A Comparative Analysis of the Financing of HIV_AIDS Programmes doc

A Comparative Analysis
of the Financing of
HIV/AIDS Programmes
in Botswana, Lesotho, Mozambique,
South Africa, Swaziland and Zimbabwe
OCTOBER 2003
Prepared for the Social Aspects of HIV/AIDS and
Health Research Programme of the
Human Sciences Research Council
by Dr H. Gayle Martin
Funded by the WK Kellogg Foundation


Free download from www.hsrc
p
ublishers.ac.za
Contents
Executive Summary vii
Acknowledgements xi
Abbreviations xii
Introduction 1
Methodology 3
Definition of HIV/AIDS Expenditures 3
Data Collection 4
Limitations and Challenges 5
Botswana 7
Level of Expenditure 7
Functional Classification of HIV/AIDS Expenditures 11
Sources of Financing 11
Financing Mechanisms 11
Lesotho 15

Level of Expenditure 15
Sources of Financing 18
Financing Mechanisms 18
Mozambique 21
Level of Expenditure 21
Functional Classification of HIV/AIDS Expenditures 25
Sources of Financing 25
Financing Mechanisms 26
South Africa 27
Level of Expenditure 27
Sources of Financing 28
Financing Mechanisms 29
Swaziland 33
Level of Expenditure 33
Functional Classification of HIV/AIDS Expenditures 37
Sources of Financing 37
Financing Mechanisms 38
Zimbabwe 41
Level of Expenditure 41
Sources of Financing 42
Financing Mechanisms 42


Free download from www.hsrc
p
ublishers.ac.za
Comparative Analysis 43
Health Expenditure 43
Government Expenditure on HIV/AIDS 45
Expenditure on HIV/AIDS by External Sources 47

Total Expenditure on HIV/AIDS 49
Conclusion 51
Special Resource Mobilisation Strategies 51
Do Increased Resources mean Increased Inefficiency? 51
Sustainability 51
Appendices 53
Appendix A: Selected Indicators by Country 53
Appendix B: HIV/AIDS Indicators by Country 57
Appendix C: Terms of Reference 58
Bibliography 59


Free download from www.hsrc
p
ublishers.ac.za
Tables
Table 1: Total and Public Health Expenditure in Botswana (1990–2000) 8
Table 2: Core Expenditure on HIV/AIDS Programs in Botswana (1999/01–2002/03, in
current US$) 9
Table 3: Sources of Funding for HIV/AIDS programmes in Botswana (2000) 10
Table 4: Expenditure on HIV/AIDS in Botswana (2001/02) 10
Table 5: Functional Classification of Government of Botswana HIV/AIDS Expenditure
(2002/03) by Financing Mechanism 13
Table 6: Global Fund Award to Botswana 13
Table 7: Total and Public Health Expenditure in Lesotho (1990–2000) 15
Table 8: Government of Lesotho funding for HIV/AIDS, Tuberculosis and Malaria in
(2001/02) 16
Table 9: Expenditure on HIV/AIDS in Lesotho (2001/02) 16
Table 10: External Sources of Funding for HIV/AIDS programmes in Lesotho (2000) 17
Table 11: Global Fund Award to Lesotho 19

Table 12: Total and Public Health Expenditure in Mozambique (1990–2000) 21
Table 13: Government of Mozambique funding for HIV/AIDS, Tuberculosis
and Malaria (2001) 22
Table 14: External Sources of Funding for HIV/AIDS programmes in Mozambique
(2000) 23
Table 15: Expenditure on HIV/AIDS in Mozambique (2001) 25
Table 16: Sources of Government Revenue in Mozambique (1999–2000) 26
Table 17: Global Fund Award to Mozambique 26
Table 18: Public Health Expenditure in South Africa (constant US$, 1999/00) 27
Table 19: Expenditure on HIV/AIDS in South Africa (2001/02) 28
Table 20: Breakdown of Conditional Grant for National Integrated Plan Funds by
Department and Function in South Africa (in current US$) 30
Table 21: Summary of the Goals and Objectives of HIV/AIDS Control in the
Departments of Health, Social Development and Education in
South Africa 31
Table 22: Global Fund Award to South Africa 32
Table 23: Total and Public Health Expenditure in Swaziland (1990–2000) 33
Table 24: Government of Swaziland funding for HIV/AIDS, Tuberculosis and Malaria
(2001/02) 34
Table 25: Government of Swaziland Non-Health Sector Funding to Government
Institutions for HIV/AIDS-related Interventions (2001/02) 34
Table 26: Swaziland NGOs involved in AIDS Interventions by
Funding Status (2001/02) 35
Table 27: External Sources of Funding for HIV/AIDS for Swaziland (2001) 36
Table 28: Expenditure on HIV/AIDS in Swaziland (2001/02) 37
Table 29: Functional Classification of Ministry of Health and Social Welfare HIV/AIDS
Expenditures in Swaziland (2001/02) 38
Table 30: Global Fund Award to Swaziland 39
Table 31: Total and Public Health Expenditure in Zimbabwe (1990–2000) 41
Table 32: Global Fund Award to Zimbabwe 42

Table 33: Summary of Expenditure on HIV/AIDS by Country (2000/01, US$) 46
Table 34: Summary of Expenditure on HIV/AIDS by Country
(2000/01, International $) 47
v
©HSRC 2003


