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The main purpose of this study is to examine the role of foreign aid on health development in Ethiopia during health sector development program IV that has been implemented from 2010/11 to 2014/15. The study focused on the International health compact signed between government of Ethiopia and development partners according to principles of Paris declaration 2005 and Accra Agenda for Action 2008 based on mutual accountability of the signing parties. Purposive sampling was used to collect the relevant data from UNFPA and Ministry of Health (Resource mobilization and utilization office, grant management office, plan policy office and offices of leads programs that were heavily financed by aid during this program implementation). Annual performance reports of health sector development program were used as secondary sources are for data collection. The study result shows that, the main focus areas of health in HSDP IV, those heavily financed by foreign aid, prevention and control of communicable diseases (HIV/AIDS, TB and Malaria), maternal health and child health. Aid has asignificant positive impact on health development. However, limiting one fiscal year on utilization of foreign aid resulted in less performance in the sector. In addition complex bureaucracy of procurement and the process of agreement that have been taking long time period for construction are found to be other challenge. Based on the study finding the researcher recommended that government of Ethiopia must increase health per capita income, ministry of health is recommended to build the capacity of the workers through continuous training on how to utilize aid effectively, donors are recommended to contribute their donation through pooled fund mechanism and expand the time limit of using aid from one to two years can make health aid effective and efficient.

Chapter One

  1. Introduction

1.1.Background of the Study

Development assistance given to promote development, in diverse areas such as health, education, social inclusion, democratization, gender equality and sustainability in aid receiving countries is the social goal of foreign aid (Barratt, 2008). Developing countries were recommended by World Health Organization to scale up health services and health expenditure in their own countries by considering improved health of people as input for development (World Health Organization, 2004). The notion of scaling up is a process of expanding the coverage of health interventions by increasing necessary inputs required to expand coverage like financial, human and capital resources (Mangham and Hanson, 2009). In fact, a society burdened by a large number of sick and dying individual cannot escape from poverty, but scaling up necessary input for health service is not easy for developing countries because of their income is low and another service provider sectors need budget.

The Abuja commitment was signed in 2001 by 53 African states with intension of increasing health expenditure by allocating at least 15% of their annual government expenditures to the health sector. Despite the Abuja commitment most of Sub Saharan African states could not fulfill the commitment due to their income is low and financing health remains major problem in the continent (USAID, 2013). And seeking more foreign aid for health service development in developing countries became a mandatory. International aid is considered as the most effective weapons in the war against poverty (UNDP, 2005) and the UN Millennium Project also makes the link from expert plans to foreign aid. Increasing foreign aid and well designed and well implemented plans are considered as best input to reduce poverty in developing countries (Easterly, 2008).

Millennium Development Goals (MDGs) declaration, one of the global policies, which focused on world poverty reduction, gives prominence to the improvements in health in poor countries (Roberts, 2003). For the implementation of millennium development goals, a number of organizations, notably the Global Fund, the GAVI Alliance and UNITAID, have deemed innovative financing mechanisms which is a vital and increasingly important element of their resource mobilization and diversification strategies (World Health Organization, 2010).

The volume of aid for health dramatically increased from $5.7 billion in 1990s to $28.1 billion in 2012 (Moon and Omole, 2013). HIV/AIDS pandemic, and in particular to calls for additional resources to make antiretroviral therapy widely available and the adoption of the MDGs in 2000 and debt relief initiatives also helped to generate increased financial resources (Mangham and Hanson, 2009).

Ethiopia, one of the Sub Saharan Africa states, has been receiving aid from foreign donors for several purposes like health, education, humanitarian aid, and the like (Meyer, 2012). The aid history in Ethiopia dates back to 1950s, however, foreign flows in Ethiopia grew in substantial amount since 1980s (Alemayehu and Kebrom, 2011). Foreign aid has covered almost half of the health sector budget for Ethiopian health sector during HSDP IV implementation (National Health Account, 2014).

Ethiopia has given attention for the health sector since the last two decades. In 1993 the government formulated the first national health policy by focusing on the expansion of primary health care system and encouraging partnership and participation of non-governmental actors (Wamai, 2009). To implement this national health policy, four health sector development programs were developed which contains five years plan and strategy in one health sector development program (WHO, 2014). This study focuses on the last health sector development program (HSDP IV) implementation.

