5. ANALYSIS
18 Mar 2020
Strategies include strengthening capacity of the state PRs and engaging top-level management

Low absorption of Global Fund grants has been a long-standing challenge among recipient countries, especially those in sub-Saharan Africa. Previously, the Global Fund had estimated that countries failed to use close to $1.1 billion from the 2014-2016 allocation period. Discussions on the absorption of Global Fund resources are therefore likely to take center stage in the coming months as most countries draw closer to the end of their grants for the 2017-2019 allocation period, by the end of December 2020 or mid-2021.

The Global Fund and implementing countries have had to come up with strategies in the current implementation period, 2018 to 2020, to address the bottlenecks to effective absorption of funds, whether at the Secretariat- or country level, and ensure that countries use all their available funding. In this article, we highlight impediments to the absorption of Global Fund grants in three sub-Saharan African countries (Malawi, Sierra Leone, and Uganda) and the strategies that these countries have put in place to address them.

Editor’s note: In July 2019 the GFO published a desk review on the challenges at Global Fund Secretariat and implementer levels found to impede absorption.

Data for this article comes from publicly available information and documents from the Global Fund website, a literature review, and interviews with officials from state Principal Recipients (PRs) from the three countries as well as from the Uganda Country Coordinating Mechanism (CCM). The State PRs include Malawi’s Ministry of Health (MOH), Sierra Leone’s Ministry of Health and Sanitation (MOHS), and Uganda’s Ministry of Finance, Planning and Economic Development (MOFPED). Sierra Leone has another state PR, the National AIDS Secretariat, which was not interviewed for this analysis.

The three countries vary in disease burden and size of allocation

The countries vary in the Global Fund’s portfolio categorization, size of the allocation and operating environment. Malawi and Uganda are high impact countries i.e. they have a large portfolio and a mission-critical burden, whereas Sierra Leone is a core country (larger portfolios, higher disease burden, and higher risk). The Global Fund also classifies Sierra Leone as a challenging operating environment (COE) as the country is still in recovery from the 2014 Ebola outbreak. It has instituted additional safeguards, including a fiscal agent and limited cash policy, to strengthen fiscal and oversight controls in Sierra Leone.

State PRs are managing most of the current grants in the three countries: 85% in Malawi, 95% in Sierra Leone and 93% in Uganda (Table 1). The State PRs have established units to manage the grants that bear different names depending on the country: Program Management Unit (PMU) in Malawi, Funds Coordination Unit (FCU) in Uganda, and Integrated Health Projects Administration Unit (IHPAU) in Sierra Leone.

Table 1: Type of Principal Recipient for active Global Fund grants in Malawi, Sierra Leone and Uganda

Country Principal Recipient Grant number Signed amount ($) Proportion (%) of the total grants
Malawi State PR Ministry of Health 394,382,867 85%
  Non-state PRs Action Aid Malawi World Vision Malawi 69,654,963 15%
Total 464,037,830  
Sierra Leone State PR Ministry of Health and Sanitation (MOHS) National AIDS Secretariat 93,011,179 95%
  Non-state PR Catholic Relief Services (CRS) 5,313,275 5%
Total 98,324,454  
Uganda State PR Ministry of Finance, Planning and Economic Development (MoFPED) 463,867,429   93%
  Non-state PR The AIDS Support Organisation (TASO) 35,559,886 7%
Total 499,427,315  

Source: Global Fund Data Explorer

Note: The Sierra Leone MOHS grant runs between July 2018 and June 2021 whereas the other state grants run from January 2018 to December 2020

State PRs spent most of their funds in 2015-2017

Absorptive capacity measures the percentage of actual expenditure compared to the total grant budget, according to the Global Fund. During the 2015-2017 implementation period, the Malawi MOH absorbed 81% of the HIV/TB grant and only 65% of the malaria grant. Uganda’s MOFPED, on the other hand, spent 102% of the HIV grant, 97% of the TB grant, and 93% of the malaria grant, as shared by the MOFPED official. The Sierra Leone MOHS spent 77% of a multi-component (TB, malaria, and health-systems strengthening) grant.

The three countries face similar impediments to funds absorption

The state PRs from the three countries highlighted the impediments to absorption within their country contexts. Some of the challenges are common to all three countries. First, the state PRs noted that lengthy government approval processes, such as for procurement, often delay the implementation of grant activities.