Free download from www.hsrc
p
ublishers.ac.za
Figures
Figure 1: Total health expenditure (US$) per capita) in the six countries vii
Figure 2: Health expenditure in the six countries as a percentage of government
expenditure (2001/02) viii
Figure 3: Total HIV/AIDS expenditure (US$ millions) ix
Figure 4: Total HIV/AIDS expenditure (US$) ix
Figure 5: Change in Life Expectancy in Botswana (1970–2000) 7
Figure 6: Financial Flows for HIV/AIDS Expenditure in Botswana 12
Figure 7: Financial Flows for HIV/AIDS Expenditure in Lesotho 19
Figure 8: Sources of Health Financing in Mozambique (1997) 22
Figure 9: The Flow of Resources for HIV/AIDS to the Provincial Level in
South Africa 29
Figure 10: Total Health Expenditure (A) as a Percentage of GDP and (B) Per Capita
(US$) for 1990–2000 By Country 44
Figure 11: Health Expenditure as a percentage of government expenditure
by Country 45
Figure 12: Government expenditure on HIV/AIDS per capita and per PLWHA (2001) 47
Figure 13: Expenditure on HIV/AIDS as a percentage of GDP (2001) 48
Figure 14: Expenditure on HIV/AIDS (2001/02, current US$) 48
Figure 15: Share of Government and External Sources of HIV/AIDS Financing 49

Figure 16: Infant Mortality Rate per 1,000 live births (1970–2000) 53
Figure 17: Maternal Mortality Ratio per million live births (1994–2000) 53
Figure 18: Life Expectancy (1970–2000) 54
Figure 19: Population Growth (1970–2000) 54
Figure 20: Gross National Product (per capita, current US$) 55
Figure 21: Economic Growth (per capita) 55
Figure 22: Human Development Index (1975–2001) 56
Figure 23: HIV Infection rates for Adults and Children 57
Figure 24: People Living with HIV/AIDS 57
vi
©HSRC 2003


Free download from www.hsrc
p
ublishers.ac.za
Executive Summary
In April 2001 in Abuja, African leaders committed to take all necessary measures to
mobilise the required resources for HIV/AIDS. The pledge was made to allocate at least
15 per cent of government expenditure to the improvement of the health sector. This
commitment was endorsed by world leaders at the Special Session of the United Nations
General Assembly on HIV/AIDS in June 2001. At this Special Session, developed countries
committed to assist African leaders in their efforts to realise the funding targets set in the
Abuja Declaration.
Botswana, Lesotho, Mozambique, South Africa, Swaziland and Zimbabwe comprise 12 per
cent of the population in the sub-Saharan African region and account for 33 per cent of
the total HIV/AIDS burden in the region. Among these six countries, four have adult HIV
infection rates of above 30 per cent and all but one have rates above 20 per cent.
Mozambique has the lowest adult HIV prevalence – 12 per cent. Because of the relatively
large population sizes in South Africa and Zimbabwe, these two countries account for

eighty per cent of the infected adults in these six countries.
It is within the context of this HIV/AIDS burden that this comparative analysis aims to
assess the readiness and ability of the countries to respond to the HIV/AIDS epidemic.
The key issues that are addressed in this analysis are:
• Is the allocation to health, as a per cent of total government expenditure, sufficient?
• Is enough allocated to deal with HIV/AIDS, given the magnitude of the problem?
Data limitations made it nearly
impossible to evaluate HIV/AIDS
expenditure allocation – in terms of
economic classification (capital and
recurrent) or functional classification
(prevention, care and support, and
treatment). The allocation of HIV/AIDS
funds by activity is therefore, generally,
not addressed in the report.
Another data limitation was the paucity
of information on household (and
business) expenditure on HIV/AIDS.
Estimates from Latin American and
Caribbean countries found that average
annual expenditure by people living
with HIV/AIDS (PLWHA) was US$1,000,
while an assessment in Rwanda reported US$25 per PLWHA. Even at the latter level, it is
clear that significant amounts of household resources are devoted to HIV/AIDS, resulting
in a combination of transient and permanent impacts on household welfare. One
particular outcome is an increase in the number of households falling below the poverty
line. While not addressed in this report, this household-level outcome has several
secondary consequences that also need to be considered – for example, increasing the
demand for government assistance in the form of poverty alleviation.
vii

©HSRC 2003
US$
300
250
200
150
100
50
0
Botswana Lesotho Mozambique South Swaziland Zimbabwe
Africa
$191
$255
$56
$43
$28
$9
Figure 1: Total health expenditure (US$)
per capita in the six countries


Free download from www.hsrc
p
ublishers.ac.za
The financing of HIV/AIDS programmes
Among the six countries, total health expenditure ranges from a high of US$255 per
capita in South Africa to a low of US$9 per capita in Mozambique. During the 1990s total
health expenditure increased in all these countries except for South Africa. The largest
increase was in Botswana where total health expenditure increased by 115 per cent
between 1990 and 2000. Estimates of the minimum level of spending on essential or basic

health services range from a low of US$12 (in the World Development Report 1993) to
US$34 (by the Macroeconomic Commission on Health in 2001). Four of the six countries
have expenditures in excess of these levels, although two countries, Lesotho and
Mozambique, have per capita expenditures of well below US$34, and in the case of
Mozambique, below US$12.
Is the allocation to health, as a per cent
of total government expenditure,
sufficient? Except for South Africa and
Zimbabwe, none of the countries fulfilled
their commitment made in Abuja in April
2001 to allocate 15 per cent of
government expenditure to health.
Botswana comes closest among the
remaining countries, spending ten per
cent of government expenditure on
health. The other countries spend about
half of the 15 per cent target. It should
however be noted that this data is for the
years 2001 and 2002. When viewed
against the background of increasing
allocations to the health sector over time, it is likely that Botswana and Swaziland will
meet the target. However, the constrained macroeconomic environment in Mozambique
and Lesotho suggests less optimism for reaching the targeted 15 per cent.
Aggregate government expenditure on HIV/AIDS in these southern African countries is
nearly US$70 million annually. There is great variation in the level of expenditure on
HIV/AIDS by individual countries. Government expenditure on HIV/AIDS ranges from a
high of US$33 million in South Africa to a low of US$0.8 million in Lesotho. Per capita
expenditure on HIV/AIDS shows similar variation – on the high end is Botswana with
US$30 per capita, which is almost 30 times the level of expenditure in the other countries.
All the other countries fall below US$1.50 per capita. The median per capita HIV/AIDS

