AID EFFECTIVENESS AND HEALTH SECTOR
DEVELOPMENT IN BANGLADESH
BY
PROFESSOR FRANKLYN LISK AND RAFI HOSSAIN
Objective and Outline
Objective:
• Analysis of ODA trends and indicators in Bangladesh, in with specific
focus on the impact of aid on the health sector, and exploring whether
or not aid going to the health sector has been effective, in terms of
contributing to health sector development and transformation
Outline:
• Bangladesh: Growth path and development impact
• Overview of changing global aid landscape and implications for
development assistance to Bangladesh
• Aid dynamics and trends in Bangladesh
• Aid and Health sector development: The SWAp - transition from aid
effectiveness to development effectiveness
• The Health, Nutrition and Population Sector Programme (HPNSP)
2003-2011: Performance, constraints and challenges
• Fiscal commitment in the Health sector
Bangladesh’s Impressive Growth Path
• Bangladesh has made significant progress in respect of economic growth –
achieving an annual GDP growth rate in excess of 6 percent in recent years and contributed to reduction of poverty.
• The economic transition process that began in the mid-1980s has been
spearheaded and driven mainly by the ready-made garment (RMG) industry.
Bangladesh’s RMG exports have increased to more than $20 billion,
accounting for about 80 percent of the country’s total export earnings, and
the sector currently employs about 4 million workers.
• Mass employment of women in this flagship export sector has greatly
empowered Bangladeshi women, contributing to improvements in the
country’s key demographic and social indicators (e.g. mortality and fertility
rates and female participation rate in the labour force) and helping to keep
Bangladesh on track towards achieving a number of the UN Millennium
Development Goals (MDGs) (Dreze and Sen 2013).
Percent Head Count
Growth but need for more inclusive development to address widespread poverty
• The benefits of stronger growth
performance do not appear to have
made much impact on poverty
Box 1: Trend in Poverty Reduction
overall; nor resulted in a more
Extreme Poor
Poor
Poor & Vulnerable
70
inclusive development for the
country’s 154 million inhabitants,
60
especially those living in the rural
50
areas.
40
• Bangladesh
still suffers from
widespread poverty and is classified
30
among the poorest countries in the
20
world, with the majority of its
10
population lacking in basic human
needs such as health, nutrition,
0
2000
2005
2010
shelter, piped water and sanitation,
etc
• Despite
impressive
growth
Source: BBS, HIES 2000, 2005, 2010
performance, the country faces
important development challenges.
The Changing Global Aid Landscape
• Historically, the giving of aid was driven by the donors and located in the
context of the individual donor deciding on how best to help those in need.
• Today, ‘aid-giving’ takes place within a different framework – ‘development
cooperation’ - that increasingly reflects the needs and development priorities
and strategies of recipient countries, often with a particular focus on poverty
reduction and sustainable development.
• The shift in emphasis in foreign assistance from just giving aid to
development cooperation brings more pragmatism into the debate on aid, by
recognising the need for adequate consultations by donors with domestic
stakeholders and interest groups in developing countries.
• The Millennium Development Goals (MDGs) adopted by the UN in 2000
and the Monterrey Consensus which emerged from the UN Conference on
Financing for Development in 2002 provided impetus and direction for this
new approach to aid, with emphasis on ‘national ownership’ of the process
and recognition that changes taking place in international economic and
political relations are also changing the role of and purpose of aid.
The Changing Global Aid Landscape (cont.)
• Shift of emphasis put the spotlight on aid effectiveness and, amplified calls
for reform of the international aid architecture.
• Concerns about the efficacy and effectiveness of development assistance
have resulted in several international declarations endorsing ‘good practice’
principles aimed at improving aid effectiveness, including those emanating
from a series of OECD-DAC high-level global meetings in Rome (2003),
Paris (2005), Accra (2008) and Busan (2011), already mentioned.
• The essence of these declarations has been to get donor, recipient countries
and the multilaterals to agree on principles of good practice. For example,
the Paris Declaration on Aid Effectiveness in 2005 agreed on 5 important
principles: ownership, alignment, harmonization, mutual accountability and
result-based management; the Accra Agenda of Action that followed in 2008
was designed to accelerate progress towards ownership, inclusive partnership
and results; and the Busan Partnership for Effective Development Cooperation of 2011 outlined priorities for future action to improve the
development impact of aid and make aid an effective tool for development
cooperation, implying a transition from ‘aid effectiveness’ to ‘development
effectiveness’.
