 2013 new HIV infections have decreased by almost 40% and the number of AIDS-related deaths has decreased by 35% since 2005.1 Still, in 2013, more than 2 million people were newly infected with HIV and 1.5 million died.1 In addition, new infections are rising in some parts of the world and some groups continue to be at disproportionately high risk for HIV and lack access to needed treatment and other interventions.1 As a result, a new UNAIDS Lancet Commission Report on Defeating AIDS calls for a significant ramping up of funding for AIDS efforts now, stating that “the next 5 years present a window of opportunity to scale up the AIDS response to end AIDS as a public health problem by 2030.”2 While the Commission notes that affected countries with financial capacity should fund more of their AIDS response, the need for international funding, particularly from donor governments, remains high. UNAIDS and the Kaiser Family Foundation have been tracking donor government assistance provided to address HIV in low- and middle-income countries since 2002.3 This report provides data from 2014, the latest available on their funding.
|Box 1: Other Sources of Funding for HIV in Low- & Middle-Income Countries:|
|While this report focuses on donor governments, there are three other major funding streams for HIV assistance: multilateral organizations, the private sector, and domestic resources.
Multilateral Organizations: Provide assistance for HIV using pooled funds from member contributions and other means. Contributions are usually made by governments, but can be provided by private organizations and individuals, as in the case of the Global Fund. Some multilateral organizations are specifically designed to address HIV (such as the Global Fund, which also finances TB and malaria efforts, and UNITAID); donor government contributions to the Global Fund and UNITAID are counted as part of the donor government’s financing effort in this analysis. Donor government contributions to multilateral organizations that are not specifically designed to address HIV, but may include HIV activities within their broader portfolio (such as the World Bank), are not included in this analysis.
Private Sector: Including foundations (charitable and corporate philanthropic organizations), corporations, faith-based organizations, international NGOs, and individuals. It is estimated that philanthropies provided US$498 million in 2013 to HIV activities internationally with U.S.-based philanthropies providing 73% of the total, E.U.-based philanthropies providing 22%, and philanthropies outside the U.S. and E.U. providing 5%.4 Among foundations, the Bill and Melinda Gates Foundation is the leading philanthropic funder of international HIV efforts.4 Corporations and businesses also support HIV programs in low- and middle-income countries through non-cash mechanisms such as price reductions for HIV medicines; in-kind support; commodity donations; employee and community prevention, care, and treatment programs; and co-investment strategies with government and other sectors.
Domestic Resources: Including both spending by country governments that also receive international assistance for HIV and by households/individuals within these countries, represent a significant and critical part of the response.
In 2014, disbursements for HIV totaled US$8.64 billion (see Figure 1 and Table 1), a less than 2 percent increase (US$149 million) above 2013 levels (US$8.49 billion). After adjusting for inflation, the increase was marginal (1%). In addition, increases in constant dollars over the past 10 year period were significantly less than increases in current dollar spending. Most of the overall increase in HIV support in 2014 can be attributed to the U.K., which increased both bilateral support and its contribution to the Global Fund. Without the U.K. increase, disbursements would have declined. In addition, contributions to the Global Fund, an increasing channel of support for a subset of donor governments over time; bilateral funding went down overall. Total funding from most other donor governments either declined or remained flat, including funding from the United States, the largest donor to HIV in the world, which was essentially flat in 2014 compared to 2013 (a less than 1% decrease).
|Table 1: International HIV Assistance from Donor Governments (USD), 2014|
|Government||Bilateral Disbursement||Global Fund||UNITAID||Total Disbursement|
|Total (100%)||Adjusted (55%)||Total (100%)||Adjusted (49%)|
International assistance for HIV includes both actual funding provided (e.g., cash transfers) as well as other types of transactions and activities (e.g., technical assistance) and products (e.g., commodities) (see Box 2). In 2014, the U.S. continued to be the largest donor in the world, accounting for approximately two-thirds (64.5%) of HIV disbursements by donor governments (See Table 1 and Figure 2). The U.K. was the second largest donor (12.9%), followed by France (3.7%), Germany (3.2%), and the Netherlands (2.5%).
|Box 2: Types of Donor Government Assistance for HIV|
|Donor governments provide multiple types of financial and other assistance to address HIV in low- and middle-income countries, which together are included in the definition of bilateral disbursements, as follows:
Grants: Transfers made in cash, goods or services for which no repayment is required and no legal debt is incurred by the recipient. Grants may be made from a grantor to a grantee, or to an intermediary organization on a grantee’s behalf. Grants can be unconditional or conditional.