expenditure for the six countries is US$1. If one considers only the HIV infected
population, then Botswana spends $51 per PLWHA. The HIV/AIDS expenditure in
Botswana is also the highest when measured as a percentage of GDP – the government
of Botswana spends one per cent of GDP on HIV/AIDS.
External sources – bilateral donors, multilateral donors (including the UN agencies),
business and NGOs – account for a total of US$180 million expenditure on HIV/AIDS in
these six countries. This translates into a per capita expenditure of US$2 and expenditure
of US$19 per PLWHA. The highest level of donor assistance, in absolute terms, is in
Botswana where US$96 million was spent in 2001. This is equal to US$60 per capita and
US$291 per PLWHA. With the exception of South Africa, expenditures on HIV/AIDS in
viii
©HSRC 2003
20
15
10
5
0
Percentage
Botswana Lesotho Mozambique South Swaziland Zimbabwe
Africa
10.4
15.4
7.4
15.8
7.4
8.8
Figure 2: Health expenditure in the six countries
as a percentage of government expenditure
(2001/02)

Free download from www.hsrc
p
ublishers.ac.za
Executive summary
these countries are financed mainly by
external sources. In Mozambique, Lesotho
and Swaziland more than eighty per cent
of total HIV/AIDS spending is funded by
external sources. The allocations from the
Global Fund to Fight AIDS, Tuberculosis
and Malaria to these countries will add an
additional US$479 million over the total
period of the allocations, and US$192 over
the first two years of each award.
Total spending in these countries
(government- and donor-financed but
excluding household out-of-pocket
spending and the Global Fund allocations)
amounts to approximately US$250 million
for the year 2001, or to US$3 per capita
and US$27 per PLWHA. In the literature,
the reported HIV/AIDS spending per capita
(excluding out-of-pocket spending) for
sub-Saharan Africa is US$0.3 per capita and
US$8 per PLWHA. Regardless of the
measure, total expenditure on HIV/AIDS in
these six countries is higher than the
regional average. Specifically, per capita
HIV/AIDS expenditure is ten times higher

and expenditure per PLWHA is more than
three times higher than in the sub-Saharan
Africa region. This is consistent with the
higher burden of HIV/AIDS in Botswana,
Lesotho, Mozambique, South Africa,
Swaziland and Zimbabwe. These countries
account for a third of PLWHA in sub-
Saharan Africa compared to a tenth of the
region’s population.
The high level of financing in Botswana, from domestic and external sources, makes this
country somewhat of an outlier. Botswana spends US$71 per capita and US$343 per
PLWHA. However, despite this relatively high level of financing, the total spending on
HIV/AIDS is substantially lower than the average HIV/AIDS expenditure in countries of
the Latin American and Caribbean region.
Is enough allocated to deal with HIV/AIDS given the magnitude of the problem? In the
literature it has been estimated that sub-Saharan Africa requires US$4.6 billion annually for
prevention, care and support, and treatment (including anti-retroviral therapy). Given that
these six countries account for a third of the HIV/AIDS burden in the region, it can be
argued that a third of this estimate are the required annual resources for HIV/AIDS
interventions. This figure exceeds the current total HIV/AIDS expenditure that is at one
quarter of US$1 billion.
ix
©HSRC 2003
Figure 3: Total HIV/AIDS expenditure (US$ millions)
Total: $249 million
Government
$69,28%
External
$180,72%
Per capita Per PLWHA

30
25
20
15
10
5
0
$1
$8
$2
$19
External
Government
Figure 4: Total per capita HIV/AIDS expenditure
(US$)


Free download from www.hsrc
p
ublishers.ac.za
The financing of HIV/AIDS programmes
The gravity of the HIV/AIDS situation in these six countries calls for prioritisation,
protection and targeting of HIV/AIDS spending. What is the appropriate institutional
funding mechanism for responding to this call? A detailed assessment of the experiences
of, for example, Zimbabwe (with the earmarking of three per cent wage tax for HIV/AIDS
expenditures), Lesotho (with the allocation of two per cent of all sectoral budgets to
HIV/AIDS) and South Africa (with the introduction of a conditional grant for HIV/AIDS),
is required in order to make specific recommendations. However, preliminary evidence
suggests that the experiences of Zimbabwe and South Africa have generally been positive,
although Lesotho has had less success. Some of these experiences are shared in the

report.
A further important resource mobilisation strategy is the Global Fund. It will be important
to share lessons and experiences before and after countries embark on the Global Fund
process. The seriousness of the HIV/AIDS situation does not allow for each country to
replicate the learning curves. It is, furthermore, important that the increased allocations
which the various international resource mobilisation initiatives aim to effect, are not
accompanied by increased inefficiency in budget management and budget execution. This
would be a tragic outcome given the unprecedented level of commitment and focus on
resource mobilisation for HIV/AIDS.
Extensive planning and consultation processes have preceded the Global Fund
allocations. HIV/AIDS has stressed the capacity of the health sectors in the six countries.
The ability to absorb the vastly increased resources will be a critical determinant of
whether the increased resources will be translated into increased outputs and, ultimately,
into improved outcomes. Importantly, as the experience in Botswana has demonstrated,
human resource capacity constraints may severely limit the response to HIV/AIDS in spite
of high level of financial resources.
The Abuja Declaration showed developing countries’ commitment to making their own
resources available to meet the enormous challenge posed by HIV/AIDS. It is important
that the gains made by the commitment in Abuja are not reversed by the nearly US$500
million Global Fund allocations made to these six countries. This will be an important
issue to monitor – specifically, to what extent does the Global Fund crowd-out
government expenditure, displacing rather than adding to the resources for health and
HIV/AIDS.
x
©HSRC 2003