The Changing Global Aid Landscape (cont.)
• The global aid landscape has also changed in respect of the
sources of finance: ODA from the OECD countries (traditional
donors) is becoming a less important source of development
financing, and a variety of other sources becoming more visible
and relevant from a development cooperation perspective.
China is the most obvious case of this brand of new donors
from among the emerging economies.
• Within the global aid landscape, the sectoral allocation of ODA
has also taken a turn over time, with the shift from
infrastructure and the ‘hard’ sectors favoured in the earlier
decade to the ‘softer social sectors preferred in the new
millennium.
The Changing Global Aid Landscape: Aid dynamics and trends in Bangladesh
FY 13
FY 12
FY 11
FY 10
FY 09
FY 08
FY 07
FY 06
FY 05
FY 04
FY 03
FY 02
FY 01
FY 00
FY 99
FY 98
FY 97
FY 96
FY 95
FY 94
5.50
5.00
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
FY 93
Figure 1: Net Official Development Assistance to Bangladesh (% of
GDP)
Source: World Development Indicators (WDI), World Bank
• During the first two decades after independence, net flow of aid was about 6% of GDP (Ahmad, Shafi
and Quibria M.G (2008).
• Since then, however, due to sustained growth in national income over the years and increase in other
sources of foreign exchange, such as exports and workers’ remittances, ODA as a share of GDP has in
general followed a downward trend. ODA inflows in FY 2013 amounted to about $ 2.3 billion or just
1.7 percent of GDP.
• While per capita ODA has also followed a downward trend, ODA still accounts for more than one third
of Bangladesh’s expenditure on the development budget.
Aid dynamics and trends in Bangladesh
16.0
Figure 2: Net ODA For other South Asian Countries (as % of
GDP)
14.0
12.0
10.0
8.0
6.0
4.0
2.0
Pakistan
2011
2010
2009
2008
2007
2006
Sri Lanka
16000.0
Figure 3: FDI, Remittances and Exports for Bangladesh
14000.0
12000.0
10000.0
8000.0
6000.0
4000.0
2000.0
FDI
Remittances
Exports
FY 13
FY 12
FY 11
FY 10
FY 09
FY 08
FY 07
FY 06
FY 05
FY 04
FY 03
FY 02
FY 01
FY 00
FY 99
FY 98
FY 97
FY 96
FY 95
FY 94
0.0
FY 93
2005
2004
Bhutan
Million USD
India
2003
2002
2001
2000
0.0
Aid dynamics and trends in Bangladesh
• While grants (as % of ODA) have
Figure 4: Grants and Loans (as % of ODA)
90.00
80.00
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
FY 93
FY 94
FY 95
FY 96
FY 97
FY 98
FY 99
FY 00
FY 01
FY 02
FY 03
FY 04
FY 05
FY 06
FY 07
FY 08
FY 09
FY 10
FY 11
FY 12
followed a downward trend during
the past decade, loans (as % of
ODA) have actually risen. For the
most part of the 1990s, ODA was
almost equally divided between
grants and loans.
• There was a sudden break from this
pattern in the late 1990s with ODA
being increasingly dispensed as
loans rather than grants.
• This
dichotomy
was
most
pronounced in 2004-05 when the
loan component of ODA was as
high as 84 percent. In general,
during the first decade of the
millennium about two-thirds of
ODA has comprised loans and the
remaining one-third grants.
Grant
Loan
Source: Bangladesh Economics Review, Ministry of Finance
Aid dynamics and trends in Bangladesh
Figure 5 : Foreign Aid Commitment
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
Total Southern/emerging donors
FY 12
FY 11
FY 10
FY 09
FY 08
FY 07
FY 06
FY 05
FY 04
FY 03
FY 02
FY 01
FY 00
FY 99
FY 98
FY 97
0%
FY 96
Total Northern/developed donors
Figure 6 : Foreign Aid Disbursement
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
Total Southern/emerging donors
Total Northern/developed donors
FY 12
FY 11
FY 10
FY 09
FY 08
FY 07
FY 06
FY 05
FY 04
FY 03
FY 02
FY 01
FY 00
FY 99
FY 98
0%
FY 97
inflows
have
overwhelmingly
come
from traditional donors in
the Global North, but
more recently new donors
from
the
emerging
economies in the Global
South
(China,
India,
Kuwait, Pakistan, Saudi
Arabia, South Korea and
UAE) are appearing on
the scene. In the short to
medium
term,
the
countries of the North are
likely to continue to be the
major source of foreign
assistance to Bangladesh.
