UNIVERSITY OF PENNSYLVANIA - AFRICAN STUDIES CENTER
Africa: Debt/HIV-AIDS Proposal
Date distributed (ymd): 990526
Document reposted by APIC
Issue Areas: +economy/development+ +US policy focus+ Summary Contents:
This posting contains a summary of a new Zambian proposal for debt reduction, with funds going to support a new national HIV/AIDS initiative. The summary comes from the AF-AIDS on- line discussion list. The posting also contains brief excerpts and a link to a May 24, 1999 San Francisco Chronicle article reporting the conflict between U.S. trade policy and efforts to make HIV/AIDS drugs more affordable to African countries.
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From: AF-AIDS <firstname.lastname@example.org>
To: email@example.com <firstname.lastname@example.org> Date: Thursday, May 20, 1999 7:12 AM Subject:  Zambia : "Debt for development agreement" to combat HIV-AIDS
Moderator's note : The Zambian Government aims to exchange international debt servicing costs (i.e., interest on debts/loans) for funds to support the national HIV/AIDS response. This is a novel strategy that may also have implications for other countries of the region.
The following is a summary of the Zambian strategy. A full description will be made available through the AF-AIDS forum on 28 May, once it has been presented formally to international creditors at the Paris Club meeting next week.
If other countries are also considering or discussing such mechanisms, please let this forum know.
ACCELERATING ACTION to COMBAT the HIV-AIDS EPIDEMIC in ZAMBIA using a MULTIDONOR 'DEBT for DEVELOPMENT' AGREEMENT (Briefing Memo as of 16 May 1999)
To support an expanded multisectoral response to the Zambia HIV-AIDS pandemic to scale-up the delivery of effective interventions by Government, NGOs, and the private sector.
Devastation of HIV-AIDS in Zambia
Zambia has one of worst HIV-AIDS pandemics in the World, with an estimated 20% of the adult population HIV-positive. AIDS-related deaths are rapidly escalating, and expected to peak in 2005. Life expectancy is plummeting, with the average Zambian lifespan dropping from 54 years to 37 years. The pandemic is also leading to an unprecedented AIDS orphan crisis, with an estimated 1, 000,000 orphans by the year 2000, representing approximately 10% of the total population of Zambia. A secondary tuberculosis pandemic is also debilitating the economically productive work force. Historic improvements in child survival are also being lost in the specter of HIV-AIDS. In summary, the Zambia HIV-AIDS pandemic seriously threatens the country's prospects for sustainable economic development as it depletes the country's most educated, energetic, and productive population.
To combat this crisis, President FJT Chiluba announced in March 1999, a new commitment to rapidly expand the national response with a war against AIDS when he said, "We must all unite in the fight against AIDS." The Government of the Republic of Zambia (GRZ) is in the final stages of planning for the implementation of a new National HIV-AIDS Council and an HIV-AIDS Secretariat which has been designed to support an expanded multisectoral response.
Debt Burden Hinders Effective Response
A major factor hindering an effective HIV-AIDS response in Zambia response is the macroeconomic situation and the unsustainable debt burden. During 1998, the real gross domestic productivity (GDP) per capita is estimated to have declined by 5%. Inflation rose from 18.6 percent at the end of 1997 to 30.6 percent at the end of 1998. Interest rates rose sharply while the Kwacha depreciated rapidly. These factors led to tight fiscal constraint as revenues were below targets, while expenditure pressures increased. The 1998 GRZ debt servicing obligations of $123 million paid to the Paris Club Members and the multilateral institutions was equivalent to 69% of the amount budgeted by the GRZ from its own resources for the social sectors. For example, District Health Boards only received 30% of their expected budget in 1998, therefore they were unable to effectively implement HIV-AIDS prevention and control activities, TB control, or control of sexually-transmitted infections. The GRZ currently has no formal mechanism for providing financial support to civil society NGOs that are at the front lines in the battle against HIV-AIDS. The debt burden severely compromises the ability of GRZ and the civil NGO sector to effectively respond to the HIV-AIDS crisis.