Second, gaps in implementers’ capacity, at the national and sub-national levels, affect the absorption of grants in the three countries. These gaps often manifest as delays in initiating activities at the state-SR level (Uganda); delayed submission of reports, disbursement requests, and relevant documentation such as procurement plans by the implementers (Malawi and Sierra Leone); and ineligible expenses (Sierra Leone). Attrition within implementers’ staff has contributed to the capacity gaps (Sierra Leone and Uganda).

Third, the state PRs from the three countries have also ended up with unspent funds due to savings and exchange-rate gains. The three countries made significant savings from a fall in the exchange rate (Sierra Leone) and overbudgeting or fall in global prices (all).

Lastly, the Global Fund additional safeguards often delay the implementation of grant activities in Sierra Leone. The safeguards include the ‘limited cash’ policy (where the PR makes direct payments to vendors, for goods and services, rather than transferring funds to SRs for this purpose) and putting in place a fiscal agent - contracted by the Global fund to minimize risk of fraud, misuse of grant funds and ineligible expenditures. For instance, the limited-cash policy affects the payment of salaries to community health workers (CHWs) due to the limited penetration of mobile money and banking services. Similarly, Malawi, which is not under the additional safeguards policy but has a fiscal agent in place, noted that delayed approvals by the fiscal agent led to delayed implementation of the grants’ activities.

Other bottlenecks that are unique to each of the countries include frequent in-country missions by the Global Fund Country Teams that often pull the implementer’s attention away from the execution of grant activities (Malawi), fear of incurring ineligible expenses (Sierra Leone), weak implementation arrangements (Sierra Leone), rigidity in Global Fund compliance standards (Sierra Leone) and failure to engage the top management of ministries serving as either PRs or SRs, which made it difficult to troubleshoot when bottlenecks arose (Uganda).

Strategies

The state PRs have come up with strategies to address the bottlenecks described above:

Leveraging the budgeting flexibilities

The state PRs in Malawi and Sierra Leone are taking advantage of the budgeting flexibilities accorded by the Global Fund to move funds from one intervention area to another for smoother implementation of grant activities. PRs can make changes of less than 15% of the total budget for any standard intervention or less than a 5% increase for any discretionary costs such as human resources or travel-related costs, without prior written approval from the Global Fund. Sierra Leone’s IHPAU, in particular, reported that budgeting flexibilities have made it easier to move funds to more impactful modules; such flexibilities may be due to their COE status. The Malawi PMU has prioritized prompt reprogramming of savings in line with the Global Fund’s budgeting guidelines.

Commoditization of the grant

A 2019 analysis by the Global Fund showed that commoditized grants have higher absorption rates as compared to their less commoditized counterparts. Uganda and Malawi have allocated 90% and 85% of their current grants, respectively, to the procurement of health commodities. However, for Uganda, commoditization of the grants was a way of minimizing stock outs. The MOFPED explained that since procurement has been made easier by the Pooled Procurement Mechanism (PPM), grant absorption has increased. Closely related to this, Uganda established a Health Commodities and Supply Chain Management task force in Uganda, which brings together development partners and the government to review quantification and forecasting, procurement, and distribution of health commodities. This engagement at the task-force level has helped improve donor confidence and hasten approvals in the procurement process.

Engagement of top leadership of state PRs and SRs

The Malawi and Uganda state PRs are engaging top leadership within the relevant ministries to enhance smoother implementation of the Global Fund grants. The Malawi MOH, for instance, holds a monthly one-hour grant-management meeting headed by the Secretary of Health, where they discuss issues that the implementers have been unable to solve. Malawi also holds a bi-weekly grant implementation meeting with the Chief of Health Services in the MOH, who is responsible for technical issues, where the implementers report on both technical and financial absorption. The Uganda MOFPED (which oversees the grant funds), and MOH (which implements the grant activities) hold a monthly meeting which is chaired by the Permanent Secretary (PS) of Health. The grant managers within the MOH provide updates on grant implementation including the challenges and bottlenecks they are facing.

Strengthening capacity of implementers and grant management units

Sierra Leone has prioritized building knowledge within the IHPAU and implementers’ staff on the Global Fund budgeting requirements to reduce ineligible expenses. The country has also brought on board a consultant to help revise the grant’s financial manual and simplify the financial processes related to grant management.

The grant management units have also recruited specialists to help in monitoring grant implementation: both IHPAU and PMU recruited a procurement specialist to help monitor procurement processes. The Gates Foundation supports the procurement officer in Malawi’s PMU, whose roles include tracking global-market and price trends for health commodities. MOFPED’s FCU includes specialists in finance, procurement, monitoring and evaluation, and communication and change management.