Free download from www.hsrc
p
ublishers.ac.za

This report is the product of contributions from various research teams. I would like to
acknowledge them and their contributions to making this monograph possible. The data
collection was completed because of the joint efforts of research teams in Botswana,
Lesotho, Mozambique, South Africa, Swaziland and Zimbabwe. The team leaders were:
•Professor Sheila Tlou – Botswana
•Dr Ron Cadribo – Lesotho
•Mr Joel Gudo – Mozambique
•Efua Dorkenoo – South Africa
• Rudolph Maziya – Swaziland
•Brian Chandiwana – Zimbabwe
The Departments of Treasury/Finance and the Departments of Health in the six countries
played an important role in the provision of information, without which this report would
not have been possible. We sincerely appreciate their collaboration.
The role of Dr Gayle Martin in analysing the data, synthesizing information, often
augmenting this with insights gleaned from other sources, and then writing it all up, is
much appreciated.
The editorial and production work of HSRC Publishers will not go unnoticed. They
worked under extreme time pressure and managed to get the report completed within the
given time frame.
Finally, the financial contribution of the WK Kellogg Foundation, and the support of
Bishop Malusi Mpumlwana and Mrs Vuyo Mahlati, who offered constant encouragement
and support throughout the project, is highly valued.
The Social Aspects of HIV/AIDS and Health Research Programme of the Human Sciences
Research Council takes responsibility for the content of this report because it was
responsible for conceiving the idea and ensuring that it was successfully carried out and
completed.
Dr Olive Shisana
Executive Director, Social Aspects of HIV/AIDS and Health Research Programme,
Human Sciences Research Council
Acknowledgements

xi
©HSRC 2003


Free download from www.hsrc
p
ublishers.ac.za
ANC Ante-natal clinic
ART Anti retroviral treatment
DFID Department for International Development, United Kingdom
EU European Union
HBC Home-based care
IEC Information, education and communication
HDI Human Development Index
HIV/AIDS Human Immunodeficiency Virus/Acquired Immuno Deficiency Syndrome
IMF International Monetary Fund
IMR Infant mortality rate
KFW Kreditanstalt für Wiederaufbau
GDP Gross domestic product
GTZ Deutsche Gesellschaft für Technische Zusammenarbeit
MMR Maternal mortality ratio
MOH Ministry of Health
NGO Non-governmental organization
OVC Orphans and vulnerable children
PLWHA Person/people living with HIV/AIDS
PMTCT Prevention of mother-to-child transmission
PPP Purchasing power parity
SIDA Swedish International Development Agency
STI Sexually transmitted infections
TB Tuberculosis

UN United Nations
UNAIDS Joint United Nations Programme on HIV/AIDS
UNDP United Nations Development Programme
UNFPA United Nations Population Fund
UNICEF United Nations Children’s Fund
USAID United States Agency for International Development
VCT Voluntary counseling and testing
WHO World Health Organization
xii
©HSRC 2003
Abbreviations


Free download from www.hsrc
p
ublishers.ac.za
Early in the twenty-first century governments and world leaders made several
unprecedented, high-level commitments to fight HIV/AIDS. One of the commitments
made by all governments during the Special Session of the United Nations General
Assembly on HIV/AIDS in June 2001 in the Declaration of Commitment was to ‘secure
more resources to fight HIV/AIDS increasing annual spending to US$7-10 billion in low-
and middle-income countries’. The Abuja Declaration, made by African leaders in April
2001 stated: ‘We commit ourselves to take all necessary measures to ensure that the needed
resources are made available from all sources, and that they are efficiently and effectively
utilised. We pledge to set a target of allocating at least 15 per cent of our annual budget to
the improvement of the health sector. We undertake to mobilise all the human, material
and financial resources required to provide care and support and quality treatment to our
populations infected with HIV/AIDS, tuberculosis and other related infections.’ This
commitment was endorsed at the UNGASS and world leaders from developed countries
also committed to assist African leaders in their efforts to realise the funding targets set in

the Abuja Declaration.
Botswana, Lesotho, Mozambique, South Africa, Swaziland and Zimbabwe comprise 1.3
per cent of the world’s population and account for 23.3 per cent of the total HIV/AIDS
burden. Similarly, 12.1 per cent of the sub-Saharan Africa population reside in these
countries, yet they account for 32.5 per cent of the people living with HIV/AIDS (PLWHA)
on the sub-continent.
It is therefore appropriate that an assessment of the extent to which the commitment
made in Abuja has been translated to action focuses on these countries. The data
collected in this study were used to assess the extent to which each of the six countries
allocated resources to back up their political commitment to HIV/AIDS. The data was
collected to fulfil one of the Kellogg Foundation’s terms of reference for the study, to find
out how HIV/AIDS programs are financed.
The report proceeds with a description of the methodology used in the compilation of
this report. In addition to describing the method of data collection, the limitations and
challenges are identified. Then brief synopses of each country are presented, highlighting
the economic context, the level of financing, the sources and mechanisms of financing of
healthcare and HIV/AIDS expenditures. This is followed by a comparative analysis of the
financial dimension of HIV/AIDS programs and interventions across the six countries. The
report concludes with some of the critical issues and implications of the findings of the
comparative analysis.
For reference, selected health and economic indicators for the six countries are presented
in Appendix A. In Appendix B the HIV/AIDS indicators for these countries are listed.
Lastly, the terms of reference are included in Appendix C.
Introduction
1
©HSRC 2003