DECLARING WAR ON HIV-AIDS BY SCALING-UP RESPONSE
Accelerating Action Through a Multidonor 'Debt for Development' Agreement
The GRZ is in the final stages of developing a proposal for "Accelerating Action Against the Zambia HIV-AIDS Pandemic Using a Multidonor 'Debt for Development' Agreement." This proposal will be presented to bilateral and multilateral cooperating partners during the May 26-28, 1999 Consultative Group Meeting in Paris. To accelerate the Zambia development process, by accelerating the national response to the HIV-AIDS pandemic, a multidonor 'Debt for Development' Agreement is proposed. This agreement is based on the following implementation steps:
Plans of Action:
Government of the Republic of Zambia (GRZ) and non-governmental organizations (NGOs) finalize HIV-AIDS Response Plans of Action (GRZ Ministries and NGO Response Plans). These plans will include a multiple year strategic plan, budget, and a monitoring and evaluation framework;
HIV-AIDS Response Fund:
GRZ establishes a "HIV-AIDS Response Fund" to receive agreed upon resources from creditors. The implementation of this fund shifts resources towards supplementary domestic investment in the national HIV-AIDS response. Actual GRZ and NGO expenditures will serve as the baseline for monitoring supplementary investments in the HIV-AIDS response;
The "HIV-AIDS 'Debt for Development' Agreement" will be based on agreed upon performance milestones that support the implementation of the Zambia HIV-AIDS Plan of Actions. Performance milestones will be developed to establish targets for legal, policy, technical performance, and people-level impact, as well as, the establishment and implementation of systems of financial accountability;
The development phase of the Zambia HIV-AIDS 'Debt for Development' is driven by an unprecedented positive response from the people of Zambia. As the full impact of the AIDS pandemic is affecting all Zambians, the HIV-AIDS 'Debt for Development' Agreement is providing a "ray of hope" in an otherwise desperately fatalistic environment.
Options for Creditors
Bilateral and multilateral cooperating partners will have different options for channeling resources into the "HIV-AIDS Response Fund." These include, but are not limited to:
Debt Servicing Swap: so that principle and interest due to creditor countries would be paid into the HIV-AIDS Response Fund instead of to creditor countries;
Moratorium of Debt Servicing: creditor have the option of issuing a moratorium on debt servicing which would defer debt servicing obligations (principle and interest) into the HIV-AIDS Response Fund;
Debt for Development Mechanisms: creditor can transfer debt obligations into the HIV-AIDS Response Fund;
Direct Contributions: creditor countries and multilateral institutions could provide direct contributions to the HIV-AIDS Response Fund as part of their overall assistance to the GRZ.
ORGANIZING FOR ACTION
Task Force for the Multidonor 'Debt for Development' Agreement to Accelerate Action to Combat the Zambia HIV-AIDS Pandemic
The GRZ has formed an Interagency Task Force to support the development, implementation, and monitoring of the multidonor HIV-AIDS 'Debt for Development' Agreement.
GRZ Institutional Oversight
The GRZ is in the final phase of establishing a National HIV-AIDS Council and a National HIV-AIDS Secretariat which is charged with the responsibility of coordinating a multisectoral response to the HIV-AIDS pandemic. The National HIV-AIDS Council and Secretariat are the proposed GRZ institutions that will be responsible for the development, implementation, and monitoring of the proposed HIV-AIDS Multidonor 'Debt for Development' Agreement. The National HIV-AIDS Council and Secretariat would make recommendations on funding priorities to be supported by the HIV-AIDS Response Fund.
GRZ-Cooperating Partners HIV-AIDS Response Fund Steering Committee
A joint "GRZ-Cooperating Partners HIV-AIDS Response Fund Steering Committee" would be formed from various interest groups, such as Government, Cooperating Partners (including creditor countries and multilateral agencies, NGOs and other interest groups. The Steering Committee would make final decisions on resource allocation disbursements, monitor the performance of the implementation institutions against the agreed upon milestones. The National HIV-AIDS Secretariat would be responsible for managing the proposed "GRZ-Cooperating Partners HIV-AIDS Response Fund Steering Committee."
1. GRZ will present initial HIV-AIDS 'Debt for Development' Proposal to Creditors Target date for Action: May 30, 1999
2. Finalization of "HIV-AIDS 'Debt for Development' Agreement with Creditors Target date for Action: August 30, 1999
3. GRZ and Participating Creditors Signing Ceremony at the XIth ICASA Target date for Action: September 12-16, 1999
4. GRZ finalizes negotiations with Participating Creditors Target date for Action: September -December 1999
5. HIV-AIDS Response Fund Established and Accelerated HIV-AIDS Response Launched Target date for Action: January 2000
Support for this Initiative is actively under discussion among UN Agencies, US government officials, and other creditors.
