Dutch donations pay for commercial healthcare in Africa

An innovative Dutch project which gives development aid not to African governments, but to commercial healthcare companies seems to be booking success. But although the first signs are positive, the traditional development aid organisation Oxfam Novib is sceptical.

At the time it was a pioneering move: in 2006 Dutch donor cash was made over to Hygeia, a local healthcare insurer, rather than the Nigerian government. Thanks to cash from Dutch donors, Hygeia can supply basic healthcare, including treatment for Aids, to groups of workers in return for a small premium payment of around two euros a month. The insurer is also responsible for improving healthcare facilities and treatment in health clinics.

“A double hit,” says Onno Schellekens, director of Pharmaccess, the foundation involved in the project. Pharamaccess has been active in tackling Aids in Africa since 2000 and was doubtful about whether traditional methods were bringing enough structural improvements. It was, for example, concerned that too much money was being siphoned off by corrupt African regimes.

Pharmaccess decided to take a different approach. Together with business leaders such as Kees Storm, former head of Dutch insurance firm Aegon, and Sjoerd van Keulen from the SNS Reaal bank and former Labour environment minister Margreeth de Boer, it set up the Health Insurance Fund.

Development aid

In 2006 this fund received a hundred million euros from the Dutch development aid ministry to provide 230,000 poor Africans with health insurance within six years.

Now, almost two years later, 45,000 market women and farmers in Nigeria have health insurance. And the Health Insurance Fund was recently given the green light to insure 70,000 coffee farmers and recipients of micro credit in Tanzania. The idea is to extend these sorts of insurance schemes across Africa.

“It is going better than expected,” says Dutch foreign aid minister Bert Koenders (Labour). “This is a good example of a broad coalition of public and private institutions. I am a fan of this project.”

He is not the only supporter. On Thursday the World Bank announced that it is making six million dollars available to expand the project in Nigeria.

Public sector

But not everyone is happy with the initiative. After all, the new fund is breaking with the way aid organisations have operated in the past. Traditionally, development agencies such as Oxfam Novib have tried to improve healthcare in the third world via the public sector.

Harrie Oostingh of Oxfam Novib, questions one of the fundamental pillars of the new concept: the fact that the Africans who are insured will eventually, perhaps with the help of their government, have to pay more of their health insurance premium themselves.

The idea that once they see that the system works, Africans will be prepared to pay more than the five percent of the monthly premium they now have to contribute is “unrealistic”, says Oostingh.

But Oxfam Novib also has a fundamental problem with the fact that the insurance scheme is not open to everyone. According to Oostingh, the Health Insurance Fund excludes people by focussing on small groups of workers such as market women in the Nigerian city of Lagos.

Medical infrastructure

Schellekens, who represents the foundation which initiated the Health Insurance Fund, concedes that this is the case. “That is the flip side of the coin. In an ideal world, public healthcare is the fairest system. But the public sector [in Africa] is a failure. And poor people already have to pay a lot from their own pockets. If the public sector can’t provide, then you have to go private.”

According to the initiators of the Health Insurance Fund, it is therefore better to focus on providing good healthcare for groups of low-paid workers and their families and gradually expand the system. “We are now working on medical infrastructure,” says Schellekens who hopes that the concept of healthcare insurance will become nationwide one day.

And what about the fact that commercial healthcare insurers are making a profit with Dutch taxpayers’ money? Schellekens: “We don’t expect insurers in the Netherlands to provide healthcare for nothing do we? These people must be paid for their work in a normal way. And the margins are very small.”

Sign up for NRC's daily newsletter and get the best of our international coverage in your inbox every day.