From Death Sentence to Debt Sentence – by Marina Galanti
5 Mar 2015
From Death Sentence to Debt Sentence – by Marina Galanti

HIV liabilities in sub-Saharan Africa to exceed $250 billion

Debt in Africa recently hit global headlines. The Overseas Development Initiative warned that the recent surge in foreign debt issuance had left fragile African economies exposed to billions of dollars of losses. With Africa’s current debt stock at $18bn, the IMF is admonishing countries not to take on more debt.

The discourse about African debt is healthy. Analysts, financial institutions, multilateral organisations, and most importantly, voters can be part of a discussion about how much national debt is too much.

RethinkHIV aims to start a conversation about a hidden debt that isn’t acknowledged by donors or governments of countries affected with HIV. It also aims to examine the investment opportunities that this debt constitutes and to explore programmatic responses that can be used to minimise it.

To that end, the RUSH Foundation and Harvard T.H. Chan School of Public Health hosted a roundtable meeting last week, ‘From a Death Sentence to a Debt Sentence: Meeting the Challenge of Long-term Liabilities of HIV Funding’.

As the blog by Professor Rifat Atun, Dr Shaloo Puri and Gabriel Seidman describes, the workshop convened senior leaders and researchers from Harvard University, University of Oxford, the IMF, the World Bank, the African Development Bank, the Global Fund, Bill and Melinda Gates Foundation, Social Finance and the Innovative Finance Foundation.

When RUSH Foundation launched the first iteration of RethinkHIV, we sensed that we needed to find a more compelling case for health expenditure as investment, rather than as effective charity. We tasked a team of formidable experts to come up with cost-benefit ratios for various HIV interventions and asked a panel of Nobel Laureates to rank them by effectiveness.

That was a controversial approach which rankled many. But it is heartening, today, to see that benefit-cost ratios are being used to powerfully make the case for smart health investments. The Lancet Commission on Investing in Health argued that between 2015 and 2035, the economic benefits of convergence would exceed costs by a factor of about 9 in low-income countries and around 20 in lower-middle income countries. And when it launched the 90-90-90 goals, UNAIDS announced that fast-tracking the AIDS response between 2015 and 2030 would yield economic returns of 15 dollars per dollar invested.

Suddenly, talking about benefits and costs is popular, which is very welcome because these are some of the arguments that will convince policy-makers to take action.

In the workshop, we began to explore more powerful and comprehensive ways to build the case for smart, up-front HIV investment.

The many breakthroughs in HIV have not been matched with the shift in financing perspective that is required by a disease with chronic as well as infectious characteristics, with the attendant financial and ethical burden that this entails.

Looking through a long-term lens brings up disturbing realisations but can also constitute the incentive to overhaul a system that lurches from replenishment to replenishment in a sub-optimal manner. It may, in fact, be the inducement needed to bring about an incentive-compatible co-financing framework for meeting – and minimizing – these liabilities.

The workshop heard from RethinkHIV senior consortium member Sir Paul Collier that providing someone with ART is an irreversible commitment across the lifetime of the person living with HIV. Almost all of the costs lie in the future, so putting someone on treatment incurs a liability that is analogous to a debt.

These debts are not currently on the books. For different reasons, neither African governments nor donors publicly acknowledge them. There is a disturbing disconnect between short-term funding cycles and long-term financial liabilities, as well as accountability for these between donors and affected governments.

Rifat Atun, another RethinkHIV Principal Investigator, presented draft research from Harvard T.H. Chan School of Public Health that attempts to quantify the long-term liabilities of HIV. The future financial obligation for HIV/AIDS in sub-Saharan Africa exceeds $250 billion, and creates a huge hidden debt obligation.

This is critical to many affected countries. To take an extreme example, when HIV liabilities are factored in, early work suggests that the debt-to-GDP ratio of Malawi more than doubles. (This puts concerns about foreign debt issuance into perspective!)

He pointed out that right now many countries in sub-Saharan Africa lack the domestic financial resources, the economic resilience, and the fiscal flexibility required to meet these substantial future obligations.

But donors also lack an effective framework through which to meet their long-term ethical obligations, let alone an equitable exit strategy.

Moreover, in a world where the challenges of AIDS are seen as ‘over’, donor attention is increasingly diverted elsewhere. We need to make the investment case, as well as the moral one, for engaging long-term with a disease that still kills 1.5 million people every year. And we need to sound a wake up call. It was only when Ebola achieved US National Security Threat status that the unthinkable suddenly got on the menu, significant extra funds were released, a vaccine task force was constituted and the African Union even contemplated a continent-wide tax.

We hope that presenting the donor community with the lifetime liabilities that follow from their implicit ethical commitments will incite them to think of meeting these through bolder, more effective and comprehensive financing mechanisms. To graduate from donors to investors in other countries’ resilience: partners who contemplate financial solutions precluded by short-term thinking.

We also hope using a fiscal lens will lead affected governments to examine the programmatic responses required to minimize these future liabilities – through cross-health and cross-development efficiencies, for starters – but also to meaningfully engage their private sector and growth drivers to invest in the resilience of their country’s human capital.

Too often when we talk about “innovative financing”, we actually just mean “new taxes” to supplement core budget. Even assuming these can be made politically palatable, they mostly amount to tinkering around the edges of the problem.

What is required is a structural rethink of the HIV financing framework, with a new role for multilaterals and commitment technologies that bind donors and recipients in a virtuous and complementary co-financing framework.

If we seriously want to grapple with financing a resilient response, we will need not only to find cleverer ways of harnessing the private sector, but better means through which both donors and affected governments can reap the benefits of investing in a healthy future.

And as prevention lies at the heart of this investment, it will also mean being more humble about which interventions impact long-term incidence and which do not. What is clear is that we need to be unafraid of putting sex back into prevention, and accept that behaviour change – and hence education – is critical to success, messy though that is to a donor community constantly on the look-out for short-term wins and bio-medical silver bullets.

Marina Galanti is president of RUSH Foundation.