USAID Invests in Ugandan Private Sector
USAID attempts to artificially prop up Uganda’s floundering public health care system have fallen flat, largely due to Uganda’s unwillingness to accept foreign aid. USAID has responded by investing in the Ugandan private sector instead.
After signing the internationally condemned anti-homosexuality bill into law, Ugandan President Yoweri Museveni declared that, “Uganda is a rich country that does not need aid, because aid is in itself a problem.”
However, it is President Musevni’s mishandling — and at times flat-out denial — of foreign aid funds that has proven to be the more menacing problem. About three quarters of Uganda’s public health spending comes directly from foreign aid, but that money has largely been squandered.
A recent World Bank survey revealed that the majority of all Ugandan public sector health workers were not showing up for work, and life-saving drugs were frequently out of stock.
Currently, only two percent of the population has health insurance. As such, health care is a major expense to Ugandans, who spend an average of 22 percent of their incomes on health care. The situation is even more dire for the poorest members of the population who are often forced to sell their assets in order to pay their medical bills.
While public health care must certainly play a central role in the future of Uganda’s health system, the private sector represents a promising alternative. Given the misuse of USAID’s previous investment in the public sector, the organization is now looking for a better way to improve the quality of health care in Uganda.
With an investment of only $315,000 from USAID, the organization has worked with local banks to open $10 million in private lending earmarked for the Ugandan health sector. Through a process of risk-mitigation and direct loans to local medical centers, USAID has managed to significantly bolster the Ugandan private health sector over the course of a mere three years.
One of the loans — amounting to about $25,000 — was given to Rhona Medical Center. The Medical Center used the loan to purchase new, state-of-the-art equipment as well as to hire additional personnel. As a result, the revenue for the facility doubled and the amount of patients receiving higher quality service increased fourfold.
Success stories like that are cropping up all across Uganda. In time, greater competition and a renewed faith from local banks mean that private health care will become a more viable option to the lower class of Uganda.
USAID already has plans to use a similar private partnership to guarantee loans for young girls’ school fees, and future USAID projects in Uganda will likely take cues from the early successes investing in the private sector.
Given Uganda’s unwillingness to accept foreign aid, circumventing the Ugandan government entirely may prove to be the most effective method to support Ugandan development. It appears that the success of USAID’s investment in the private sector of Ugandan health care may signify a paradigm shift in the international community’s approach towards aid in Uganda.
— Sam Hillestad
Sources: USAID Blog, Health Market Innovations
Photo: Hydro World