FY 96
• ODA
Aid dynamics and trends in Bangladesh
Figure 7 : Foreign Aid Commitemnt & Disbursement
(Million USD)
2500
Million USD
2000
1500
1000
500
Commitment
FY 12
FY 11
FY 10
FY 09
FY 08
FY 07
FY 06
FY 05
FY 04
FY 03
FY 02
FY 01
FY 00
FY 99
FY 98
FY 97
FY 96
0
Disbursement
Source: Bangladesh Economic Review, Ministry of Finance
• From the mid-nineties till FY2004, there were substantial gaps between the amount of aid
commitments made by the development partners and the actual amount disbursed.
• Due to improvements in policy and practice, the gap between the amount committed and
what is actually disbursed has diminished significantly in the recent years.
Development Impact of Aid
• There is not much empirical evidence showing whether external assistance to Bangladesh has
had positive or negative effects on development overall.
 First, there are information gaps with respect to data on performance and impact of
individual projects and programmes.
 Secondly, in cases where project data may be available, government has not been keen to
draw conclusions about the wider impact of donors’ contributions or of a particular aid
programme to the country’s aggregate growth and sustainable development performance.
• This is perhaps not surprising, as until quite recently aid was not generally viewed by both
donors and recipients as a tool for national development in the sense of a unified country
programme against which it might be judged, but instead seen as a package of different
projects and programmes loosely linked together, at best clustered around sectoral priorities
such as health or education (Arndt et al 2011).
• It is difficult to assess the wider impact of aid on development (e.g. growth and poverty
reduction) in Bangladesh, since aid has not been provided within a wider strategic context
with clear indicators against which to judge performance and impact.
The transition from Aid Effectiveness to Development Effectiveness
• The increased prominence of, and the growing donor commitment in the new millennium to,
the MDGs has given impetus to the need to link ‘aid effectiveness’ with ‘development
effectiveness’ at country level.
• There is ample evidence to suggest that at country level aid promotes development, especially
when aid is provided under the right circumstances and with the right design. For example,
large-scale investments of external resources on HIV/AIDS response (e.g. through the Global
Fund and the US funded PEPFAR country projects) over the past decade or more have
impacted positively on the prevention, treatment and care of the epidemic.
• Thus while the Paris Declaration and the Accra Agenda represented significant international
efforts to achieve greater coherence among donors and recipients; they did not constitute
operational frameworks for driving and enhancing the processes for achieving improved
development outcomes or results.
• The Busan partnership agreement constitutes an international framework for aid architecture
that focuses on both the design of aid and the substance of implementation mechanisms
required for transforming aid relationships into spurs of improved development outcomes, as
well as provides a concrete basis for engaging a wider and more representative group of
stakeholders that includes the emerging economies and private sector and civil society
organisations in developing countries.
The transition from Aid Effectiveness to Development Effectiveness
• The pledge made in Busan enables recipient country like a Bangladesh to
have a greater say in how aid benefits its development agendas and
processes and how aid effectiveness is measured, which would imply
assessment of the effectiveness of aid in terms of the impact on tangible
development targets, goals and objectives.
• Given that poverty and deficits in health and nutrition needs constitute the
central challenge in the national development, and most of aid going to
Bangladesh is targeted on those concerns, a strong case can be made for
linking aid effectiveness with development effectiveness to assess
improvements in the lives of the Bangladesh people – which is what
development is supposed to be about after all.
• The transition from aid to development effectiveness for assessing the
impact of aid is particularly relevant in the context of the health sector,
which in many developing countries are affected by misalignment between
funding and need.
Aid and Health Sector Development in Bangladesh
• In the health sector in Bangladesh, malnutrition and high fertility rates have been
identified as key obstacles to social and economic development. In an effort to
ensure these issues receive proper attention, the health sector in the country has been
divided into three sub-sectors: health, population control and nutrition (HPN) for the
purpose of policy and programme interventions.
• Initially, donors providing external assistance to the government in these areas did so
through project aid, which was easy to plan, administer and monitor but contributed
to the high fragmentation of aid in the health sector as a whole.
• The need for greater coordination of aid within the sector gave rise to the shift
towards more programmed-based aid, characterized mainly by the sector-wide
approach (SWAp) which was first used in Bangladesh in the late 1990s.
