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I would like to add some thoughts to the "Public Policy and Expenditure"
theme. Focus here will be given to concrete alternatives for funding
livestock services, especially animal healthcare systems.
Before starting with this contribution, I would like to say that I agree
with Jock Campbell in that human health and education are a priority in
developing countries. However, the need to increase financial resources to
be allocated to the development of agriculture still remains. Here I will
mainly concentrate on the livestock sub-sector.
Three main points arise at that level: (i) why financing of livestock/AH
services, (ii) what is their current situation (in terms of financial
resources), and (iii) what are the available funding mechanisms for such
services.
First, the "Livestock Revolution" trends have already been pointed out in
other sections of this e-forum (see Andy Catley's contribution in the
"Economic growth and poverty" theme). What this new food revolution implies
is a considerable growth in livestock production and processing of derived
products. The associated consequences are several and include various levels
such as: nutrition, food security and poverty alleviation, environmental
sustainability, world trade and food prices and public health (see Delgado
et al. 1999 "Livestock 2020: the next food revolution" for further debate of
each category). Logically, such increment in production will lead to higher
demand for AH services. These need therefore to be effective and efficient,
assuring international trade standards, and minimising public health and
environmental risks due to the expected increase in human-animal contact.
These trends lead to the second point: the current financial situation of
animal healthcare systems. Concerns deriving from the privatisation process
of these services started in the early 1990s. Most countries felt and still
feel in constant pressure because expenditure is increasing and resources
are scarce. This is especially the case of sub-Saharan Africa after the
"Great African Depression" of the 1970s, which led to major changes in the
way animal healthcare systems were organised and financed. Cost-containment
through privatisation of services has been central to the policy discussions
in the international arena. However, if budgets are to be balanced,
sufficient revenue needs to be generated. Since large-scale public borrowing
is no longer considered to be a sound economic policy in many countries,
concern should focus on revenue policies, that is: how to fund animal
healthcare systems (and other services) in a sustainable basis.
This leads to the third point. Colin Poulton and Michael Wales have already
pointed out that MoAs tend to have a limited bargaining power when it comes
to the annual resource allocation by the MoF. Needless to say is that the
livestock sector does not have a focal point in the MoF. Thus, logically,
the livestock sector's bargaining power is even lower. However, public
finance economics theory may point out ways in which resources might be
collected, pooled and allocated for that specific sector. Here a comparison
is drawn with the funding mechanisms used in the human healthcare sector.
Implications and extent of coverage are undisputable different between the
two sectors. Nonetheless, some similarities in terms of structure and
delivery have already been pointed out in the literature (see David Leonard
2000, "Africa's changing markets for health and veterinary services"). Thus,
concrete options to collect funds for AHS would be a mix of taxation (were I
give especial attention to hypothecated taxation) whether direct /indirect
/local /national, compulsory national contributions (e.g. from primary
industries in the livestock sector), private insurance premiums and
user-charges or out-of-pocket payments. However, the combination of each of
these elements in a given country needs to be balanced against the
evaluation criteria of any public finance system which are: efficiency,
equity, feasibility and accountability. Undoubtedly, the problem of lack of
formal direct taxation remains in most developing countries. Additionally,
indirect taxation in the livestock sector might be regressive, thus
counteracting the initial pro-poor focus an earmarked indirect taxation
system could have. The debate could go on for each of the funding sources
and combination of sources. These are only some of the questions arising
when thinking of designing a funding mechanism to increase the livestock
sub-sector budget.
These are mechanisms that could possibly be used in the livestock sector
context to increase budgetary generation and allocation from public sources
(as well as private). It has been recently pointed out by a joint
publication of Farm Africa, HarvestHelp and Imperial College ("Reaching the
poor: A call to action") that in certain circumstances, especially in
relation to rural areas, higher government involvement might be needed. The
mechanisms outlined above might be useful for resource generation targeted
to rural areas. Of course, many other aspects will need to be taken into
account in that equation as resource generation is not a synonymous of
improved effectiveness and efficiency of a system.
Thank you for this very interesting e-forum.
Ana Riviere-Cinnamond
PhD candidate - London School of Hygiene and Tropical Medicine
Consultant - Food and Agriculture Organisation/ Pro-Poor Livestock Policy
Initiative
Please visit dfid-agriculture-consultation.nri.org.