This post was prepared by Jason Lakin of the International Budget Partnership.

How should we allocate scarce resources to health sector priorities? Suppose we have a pot of $1000 available to spend on the treatment of two diseases. One disease kills 2000 people per year, and the other 1000 . If it costs $1 to treat 1 person, the pot of money could cover treatment for all of the people suffering from the less prevalent disease, or half of the people suffering from the more prevalent disease. (The cost of treatment is the same; assume, too, that people who are treated recover from both diseases with the same probability.) Of course, the money could be split up in different ways to cover some of the people suffering from each disease. What is the “right” way to divide the pot of money?

This is not an academic question. Governments confront this dilemma every day. Of course, they are often choosing between allocating funds to treatments that affect different populations, have different rates of success, and have very different costs. But that just renders the decisions even more complicated. A recent article in the New York Times provides a stark example of the trade-offs.

“In Africa’s two most populous nations, Nigeria and Ethiopia, the number of people who died of AIDS in 2007 — 237,000 — was less than half the 540,000 children under 5 who died of pneumonia and diarrhea. But this year, the $750 million the United States is spending on H.I.V. and AIDS in the two countries not only dwarfs the $35 million it is spending there on maternal and child health, but is also more than the $646 million it is spending on maternal and child health in all the world’s countries combined.”

Treating pneumonia and diarrhea can be done for a fraction of the cost of providing treatments for HIV, so it is natural that we spend more on treating HIV. But what is the cost of doing so in human lives? We can get a very rough idea by using some global estimates of the cost of providing treatment for people with these diseases.

First, we can use an estimated cost per case of treatment for HIV of US$485 (a 2007 estimate of the median price of a first-line ARV, lab costs and service delivery in Africa as reported by UNAIDS here). Let us ignore diarrhea for now, which is probably the cheapest of the three diseases to treat of those we are discussing. We can assume that if we treat all the cases of diarrhea and pneumonia as cases of pneumonia, that will be an upper bound on the cost of treating them. How much does it cost to treat pneumonia? This table provides some estimates for Africa, based on four different levels of severity. If we assume that the four types of respiratory infection are equally likely to occur, we get a weighted average cost of US$55 in 2001. Of course, these numbers are just estimates. I use them for illustrative purposes (and as long as it is cheaper to treat pneumonia and diarrhea than HIV, the point I am making stands).

Using these estimates, it would cost an additional US$29.7 million to treat all of the 540,000 kids who died from pneumonia/diarrhea in Nigeria and Ethiopia. Were this money to come out of the HIV budget, it would reduce the number of HIV patients that could be provided treatment by about 61,240. So, using these admittedly very rough estimates, our current allocation of resources from the pot of money for disease treatment suggests that we value the life of a person with HIV at 8.8 times the value of the life of a child with pneumonia.

In the same New York Times article cited above, Jeffrey Sachs questions this logic:

“Jeffrey D. Sachs, the Columbia University economist, countered that wealthy donors still spent far too little on global health and rejected what he called the wrong-headed idea that ‘we need to make a terrible and tragic choice between AIDS or pneumonia.’ The United States has invested heavily in the fight against AIDS, and other wealthy nations should pick up more of the cost of other global health priorities, he says.”

According to Sachs, the key problem is that the pot isn’t big enough. That may be true, but the needs are also unlimited. For example, in spite of all the money that has poured into HIV in recent years, half of those who need treatment still don’t get it. And things are only getting worse: the price of ARVs has fallen, but new guidelines from the WHO (based on new science) may advise that treatment begin earlier than in the past, in order to improve survival rates. This will almost certainly raise the overall cost of treatment.

Are the lives of people with HIV really more valuable than those of children with pneumonia? If not, are we willing to invest enough money in both diseases to cover treatment for everyone who needs it?

This blog post is a shortened  version of a Brief prepared for the IBP by Ruth Carlitz

Although the Millennium Development Goals (MDGs) have come under fire for being overly ambitious or unfair, they have mobilized resources and helped to build political will to improve the education sector in countries around the world. Now, more than halfway to the MDGs’ target end date, concerns are being voiced that progress toward achieving the goals is off track, particularly in Africa. This has led to calls for increased foreign aid and greater local investment in education and other development priorities.