Frequent reporting by the SRs and disease programs

The Malawi PMU requires each of the SRs and disease programs to submit quarterly and six-monthly work plans and budgets. It also requires that the different entities report absorption at the module and activity level, unlike before, when they would review the budget and expenditures at a high level. The PMU also holds quarterly review meetings, which promote increased peer engagement and accountability among the implementers.

Active monitoring by the CCM

CCMs also play a critical role in identifying low absorption, bottlenecks, and ensuring that the implementers take well-timed corrective measures. The Uganda CCM representative noted that they have mainstreamed absorption discussions during all the quarterly CCM meetings. The Uganda CCM representative also noted that they have a vibrant Secretariat, which analyses data from the PR reports and closely monitors absorption. The CCM also pushes the PRs to prepare acceleration plans to catch up on delayed activities. At the time of the GFO’s interview with the Uganda CCM, they were leading a reprioritization consultation process with the Country Team and relevant in-country stakeholders.

Others

Sierra Leone’s MOHS has integrated TB, malaria, and health systems strengthening into one grant to ease the administrative burden and allow for the swift reallocation of funds. The IHPAU has also enlisted pre-qualified suppliers, with a one-year performance-based contract for administrative-related costs, which has reduced delays that often result from tendering processes. Uganda’s MOFPED also noted that they have improved continuous engagement and communication between the various stakeholders including the CCM, implementers, the Global Fund Country Team, and other development partners, which has helped improve the implementation of grants.

Global Fund support

The state PRs from the three countries all said that the Global Fund has been responsive and has supported them in implementing these strategies. They noted that they have regular meetings with the Global Fund team. For Uganda, this meeting is called the ‘enhanced grant review meeting’, where the implementers and the Country Team, after each reporting period (which is usually after every six months), review the PR’s Progress Update and Disbursement Request (PUDR), identify challenges and devise a way forward. Sierra Leone’s IHPAU also noted that they host quarterly Global Fund missions, which provide a platform to discuss challenges and possible solutions.

However, the Malawi PIU noted that there had been delays by the Global Fund country team in approving one reprogramming request submitted by the PIU. The PIU also explained that the Global Fund conducts many in-country missions, which draw grant implementers’ attention and time away from actual implementation. The PIU explained that currently, the Global Fund holds four finance missions, two to three procurement missions, one supply chain mission and two M&E missions in Malawi – a minimum of nine missions – every year. They called for the Global Fund to reduce the number of country missions and to communicate the schedule for these well in advance.

Strategies seem to be working as absorption increases

The state PRs from the three countries attested that absorption has improved for the current grants. In fact, the Malawi PIU noted that the absorption rate at the time of the interview was the best they have had so far within any grant, at that stage of implementation. Malawi’s MOH spent 67% and 93% of the budgeted amount for the period 2018 and 2019 under the HIV/TB and malaria grants, respectively, according to the PMU. Cumulatively, the Malawi MOH has now spent 40% of the HIV/TB grant (compared to an expected absorption of 59%) and 77% of the malaria grant (compared to an expected 84%).

Uganda, at 30 June 2019, had spent 60.1% of its HIV grant (compared to an expected absorption of 66%, according to the grant budget downloaded from the Global Fund website), 80.3% of the TB grant (compared to 62%) and 17.8% of the malaria grant (compared to 92%). The MOFPED explained that malaria had a lower absorption rate because the insecticide-treated nets mass distribution campaign, which is a major component of the malaria grant, has not yet taken place. As of June 2019, the Sierra Leone MOHS had spent 63% of the budget for the first year of the HIV/TB grant. This proportion accounts for 23.3% of the total grant whereas 37% of the total grant was expected to have been spent by the end of the first year. The Malawi MOH and Uganda MOFPED grants end in December 2020 while that of Sierra Leone’s MOHS ends in June 2021.

Editor’s note: The GFO will publish an article highlighting the strategies the Global Fund has put in place to address the absorption challenges in an upcoming issue.

Further reading:

·      From GFO Issue 360, 10 July 2019, ‘Challenges at Global Fund Secretariat and implementer levels found to impede grant absorption

·      From GFO Issue 333, 21 March 2018, ‘A success story: Global Fund grants in Burkina Faso show significantly increased absorption rates

·      From GFO Issue 321, 4 October 2017, ‘Identifying Secretariat-level impediments to full absorption of Global Fund money

From GFO Issue 320, 20 September 2017, ‘Identifying and solving country-level impediments to full absorption of Global Fund money

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