The private sector is ably demonstrating the problem--not through failure but through success. For example, the Gates Foundation and Merck program in Botswana, the Bristol Myers Squibb Programs in Lesotho, South Africa, Namibia and elsewhere; and Anglo American's programs across Southern Africa demonstrate that it's possible to have sophisticated, largely resistance-free therapy in Africa.
Such programs cost a lot and few can be treated quickly. For example, the combined Secure the Future (SF) programs in Lesotho and South Africa have spent many millions of dollars and have fewer than a thousand people on treatment. But the treatment is sustainable, which is more than can be said for nearly all the government programs in Lesotho, where single, dual and poorly monitored triple therapy all occur. Dr. Tonny Mwabury reported that out of 24 patients he saw, six were on sub-optimal mono or duel therapy. One patient had been prescribed just 10 doses of Nevirapine, which is meant to be taken indefinitely in conjunction with other drugs.
To prevent these types of problems, SF has been developing these initiatives since 1999 but only started treating people last year. They held off because without training staff, procuring support services and promoting local groups, treatment could not be sustained.
Examples of failure in other parts of Africa are replete. For example, antiretroviral drugs (ARV) provisions are pointless if there are no personnel to distribute them properly. In Guinea-Bissau, a shipment of Brazilian-made antiretroviral drugs that arrived in February remains at the airport because the country does not have trained health workers to distribute them.
Visiting the SF sites makes one realize the massive task of treating millions of Africans. Most people cannot afford to get to clinics, either because they are too malnourished, too sick to travel, or it's simply too far to travel - walking a long way to have an HIV test, which I calculated would be several hours for most of the people I spoke with at clinics in South Africa and Lesotho, is simply impossible for anyone even slightly sick. Viral load testing can only be done in a handful of hospitals and labs in South Africa (the wealthiest country in Africa).
For every person on treatment, perhaps four or five whose CD4 counts are above 200 are on nutritional support (since poor diet is the fastest route to a drop in CD4 count), and it is far cheaper to improve their diet than treat them (especially if they can be supported with donations from the World Food Program). But good work is often undermined by idiocy. Some local groups, as well as the Health Minister of South Africa, promote dietary supplements that actually lower CD4 counts. Even worse, there is an increasing amount of fraud occurring as more funds flood into Southern Africa to combat HIV/AIDS.
AIDS Fraud, a small problem with a big effect
Limiting serious fraud is vitally important, especially now that the United States is embarking on a $15 billion worldwide AIDS program (PEPFAR), the UK Government is increasing its health aid commitments and agreeing to write off all its previous loans to African countries, and the Global Fund to Fight AIDS, Tuberculosis and Malaria also is increasing its efforts. In the next year, AIDS funding is expected to increase from $1 billion to $8 billion.
Previous HIV aid efforts gave a low priority to financial and behavioral accountability, which is understandable given the scale of the problem they were taking on, but the inevitable consequence has been poor oversight and fraud. Now that total sums are to be increased so dramatically, these failings must be reined in.
Abuses of funds for AIDS have occurred at least since 1996 when then South African Health Minister, Nkosozana Dlamini-Zuma was reprimanded by the Auditor-General for spending US $2 million on an AIDS education play without coherently accounting for the expenditures. The current Auditor-General is investigating allegations made by the Sowetan newspaper, that a major AIDS group, the National Association of People Living with AIDS (NAPWA), has not paid staff and been forced to close several offices even though sufficient funds for these agreed allocations were previously released.
Kenya's National AIDS Control Council has witnessed several abuses and only investigative journalism has uncovered most of them. Nicole Itano, a South African writer, describes how 'the council's director, Margaret Gachara, was removed from her position after she used faked documents to garner a salary almost seven times above the norm for someone in her position.' In August 2003 the Kenyan Government, under pressure to act from its own finance officials, cut funding to four AIDS organizations alleging fraud, and is investigating 10 others.
Fatima Hassan, an attorney with the Johannesburg-based AIDS Law Project who filed requests with the SA Attorney-General requesting investigations into AIDS finances, notes, "There are groups meeting their objectives and those that are not, but no one is holding them accountable." According to Hassan, the South African Government simply does not have the appropriate systems in place to prevent fraud. Hassan says current investigations may be touching just the tip of the iceberg. Indeed, disability grants in South Africa have increased by 32% in the past year, and while legitimate HIV-related claims may be the cause of much of this rise, the South African Department of Social Welfare believes fraud is another.
But in dealing with problems of fraud, donors must strike a difficult balance between ensuring accountability and allowing grant recipients the flexibility to be effective. Ignoring the importance of the latter, major Western government donors often err on the side of draconian anti-fraud practices. That's unfortunate, because massively handicapping the effectiveness of aid money out of fear of a few instances of abuse is often far more wasteful than the fraud itself.
USAID's tough stance
A prime example of this tendency is the U.S. Agency for International Development. USAID is so worried about bad publicity from small scale fraud that they are employing huge Washington DC-based 'beltway' contractors to do much of their 'giving', instead of taking a chance on working with organizations based in affected countries.
These contractors mainly provide what is known in aid parlance as 'technical assistance'. In most cases, TA consists of hiring US-based organizations to consult with recipient governments on matters of policy. Occasionally, these groups will provide personnel training, though the human resource development goal is often subverted as the best local staff are hired away by the AID-funded NGOs.
On rare occasions, Western NGOs will actually run health programs aimed directly at affected populations. Such programs are supposed to bring in local actors, but often cooperation is strictly nominal. Frequent USAID collaborator Stephen Snook's analysis of the Agency's role in Tanzania revealed that "The Tanzanians...are brought in at the end to stand there and nod yes."
