Periodic Review ccm request template

SECTION 4: PROGRAMME OVERVIEW

4.1 Financial Gap Analysis, Counterpart Financing and Additionally

Please provide an update of the financial needs, actual and planned sources of funding, and financial gap of the disease/HSS program.

(Note: Please refer to Renewals Financial Template for exact amounts used in the gap analysis template and sources of the data. Also please read in conjunction with 4.1.1 to 4.1.3.)

The resources required to achieve the objectives of South Africa’s National Strategic Plan for HIV AIDS, STIs and TB (2012-2016) is estimated to cost $9.5 billion over the next 3 years. In 2013/14 the annual cost of the required response is $2.3 billion, rising to $3.5 billion in 2015/16 (using an exchange rate of 8.5 to 1)⁶⁶. During this period, South Africa aims to screen between 15 million and 25 million people per year for HIV and TB, carry out over 2.2 million circumcisions of uncircumcised men, enrol over 500,000 adults and children every year on ART and treat approximately 400,000 adults per year for pulmonary TB.

Funding from external partners will decrease steadily over the next 3 years, as PEPFAR re-aligns its programmes to government priorities and withdraws from funding treatment facilities and as the contraction of the global economy is felt by other bilateral partners. Total funding from external partners (excluding the Global Fund) is expected to decrease from $406 million in 2012 to $293.1 million in 2015, a reduction from 20% of total funding available to 11%, whilst the government will increase its contribution to total available funding from 76% to 84%.

The financial gap between the resources required and available funding over the next 3 years is $1.87 billion, without taking into account the funding requested by the Global Fund.



Figure 5: Available resources and funding gap

The sub-programmes that are expected to have the greatest financial gaps between funding requirements and available funding are ART, TB and HCT. The financial gap between need and funding for ART in 2012/13 was $542 million, for TB it was $167.1 million and for HCT it was $124 million. The gap for HCT is likely to be overstated due to recent cost efficiencies achieved in HCT services, although it is still estimated that there will be a material financial gap over the next 3 years as South Africa increases its operational targets for HCT.

Table 9: Funding gap ART, TB and HCT

	Budget 2012/13 (USD Millions)		NSP Cost 2012/12 (USD Millions)	Gaps
	Government	DP	Total	Absolute	%
ART	722	174	1 438	542	37.70%
TB**	303	22	493	167	33.90%
HCT	51	29	205	124	60.60%

** Aggregated screening and treatment, as expenditures difficult to disaggregate in this respect

Note: % gaps calculated as absolute gap / NSP cost.

4.1.1 Overview of Government Financing of the National Programme

Please specify the levels of government (central, regional, local) that incur spending on the disease programmes and the major agencies through which government funds are spent. Elaborate on the availability of earmarked budget line items to capture government disease spending and the extent to which these budget line items capture total government spending on the disease program.

Domestic financial allocations to the HIV programme take place within the context of the priorities outlined in the NSP, as well as within the context of national and provincial operational plans and medium-term budgeting frameworks for HIV AIDS.

Domestic spending on the national HIV programme generally flows through the following main channels:

• 
  Spending on HIV programmes by the 9 provinces under their provincial health budgets: The 9 provinces are allocated funding by National Treasury through a statutory equitable share formula (that considers inter alia demographic, education, poverty and health criteria). Each province’s allocation to HIV and AIDS from this stream is then based on their own priority setting process. The funds are generally used to cover the costs of hospitalisation and primary care visits of HIV infected persons. Provincial governments’ allocations to HIV AIDS are guided by Provincial Strategic Plans for HIV AIDS which in turn are aligned with the NSP.;
  
• 
  The Comprehensive HIV AIDS grant: This is a conditional grant from the NDOH HIV AIDS Sub-Programme to Provinces to implement specific interventions related to achieving specific results. The total value of this grant in 2012/13 was ZAR8.8 billion and comprises the large majority of provincial spending on the disease. Approximately 65% of these funds are currently earmarked for ART;
  
• 
  NDOH’s core funding for national programme management, mass media, condoms, M&E, nutrition etc.
  
• 
  The Lifeskills Conditional Grant from the National Department of Education to the 9 provincial education departments for lifeskills training and peer education to prevent and mitigate the effects of HIV AIDS; and
  
• 
  The HIV AIDS sub-programme implemented by National Department of Social Development (NDSD) and the 9 provincial social development departments. This funding is to support OVC and community and home based care for people affected by HIV AIDS.
  
• 
  Foster care and child support grants for OVC under the Vote of the National Department of Social Development and administered by the South African Social Security Agency.
  

South Africa has extensive experience in tracking HIV expenditure through the completion of the comprehensive National AIDS Spending Assessment in 2011 and the recent production of the Annual Planning Tool, which tracks all government and Development Partner spending. Spending under the conditional grants is the most straightforward to track as provincial governments have statutory financial and programmatic reporting requirements to NDOH and National Treasury. These grants funded approximately 70% of annual HIV expenditure in 2012/13. Expenditure pertaining to most other standard HIV sub-programmes in national and provincial accounts that rely on discretionary funding is coded accordingly in the South African Government Basic Accounting system (BAS). In some instances, expenditure may not be accurately coded, for instance for human resources who provide cross-cutting services and for programmes and hospitalization costs. However, according to the National AIDS Spending Assessment, these do not make up a large proportion of the public spending on HIV/AIDS.

