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Budgeting for HIV/AIDS in South Africa: Report on Intergovernmental Funding Flows for an Integrated Response in the Social Sector

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Budgeting for HIV/AIDS in South Africa: Report on Intergovernmental Funding Flows for an Integrated Response in the Social Sector Budgeting for HIV/AIDS in South Africa: Report on intergovernmental funding flows for an integrated response in the social sector Alison Hickey Nhlanhla Ndlovu Teresa Guthrie AIDS Budget Unit November 2003 IDASA - Budget Information Service (BIS) 6 SPIN STREET • CHURCH SQUARE • CAPE TOWN 8001 PO BOX 1739 • CAPE TOWN 8000 • SOUTH AFRICA TEL + 27 (021) 467-5600 • FAX +27 (021) 462-0162 This Report is also available on-line at: www.idasa.org.za This research paper is jointly sponsored by the foreign development agencies of Australia (AusAID), the United Kingdom (DFID) and the United States (USAID) and admini stered by the Joint Center for Political and Economic Studies through a subcontract agreement with Nathan Associates Inc. © Budget Information Service, Idasa, 2003 ACKNOWLEDGEMENTS The AIDS Budget Unit of the Budget Information Service, Idasa, would like to extend its gratitude to various people for their contribution towards the publication of this report. Firstly we would like to thank government officials who were able to take time off their very busy schedules to participate in our research advisory group and to offer us invaluable inputs and feedback on our research. Specifically we would like to thank Mrs Nomalanga Makwedini from the Eastern Cape, Dr Sandile Buthelezi from KwaZulu-Natal, Mrs Ntsiki Jolingana from the Free State, Dr Mark Blecher from National Treasury, Mr Gandi Moetlo from Limpopo, Dr Elizabeth Floyd from Gauteng, Dr Fareed Abdullah from the Western Cape and Mr Martin Hensher from the national Department of Health. We would also like to thank the following national government officials for making time to talk to us about HIV/AIDS budgets and expenditure issues: Gerritt Muller, Chief Director: Financial Management, national Department of Health; Johanna de Beer, Deputy Director: HIV/AIDS, national Department of Social Development; and Lungisa Fuzile, Chief Director: Provincial Policy and Planning, National Treasury. Particular thanks to Anita Marshall, National Co-ordinator - National Integrated Plan, national Department of Health; and Brennand Smith, National Life Skills: HIV/AIDS Co-ordinator, national Department of Education, for their valuable comments on the draft report. Our gratitude as well to Alan Whiteside for his ongoing support and input throughout the research process. In addition, we would like to thank provincial government officials (full details in the reference list at the end of the report) working in the provincial Departments of Health, Education and Social Developments for their willingness to talk to us and provide us with information that has helped us compile this report and complemented information from government documents. Moira Levy edited the report. The cover design was done by Doret Ferreira and the report layout and design was done by Marise Groenewald. This research paper is jointly sponsored by the foreign development agencies of Australia (AusAID), the United Kingdom (DFID) and the United States (USAID) and administered by the Joint Center for Political and Economic Studies through a subcontract agreement with Nathan Associates Inc. We would like to thank Amanda Gillett of AusAID for her support throughout this process. Budgeting for HIV/AIDS in South Africa: Report on intergovernmental funding flows for an integrated response in the social sector AIDS Budget Unit—Idasa Executive Summary 1. Introduction 1 1.1. The problem and the basic research question 1 1.1.1 Track record of conditional grants 1.1.2 Increased reliance on provinces 1.1.3 Introduction of new funding mechanism in Budget 2002/3 1.1.4 Research question 1.2. Framework for analysis 3 1.2.1 HIV/AIDS specific allocations 1.2.2 Indirect or “hidden” expenditure as a result of HIV/AIDS 1.3. Research methodology 6 1.4. Limitations and scope of this study 6 1.5. Relevance for a national ARV programme 7 2. Background overview of South Africa’s HIV/AIDS policy and programmes 9 2.1. HIV/AIDS epidemic in South Africa 9 2.2. Early development of the South African government’s HIV/AIDS policy 10 2.3. HIV/AIDS and STD Strategic Plan for South Africa, 2000-2005 11 2.4. National Integrated Plan for HIV/AIDS 12 2.5. Enhanced Response for HIV/AIDS 12 2.6. Provincial policies 12 2.7. Recent developments in South Africa’s HIV/AIDS response 13 3. Overview of South African budget and health spending 15 3.1. General trends in total provincial health expenditure 17 3.2. Provincial health expenditure as share of total provincial budget 18 3.3. Health conditional grants 19 3.4. Provincial discretionary health expenditure 20 3.5. District Health Services Programme expenditure 20 3.6. Other developments in provincial health budgets 21 4. HIV/AIDS conditional grants 22 4.1. Overview 22 4.1.1 General funding