Loans: Transfers for which the recipient incurs a legal debt and repayment is required in convertible currencies or in-kind.Concessional loans: Loans that are made at or below market interest rates (including at zero interest), and typically are given a much longer grace period and maturity than other forms of financing. To be considered part of official development assistance (ODA) as defined by the Organisation for Economic Co-operation and Development (OECD), a loan must have a grant element (a grant “equivalent”) of at least 25%.
Commodities: Materials, supplies, and equipment, such as medicines and diagnostics.
Technical assistance/co-operation: Transfer of knowledge through training, staff, and other services.
Funding from most donor governments assessed either decreased or remained flat. Seven (Australia, Canada, Denmark, France, Ireland, Sweden, and the European Commission) decreased HIV disbursements in 2014 and funding from two (Germany and the U.S.) was essentially flat. Five donor governments (Italy, Japan, the Netherlands, Norway, and the U.K.) increased total disbursements for HIV in 2014, although increases by Japan and the Netherlands follow prior declines and are still below earlier funding levels.
The majority of international assistance for HIV has historically been provided by a subset of donors (France, Germany, the Netherlands, the U.K., and the U.S.), with the U.S. consistently being the single largest (in both bilateral disbursements and contributions to the Global Fund). Since 2006, these five donors have accounted for approximately 80% or more of total assistance for HIV.
Assistance is provided by donor governments through both bilateral and multilateral channels, and some mix of the two (see Box 3). Decisions about how much assistance to provide through these different channels (what “mix” to use) are dependent on several factors, such as: the desired level of control over the use of funds by donors; varying approaches to cooperation and coordination; a donor’s own internal capabilities and field staff capacity for carrying out programs; and recipient country governance and capacity.
|Box 3: Defining Bilateral and Multilateral Channels for Assistance|
|The different channels for delivery of international assistance can be described as follows:
Bilateral assistance: Direct assistance from one government to, or for the benefit of, one or more other countries. Bilateral assistance generally consists of projects and programs, the content and direction of which is decided by the donor, providing more direct control over decisions about how and where funding is targeted (e.g., donors can stipulate countries, conditions, etc.).
Multilateral assistance: Indirect assistance, in that it is provided by donor governments (usually unconditionally) to multilateral organizations that also receive funding from many other donors and in turn provide assistance to, or on behalf of, one or more countries. Multilateral assistance generally consists of projects and programs, the content and direction of which is decided by the multilateral organization, using pooled funding from multiple donors. Multilateral aid may enable donors to satisfy other goals, such as leveraging support from other donors, financing the response through alternative vehicles, reaching more or different countries and regions, and/or accessing different capacities. For example, a donor without a large field presence may choose to provide more of its aid through a multilateral mechanism.
Multi-bi assistance (multilateral-bilateral): Assistance provided by a donor to a multilateral organization for specific activities, as defined by the donor, and for which the multilateral organization acts as an implementing agent.
The majority of donor government assistance for HIV is provided bilaterally, although in recent years there has been a shift towards greater use of multilateral channels (see Figures 3 & 4):
- Bilateral assistance, which accounted for 73% of funding for HIV from donor governments, totaled US$6.3 billion in 2014, a decline of approximately US$100 million (2%) below the 2013 level (US$6.4 billion). Four donors (Italy, Netherlands, Norway, and the U.K.) increased bilateral assistance, while eight donors (Australia, Canada, Denmark, Germany, Ireland, Japan, Sweden, and the European Commission) declined and two (France and the U.S.) remained essentially flat.
- Multilateral assistance, which accounted for 27% of funding for HIV, totaled US$2.3 billion. This represents an adjusted “AIDS share” based on the share of both Global Fund approved grant funding for HIV (55%) and UNITAID commitments for HIV through 2014 (49%).5,6 Multilateral assistance increased by approximately US$250 million (12%) above the 2013 level (US$2.1 billion).5 Seven donors (Denmark, Germany, Italy, Japan, Sweden, the U.K. and the U.S.) increased multilateral assistance, while four (Australia, France, Ireland, and Norway) declined and three (Canada, the Netherlands, and the European Commission) remained essentially flat. The U.S. was the largest donor to the Global Fund followed by the U.K., France, Germany, and Japan. France was the largest donor to UNITAID followed by the U.K. and Norway.
