PEPFAR funding: Taking stock of the latest changes

As the largest and most impactful global health initiative ever undertaken, the U.S. President’s Emergency Plan for AIDS Relief is credited with saving millions of lives and changing the trajectory of the global HIV epidemic. Since its creation in 2003, PEPFAR has set aside more than $80 billion for HIV bilateral programs across the globe. By comparison, the Global Fund to Fight AIDS, Tuberculosis, and Malaria has disbursed close to $20 billion for HIV/AIDS since 2002 — a total that includes contributions from PEPFAR. In spite of its success, PEPFAR’s future has never been more uncertain. In fiscal years 2018 and 2019, President Donald Trump's administration suggested slashing PEPFAR’s annual budget by 18%. While these proposed cuts were flatly rejected by Congress, PEPFAR funding essentially remains unchanged since 2014. Under the Trump administration, the U.S. flagship global program for HIV/AIDS has undergone a flurry of changes. For instance, the 2017-2020 Strategy for Accelerating HIV/AIDS Epidemic Control aims to concentrate efforts in 13 high-burden countries that show the greatest potential of achieving HIV/AIDS control by 2020: Botswana, Côte d'Ivoire, Haiti, Kenya, Lesotho, Malawi, Namibia, Rwanda, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe. This move sparked concern among AIDS leaders and advocates about what would happen to PEPFAR’s support in all nonpriority countries. PEPFAR is also going local. In 2018, U.S. global AIDS coordinator Deborah Birx directed U.S. agencies to channel 40% of PEPFAR annual funding to “indigenous” organizations — those based in developing countries — by the end of FY2019, and to further reach 70% indigenous funding by the end of FY2020. This is expected to impact U.S. government agencies such as the U.S. Agency for International Development, which tends to award massive contracts to large international organizations and contractors active in HIV/AIDS. In parallel, the U.S. government plans to increase PEPFAR funding for faith-based organizations — a trend that many see as aligned with the effort to partner with local groups. Announced in November 2018, the new investment of $100 million aims to address key gaps toward achieving HIV epidemic control by increasing funding by one-third to faith-based organizations. To better understand PEPFAR’s evolving business model, Devex dug into publicly available data to uncover key issues and trends currently shaping PEPFAR activities on the ground. Using information from a variety of sources — including PEPFAR country operational plans and datasets, U.S. government procurement information, press releases, and expert interviews — the Devex Analytics team analyzed HIV funding flows in Nigeria and Zambia for insights into PEPFAR’s funding ecosystem and to explore how recent strategic shifts are unfolding. Nigeria Although HIV prevalence is less pronounced in Nigeria than in other sub-Saharan states, Africa’s most populous nation has an estimated 1.9 million Nigerians living with HIV. But Nigeria was excluded from the 13 focus countries of PEPFAR’s 2017-2020 strategy, largely because PEPFAR lacked accurate recent data on the breadth and depth of the epidemic. Between 2004 and 2018, PEPFAR invested nearly $5.3 billion in Nigeria’s HIV response. While the U.S. government remains the biggest donor to the country’s HIV/AIDS efforts, PEPFAR yearly spending has been declining, falling from $450.6 million in 2015 to $288.2 million in 2018. PEPFAR’s shrinking budget has made Nigerian policy- and decision-makers increasingly vocal about the urgency of establishing a Nigerian HIV/AIDS trust fund and facilitating the local manufacturing of HIV/AIDS drugs. However, the Nigerian government has consistently failed to make health a priority, despite the daunting prospect of becoming ineligible for a range of external health financing sources over the next two decades. The declining allocations to Nigeria are likely to make HIV interventions more cost-effective and efficient in the short- to medium-term. Based on the results from the “Nigeria HIV/AIDS Indicator and Impact Survey” conducted in December 2018, PEPFAR programs and services are expected to make difficult decisions aimed at refocusing investments to regions and interventions that are critical to achieving epidemic control. Since the start of its operations, PEPFAR Nigeria has channeled the bulk of its support to NGOs and private contractors, which received 29% and 26% of PEPFAR allocations respectively between 2005 and 2018. Although international NGO FHI 360 has become PEPFAR Nigeria’s largest recipient over the years, local organizations have also received substantial support. The $300 million “Engaging Indigenous Organizations to Sustain and Enhance Comprehensive HIV/AIDS Services in 26 States of the Federal Republic of Nigeria” initiative, which ended in 2018, was the largest PEPFAR initiative in the country and was implemented by a diverse coalition of 10 local organizations. While PEPFAR’s implementer landscape in Nigeria has experienced little turnover in recent years, Birx’s localization agenda is expected to trigger some noteworthy shifts, particularly among prime partners of USAID. The agency disburses the majority of PEPFAR funding in Nigeria and relies heavily on large awards managed by international organizations and contractors to implement its activities. On the other hand, the Centers for Disease Control and Prevention already channels the majority of its PEPFAR funding in Nigeria to local organizations. Zambia In spite of decreasing infection rates, HIV prevalence among adults in Zambia has barely changed over the past decade. As the country’s largest donor, PEPFAR has invested more than $3.8 billion in Zambia’s HIV response between 2005 and 2018, and typically accounts for approximately 75%-80% of total annual HIV/AIDS investments. Because Zambia is one of PEPFAR’s 13 focus countries, the country operational plan 2019 primary directive is to “scale up faster” to achieve epidemic control in the country by 2020. PEPFAR funding for Zambia has therefore increased in recent years, jumping from $313.3 million under COP 15 to $385 million under COP 18, with a peak of $403.9 million under COP 17, when PEPFAR’s acceleration strategy came into force. Although Zambia has dramatically increased domestic spending on HIV/AIDS, it remains at just 12% of the overall budget. The Zambian government has pledged to spend at least $179 million between 2018 and 2020 on antiretroviral drugs and treatment as part of the Global Fund’s co-financing requirements. Since 2017, national discussions have been underway about the possibility of integrating HIV into a national health fund via a social health insurance scheme. Since the start of its operations in 2004, PEPFAR Zambia channels most of its support to private contractors and NGOs, which absorbed 28% and 24% respectively of PEPFAR allocations over the 2005-2018 period. Along with private contractors Partnership for Supply Chain Management and Chemonics, international NGOs FHI 360 and the Elizabeth Glaser Pediatric AIDS Foundation have become PEPFAR Zambia’s largest recipients over the years. As part of the U.S. government’s drive to increase funding by one-third to faith-based organizations, there are signs PEPFAR Zambia is ramping up support. After following a downward trend since 2008 and hitting an all-time low of $2.5 million in 2016, PEPFAR funding for faith-based organizations has recently experienced a revival. This is exemplified by large projects such as Supporting an AIDS Free Era, a project worth up to $150 million implemented by John Snow. Inc in collaboration with Abt Associates, African NGO mothers2mothers, and the Catholic Medical Mission Board throughout the 2017-2022 period. Under COP19, Zambia is slated to receive $14.5 million through the FBO and Community Initiative. With only a quarter of USAID PEPFAR funding in Zambia currently going to indigenous NGOs, Birx’s localization agenda is expected to prompt significant changes among the agency’s prime partners. This, however, occurs at a time when some Zambian NGOs and faith-based organizations expressed growing frustration with USAID’s award-making process. Devex Analytics is a team of analysts, data scientists, and engineers delivering actionable solutions on development issues through structured datasets, official reports, press releases, and community-sourced information. Do you have questions about our methodology or analysis? 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