However, despite spending more on the education sector as a whole, governments inevitably have to make choices about what to prioritize within the sector. Unfortunately, it appears that in some cases additional spending to achieve the education MDG has been channeled disproportionately toward quantity (dramatically increasing enrollment), possibly at the expense of quality. It could be argued that this was caused by the education MDG’s emphasis on quantity over quality.

What happened in Tanzania

Tanzania is widely considered to be an MDG “success story.” For instance, at a media briefing on a recent meeting of the UN’s MDG Africa Steering Group, UN Secretary-General Ban Ki-moon cited Tanzania as an example of progress on primary education. The World Bank has also highlighted Tanzania’s “impressive results” in boosting primary school enrollment.

However, Tanzania’s success masks some pernicious consequences of hasty efforts to boost enrollment and calls into question the longer-term impact of these reforms. An immediate consequence of increased enrollment has been overcrowded classrooms. While the government’s plans to address this problem include building classrooms and recruiting new teachers, pupil-teacher ratios remain high—an average of 54-1 in primary schools, and 37-1 in secondary schools. These averages, as high as they are, mask glaring disparities—particularly between schools in urban areas and those in more remote, rural places where teachers are often unwilling to be posted or fail to report for duty.

The impact of quickly expanding enrollment has been particularly hard on the secondary school system. With net enrollment jumping from 6 percent to 26 percent in just four years (2004 to 2008), there has been a scramble to accommodate the new primary school graduates, resulting in the recruitment of vast numbers of poorly qualified teachers. Barely out of secondary school themselves, and sometimes given just weeks of training, these teachers are providing instruction of questionable quality and, some argue, bringing down the prestige of the teaching profession.

What should Donors do?

Revising international goals for education could be an important step in creating incentives for quality. Donors might consider an alternative to the education MDG that has been proposed by the Center for Global Development. The CGD researchers suggest judging progress in terms of outcomes of the educational system, or the capabilities of all children in a given cohort. Assessing progress toward such a Millennium Learning Goal (MLG) would create incentives for improving quality in education, not just quantity.

In addition, this framework would address legitimate concerns that have been raised about a possible trade-off between quality and equity—in other words, increasing the quality, and consequently the cost, of education might lead to restricting enrollment. An MLG that is constructed to measure capabilities of children both in and out of school would create an incentive to draw more children into the formal schooling system, since such an action would presumably raise cohort learning achievement.

Donors might further contemplate the “cash on delivery” strategy, which has also been proposed by CGD. Under this approach, additional aid would be linked to evidence of progress already achieved on the ground, measured by independent assessment. Unlike traditional donor “conditionality,” aid would not be tied directly to the implementation of any specific policies or reforms. Rather, the means of achieving progress would be left to the discretion of the individual government.  “Cash on delivery” could be integrated into the MLG framework, with a given learning goal linked to aid payments for education.

What should governments do?

Planning and budgeting for increasing quality in education will require a fundamental shift from thinking about inputs to focusing on learning outcomes (what an “educated” person is able to do). Once they have identified their desired educational outcomes, governments should then work to determine the inputs needed to achieve these outcomes. Starting from inputs (simply directing more money to the education sector) will not guarantee improved outcomes. In particular, just increasing spending on physical infrastructure and other inputs has not been shown to lead to substantial increases in children’s competencies and learning achievement.

One input that flows more logically from a focus on learning outcomes is investment in teacher quality— one of the only school-related factors that consistently has been shown to influence student achievement. Many countries lag behind target teacher-to-pupil ratios and also suffer from chronic underinvestment in teacher training and professional development. Spending more on teachers implies a longer term view, as the benefits of such additional spending would not be realized immediately.  However, it could help to ensure that the newly constructed classrooms are not empty shells but, instead, fulfill their promise of expanding access to quality education.

