Africa has experienced almost uninterrupted real growth in the last decade, averaging 5% per annum, and is predicted to continue this trend over the next decade. Growth rates for sub-Saharan Africa are even higher.
Base years for calculating GDP levels for some countries, such as Nigeria, Ghana and Kenya, have been revised due to structural changes in their economies. That has had a considerable impact on our understanding of size of these countries’ economies. For instance, Nigeria is now recognized as the largest economy in Africa, overtaking South Africa.
The effect of GDP growth and the rebasing exercise is that some countries are ‘graduating’ into lower middle income country (LMIC) and middle income country (MIC) status without any positive change in levels of poverty and inequality.
Growth has not been inclusive and, as a consequence, poverty levels remain high – 47% of the population of sub-Saharan Africa lives on less than $1.25 per day.
At the same time, we are seeing aid flows from developed to developing countries flatten due to fiscal pressures and fissures, arising from the global financial crisis.
In the health sector, the Equitable Access Initiative (EAI), comprising institutions such as the Global Fund, WHO, World Bank, UNAIDS, and policy makers and experts around the world, seeks to improve access to health in the developing world. I am a member of the EAI Expert Group. The EAI initiatives target those who are poor or who face disadvantages in accessing health services.
Aid must continue to flow to countries as they graduate to higher economic status to ensure that those who are less fortunate continue to receive essential health services. For example, in just one segment of health, the fiscal consequences for placing HIV-infected citizens on ART and committing to treat for life are large and growing quickly.
These are hidden liabilities that threaten, in many circumstances, to overwhelm the fiscal capacity of affected countries, even those graduating to higher economic status. This growing burden needs to be confronted – now – to ensure that it does not choke off vital growth and long-term prospects. It must also be recognized by donor and multinational organisations when determining the need for aid by affected countries.
The resource allocation formulas for the various bodies funding health globally primarily rely upon Gross Domestic Income per capita, as an input. From the RethinkHIV paper by Ncube and Hausken (2015) on resource and responsibility allocation, the allocation formulas should not reflect only GNI per capita, but also disease incidence, health access, domestic resources, the benefits of keeping people healthy and alive, and efficient use of resources.
Using a more comprehensive resource allocation framework will ensure that the flow of resources is maintained to the most needy and disadvantaged even in the face of rising average income levels as measured by GNI per capita.
Moving beyond a focus on average income levels towards a more comprehensive framework when determining the need for aid will improve access to resources for health by those for whom the impact will be greatest.
Mthuli Ncube is a Senior Research Fellow and Project Leader at Blavatnik School of Government, University of Oxford, and the principal investigator of RethinkHIV.
RethinkHIV is a consortium of senior researchers from London School of Hygiene & Tropical Medicine, Imperial College London, Harvard School of Public Health, Centre for the Study of African Economies and Blavatnik School of Government at Oxford University.
The consortium will evaluate new evidence related to the costs, benefits, effects, fiscal implications, and developmental impacts of HIV interventions in sub-Saharan Africa, in order to maximise contributions to the fight against HIV there.
The aim of RethinkHIV is to find ways of creating, optimising, and sustaining fiscal space for domestic HIV investment, as well as exploring long-term, sustainable national and international financing mechanisms. RethinkHIV is funded by RUSH Foundation.