Money Talks: The Lusaka Agenda Financing Alignment Indicators

Just over a year ago, the Future of Global Health Initiatives process concluded with the publication of the Lusaka Agenda, which recognized that the current global health financing architecture needs to change. It emphasized the need for donor funds to align and use government systems, and to drive accountability for country ownership through enhancing the transparency of financial flows to make progress towards universal health coverage (UHC).

In September 2024, the Center for Global Development published a Lusaka Agenda Tracker to enable the monitoring of progress and alignment to the shifts laid out in the Lusaka Agenda. Its primary audience is development partners—specifically the global health initiatives (GHIs) (e.g., Gavi, the Global Fund, and Global Financing Facility) and those constituencies who sit on their boards. Building on the Tracker’s approach, we unpack the public financial management (PFM) alignment component into six indicators. These indicators enable more in-depth tracking of “how” funds align to PFM systems—i.e., the processes and mechanisms through which donor funds are channeled. They do not focus on the “what”—i.e., the content and scope that the funds intend to support.

Why focus on financing?

Country leaders are demanding shifts that demonstrate real alignment of donor funding to their systems and priorities, and there is an expectation for domestic systems to manage donor funds and ensure accountability and transparency of results. This implies changes in mindsets around how donor funding, and specifically grant-making processes, are designed vis-a-vis domestic funding, and how these funds are formulated, channeled, accounted for, reported, and audited. Figure 1 maps the specific areas where the donor grant-making process can better align and embed within the stages of the domestic budget cycle.

Figure 1. Budget cycle and grant-making process mapping

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Getting the financial alignment component of the Lusaka Agenda right is critical for three reasons:

1. Country ownership: Country leaders are ultimately responsible for the health and well-being of their populations; however, they do not have ownership, control, or in some cases even full visibility of the funds that are flowing into their health systems. In some low-income countries, the majority of health spending comes from external sources; for example, in Malawi 62 percent of total health expenditure came from external sources in 2021, of which one-third was from Gavi and Global Fund. Aggregate funding flows need to be unpacked based on how they are specified and flow through (or around) country systems so that finance and health authorities can better coordinate and align external funds with domestic health priorities and processes. The persistent bypassing of domestic PFM systems by donors can also lead to a vicious spiral which can actually undermine and weaken these systems.

2. Mitigating against aid volatility: GHIs and other donor agencies are, inherently, financing agencies. Transparency around their financing flows, both at a global and national level, is a prerequisite for efficient budget allocation decisions as well as sustainability and transition planning. If there is consensus on reform, then the reform will ultimately relate to their financing mechanisms. Importantly, visibility of donor flows is needed for treasuries to address the de facto contingent liabilities that these substantial off-budget investments place upon them, especially in light of donor funding volatility. With many health workers funded outside of government payrolls, for example, any fluctuations in aid flows could be highly disruptive for health system functioning.

3. PFM strengthening: The way in which GHI funding is allocated and disbursed—often off-budget, off-plan, off-cycle—creates specific challenges for country health and PFM systems. It is not enough to document on- vs. off-budget, but rather to go into granularity around financing flows. In doing so, specific PFM system bottlenecks can be identified, as a basis to identify areas for PFM strengthening, and to establish pathways for alignment in support of UHC.

Previous financing alignment indicators

Reporting on the alignment of aid flows to country systems is not new. Such indicators have been defined as part of the Paris Aid Effectiveness and Accra Agenda for Action, endorsed almost 20 years ago by UN institutions, multilaterals, GHIs, as well as bilateral donor and partner country governments. GHIs such as the Global Fund had been reporting against these indicators (including through IHP+ and through their direct reporting). However, this reporting has been intermittent, inconsistent, and insufficiently disaggregated—and has recently been completely dropped.

Table 1. Example of pre-existing alignment monitoring

Proposal for enhanced monitoring

Assuming such reporting is resumed as part of the Lusaka Agenda, the indicators used could be improved to provide a more disaggregated and clearer picture of actual funding flow alignment. This is a nuanced question, and it requires a specific set of measures to reflect the different features and aspects of PFM alignment of donor funds based on the phase of the budget cycle. For example, donor funding can be on budget but not recorded in the expenditure management system, or on accounts but not on audit.

To address these gaps, we identify a select set of indicators to track health aid alignment systematically and consistently with domestic PFM systems (Table 2). These are based on specific areas where the donor grant-making process can better align and embed within the stages of the domestic budget cycle (Figure 1). The alignment issues raised in the Lusaka Agenda pertain to all donors, and not only the GHIs. Therefore, the set of indicators proposed reflects that countries can use them to track all donor behavior in support of health, as well as GHI-specific monitoring.

The indicators are articulated around the stages of the budget cycle and are quantitative proportions that are not based on subjective interpretation and do not assess the quality of PFM systems. In this way, they can be used to better monitor progress towards alignment at the country level. They can also be compiled to inform donors, including GHIs and their boards, on their financing alignment performance.

Table 2. Proposed financing alignment indicators

We recognize that not all the data for the various indicators are readily available for every country and donor; however, baselines can be established as a basis for continued monitoring and mutual accountability moving forward. Much of the data needed to compile the indicators exists in various formats and could be brought together consistently for financing alignment monitoring. Donors should keep track of how their individual funding is allocated, spent, accounted for, and reported, and be responsible to report this to countries.

Way forward

The Lusaka Agenda sits at a crossroads: either we track progress and ensure mutual accountability, or it becomes another unfulfilled agenda for global health reform. We call for testing of these financing-related indicators, as part of the overall Lusaka Agenda accountability process, with a learning agenda across all regions to refine the definition and measurability of the indicators so they can be usefully incorporated into the Lusaka Agenda-related donor accountability processes, as well as country-level plans. Country-level accountability needs to be matched by strong, independently, and consistently reported alignment measures to GHI boards, as well as other bilateral and multilateral funding agencies to contribute to needed shifts in the funding arrangements. The measurement, tracking, and reporting of these financing indicators is central to implementing the Lusaka Agenda. It is doable and ought to be done.