Free download from www.hsrc
p

ublishers.ac.za
The financing of HIV/AIDS programmes
2
©HSRC 2003


Free download from www.hsrc
p
ublishers.ac.za
The purpose of this study was to identify the sources and quantities of the funds available
for health expenditure and, more specifically, for HIV/AIDS programmes in the six
countries. The study sought to identify the different sources of funds for HIV/AIDS
interventions that are available to the Ministry of Finance/National Treasury. These
sources have been dis-aggregated as far as the data would allow. The purpose of the
study was, however, not to scrutinise the allocation criteria but to quantify the allocation
for health and HIV/AIDS.
None of the countries studied have undertaken a ‘National HIV/AIDS Accounts’, as has
been done in other countries such as: Rwanda, Argentina, Brazil, and other Latin
American and Caribbean countries. The data are therefore largely incomplete. For
example, private/household expenditures on HIV/AIDS have been completely omitted,
despite several studies indicating that households of PLWHA contribute substantially to
HIV/AIDS expenditures. For example, a study in twelve Latin American and Caribbean
countries found that average expenditure by PLWHA was US$1,000, ranging from over
US$3,000 (in Uruguay) to US$125 (in Guatemala). An assessment in Rwanda reported
US$25 per PLWHA spent on HIV/AIDS-related expenditures. If the latter amount were
extrapolated to the six countries, the level of aggregate household expenditure on
HIV/AIDS would be over US$200 million, if one only considers expenditure by adults
with HIV/AIDS. This estimate would have to be verified in a purposively sampled
household survey and facility-based (private and public) survey in a multi-country setting.
The high level of out-of-pocket healthcare spending that households already incur

supports the importance of household expenditure on HIV/AIDS. For example, a National
Health Accounts assessment in Mozambique found that 20 per cent of total health
expenditures were borne by households (see Figure 8).
Due to the data limitations, the emphasis in this report is therefore on expenditures by
governments and external sources of funding, such as bilateral and multilateral donor
partners, foundations and the business community. It is, however, important to remember
that all these resources ultimately come from households – from taxpayers in low-,
middle- and high-income countries, as well as from consumers of businesses in the
developed and developing world.
Definition of HIV/AIDS Expenditures
The definition proposed in the HIV/AIDS Survey Indicators Database is: ‘The amount of
money allocated in national accounts for spending on HIV/AIDS prevention and care
programmes, per adult aged 15–49.’ The definition suggests that the per capita estimates
should use only adults aged 15–49 years. However, the comparison studies, reported by
UNAIDS and others, used total population and not only the sexually active population as
the definition from the HIV/AIDS Survey Indicators Database suggests. In this report, two
definitions of HIV/AIDS expenditures are used. Core HIV/AIDS expenditures are
expenditures allocated to dedicated HIV/AIDS programmes, such as IEC (information,
education and communication), distribution of condoms, VCT (voluntary counselling and
testing), HBC (home-based care) etc. Expanded HIV/AIDS expenditures include the core
expenditures as well as healthcare expenses incurred in facility-based care and treatment
of opportunistic infections in general health facilities. Expanded HIV/AIDS expenditures
are reported for two countries, Botswana and South Africa.
Methodology
3
©HSRC 2003


Free download from www.hsrc
p

ublishers.ac.za
The financing of HIV/AIDS programmes
The expenditures have been reported in US$ to facilitate cross-country comparison. In
Table 34 a summary table is presented in international dollars (PPP$), allowing for
purchasing power parity. Purchasing power parity takes into account variances in
domestic purchasing power of a given level of expenditure. However, it makes the
assumption that prices in the health sector follow the same structure as the broader
economy, which is not always the case. Variance in domestic and international purchasing
power is especially of concern for non-tradable inputs, for example, domestically
provided labour inputs (which often account for up to 80 per cent in the health sector).
Where goods are purchased from international markets (for example, imported drugs,
imported medical supplies, and international consultants) the conversion to international
dollars does not make sense. This would be the case for donor financing and some of
domestic funding. This would suggest using PPP$ for government funding and US$ for
donor funding. However, this approach would provide internally inconsistent, aggregate
estimates of expenditure, and for this reason the reporting and analysis are done in US$,
while the purchasing power parity conversion is done for mainly for completeness.
Data Collection
The key sources of information were Ministries of Finance/National Treasuries, Ministries
of Planning, Ministries of Health, Tax Offices, National Income Accounts and National
Health Accounts, income/employment and household surveys as well as any special
research studies. An important source of information was the submissions by four of the
countries (Botswana, Lesotho, Mozambique and Swaziland) to the Global Fund. Extensive
use was also made of the reports by multilateral agencies: UNAIDS, UNDP, World Bank
and IMF.
During the data collection the assumption was made that in each country the Ministries of
Finance/National Treasuries are directly responsible for distributing funds to the various
sectors and would therefore be one of the best sources of expenditure information. The
original intention was to divide the sources into:
• public sources (tax and compulsory heath insurance contributions)

•private sources (private health insurance, private individuals and or employers,
charitable organisations and user fees, for example, for health services)
•sources of external co-operation (official or unofficial multilateral/bilateral
organisations or countries respectively)
However, the data only allowed for the identification of the first and third categories.
Information was also collected from the Ministries of Health on all health-related finances
received from Ministries of Finance/National Treasuries, as well as from other ministries.
Donations from other countries, local or international businesses, organisations, or private
individuals (in the form of grants or loans) were divided into external co-operation and
charity. The first category refers to the finances that the Ministry of Health receives
through bilateral or multilateral agreements via the Ministry of Finance/National Treasury.
The second category refers to allocations from businesses, individuals, NGOs, trusts or
missions within the country directly to the Ministry of Health. In the reporting of the data
in this report, this separation was not possible and aggregate figures for external sources
were reported.
4
©HSRC 2003


Free download from www.hsrc
p
ublishers.ac.za
Methodology
Ministry of Health officials were asked to allocate spending, using various criteria, into
different activities and pregrammes to enable a functional classification of HIV/AIDS
expenditures. The main categories of uses of HIV/AIDS expenditures included:
•information education and communication
• home-based care
• voluntary counselling and testing
•prevention of mother-to-child transmission