4.1.2 Estimation of Current and Anticipated Domestic and External Funding

Estimated contributions from various sources of funds, including reference to:

1. 
   Methodology for estimating current and anticipated funding;
   

Current and anticipated domestic funding was ascertained from government policy documents, namely the Estimates of National Expenditure, the Estimates of Provincial Expenditure and the Medium Term Budget Policy Statement 2012/13 prepared by National and Provincial Treasuries respectively. These estimates form part of the Medium Term Expenditure Framework and provide the allocations for the current year and estimated allocations for the outer 2 years. The allocations for the current year are revised by Treasury mid-way through the year and become the revised allocation.

Most sub-programmes and interventions outlined in the NSP are clearly identifiable in the national and provincial budgets and therefore can be attributed as funding sources for the relevant elements of the NSP.

The contributions from external partners were sourced from the government’s Annual Planning Tool (APT). Data for the APT was sourced from reviewing donor documentation and through interviews. Where no data for the outer years of the gap analysis template was available for partners, an annual contraction of 10% of the previous year was assumed from a precautionary perspective.

2. 
   Composition of reported government spending (part or all of government spending; programmatic costs alone or includes apportioned health system costs; recurrent costs alone or includes capital costs);
   

Most of the HIV AIDS related spending recorded is directly attributable to specific government sub-programmes and includes budgets lines for government staff, goods and services and transfers to NGOs. Capital expenditure relating to health equipment is included, but infrastructure development costs such as building and renovating health facilities have been excluded from the HIV allocations.

Where possible overhead expenditure allocations have been included, for instance for ART and TB services, except where services are integrated into the general health services. Inpatient costs for these treatment services have been excluded however.

3. 
   Whether amounts contributed by each source for the current and previous years pertain to budget, disbursement, expenditure or an estimate of spending;
   

• 
  For domestic and external partner contributions, previous years relate to actual expenditure;
  
• 
  Actual budgets for government and commitments for external partners are used for the current year.
  

4. 
   Whether amounts forecast from each source for the future years pertain to estimation or commitment.
   

• 
  For domestic contributions, amounts forecast for future years are official medium term estimates published in government medium term budget statements; and
  
• 
  Amounts forecast from external partners were either actual commitments provided by some external partners, or internal estimates based on the general assumption that external contributions will contract by 10% if no other data is available to suggest otherwise.
  

4.1.3 Financial Gap and Counterpart Financing Data Sources

1. 
   Sources used to complete the financial gap analysis and counterpart financing table
   

The funding needs were sourced from the costing model for the NSP 2012 - 2016. As a result of some data being outdated in the costing model which was completed in December 2011, the cost forecast was revised to include updated ART and TB cost data from the National ART Costing Model (NACM) and the National TB Costing Model (NTCM) respectively. The NACM used the latest ARV tender prices (2013). The NTCM used the latest prices for GeneXpert testing and updated the pace of the roll out of GeneXpert testing.

As described in 4.1.2 above, the sources used for domestic and external sources of funding were:

• 
  Estimates of National and Provincial Expenditure budget statements, released by national and provincial Treasuries on an annual basis;
  
• 
  Medium Term Budget Policy Statement from National Treasury;
  
• 
  Budget votes for each sector; and
  
• 
  Annual Planning Tool (APT) for domestic expenditure and for expenditure and commitments from external partners.
  

2. 
   Assessment of the completeness and reliability of financial data reported, include any assumptions and caveats associated with the figures
   

Over the last few years the completeness and reliability of financial data has increased significantly in South Africa, from both perspectives of estimating resource needs and tracking expenditure. The NACM, NTCM and the AIDS 2031 study have improved the estimation of resources required over the medium to long term to implement the national response. The National AIDS Spending Assessment and the new government driven Annual Planning Tool have provided more reliable expenditure data. SANAC has also established a Costing Technical Task Team to analyse HIV and TB programme costs, track expenditure and package information for decision makers.

There will however always be challenges in providing accurate future estimates of resource needs and in predicting availability of funding for the response. The following assumptions and caveats are associated with the gap analysis:

• 
  The costing of the NSP was undertaken using 2011 prices which were not adjusted for inflation in the outer years. This notwithstanding, ART and TB cost forecasts in the NSP costing model have been updated with the latest tender prices and it is expected that cost efficiencies over time may mitigate the effects of inflation;
  
• 
  Although all the bio-medical interventions in the NSP were appropriately costed, the total annual cost of the NSP is an under-estimate as some interventions in the NSP were not costed. Interventions were not costed if:
  

The intervention was not yet fully conceptualized at the time of costing;

No programmatic targets for the intervention were available;

No cost data was available for the intervention;

• 
  Unit costs for some services were outdated and may be less reliable due to guidelines or norms and standards for a particular service having changed (for instance task shifting in HCT);
  
• 
  Certain NSP targets have since been superseded by new sectoral planning processes that translate into new operational targets. For instance, for VMMC, the annual targets over the next 2 years have been increased as the NDOH plans to scale up earlier than what was earlier anticipated as possible;
  
• 
  The costing of OVC will be improved once the National Action Plan for OVC 2012-2016 has been costed; and
  
• 
  Comparing resource needs against available funding can be tricky since the two processes may look at different costs. For instance, the estimate of TB resource needs assessed the cost of diagnosis and treatment of pulmonary TB in adults, through applying direct costs of diagnosis and treatment and as well as attributable overhead costs. TB expenditure however in the government accounting system may account for other costs such as capital costs and running costs of TB hospitals.
  

3. 
   Details of how the country plans to improve data quality consistent with the guidelines for reporting of Programme financial data to technical partners
   

N/A

4. 
   If applicable, state if the CCM Request includes a budget for an expenditure tracking study and/or measures to strengthen financial data collection and reporting during the next Phase/Implementation Period.
   

N/A

4.1.4 Compliance with Counterpart Financing Requirements