flow between national and provinces 4.1.2 Purpose and programmes associated with each conditional grant 4.2. Criteria and decision-making structures for determining provincial split 24 4.2.1 Lifeskills education conditional grant 4.2.2 CHBCS conditional grant from the Department of Social Development 4.2.3 Health HIV/AIDS conditional grant 4.3. Spending record on HIV/AIDS conditional grants 31 4.3.1 Improvements since 2000/1 4.3.2 By sector 4.3.2.1 Health 4.3.2.2 Education 4.3.2.3 Social Development 4.4. Processes, structures and obstacles for spending 43 4.4.1 Lifeskills education conditional grant 4.4.2 CHBCS from the Department of Social Development 4.4.3 Health HIV/AIDS conditional grant 4.5. Discussion of provincial experience with HIV/AIDS conditional grants 52 5. Provincial own allocations for HIV/AIDS 57 5.1. Total HIV/AIDS subprogramme allocations in provincial health budgets 57 5.2. HIV/AIDS subprogramme (District Health Services) as share of provincial health budgets 58 5.3. Provincial discretionary allocations for HIV/AIDS in health budgets 59 5.3.1 According to official provincial budget statements 5.3.2 According to provincial interviews 5.4. Crowding out of non-HIV/AIDS-related expenditure 62 5.5. Per capita HIV/AIDS spending in provincial health budgets 64 5.6. Discussion 67 6. Role of equitable share grant in channelling HIV/AIDS funds to provinces 69 6.1 Available evidence on the “indirect” costs incurred by health sector in Africa due to HIV/AIDS 69 6.1.1 Overview of the available literature 6.1.2 Summary of available data on indirect costs of health care due to HIV/AIDS in developing countries 6.1.3 Gaps in the available information 6.2 Introduction and debate on the equitable share funding flow for HIV/AIDS 72 6.3 Assessing the success of the targeted increment to the equitable share for HIV/AIDS 74 6.3.1 The problem of how we measure or monitor effectiveness of new approach 6.3.2 Proposed indicators of success of equity share funding mechanism for HIV/AIDS 6.3.3 Evidence in budget allocations 6.3.4 The targeted increment for HIV/AIDS in the budget process 6.3.5 Phasing out conditional grants 6.4 Other funding options 83 6.4.1 Incorporating HIV/AIDS in the equitable share formula 6.4.2 Loosened conditional grants for HIV/AIDS 7. Key findings and recommendations 87 7.1 Key findings 88 7.2 New recurrent grant to support integrated provincial HIV/AIDS strategies 93 7.3 Conclusion 94 Sources 96 Appendix 1. Overview of components of health HIV/AIDS conditional grant 104 Appendix 2. HIV/AIDS conditional grant expenditure (including rollovers) 106 Appendix 3. HIV/AIDS conditional grant expenditure (excluding rollovers) 108 Appendix 4. Provincially-sourced HIV/AIDS allocations in provincial health departments 111 ACRONYMS AE Adjusted Estimates ANC African National Congress ARV Anti-retrovirals ASSA Actuarial Society of South Africa BS Budget Statements CBO Community-based organisation CFO Chief Financial Officer CG Conditional Grant CHBCS Community and Home Based Care Services CHS Community Health Service CHW Community Health Worker DDG Deputy Director-General DG Director-General DHS District Health Services DOE Department of Education DOH Department of Health DOR Division of Revenue DORA Division of Revenue Act DSD Department of Social Development EC Eastern Cape ECD Early Childhood Development ES Equitable Share FBO Faith-based organisation FFC Financial and Fiscal Commission FS Free State GAAP Government AIDS Action Programme GP Gauteng Province HBC Home-based care HOD Head of Department IEC Information, Education and Communication IGFR Intergovernmental Fiscal Riview INP Integrated Nutrition Plan KZN KwaZulu-Natal LP Limpopo Province MP Mpumalanga Province MT Master Trainer MTEF Medium Term Expenditure Framework NACCA National Action Committee for Children Affected by HIV/AIDS NACOSA National AIDS Coordinating Committee of South Africa Nat. National NC Northern Cape NDOE National Department of Education NDOH National Department of Health NDSD National Department of Social Development NGO Non-governmental organisation NIP National Integrated Plan for HIV/AIDS NT National Treasury NW North West OI Opportunistic Infection PEP Post Exposure Prophylaxis PFMA Public Finance Management Act PHC Primary Health Care PL(W)A People Living with AIDS PMTCT Prevention of Mother to Child Transmission Prov Provincial SANAC South African National AIDS Council STD Sexually Transmitted Diseases STI Sexually Transmitted Infections TB Tuberculosis TI Targeted Increase VCT Voluntary Counselling and Testing WC Western Cape EXECUTIVE SUMMARY What is the best way to deliver funds to the provinces for HIV/AIDS interventions? This report analyses provincial capacity and spending procedures currently impacting on conditional grant (CG) effectiveness and assesses the success of the new funding approach which channels HIV/AIDS funds to the provinces via the equitable share grant. Analysis is based on official budget documents and interviews with national and provincial officials in social service departments and treasuries.
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