EDITORIAL COMMENT : Aid gaps need to be funded, but fairly

THE suspension or withdrawal of much US financial support has meant African countries, including Zimbabwe, are having to mobilise their own resources to fill the gap, especially when it comes to winning the battle against HIV infection where US support was generous and effective.

The imaginative US President’s Emergency Plan for Aids Relief, launched by President George W Bush in 2004, had a budget of US$7,1 billion from March last year to March this year, and supported a swathe of programmes across Africa and parts of Asia, concentrating on the testing of HIV, supply of ART medication to suppress the virus and give those living with HIV close to a normal life, and some other programmes.

While most countries, again including Zimbabwe, mobilised significant domestic resources for these needs, the Pepfar grants often formed an important part of the national programme, in Zimbabwe’s case just over US$200 million a year.

In addition, through the general overseas assistance programmes, the United States provided some support for other health programmes. While US sanctions on Zimbabwe precluded many aid programmes, emergency aid and workarounds, such as using NGOs as a conduit, allowed significant health sector support.

Zimbabwe was not relying on others to pay its health bills. Almost 14 percent of the national budget, very close to the African target of 15 percent that everyone is still working towards, was allocated in this year’s budget, showing Zimbabwe was prepared to pull its weight.

Now we have to do more to maintain these crucial social services, and Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube has talked about how African countries will have to mobilise more funds internally, and that could well mean extra taxes as well as probable reassignment of funds within the budget.

Most countries, and again Zimbabwe is no exception, already have tight budgets with no real “pork” that can be cut.

Most of us have global outfits like the International Monetary Fund breathing down our neck, checking that we are in fact working within limits.

Zimbabwe is now getting good reports from the IMF and praise for the reforms already pushed through under the Second Republic, the major one when it comes to budgeting being that the Government lives within its means.

It spends only what it receives in taxes, with the only borrowing being for a small proportion of the capital spending where a new flow of income immediately results, allowing the loan to be serviced and paid off.

As Zimbabwe is negotiating a process of dealing with debt arrears from previous decades, this tight fiscal policy is essential.

Prof Ncube is now warning as he finalises his mid-year fiscal review and starts the process that leads to next year’s national budget that there is limits to what he can do if we wish to maintain our essential programmes, especially the social programmes, and fill the aid gap in our health services. New taxes may be required.

This will not surprise most people, although we have all been impressed with how the Ministry of Health and Child Care has been sufficiently funded to buy enough ART supplies for the rest of the year.

But if taxes are necessary they must be the right sort of taxes, ones that cause minimum pain and maximum gain.

This would seem to require more progressive taxes, as we see in our income tax, rather than across the board taxes like VAT and the sugar levy where rich and poor pay roughly the same.

The oldest of our special health taxes, the Aids Levy, is three percent of the income or corporate tax we pay. So those who earn too little to pay income tax pay no levy; most of us, having to pay some income tax, pay modest levies and the high-earning individuals and companies with large tax bills pay the most.

Two recent, if small, consumer taxes assigned to health, the sugar and take-away taxes are paid by everyone who uses sugar, which is most of the population, or who buy fried take-aways, large groups in urban areas.

Both taxes were introduced to help make the product less-appealing, although the extra cost that reaches the final consumer is trivial.

There are options for a Finance Minister wanting extra health funds, such as an extra tax bracket for very high earners, or a rise in transfer taxes on the more expensive properties, that will help to restore the progressive element missing from some recent taxes. We all need to pay something, but the payments should be fairly apportioned.

That US$200 million Pepfar gap need not be totally filled. The United States preferred to funnel the money though NGOs, which is its right, rather than in grants to the Government.

So if Zimbabwe has to fill the hole it needs to find the money to buy the essentials, the medicines and the test chemicals and the like, and pay the health professionals supported through the programme. But the NGO administration can be transferred to the Health Ministry and its existing staff, allowing a large saving. A sort of NGO industry arose that is not essential.

We assume the Finance Ministry, as it takes on an even larger proportion of the total health budget, will be insistent on high levels of efficiency.

Using the public health system, being expanded under the Second Republic, as the main channel for State-supported health care means that some costs, especially administrative costs, can be shared, allowing a higher proportion of the budget to go on the medicines, equipment and health professionals.

Those paying existing taxes, let alone any extras, will want to be assured of that efficiency as well.