Health sector development program IV (HSDP IV) covered period from 2010/11-2014/15 which was the expression of the renewed commitment of Ethiopian government to achieve health millennium development goals. The national health policy and the most influential international commitments global declaration of MDGs, the African Health Strategy 2007-2015, the Paris Declaration on Aid harmonization (2005), Accra Accord on Aid effectiveness (2008) and the Abuja Declaration on health care financing in Africa taken in to account while designing HSDP IV. For the successful implementation of HSDP IV and in order to strengthen the Health Extension Program (HEP), the organization and mobilization of the Health Development Army (HDA) was started during the beginning year of HSDP IV implementation (2010/11). This has targeted capacitating families who are lagging behind in terms of adopting safe health practices (HSDP, 2011).

All implementation efforts of the HSDPs and the progress the sector making to advance the policies and institutional reforms in Ethiopia would not have possible without the dedicated support of development partners (National Health Account, 2014). Particularly, in HSDP IV implementation, multilateral and bilateral donors contributed a significant amount of money for Ethiopian health sector.

Table 1: Pledged and disbursed money during HSDP IV

Year Pledged (USD) Disbursed (USD)
2010/11 485,439,775 422, 351,726
2011/12 409,345,028.61 410; 996,784.23
2012/13 550,989,473.00 531,133,786.35
2013/14 538,327,539 612,865,345
2014/15 445,962,381.60 269, 070,132.35


Data source: HSDPs (2011, 2012, 2013, 2014 and 2015)

Even though the amount of commitment and actual donation increased during HSDP IV implementation, there was fluctuation. Hence, this study tries to deal with the significances of development partners’ contribution to Ethiopian health sector and health outcomes in Ethiopia during the Health Sector Development Program IV implementation.

1.2.Problem Statement

Most of developing countries are looking for the rich countries and international development organizations to scale up their health services and reduce poverty. World Health Organization has recommended that developing countries to scale up and reach $34 per capita income per individual spend on health in 2001 and this will be revised to $60 for 2020. Accordingly the expected expenditure for health was $34*81, 9000, 00 however, by 2011 per capita income spent on health in Ethiopia was only $ 20.77 and the share of total government expenditure spending on health was not more than 5.6% of the total government expenditure (NHA, 2014). This is very low as compared to the Abuja Declaration commitment of African countries to raise the share of health expenditure to 15%, which shows the existence of wide gap from the benchmark.

Hence “Health is still underfinanced in Ethiopia and there is strong need to make more resources available to the sector to improve the health status of the population” (NHA, 2014). In HSDP IV implementation period, development partners’ contribution has covered 49.9% of the total health expenditure. During this program implementation, the financial commitment and actual donation of development partners to Ethiopian health sector has shown an increasing trend. In spite of its increasing trend, there was a variation between the pledged and actual disbursement amount of the donors during program implementation fiscal years. This is because of some development partners failed to actualize their commitments. For instance, CSO and ISS in 2010/11; global fund for malaria in 2011/12; UNFPA and USAID in 2012/13; Italian cooperation in 2013/14 and UNFPA, GAVI, global fund HIV/AIDS. DFID, Italian cooperation and UNICEF in 2014/15 were aid donors to Ethiopian health sector which totally failed to disburse their pledge during HSDP IV implementation (HSDP, 2011; HSDP, 2012 HSDP, 2013; HSDP, 2014; HSDP, 2015).

Irregular aid disbursement and uncertain financial flow on the future can undermine long term effort to build health system especially in the country like Ethiopia aid covers most of the sector’s budget (Moon and Omole, 2013). The key areas of the health sector in Ethiopia heavily financed by donors (WHO, 2013). Since the spending of government is minimum on health and the donors’ fund was the major sources of health care finance in Ethiopia, while the donors’ commitment was not fully disbursed, this is a problem for Ethiopian health sector.

In 2009, Wamai (2009) has conducted research on health system development in Ethiopia and found that many of HSDPs objectives remained unachieved due to various reasons. The maximum cost for health service covered by household at that time challenged the health service utilization improvement. Imbalanced spending of health budget among regions and shortage of human resources for health listed as a major problem in his study. Similarly, In 2007, Amarech (2007) conducted study on the impacts of user fees on health services and she found that user fee cost recovery decrease health demand and exposed poor people for more problems because of their spending most of their income on health.