Governments could also strengthen “value-for-money” auditing of the education sector to ensure that additional investment is having an impact.  Facilitating public expenditure tracking studies would also help to ensure that money spent on education is spent well.

And Civil Society?

In a few countries, civil society has started playing an important role in monitoring and measuring the impact of spending on education.

For instance, the Uganda Debt Network (UDN) has supported community monitoring groups to track the impact of spending under the country’s Universal Primary Education Programs.  The UDN organized citizens, empowering them to gather relevant budget information and monitor the quality of expenditure and new services. The groups then held public hearings to raise concerns about poor quality school construction and other misspending.

In Malawi, the Civil Society Coalition for Quality Basic Education has implemented public expenditure tracking surveys to monitor education spending at the district and school level.  The coalition’s efforts spurred the government to launch its own expenditure tracking survey and address issues raised by the coalition, such as the late or incomplete disbursement of teacher salaries. In Tanzania, HakiElimu has engaged in similar efforts through the development of a PEDP Monitoring Tool—a questionnaire that community volunteers implement at the school and local government level.

CSOs also can help to measure the extent to which children are learning and building cognitive skills. For example, the CSO Pratham in India produces an Annual Status of Education Report (ASER) that uses data collected by a huge corps of citizen volunteers that  is dispatched across India’s rural districts, where they administer simple tests to school-age children in basic reading, simple comprehension, basic math, and English. The volunteers also visit schools to gather information on enrollment and infrastructure and record other general observations.

This post was prepared by Porter McConnell of OxfamAmerica.

Development aid, used in smart ways, can save lives and help people get themselves out of poverty.  But sixty years of foreign aid have shown that donors cannot fix the problems of poor people by themselves.  Poor people themselves are demanding accountability and performance from their governments, and our aid is most effective when it invests in strengthening this relationship.

Oxfam recently released a paper calling for specific reforms that emphasize recipient ownership—making US foreign aid support the efforts of governments and citizens to lead their own development.  In particular, reforms should follow these three principles:

Information:  Let countries know what donors are doing

•             Be transparent, publishing what the US gives overall every year in a form that recipient governments can use and their citizens (and US taxpayers) can access and understand.

•             Be predictable, providing countries with regular and timely information on three-to-five-year forward expenditure and implementation plans with at least indicative resource allocations.

Capacity:  Help countries lead

•             Better align technical assistance with what governments and citizens need, including by untying aid.

•             Support local efforts to improve domestic accountability, including by using public financial management systems when appropriate and supporting efforts by citizen groups, parliaments, and auditing agencies.

Control:  Let countries lead

•             Limit earmarks and Presidential initiatives that are inconsistent with country priorities.

•             Give recipient governments and citizens incentives to manage their own development effectively and hold each other accountable, including direct budget support in appropriate contexts.

As the report is careful to point out, every country is different, and donors should view the above as a continuum.  Where governments are corrupt or non-responsive, donors can provide information and work primarily with civil society groups.  However, where governments have a record of transparency and providing services to their citizens, donors can and should let countries control the development agenda.

To subscribe to Oxfam’s Aid Reform updates, click here.

Read a related IBP paper: Improving Budget Transparency and Accountability in Aid Dependent Countries: How Can Donors Help?

A paper recently published by the World Bank and Unicef argues that school fees should be abolished in order for Africa to achieve its enrollment objectives and to stimulate further educational improvements on the continent. Quite ironic after the Bank’s user fee crusade of the 80s and 90s.

In the paper Birger Fredriksen argues that “school fees are a key determinant in the growth of enrollment rates and are also important for equity and access considerations, with more vulnerable children often unable to attend or complete primary school.”

He also argues that “the bold initiative required to abolish school fees could provide the catalyst for further educational reforms and improvements.”

Given the various challenges to education in Africa, it is hard to see how the scrapping of school fees could be the magic formula. Surely the general lack of financing,  the lack of trained teachers and poor road access to distant schools play at least an equally important role in poor education outcomes?