• It was perceived that this approach would rationalize and simplify what was
considered at the time an overly complex aid architecture, where many projects,
vertical interventions and donor-driven initiatives were affecting the development of
the national health system and undermining the role of government.
Sector Wide Approaches (SWAps)
• The first SWAp in Bangladesh was implemented during 1998-2003 to deal with health and
•
•
•
•
population issues. In 2003, due to the extent of malnutrition in the country, nutrition was
included in the second SWAp (Health, Nutrition and Population Sector Program) adopted by
the Government in the Ministry of Health and Family Welfare (MOHFW).
The SWAp required the MOHFW to take the lead role in contrast to the traditional donordriven project approach where each donor developed and supported the implementation of
projects in the areas of their interest.
One study (White 2007) found that the health SWAps in Bangladesh had succeeded in
lowering transaction costs, and that the associated budget support had been a successful
funding mechanism. However, the study also found that donors were still driving the policy
process and that projects were too complex.
Other studies of the Bangladesh SWAps have found donors’ unwillingness to fully participate
due to lack of trust in the country systems (Buse, 1999); and that despite the clear
contributions the SWAps have made to towards donor alignment and aid predictability, and
strengthening of national health policy, they has failed to bring organisational and governance
reforms (Martinez 2008).
However, the failure of the SWAp mechanism to fully achieve its intended results should not
be seen as a consequence of the inappropriateness of the SWAp model, but as a result of
weaknesses in implementation such as the poor quality of the underlying health plans and
monitoring systems.
Health Sector Development –A Comparative Perspective
Table 1: Wealth and Health Indicators - Comparative Perspective
Bangladesh
Income per person, $PPP
1990
540
2012
2030
Life Expectancy at Birth, 1990
59
years
2012
69
Infant deaths per 1000 live 1990
99
birth
2012
33
Child (aged<5) deaths per 1990
143
1000 live births
2012
41
Maternal deaths per 1000 live 1990
800
births
2011
194
Infant Immunization rate, %
1990
65
2012
96
Underweight children, % of 1990
62
Total
2012
34
Source: World Bank, UNICEF, UNFPA
India
874
3910
58
66
88
44
125
56
600
230
56
74
60
43
Pakistan
1200
2880
61
66
106
69
138
86
490
260
50
83
39
32 (2011)
Sector Wide Approaches (SWAps): HNPSP 2003-2011
• Building on the lessons learned from the first SWAp, the HNPSP marked a shift
from a multiple-project approach to a single sector-wide approach.
• The total cost of HNPSP was $4.3 billion (the “Programme”), of which $3.1 billion
was Government of Bangladesh funding and $1.2 billion in development partners’
funding.
Key Constraints and Challenges:
• HNPSP started as a 3-year sector programme (2003-2006), was revised in 2005 after
the signing of a credit agreement with the World Bank as HNPSP (2003-2010) and
then it underwent a second revision in 2008 which extended HNPSP up to 30 June
2011.
• Political Context
• Inadequate Leadership
• Decentralization
• Performance Based Financing
• HNPSP Coordination
HNPSP 2003-2011: Major Achievements of the HNPSP
• Under the HNPSP the maternal mortality ratio (MMR) declined by
40% from 322 in 2001 to 194 maternal deaths per 100,000 live births
in 2010 and under five child mortality rates (U5MR) declined by 26%
from 88 per 1,000 live births in 2004 to 65 in 2010.
• Total fertility rate (TFR) declined from 3.0 in 2004 to 2.5 children per
woman in 2010 and the contraceptive prevalence rate (CPR) for
modern methods increased by 10% over 2004 and 2010 (from 47% to
54%).
The role and impact of aid funding in health sector development in Bangladesh
• Examining the sectoral allocation of
Figure 8: Assistance Disbursement in Health,
Population & Family Welfare (% share)
• It is recommended that ODA to the
health sector should be more
predictable and stable, as uncertainty
and uneven spending could hold back
progress towards the achievement of
the MDGs and other national
development goals.
Source: Bangladesh Economic Review, Ministry of Finance
FY 12
FY 11
FY 10
FY 09
FY 08
FY 07
FY 06
FY 05
FY 04
FY 03
FY 02
FY 01
FY 00
FY 99
FY 98
FY 97
18.00
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
FY 96
ODA, it is observed that external
development assistance to the health
sector has on average increased
between FY1996 and FY2012,
characterised by a sharp increase
during FY2006 and 2007, but followed
afterwards by a steep decline in aid
allocation to the sector, as shown in the
Figure below. Since the beginning of
the present decade, ODA allocations to
health and population and family
welfare have increased in line with
MDGs requirements.
