It's Time For Health Aid to Refocus on the Poorest Countries

In the early 2000s, close to 70 percent of health aid was directed towards low-income countries (LICs). Today, it is less than 40 percent. But supporting health in LICs can provide better returns than elsewhere if capacity constraints in LICs and potential risks from reallocation are addressed head-on. As aid is facing turbulent times, refocusing on LICs should be front and centre of ongoing reprioritisations. This argument forms the bedrock of new research we will carry out over the next 18 months which will explore the potential benefits, risks, constraints, and policy levers that would determine whether such a refocus is practical and responsible across major global health funders.

Health aid doesn’t really focus on LICs

Remarkably, the split of health aid by country income groups is not routinely tracked by any agency. As part of our new programme of work, we will develop new estimates. But based on IHME’s latest complete disbursement data from 2023, we can estimate that about 36 percent of country allocable health aid went to LICs, compared to 44.5 percent for lower-middle-income countries, and 19 percent to upper-middle-income countries. There was, however, wide variation across major aid channels (Table 1). For Gavi and World Bank IDA, higher shares of close to 50 percent are expected relative to other channels given their mandate and explicit weighting in favour of LICs in allocation criteria, but also arguably somewhat underwhelming precisely given this mandate. Meanwhile the Gates Foundation and the United States Government come in at around 30 percent (prior to aid cuts and recent bilateral health compacts).

Table 1. Country-allocable development assistance for health (DAH) disbursements and share to low-income countries, by selected channels, 2023

Notes: authors’ calculations based on the IHME DAH database, 11 June 2026 release. Includes country-allocable DAH only. Transfers between channels are excluded to avoid double counting, so funds are attributed to the channel that disbursed them to the recipient country. Disbursements in US$ 2023 values. Country income group status as of World Bank FY2025 classification, based on 2023 GNI per capita.

Focusing health aid on LICs could save more lives…

From an efficiency perspective, what matters is to use available DAH to the largest possible effect, for example, lives saved or disability-adjusted life years (DALYs) averted. By and large, an additional dollar spent in LICs goes a lot further than in middle-income countries (MICs). Based on country-specific marginal productivity of health spending estimates by Ochalek, it costs at the margin about $200 to avert a DALY in a typical LIC (income group range $78 to $695), compared to $700 in a typical lower-middle-income country (income group range $80 to $5,004).

Currently, the country distribution of the DAH portfolio does not follow the marginal cost principle. Many countries with very low marginal productivity of health spending get very small shares of the DAH pie. The same paper estimated that reallocating $12.3 billion on-budget support for health to where it could have the greatest benefit (i.e., towards countries with lower marginal costs per DALY averted, most of which are LICs) would avert 71.1 million DALYs. From this perspective, readjusting the distribution of DAH towards countries with low marginal costs per DALY averted—of which most are LICs—makes a lot of sense, especially during a time of declining aid.

… improve equity and decrease displacement of domestic financing

The equity case is also strong. Today’s LICs face more entrenched and harder-to-solve challenges than LICs did two decades ago. Most are unlikely to graduate to lower-middle-income status within a generation. Many also face conflict and instability. Most are very vulnerable to climate shocks. Most are deeply fiscally constrained—for almost all LICs governments are unable to finance a basic, high-value health package. Most do not have sufficient access to capital markets to refinance their debts. Despite sustained progress in health system development, the needs of LICs are clear. Ending extreme poverty in many MICs would cost the equivalent of a few percentages of GDP, which arguably some could afford, while in LICs the same would take closer to 20 to 30 percent of GDP. 

In most MICs, on the other hand, governments have more options for responding to pressing health needs. The domestic tax base and administrative capacity are larger than in LICs, and the core problem is often distribution and prioritisation rather than absolute financing scarcity. In 2023, total health aid allocable to lower-middle-income countries was less than 0.3 percent of the group’s total gross domestic product. Ending extreme poverty in many MICs would cost the equivalent of a few percentage of GDP, which arguably some could afford, while in LICs the same would take closer to 20 to 30 percent of GDP.

What holds back more distribution of health aid to LICs?

First, the current distribution of health aid reflects a large degree of path dependency and entrenched interest groups. Once countries enter major global health portfolios, support tends to persist through income transitions, often because transition policies are designed to be gradual and risk-averse rather than to maximise the marginal impact of each dollar. In the current aid environment, what once looked like prudence can become implicit misallocation.

Second, there is a practical concern that MICs may use additional money better. They often have stronger public financial management (PFM) systems, more stable budget execution, and more institutionalised priority-setting processes. The right conclusion is not to avoid LICs, but to pair any shift in their favour with stronger safeguards: better budget execution support, clearer prioritisation, and a move away from fragmented off-budget delivery where that undermines country ownership.

Third, many poor people still live in MICs, and some programmes—especially for HIV and other services reaching key populations—serve groups that may be politically neglected even where governments have greater aggregate fiscal capacity. The concern about the impacts of moving health aid away from such groups is real and should not be dismissed, but it should justify targeted civil society support, not across-the-board country allocation decisions.

What global health funders can do

The current high-level distribution of the DAH portfolio appears to be more the result of inertia and eligibility artefacts than deliberate, coordinated adjustment. Opportunity costs should become a central consideration going forward, and the response should proceed on three fronts.

1. Funders should prioritise the DAH channels that already favour LICs. Gavi’s and the World Bank IDA’s existing eligibility structures already skew towards LICs. An IDA Health Window would therefore substantially shift resources to LICs.
2. Channels that could better prioritise LICs should be adjusted directly. For example, this can involve changing allocation formulas or speeding up transition criteria. For the Bank this also includes shifting more MICs off IDA onto IBRD.
3. Most importantly, none of this works without safeguards. The potential net positive impact of more DAH to LICs is not guaranteed without careful targeting, and the caveats raised above need to be addressed head-on rather than assumed. Additional DAH should be coupled with accelerated PFM reforms in LICs, particularly on the budget execution side, and with investment in institutionalised priority-setting capacity for approaches such as health technology assessment, so that money enters LICs increasingly on budget and is spent increasingly better—in line with the principles of the New Compact for Health Financing. Careful analysis of how MIC governments can step in for withdrawn support, and how civil society targeting marginalised populations (such as populations requiring HIV treatment) can continue to be supported in MICs should run in parallel.

The direction of travel is clear: focusing more DAH towards LICs makes a lot of sense, channel by channel. Delivering on that potential will require just as much discipline in how the money is protected and safeguarded as in how much of it is redirected.

We will further develop this area of work over the next 18 months and propose actionable ways to make this happen.