|A Guide to Sector-wide Approaches for Health Development - Concepts, Issues and Working Arrangements (European Commission, 1997, 84 pages)|
Sectoral policies and strategies
· Policy documents often fail to identify and address major policy issues. Long-term plans and descriptions of programmes are common: policy frameworks, which go beyond a list of constraints facing the sector, and link strategic analysis with decisions about resource allocation are relatively rare. And yet that is what is needed as the starting point for a sector-wide approach.
· Policy development is not a one-off task to be completed prior to the first tranche of donor funding. Rather, it should be an integral part of the programme of work, and thus a process which continues - and is both a focus for performance reviews, and subject to revision as new issues emerge.
· In addition to defining sectoral goals and objectives, a policy framework should: (i) clearly define the respective roles of the public, private and voluntary sector in the financing and provision of health care, (ii) identify the policy instruments and set out the institutional arrangements that will be required (in both public and private sector) to achieve sectoral objectives - thereby setting the agenda for capacity building and institutional development, and (iii) provide guidance for prioritising government and donor expenditures, within the overall public and private resource envelope - thus providing the basis for preparing government spending plans.
· Many of the policy instruments and institutional arrangements necessary to improve health sector performance - such as managerial decentralisation, changing staff incentives, reforming accounting and budgeting systems, starting social insurance systems, and increasing the managerial autonomy of hospitals - cannot be introduced by the ministry of health alone. An assessment of the extent to which proposed sectoral policies are supported or opposed by other parts of government, is an essential part of the policy appraisal process.
Resource projections, spending and financing plans
· Estimates of the resources available to the sector need to be as comprehensive as possible, and take into account private as well as public spending. The difficulty of preparing medium-term projections is increased when donors and/or ministries of finance are reluctant to make firm long-term financial commitments, and if levels of sectoral funding - either from the treasury or external sources - are linked to measures of performance.
· Getting the balance right, between the resources needed to fund minimum levels of health care and financial sustainability -particularly in low income countries where the social sector as a whole is chronically under-funded - will not be easy.
· There is, however, a need to counter concerns that sector-wide approaches will distort overall patterns of public expenditure, or result in a rapid increase in funds to the sector followed by an equally rapid decline at a later date. To ensure that this does not occur requires that the preparation of sectoral spending programmes be preceded by dialogue with government about inter-sectoral priorities for public spending. Ideally, governments will base their decisions on a policy-based, medium term expenditure framework.
· In a sector where fixed costs dominate, spending patterns will be subject to greater inertia than statements of policy and strategy. Rapid adjustments will rarely be possible without incurring a major political backlash. Medium-term projections of spending are therefore required in order to demonstrate the desired direction of change. Medium-term plans will also help in defining annually-reviewed spending targets, and identifying areas in which spending should be protected in the event of resource shortfalls.
Institutional development and capacity building
· Weak institutional capacity is one of the main constraints affecting the implementation of sector-wide approaches. Key components of this part of the programme of work will include: (i) building government capacity to lead the process of sectoral development, particularly in relation to strategic planning and policy, budgetary and financial analysis, (ii) the development of structures, systems and incentives, in both the public and private sector, to manage health services in line with national policies, (iii) the establishment of management systems - by governments and, donor agencies - which will facilitate the introduction of common management arrangements.
Common management arrangements
· In moving from projects toward a sector-wide approach the aim is not just to harmonise donor procedures, but for donors to use national systems for monitoring performance, financial management and procurement of goods and services. There are two obstacles to be overcome. Firstly, the issue of attribution - the need for donors to be associated with specific inputs or outcomes. Secondly, the need for financial accountability, to ensure that funds are spent for agreed purposes and accounted for correctly.
· Central to the concept of the sector-wide approach is that donors and governments take collective responsibility for sectoral achievements. Rather than attribute the achievement of project-specific objectives to inputs from individual agencies, the intention is that donors justify their individual contributions in terms of progress against jointly agreed sectoral objectives. To ensure financial accountability - the key challenge is to develop national management systems, which link the use of funds with measures of performance.
· An effective framework for performance assessment will include: (i) regular monitoring of individual cost centres - defined in terms of individual institutions or levels of the system, which hold a budget, allocate resources, and manage a programme of work; (ii) aggregate assessments of sectoral performance - including health outcomes among different groups, coverage, service quality, cost-effectiveness and consumer satisfaction; and (iii) monitoring achievements in policy, finance, budgetary, institutional and systems development.
· Reaching agreement on a manageable number of indicators, particularly at the level of overall sectoral performance, will require negotiation on a country-by-country basis. Once agreement has been reached, however, agency-specific management instruments, such as logframes, should not include indicators that cannot be verified as part of the common system.
· If funding is linked to performance, transparency in relation to the criteria used, and agreement on the timing and frequency of data from cost centres will be essential. In addition, it is important that the criteria against which performance is judged do not distort service provision.
· The development of robust financial management systems will be a decisive factor in determining whether donors will disburse funds through the budget. A starting point will be to ensure that the structure of public budgets allows the monitoring of spending patterns in relation to sectoral priorities. Thereafter, systems for disbursing and channelling funds from central treasuries to the point of use need to be designed so that pooled funds can be used for a common programme of work at each level.
· An underlying assumption is that funds from different donors, and from donors and government, will no longer be used for different purposes. Logically, this argues for payments into a common account, rather reimbursement of specific expenditures. It also assumes that donors are prepared to finance recurrent costs. These two issues demonstrate that local financial management capacity is not the only barrier to common funding, and that there is a need for review and reform of management systems at agency level as well.
Procurement of goods and service
· The aim is that governments should be able to use pooled resources for procuring goods and services in support of a sectoral programme. Progress will depend on a full understanding of issues in relation to national capacity and donor rules and regulations.
· There is evidence from several agencies that previous restrictions about rules of origin and tied aid are being relaxed. There remains a question, however, as to whether new procedures for purchasing drugs and equipment will be acceptable when it comes to the procurement of technical assistance services.
· There is a risk that ministries will be required to adopt the procedures of the most restrictive donor involved in procurement. A better approach is to arrive at a country-specific solution, based on a joint appraisal of existing capacity. This will require compromise on the part of some external agencies, agreement on interim arrangements, and the definition of a programme of institutional development to address present weaknesses.