The role and impact of aid funding in health sector development in Bangladesh
• Bangladesh has made significant
the last four years shows that infant
and under-5 mortality declined
substantially since independence.
• As a consequence of this rapid rate
of decline, Bangladesh is on track
to achieve the MDG 4 target for
under-5 mortality by the year 2015.
200
150
100
50
0
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
• Comparison of mortality rates over
250
160
140
120
100
80
60
40
20
0
Figure 10: Mortality rate, Infant (per 1,000 live
births)
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
progress in health indicators over
the last 30 years and also achieved
substantial progress in reducing
death rates, especially mortality of
under-five children and infants.
Figure 9: Mortality rate, under-5 (per 1,000 live
births)
The role and impact of aid funding in health sector development in Bangladesh
• According to the Bangladesh Maternal
Mortality Survey 2010 (NIPORT 2011),
maternal mortality declined from 322
per 100,000 in 2001 to 194 in
2010/2011, showing a 40 percent
decline which gives an average rate of
decline of about 3.3 percent per year.
8.0
Figure 11: Total Fertility Rate (births per
woman)
7.0
6.0
5.0
4.0
3.0
2.0
1.0
dramatically increasing the country’s
contraceptive prevalence rate (CPR),
from 7.7% in 1976 to 52.8% in 2008,
which contributed to a sharp decline in
the total fertility rate (TFR), from
about 7 children per woman to about
2.1 in 2011 % of women ages 15-49.
0.0
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
• FP programme played a critical role in
Source: BBS
Fiscal Commitment in the Health Sector
Figure 12: Comparison in Health’s Development Budget (Planned,
Actual, and Expenditure)
SFYP Planned Development Budget
6,823
Actual Development Budget
5,404
Actual Development Expenditure
4,499
3,825
3,473
3,562
3,602
3,473
2,612
3,623*
2,551
FY11
FY12
FY13
FY14
Source: Source: Data taken from SFYP, p.109; MoF, 2011; MoF, 2012; MoF, 2013.
•
This partly explains why the plan’s execution fell short of its objectives. Many of the
strategies were not implemented, limiting the performance of the SFYP
Fiscal Commitment in the Health Sector
Figure 13 : Evolution of Health Budget
Budget
7.00%
250,000
222,491
6.18%
5.68%
6.00%
5.00%
5.03%
5.71%
152,448
4.00%
3.00%
189,326
200,000
Health
Budget
4.82%
4.26%
128,268
150,000
101,521
89,316
100,000
2.00%
1.00%
0.83%
5,101
0.00%
0.91%
0.93%
6,271
0.84%
7,667
7,287
0.88%
0.80%
9,470
9,130
50,000
0
Health
budget as %
of total
budget
FY2014 P
FY2013 R
FY2012
FY2011
FY2010
FY2009
Health
budget as %
of GDP
• Indeed, when looking at these sectors’ budgets as a percentage of the national budget, it is
clear that it has been sharply declining since FY10.
• To ensure the objectives of the SFYP are met, the budgets for both of these sectors must be at
least equal to the values projected in the plan (Ahmed, 2013). Furthermore, a more pro-poor
budget would go a long way towards reducing disparities in society, mainly in the HD realm
(UNICEF, 2012b).
Conclusion
• Aid has worked reasonably in the case of the health sector SWAps
(programme aid) in Bangladesh, and contributed positively and
tangibly to improvements in health and related social indicators and
to increasing the resource base of the country for health services.
• But effectiveness of this aid could be enhanced if more attention is
paid to:
 Bridging the gap between commitment and disbursement, and ensuring greater
predictability of funding;
 Building local capacity through technical assistance, so as to reduce the direct
'hands on' involvement of donors in implementation;
 Institutional development especially in relation to monitoring and evaluation
such as through the availability of long-term, time-series data for assessing
impact and change over time.
 Achieving longer-term sustainability for aid-funded projects and programmes
and contributing to broader development goals and outcomes (e.g. poverty
reduction) in a lasting way, rather than just short-term objectives in the form
of specific targets of individual interventions.
Thank You for your attention