It's difficult to ascertain exactly how much USAID spends on each project, as it is obsessively stingy with releasing any information relating to contract proposals, terms or budgets. It took a Congressional inquiry to convince the Agency to account for its malaria spending. The numbers eventually released were revealing: 95 percent of its money was allocated to contractors for technical assistance and 5 percent for buying life-saving commodities like medicine.
But even those numbers fall hopelessly short of explaining where USAID's money goes. That's probably because the vast majority of USAID (taxpayer) funding never leaves the United States. Indeed, according to the Agency's own estimates for 2003, approximately 81 percent of its appropriations went to US sources. That means only a few cents of every aid dollar ends up in the hands of the countries and people that need aid the most.
It is a perverse betrayal of HIV sufferers to spend most of an AIDS budget on big advice-giving US contractors primarily because these groups are easier to monitor and have sophisticated accounting techniques--not to mention entrenched Washington interests. USAID's own refusal to account for its activities to its donor--the US taxpayers--makes its hypocritical practices even more egregious. Neither does the overzealous attack on abuse encourage accountability in those local organizations that are actually helping AIDS patients.
Realizing that their international funding is put at risk, the Treatment Action Campaign in South Africa, which tries to increase generic drug distribution to those with HIV, rarely discusses funding abuses in order "to avoid creating confusion or further disunity among people with HIV/AIDS and the organizations that represent them." In other words, a vicious circle of hiding the truth to prevent upsetting the funding machine, which set in motion by western aid agencies, is picked up and copied by those based in Southern Africa.
Undoubtedly, part of USAID's problems stem from the inherent difficulty in balancing counterproductive accounting controls and resource-draining fraud. But as a privately-funded South African organization demonstrates, achieving that balance is possible.
The South African Sibambisene AIDS Network, funded by drug company Bristol Myers Squibb and the Nelson Mandela Children's Fund, helps distribute money to 30 or so small organizations working on AIDS in South Africa.
PhaPhamini, an orphan support group in the beautiful location of Hluhluwe in Kwa-Zulu Natal, is what most are like. From most analysis it does a great job of protecting AIDS orphans and educating people about the dangers of AIDS. And it operates on only a few thousand dollars a year.
As Nicole Itano explains: "PhaPhamini is run by a woman who speaks no English and has no computer skills." The woman is typical of the people doing much of the essential compassionate caring work. They are not trained professionals and are unlikely to care about filing reports on time. Some have trouble appreciating the separation of work from home life, since they have never held a job before. Many used work cell phones for personal calls without apparently knowing that such a practice was inappropriate.
Unfortunately, three of the 16 other orphan networks Sibambisene supports couldn't account for how they had spent most their funds. Anthony Mkhabela, Sibambisene's network's project manager, suspects that the money was used privately by the organization's leaders.
What to do? Demand more paperwork from operations such as PhaPhamini? It would make no sense.
Instead, Sibambise tacitly accepts that a small amount of abuse, such as using money for cell phones, may occur, but uses its own funding structure and distribution systems to minimize waste to less than a month's worth of money granted to any organization.
The losses from embezzlement by the three guilty orphan agencies thus amounted to less than a thousand dollars. Furthermore, the guilty are now repaying the missing funds, and the local organization responsible does not receive monthly distributions any more.
Finally, learning from the past, Sibambisene helps small organizations account for money responsibly and provides basic training in banking and accounting.
Much of the expertise for this approach originates in the excellent BMS SF program, which has even devised an 'NGO Financial Management Pocket Guide', to help small groups achieve good practice.
This BMS-inspired approach makes far more sense than what USAID is doing in hiring huge contractors to watch over its giving. As one Washington DC-based consultant who also declined to be named because of the risk of future contracts being withdrawn, said, "Paying USAID funded consultants, doing work of marginal value, more per week than was stolen in an entire year by the private Sibambisene groups is a poor allocation of resources."
Fraud will happen. Efforts need to be made to limit it. But overly zealous efforts to eliminate it will only waste more aid than is saved. USAID officials may be able to say that taxpayer funds are not embezzled, but neither will they be able to say that they did much good--except to contractors.
Grass roots movement
The indirect result of the insulation from local groups, in efforts to prevent fraud, is probably even more alarming. Without local knowledge and more importantly, commitment and goodwill of local people, treatment is not sustainable For the poorest the key factors for drug delivery are improving nutrition and transporting patients to clinics--and the big consultants and other major aid groups know little and probably care even less about such issues.
The Lesotho Government, under significant pressure from UNAIDS and WHO, wants to treat 28,000 by the end of this year. The Government is pushing local treatment centers to deliver more ART, but currently only 2,000 people are being treated, and I estimate perhaps 800 are on good triple therapy (and many of these are at the excellent SF site). If Lesotho has 5,000 on sustainable treatment by the end of this year I will be amazed. And if Lesotho is even remotely representative of the rest of Africa then 3 by 5 is doomed.
Western money and drugs help but are not enough, there are staff shortages and lack of infrastructure, as well as all the local support that is required and simply lacking. Small amounts of fraud are a small price to pay for engaging local groups and slowly ramping up treatment--any other approach is doomed to fail.
Roger Bate is a resident fellow and Ben Schwab is a research assistant at AEI.
 Nicole Itano, "Concern in Africa over Private Doctors Giving AIDS Drugs," Christian Science Monitor, February 22, 2005.
 HIV resistance builds fairly quickly to Nevirapine even in the best of conditions, under poor conditions it is likely to flourish.
 John Donnelly, "Staff Level Hurts AIDS Fight." Boston Globe. February 24, 2005.