This document was made available to AF-AIDS by:
Dr. Paul Zeitz
Senior Policy and Technical Advisor for
PHN USAID/Zambia and GRZ/Central Board of Health tel: 260-1-254-303 cell: 260-1-702-042 fax: 260-1-254-532 home: 260-1-264-700 email: email@example.com
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Brief Excerpts from
"New Crusade To Lower AIDS Drug Costs;
Africa's needs at odds with firms' profit motive" San Francisco Chronicle, May 24, 1999
by Sabin Russell, Chronicle Staff Writer
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/ archive/1999/05/24/MN104738.DTL [type URL on one line]
The problem is this: At Western market prices of $1,000 a month, the multidrug therapies are hopelessly out of reach in the very countries hit hardest by the epidemic -- in African and other developing nations where 90 percent of AIDS cases occur. ...
But the quest to flood Africa with cheap AIDS drugs has run headlong into conflict with American trade policy. High level Clinton administration officials are blocking attempts to tamper with AIDS drug patents, saying that they undermine the entire system of intellectual property protection that encourages businesses to find new drugs.
One of the best examples of this new front in the battle over AIDS drugs is South Africa, where a recently enacted law would override pharmaceutical company patents and allow "gray market" imports of cheap drugs from other countries.
Prescription drug prices vary dramatically from country to country, based on deals cut by the manufacturer. The antibiotic Amoxicillin, for example, costs 50 cents a pill in Johannesburg, 4 cents in Zimbabwe. The South African law would let the country pursue the lowest cost drugs on the world market.
But court challenges have delayed the law's being put into effect. Also, U.S. officials are threatening trade sanctions. One State Department memo to Congress boasted of a "full court press" involving the Vice President Al Gore, Commerce Secretary William Daley and four U.S. agencies to change the "offending" law. ...
Veteran AIDS activists are angry. The Clinton administration, they charge, seems content to let multinational drug companies set American trade policy ...
Drug companies have all but ignored markets in Africa. Less than 1 percent of AIDS drugs are sold in African nations south of the Sahara Desert, where 70 percent of new HIV infections and 90 percent of all AIDS deaths occur. Some 11.5 million people in sub-Saharan Africa have died of AIDS since the epidemic began.
Dr. Ian Roberts, special adviser to the South African Health Ministry, said the United States is showing little understanding of his country's public health catastrophe.
"Medicines to treat HIV/AIDS are far too highly priced for the mass of our people," he said. "With up to 16 percent of our people already HIV positive, this can be seen as a national disaster."
Despite South Africa's gold and diamond mines, most of its people remain poor, with an average annual income of $2,600. "Clearly, we cannot afford retrovirals at a cost of $1,000 per month," said Roberts.
South Africa has emerged from the shadow of apartheid only to become a major center of the AIDS epidemic. An estimated 3.2 million South Africans are infected by the virus, including 45 percent of the nation's military personnel. Most of those infected are poor and black. ...
In a sharply worded letter to Gore, who chairs a commission on South African trade, [consumer advocate Ralph] Nader accused the United States of abusing its superpower status: "You have engaged in an astonishing array of bullying tactics to prevent South Africa from implementing policies . . . designed to expand access to HIV/AIDS drugs."
Nader's Consumer Project on Technology advocates two steps -- both of them legal under international law -- by which poor countries can slash the cost of AIDS drugs.
The first is for poor countries to issue "compulsory licenses," granting rights to make copies of patented drugs without the approval of the patent holder. Compulsory licenses are permitted in health emergencies under international trade agreements.
The second step is to allow countries to shop around on the international market for AIDS drugs and import the cheapest available. Forbidden in the United States, such "parallel market" or "gray market" purchases are routinely permitted in Europe. ...
But the pharmaceutical industry and the Clinton administration take the view that compulsory licenses and gray markets pose a threat to the entire system of intellectual property protection. ...
Experts in the international AIDS crisis agree that merely lowering the price of AIDS drugs will not solve the problem, and potentially could make the epidemic worse.
"If you spread anti-HIV drugs in a population, but not in sufficient quantities, you ... could make people sicker, rather than better, and increase the possibility for development of drug- resistant HIV strains," said Tom Coates, executive director of the University of California at San Francisco AIDS Research Institute.
Coates said the limited money available to fight AIDS in Africa would save the most lives if it were directed at prevention first. Most African nations do not even have funds to pay for testing of the blood supply, and in 1997, only $650 million was spent on all African AIDS programs. "If, as UNAIDS (the Joint United Nations Programme on HIV/AIDS) has suggested, we raised spending to $2.5 billion, we could prevent half the HIV infections from occurring," Coates said.
Date: Wed, 26 May 1999 22:20:38 -0500
Subject: Africa: Debt/HIV-AIDS Proposal
Editor: Ali B. Ali-Dinar
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