Despite the programmed aid to health play a significant role since HSDP III implementation, both studies did not discuss the contribution of development partners for Ethiopian health sector in depth. The purpose of this study is to fill the gaps which were not discussed in both investigations. The first one is the time gap, both of the previous studies deal with HSDP III implementation but this study deals with HSDP IV (2010/11-2014/15) which was the final program of HSDPs and finished in the same year with the millennium development goals. The second one is the contribution of development partners to the health sector of Ethiopia was discussed in depth under this study.

1.3.Objective of the Study

1.3.1.                                                                                                                         General Objective

The overall objective of this study is to investigate the contribution of development partners for Ethiopian health sector and to identify the reasons of the gap between the amounts of money pledged by the development partners and the actually donated money during the implementation of HSDP IV.

1.3.2. Specific Objectives of the Study Specific objectives of the research are:

  1. To examine the areas of health financed by foreign aid
  2. To assess the relation between foreign aid to health sector and health development in HSDP IV
  3. To assess the gap between pledged and actually disbursed money in HSDP IV
  4. To investigate how the sector uses foreign aid for health development in HSDP IV

1.4.Research Questions

The research paper aspires to address the following research questions

  1. Which areas of health are financed by foreign aid?
  2. What is the relation between foreign aid and health development in Ethiopia?
  3. How development partners did disbursed their commitment for health sector in HSDP IV and what are gaps between their commitment and disbursement?
  4. How did the sector use foreign aid for health development in HSDP IV?

1.5.Research Methodology

1.5.1.   Methods of Data Collection

So as to come up with deeper and comprehensive understanding of the role of foreign aid in health sector development program IV in Ethiopia, the research adopted both qualitative and quantitative research approach. The total population of the study is 50 people from Federal Ministry of Health of Ethiopia and donor organizations. Of the total 13 (thirteen) were selected as a sample by using purposive sampling technique based on their experience on the study area. Except grant management office workers most of the interviewees had more than ten year experience in the health sector. This sampling technique helps the researcher to collet important data about the study from the key informants or right persons who can provide relevant data for the success of the study. The researcher used both primary and secondary sources. The primary data used in this research were collected through interview from different departments in Federal Ministry of Health, which include Resource Mobilization and Utilization, Plan Policy Office, Grant Management Office, TB Case Team, Malaria Case Team, HIV/AIDS Prevention and Control Office, Maternal and Child Health Program and UNFPA country office.

Different Books, journals, and different reports on related topics were used as secondary data sources. HSDP IV annual performance reports were used to understand how the existence of foreign aid brought a change on the health areas heavily financed by foreign aid and how much of the pledged money were disbursed by donors in HSDP IV. Since the study was qualitative research, the data collected from the respondents were analyzed and summarized in text analysis. Tabulation, graphs and description were used to analyze and present the obtained data to make it easily understandable for readers of the research.

1.6. Significances of the Study

To sustain health development in a given country, the necessary resources should be available. However, least developed countries like Ethiopia need foreign aid for sustainable health development still their income capacity will be able to allocate the necessary expenditure for the health sector from the government budget. Foreign aid has played a crucial role for Ethiopian health sector during HSDP IV implementation. This study assessed the role of foreign aid to health development in Ethiopia during HSDP IV implementation and identified the problems related to foreign aid to the health sector. Therefore, the findings of this study will help Ethiopian health sector and the donors to examine the role and problems of foreign aid to health sector and to find solution by conducting further studies on the problems related to aid. Finally, this study will serve researchers as a source who wants to conduct further studies on the related study area.

1.7.Scope of the study

The health care finance in Ethiopia comes from variety of sources such as from government, house hold and International Development Partners. In all HSDP implementations, Ethiopian health sector has been supported financially by development partners. However, dealing with all HSDP implementation and all the sources of finance in the implementations of HSDPs are beyond the capacity of the researcher due to a limited time. Therefore, this research is limited to the role of development partners particularly channel II donors for Ethiopian health sector during HSDP IV implementation.

1.8.Structure of the Study

This paper is divided into four chapters: the first chapter deals with an introduction, which contains background, problem statement, and objectives of the study, scope of the study, research methodology and significance of the study. The second chapter deals with review of related literature and the third chapter discusses about an overview of health system in Ethiopia. The fourth chapter discusses the contribution of development partners to health development in HSDP IV implementation as well as the findings of the investigation and recommendations.

1.9. Limitation of the study

The nature of the research problem needs adequate data from donors and Federal Ministry of Health. However, the researcher has faced various problems like lack of interest to provide the primary data from donors except UNFPA country office.


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