• human resource development
•treatment of HIV/AIDS
•HIV/AIDS research
• administration
Funds for HIV/AIDS control could have been allocated to various intermediaries for a
number of uses, as is the practice in National Health Accounts. The intermediaries may
include the following: regional/local governments, non-government organisations (NGOs),
community-based organisations (CBOs), research institutions, and other ministries. Where
available, the intermediaries were reported.
Limitations and Challenges
Discrepancies have been noted in data obtained from different sources. This illustrates
the difficulties encountered in collecting the data. The experience from other studies
assessing HIV/AIDS expenditures showed that questionnaires to government institutions
and HIV/AIDS co-ordinating structures are an inefficient data collection tool. This was
also the experience in this study.
The limitation of data from special studies is that different definitions may be used in the
variables that are reported, or they are not sufficiently dis-aggregated for the purpose at
hand. The lack of information about households’ out-of-pocket expenditure was a further
limitation.
For these reasons, the reported data should be taken as an indication of expenditures on
HIV/AIDS, and an effort should be made to have the various governments and external
partners verify the data captured in this report. Input by donors would be especially
pertinent to minimise the potential for double counting of donor inputs. For example,
UN agencies often implement bilateral donor-funded activities and a simple aggregation
of donor expenditures, as was done in this report, will likely suffer from some degree of
double counting of donor inputs. In future, National HIV/AIDS Accounts would be able
to address the assumptions made in the data just mentioned, as well as data omissions
encountered in this study.
5
©HSRC 2003

Free download from www.hsrc
p
ublishers.ac.za
The financing of HIV/AIDS programmes
6
©HSRC 2003


Free download from www.hsrc
p
ublishers.ac.za
Lesotho
Lesotho is a low-income country with a per capita GDP of US$530 in 2001, similar to the
average for the sub-Saharan Africa region. The country has a population of 2.2 million
people, most of whom are rural residents (about 80 per cent), and half of whom live
below the poverty line. The average real per capita growth for the 1990s was 2.1 per cent
(Figure 21 in Appendix A). In 1998 Lesotho experienced economic contraction, but has
since had positive economic growth. The government of Lesotho has limited control over
monetary policy (given that the Maloti is pegged to the South African Rand), and
therefore fiscal measures are the most important means whereby government manages
the economy. This has important implications for future government-financed HIV/AIDS
expenditure.
The country ranks 137th out of 174 in the Human Development Index (HDI=0.510)
(Figure 22 in Appendix A). Life expectancy has dropped by more than ten years during
the 1990s: from 56.0 years in 1991 to 43.3 in 2001 (Figure 18 in Appendix A). This has
largely been ascribed to HIV/AIDS. The adult HIV prevalence is 34 per cent which,
second to Botswana, is among the highest in the world (Figure 23 and Figure 24 in
Appendix B). It is projected that Lesotho will experience an annual loss of GDP growth

due to HIV/AIDS of 0.6 per cent point in 2001 and a loss of 2.7 per cent points by 2015.
Level of Expenditure
Health expenditure
Total health expenditure in Lesotho averaged at about six per cent of GDP for the past
two decades. Public health spending increased from a low of 2.6 per cent in 1990 to
5.2 per cent of GDP in 2000 (Table 7). Per capita spending at US$28 is slightly above the
mean per capita health expenditure of low-income countries ($21).
As alluded to earlier, the HIV/AIDS expenditure for Lesotho needs to be viewed within
the context of macroeconomic concerns, given the lack of government control over
monetary policy. Government will likely place strong emphasis on containment of public
expenditure to address the macroeconomic challenges. While health sector allocations
have not come under threat, it is unlikely that the health budget will show significant real
increases (from government sources) in the medium term.
Government Financed HIV/AIDS Expenditure
In 2001/02 the government of Lesotho spent US$0.8 million on HIV/AIDS programmes
and a further US$0.2 million on tuberculosis and malaria (Table 8). These expenditures
15
©HSRC 2003
Table 7:Total and public health expenditure in Lesotho (1990–2000)
1990 1995 2000
Total health expenditure (percentage of GDP) 6.2 6.3
Public health expenditure (percentage of GDP) 2.6 4.9 5.2
Total health expenditure per capita (current US$) 31 28
Source: World Bank, 2003


Free download from www.hsrc
p
ublishers.ac.za
The financing of HIV/AIDS programmes

have been channelled mainly through the Ministry of Health and Social Welfare. The
budgetary HIV/AIDS allocation channelled through the Lesotho AIDS Programme Co-
ordinating Authority (LAPCA) for 2001/02 was US$60,754 and US$97,345 for 2002/03.
Government-financed per capita spending on HIV/AIDS is US$0.40 per capita, US$2.34
per PLWHA and, in total, accounts for 0.07 per cent of GDP (Table 8).
Externally Financed HIV/AIDS Expenditure
Table 10 shows the external sources of HIV/AIDS financing in Lesotho. It is estimated that
Lesotho receives annual external funding for HIV/AIDS of US$5.3 million. This converts
into US$2.61 per capita and US$14.73 per PLWHA.
16
©HSRC 2003
Table 8: Government of Lesotho funding for HIV/AIDS, tuberculosis and malaria in (2001/02)
Expenditure type US$ Per capita Per PLWHA Percentage Percentage
US$ US$ of total of GDP
HIV/AIDS 842,075 0.4 2.34 80 0.07
Tuberculosis 200,000 0.1 19 0.02
Malaria 5,000 0.0 0 0.00
Total 1,047,075 0.5 100 0.09
Source: Government of Lesotho, 2002
Table 9: Expenditure on HIV/AIDS in Lesotho (2001/02)
Core
Government (US$) 842,075
Donor (US$) 5,303,862
Total (US$) 6,145,937
Total HIV/AIDS expenditure as a precentage of GDP 0.52
Per capita HIV/AIDS expenditure (US$) 3.02
Per PLWHA HIV/AIDS expenditure (US$) 17.07
Estimates based on the following country information:
GDP (US$) 1,180,300,000
Population 2,035,000