Decentralization is not helping either. Most African states are involved in some decentralization program with primary education and health often being among the first functions to be devolved to local level. But funds seldom follow the transfer of responsibility. Already weak administrations are challenged further by the complexities of fiscal transfers to remote localities. The result is a dramatic delays in the transfer of teacher salaries and operational funding for schools.

To his credit, Fredriksen concedes that school fee abolition should not be viewed as a stand-alone policy and should be implemented in conjunction with a number of other reforms.But it is hard to agree that the abolition of school fees should be one of the first steps in addressing the education challenge.

What do you think? Is school fees one of the major blockages to enrollment and quality education? Or are there other, more important blockages?

The PFM Blog recently posted a fascinating Q&A with the IMF’s Richard Allen Apart from a serious faux pas where he refers to the IMF as an ‘honest broker’ that can provide ‘genuinely impartial advice… and its implementation’, he shares some stunning insights that reflect his years of experience in the field

First he argues (admits?) that there is no ‘consensus mode’ for sequencing Public Finance Management (PFM) reform. In plain English: there is no recipe for where to start or how to string together such reforms. After a comment by Sanjay Vani, Allen does however agree that ‘a solid accounting and reporting is as a precondition to any other reform. In Vani’s words:  “If the Ministry of Finance cannot accurately tell how much money has been spent and for what purposes, no other PFM reform has any chance of success.”

According to Allen, this is not just a gap in our knowledge about how reform works; he also argues that the political, administrative and financial incentives for rapid PFM reform do not exist in most developing countries. He goes even further by arguing that “there are much more prevalent incentives against reform. Budgetary institutions are particularly difficult to reform because they are a primary source of rent seeking’.”

This may look like pessimism about the possibility of any PFM reform at all, but Allen actually argues for a more cautious and modest approach to such reforms: “Even developed countries normally tackle only one major reform a time, compared with the dozens of items typically found in a platform approach document.” But “unfortunately, such scaled-down approaches to PFM reform are not very appealing to some governments and donors.”

After this Allen takes some delicious sideswipes at donors, recipient governments and technical assistance (TA) providers:

“They (donors) are reluctant to say ‘no’ to ministers who ask for the ‘wrong’ types of reform, such as MTEFs and performance budgeting, that are way beyond the capacity of most countries to implement, and contravene the principle of getting the basics right first―Allen Schick’s famous motto ‘look before you leapfrog’.”

“World Bank teams and other donors have pushed IFMIS (Integrated Financial Management Information System) and similar high-tech projects on countries as a way of disbursing loans, and with too little thought to the real needs of the country.”

“Many TA providers have a vested interest in maintaining existing approaches and instruments. TA providers are not sufficiently held to account for the imperfections of the models they use, and the advice they offer.”

Is this fair criticism? In my experience many donors, government officials and TA providers are as perplexed as Allen about what to do next in countries that have seen wave upon wave of reform. So what to do?

If we have learnt anything over the last 30 years, it is that PFM reforms cannot be approached as a series of technocratic projects. For this reason the ‘political turn’ in the thinking of donors is an encouraging development (see DFID’s Drivers of Change studies, for example ). It seems obvious that an understanding of why things are the way that they are, is a necessary first step to any reform. Introducing reforms without changing the political balance of power will doom these reforms to failure or the permanent reform limbo that so many developing countries are stuck in.

With this insight in mind, more and more donors have started working with audit institutions and legislatures. More and more donors also understand that citizens and civil society organisations can provide the political impetus to support technical reforms. See for example DFID, SIDA, DANIDA’s large investments in civil society policy advocacy.

Of course there is no standard recipe for such politically streetwise reforms either. The liberal assumption that the rebalancing of power will emanate from the countervailing forces of the legislature, judiciary, media and civil society is not always true. Those trying to support change cannot avoid have to search for people that have the wider public interest at heart. Sometimes the people driving change are in the Executive. In a few recent cases we have even seen expatriates play this role through the electronic media.

We should also stretch Vani’s point wider. Few of the political processes supporting PFM reforms will get traction if the information produced by ’solid accounting and reporting’ is not made publicly available. The people and institutions that may change the balance of power will need to know what government is doing with public resources before they can change anything about it.