- The Global Fund has become an increasing channel of support for a subset of donor governments over time. The 2014 increase in overall funding for HIV was almost entirely due to an increase in contributions to the Global Fund, which undertook significant reforms and finalized a major three year replenishment effort in 2013 to raise resources for the 2014-2016 period. In 2014, six donors (Canada, the European Commission, France, Germany, Italy, and Japan) provided the majority of their funding for HIV through the Global Fund.
- Overall, the share of HIV funding provided by donor governments through multilateral channels has increased over time, rising from 24% in 2006 to 27% in 2014. Without the U.S., which provides most of its funding bilaterally, the share rose from 29% to 47%.
- At the same time, not all governments provided multilateral contributions. In 2014, for example, nine members of the Organisation for Economic Co-operation and Development’s (OECD) Development Assistance Committee (DAC) did not contribute to the Global Fund. In addition, only four DAC members contributed to UNITAID7
- For the first time, this analysis includes multilateral contributions by donor governments that are not members of the OECD DAC (and prior year amounts were adjusted accordingly). In 2014, these non-DAC donors provided US$32.1 million in multilateral funding for HIV.8
Assessing Fair Share
- What is the “total” against which individual contributions are assessed? Estimated total funding by donor governments? Should that total include just direct HIV-related costs or be broadened to include critical infrastructure and capacity deficits?
- Which funders should be included in a fair share calculation? DAC governments only, or private sector, recipient government and out-of-pocket spending by individuals?
- To what extent should the efficiency of donor assistance be taken into account (e.g., how much is “tied” aid)?
- How should differences in relative wealth between donors be taken into account?
- Should factors other than funding (e.g. differences in country tax subsidy policies for charitable giving for HIV by individuals, foundations, and corporations; patent policies) be taken into account?
- Rank by share of total donor government funding for HIV: By this measure, the U.S. ranked first in 2014, followed by the U.K., France, Germany and Denmark (see Table 2 and Figure 2).
- Rank by share of total resources available for HIV compared to share of the global economy (as measured by GDP): In 2014, UNAIDS estimates that US$20.2 billion was made available for HIV from all sources (donor governments, multilaterals, the private sector, and domestic sources) for HIV.9 Of this the U.S. provided 28%, the largest share of any donor and above its share of the world’s economy as measured by gross domestic product or GDP (23% in 2014). Denmark, Sweden, and the U.K. also provided greater shares of total HIV resources than their shares of GDP (see Table 2 and Figure 5).
|Table 2: Assessing Fair Share Across Donors|
|Government||Share of World GDP||Share of Total Donor Government Funding for HIV||Share of Global Resources Available for HIV||Total HIV Funding Per $1 Million GDP|
|*Represents Non-DAC member contributions to the Global Fund and UNITAID. Bilateral HIV funding from these donor governments is not currently available.|
- Rank by funding for HIV per US$1 million GDP: When donor government disbursements are standardized by the size of their economies (GDP per US$1 million), donors rank quite differently than when measured by actual disbursement amounts. Whereas Denmark ranked seventh in actual disbursements provided for HIV in 2014, it ranked number one when standardized by GDP. The U.K. ranked second by this measure, followed by the U.S., Sweden, and the Netherlands (see Table 2 and Figure 6).
Resources Available Compared to Need
Funding from donor governments has played a significant role in the HIV response. With global resources from donor governments and all other sources reaching US$20.2 billion in 2014, and taking into account donor commitments for 2015 and increased domestic financing of the AIDS response, the world is close to meeting the target set by member states at the 2011 United Nations High Level Meeting (US$22-24 billion).9,10
In 2014, funding for HIV from donor governments increased slightly, though this was driven primarily by a single donor – the U.K., the second largest donor to HIV – without this increase, overall funding would have declined. This, combined with the fact that most donor government funding for HIV is still provided by the United States, indicates some vulnerability in the total donor government funding envelope. Future increases will largely depend on the U.K. and U.S. unless other donor governments are able to allocate additional resources for HIV. This is important as 2015 ushers in a new era for development, raising hard questions about competing priorities and financial resources. The quest to end AIDS as a public health threat by 2030 is squarely in the midst of this discussion. Having made tremendous gains and turning around the trajectory of the HIV epidemic in many parts of the world, there is still much more to be done and a continued need for donor financing to meet the challenge.