PLWHA 360,000
Source: Government of Lesotho, 2002


Free download from www.hsrc
p
ublishers.ac.za
17
©HSRC 2003
Table 10: External sources of funding for HIV/AIDS programmes in Lesotho (2000)
Name of agency Type of Budget Time period Estimated annual Main programmes
agency (US$) budget (US$)
CHAL (Christian Health NGO 134,191 3 years 44,730 Lesotho Pastoral Education Project, care and support, counselling,
Association of Lesotho) prevention, income generating activities, clinical care, home-based
care, adolescent health
CARE NGO 2,000,000 3 years 666,667 IEC: Sexual Health and Rights Programme (SHARP)
Lesotho National Assoc. for
the Physically Disabled NGO 3,500 3 years 1,167 IEC for People with Physical Disabilities
Lesotho Red Cross Assoc. NGO 78,936 3 years 26,312 Youth against HIV/AIDS
World Vision International NGO 1,500,000 3 years 500,000 Support for orphans and vulnerable children through educational
and Save the Children inputs, material donations and developmental activities
DFID Bilateral 1,500,000 3 years 500,000 Regional AIDS and agriculture
KFW Bilateral 350,000 3 years 116,667 Family planning, condoms, STI drugs
Ireland Aid Bilateral 650,000 3 years 216,667 Bilateral support to HIV/AIDS programme
World Bank Multilateral 2,000,000 3 years 666,667 Multisectoral HIV/AIDS initiatives
World Food Programme Multilateral 5,361,595 3 years 1,787,198 Mitigation of HIV/AIDS
UNFPA Multilateral 1,002,837 3 years 334,279 Population policy review, reproductive health, IEC materials
development, youth centre
WHO Multilateral 858,678 3 years 286,226 Care and support, adolescent friendly health services,
IEC material development

UNDP Multilateral 471,850 3 years 157,283 Support capacity of LAPCA to monitor implementation of
National AIDS Strategic Plan
Total 15,911,587 5,303,862
Source: Government of Lesotho, 2002


Free download from www.hsrc
p
ublishers.ac.za
Total HIV/AIDS expenditure
The total financial resources available for core HIV/AIDS expenditure are shown in Table
9. Core HIV/AIDS expenditure for 2001/02 was US$6.2 million or 0.5 per cent of GDP.
This translates into US$3.02 per capita and US$17.07 per PLWHA. Nearly 90 per cent of
the total HIV/AIDS expenditure in Lesotho is financed from external donor sources,
whereas government expenditure accounts for 14 per cent of the core total HIV/AIDS
expenditure.
Sources of Financing
In Lesotho, government tax and non-tax revenue is 44.7 per cent of GDP. Approximately
three quarters of this revenue is in the form of import duties and receipts from the
Southern African Customs Union agreement. Government HIV/AIDS expenditure is
financed mainly from government revenue. However, the government has an annual
deficit (-3 per cent of GDP) and therefore part of government expenditure is financed
through loans/credits.
Lesotho receives US$32 per capita in international development assistance (5.7 per cent of
GDP), which is very high compared to the mean of low-income countries (US$7 per
capita, 1.3 per cent GDP) and sub-Saharan African countries (US$21 per capita, 4.1 per
cent GDP).
Eighty six per cent of total HIV/AIDS financing is derived from external sources, which
include: bilateral agencies (e.g., Ireland Aid, DFID, KFW), multilateral agencies (e.g., EU,
UN agencies, World Bank), national and international NGOs (e.g., Christian Health

Association, CARE, Lesotho National Association for the Physically Disabled, Lesotho Red
Cross Association, World Vision, Save the Children) (see Table 10).
Financing Mechanisms
Figure 7 demonstrates the flow of funds for HIV/AIDS-related activities. As mentioned, the
two main sources of funding are the Ministry of Finance and Planning and donors. The
Ministry of Finance and Planning allocates resources (as part of the health budget) to the
Ministry of Health and Social Welfare for HIV/AIDS interventions, which are implemented
mainly by the Disease Control Unit in the ministry. These interventions are implemented
in health facilities by NGOs or CBOs. The Ministry of Health and Social Welfare also
receives donor assistance for the implementation of its HIV/AIDS programmes.
Realising the magnitude of the impact of HIV/AIDS, the Ministry of Finance and Planning
has introduced a targeting strategy for HIV/AIDS expenditure that is intended to have
minimal fiscal impact. For the last two financial years (2001/02 and 2002/03), the Ministry
of Finance and Planning has required that each sectoral ministry commit a minimum of
two per cent of their respective budgets to HIV/AIDS-related activities. This has been
largely an unsuccessful tool to target multisectoral resources for HIV/AIDS. Recently, this
directive has become more explicit by dictating the line items for ministries to allocate
resources to HIV/AIDS. The 2002/03 national government budget is approximately
US$437.3 million, and through this initiative, an estimated US$7.8 million is targeted for
HIV/AIDS-related activities (from the budgets of the various ministries). It should,
The financing of HIV/AIDS programmes
18
©HSRC 2003


Free download from www.hsrc
p
ublishers.ac.za
however, be noted that the two per cent allocated translates into five per cent of what,
according to LAPCA, is required for implementation of the National AIDS Strategic Plan.

The Ministry of Finance and Planning finances the administration of LAPCA, which
organisationally is located within the Prime Minister’s office. LAPCA also receives funds
from external sources. Given that LAPCA is not an implementing agent, it transfers
resources to various actors for implementation of HIV/AIDS interventions, for example,
the Ministry of Health and Social Welfare, other sectoral ministries, churches, NGOs and
CBOs.
The Office of the First Lady is also an important channel for government HIV/AIDS
funding. In the last two financial years, 2001/02 and 2002/03, the office was allocated
approximately US$0.1million and US$0.2million, respectively. Although the mandate of
the office is not HIV/AIDS per se but ameliorating the plight of both disadvantaged
women and children, the current priority of the office is HIV/AIDS. The office reports to
LAPCA like other ministries.
The constraints in the government of Lesotho’s ability to respond financially to the AIDS
crisis are evident and a very real challenge. The Global Fund will therefore be a welcome
and an important additional source of financial assistance in the fight against HIV/AIDS in
Lesotho. Lesotho was allocated a total of US$34,312,000 for HIV/AIDS (85 per cent) and
tuberculosis (15 per cent) interventions. This is equal to US$16.68 per capita and
US$95.31 per PLWHA (Table 11).
Lesotho
19
©HSRC 2003
Ministry of Finance
Ministry of Health
NGOs/CBOs
Prime Minister’s Office
LAPCA
Sectoral Ministries
Figure 7: Financial flows for HIV/AIDS expenditure in Lesotho
Table 11: Global Fund award to Lesotho
Lesotho Budget for years Total lifetime US$ per capita US$ per

1 & 2 (US$) budget (US$) PLWHA
HIV/AIDS & TB 10,557,000 29,312,000 14.25 81.42
Tuberculosis 2,000,000 5,000,000 2.43 13.89
Total 12,557,000 34,312,000 16.68 95.31
Source: Global Fund, 2003


Free download from www.hsrc
p
ublishers.ac.za
The financing of HIV/AIDS programmes
20
©HSRC 2003


Free download from www.hsrc
p
ublishers.ac.za
Mozambique
Mozambique is one of the poorest countries of the world. Globally, it has one of the
highest infant mortality rates (130 per 1000 live births) and maternal mortality ratios
(980 per 100,000) (Figure 16 and Figure 17 in Appendix A). After many years of war and
devastation, the economy has recovered significantly, but the floods in 2000 curtailed this
recovery (Figure 21 in Appendix A). Between 1997 and 2000, average per capita income
in the economy increased from US$196 to US$ 224 (at 2000 prices), a real annual growth
rate of about five per cent. Given the population of 17.7 million people this translates
into a per capita GDP of US$220.
Level of Expenditure
Health expenditure
Between 1997 and 2000 total public expenditure on health grew much faster than GDP,

from US$4.6 per capita to US$7.5, in constant 2000 prices. Total health expenditure in
2000 was US$9 per capita (Table 12), among the lowest worldwide. Since 1999, the
proportion of domestic resources allocated to the Ministry of Heath increased from
US$116.3 million in 1999 to US$135.0 million in 2001, an annual average growth rate of
16 per cent over this period.
The sources of health expenditure are shown in Figure 8. External finance accounts for
the largest share (52 per cent) of the total health budget. There was an increase in
external finance to the health sector over the period 1997–2001. External finance takes the
form of grants or loans. These are provided and managed through different financial
mechanisms. Sector loans are managed by the sector, and are usually provided by the
multilateral agencies and by the development banks.
There has been an overall expansion of government expenditure during the late 1990s,
coupled with the conclusion of agreements on Heavily Indebted Poor Countries (HIPC)
debt relief. As part of this agreement, the government pledged to increase its spending on
health. As a result, the share of total government expenditure allocated to the health rose
from 7.7 per cent in 1999 to 8.8 per cent in 2000. During this period the GDP also grew
substantially which is why government health expenditure, measured as a proportion of
GDP, decreased from 3.7 per cent in 1990 to 2.7 per cent in 2000 (Table 12).
Government Financed HIV/AIDS Expenditure
Table 13 shows that the government of Mozambique spent US$16.0 million on HIV/AIDS
in 2001, which amounts to 0.4 per cent of GDP. In per capita terms, US$0.9 per capita
21
©HSRC 2003
Table 12: Total and public health expenditure in Mozambique (1990–2000)
1990 1995 2000
Total health expenditure (percentage of GDP) 4.7 4.9 4.3
Public health expenditure (percentage of GDP) 3.6 3.0 2.7
Total health expenditure per capita (current US$) 8.0 7.0 9.0
Source: World Bank, 2003

Free download from www.hsrc
p
ublishers.ac.za
The financing of HIV/AIDS programmes
and US$14.58 per PLWHA were spent in 2001. Of the total government expenditure on
HIV/AIDS, US$10.2 million came from the health budget. This is up from US$3.3 million
in 1999.
Externally Financed HIV/AIDS Expenditure
In 2001 Mozambique received external funding for HIV/AIDS of approximately US$73.3
million (Table 14). This is equal to US$4.14 per capita and US$66.64 per PLWHA. External
sources account for 82 per cent of total HIV/AIDS expenditures in Mozambique.
Total HIV/AIDS expenditure
Table 15 shows the total financial resources available for core HIV/AIDS expenditure in
Mozambique. Total expenditure for HIV/AIDS in 2001 was US$89.4 million or 2.40 per
22
©HSRC 2003
Figure 8: Sources of health financing in Mozambique (1997)
Treasury 22%
Donors 52%
Employers 7%
Households 19%
Source: Chao and Kostermans, 2002
Table 13: Government of Mozambique funding for HIV/AIDS, tuberculosis and malaria (2001)
Expenditure type US$ Per capita Per PLWHA Percentage Percentage
US$ US$ of total of GDP
HIV/AIDS 16,036,000 0.9 14.58 68 0.4
Tuberculosis 1,600,000 0.1 0.32 7 0.0
Malaria 6,000,000 0.3 35.29 25 0.2
Total 23,636,000 1.3 10.28 100 0.6

Government of Mozambique, 2002


Free download from www.hsrc
p
ublishers.ac.za