Can national health compacts reduce aid dependency? Comparative insights from Uganda, Ethiopia, and Rwanda

¹Seed Global Health, Kampala, Uganda

^&Corresponding author
Bernard Jackson Zikanga, Seed Global Health, Kampala, Uganda

Introduction    

Universal Health Coverage (UHC) remains a central goal of health sector reform across Africa. Achieving and sustaining UHC depends not only on access to essential health services but also on the availability of reliable, equitable, and sustainable financing. Over the past two decades, development assistance for health has contributed significantly to improvements in immunization coverage, maternal and child health, infectious disease control, health workforce development, and emergency preparedness in many low- and middle-income countries [1-4]. These investments have strengthened health systems and improved health outcomes, particularly in countries where domestic resources alone were insufficient to meet growing health needs.

Despite these gains, concerns about the long-term sustainability of externally financed health programmes have persisted. Many countries continue to depend heavily on donor resources to support essential services, medicines, health workers, and disease control programmes. External financing has often been accompanied by multiple funding streams, separate reporting systems, parallel implementation arrangements, and differing donor priorities, creating challenges for government stewardship and coordination [5,6]. As a result, improving the effectiveness of aid and strengthening national ownership of health sector investments have remained important priorities in global health policy.

International efforts to improve aid effectiveness have evolved over several decades. The Paris Declaration on Aid Effectiveness, the Accra Agenda for Action, and the Busan Partnership established principles of country ownership, alignment with national priorities, harmonization, managing for results, and mutual accountability [7-11]. Within the health sector, these principles informed Sector-Wide Approaches (SWAps), the International Health Partnership (IHP+), and subsequent health compact arrangements designed to strengthen government leadership and coordination of external assistance [8-11].

Health compacts should therefore be viewed as an evolution of earlier aid-effectiveness reforms rather than entirely new policy instruments. Under IHP+ and related initiatives, development partners increasingly aligned their programmes with national health strategies through approaches such as joint planning, shared accountability frameworks, and the "One Plan, One Budget, One Report" (OPBR) model [8,11-14]. Although these reforms improved coordination and alignment, evaluations consistently reported more limited progress in integrating external financing into government budgeting and public financial management systems [11-14]. Consequently, gains in aid effectiveness were not always accompanied by changes in the underlying sources of health financing.

This distinction has become increasingly important as the global health financing landscape changes. The Lusaka Agenda renewed calls for stronger country leadership, improved alignment of global health investments, and sustainable transitions from externally financed programmes towards domestically financed health systems [10]. At the same time, slower economic growth, rising debt burdens, post-pandemic fiscal pressures, and reductions in development assistance have increased concerns about the sustainability of externally financed health programmes and renewed calls for greater African ownership of health financing and health security [15-20].

Although aid effectiveness and aid dependency are closely related, they address different dimensions of health financing. Aid effectiveness concerns how external resources are coordinated, aligned, and managed in support of national priorities, whereas aid dependency refers to the extent to which health systems rely on external resources to finance service delivery [1-4]. Countries may therefore achieve strong coordination while remaining highly dependent on donor financing. In this paper, financing sovereignty refers to the ability of a country to finance and govern its health system in line with national priorities while reducing vulnerability to external financing shocks. Financing sovereignty differs from fiscal space for health, which refers to the resources available for public spending on health, and from simple self-financing. A country may reduce donor dependence through higher out-of-pocket spending yet worsen equity and financial protection. Financing sovereignty therefore requires not only greater domestic control over financing but also equitable and sustainable resource mobilization in support of Universal Health Coverage [1-4,21-30].

The health financing functions framework helps explain this distinction. National health compacts operate primarily through the governance function by strengthening stewardship, accountability, coordination, and strategic planning [1-4]. While these reforms can improve efficiency and alignment, financing sovereignty ultimately depends on stronger domestic resource mobilization, expanded fiscal space, effective public financial management, and sustained government investment in health [21-30]. This paper therefore examines whether improvements in aid governance are associated with reduced aid dependency in Uganda, Ethiopia, and Rwanda.

This paper is built around the proposition that health compacts mainly improve the governance of aid rather than its source. In other words, they can help countries manage external financing more effectively without necessarily reducing reliance on that financing. If this proposition is correct, then financing sovereignty depends on more than coordination reforms. It requires broader efforts to expand domestic resource mobilization, strengthen public financial management, increase fiscal space for health, and improve the sustainability of government health spending [21-30]. Uganda, Ethiopia, and Rwanda provide useful cases through which to examine this question. Uganda recently adopted the Universal Health Coverage Health Compact (2025-2030) to strengthen alignment and accountability across the health sector [31]. Ethiopia has introduced a National Health Compact that builds on earlier reforms associated with the OPBR approach and long-standing efforts to improve country ownership of development assistance [32]. Rwanda, while not implementing a formal national health compact, has developed one of Africa's most established government-led coordination systems through successive Health Sector Strategic Plans and a mature Sector-Wide Approach [33]. Together, these three countries offer an opportunity to compare different models of coordination and explore whether stronger governance arrangements are associated with lower levels of aid dependency.

Health workforce financing provides an especially important lens through which to assess this relationship. Development partners often support health worker training, technical assistance, and short-term programmes, but governments remain responsible for financing salaries, pensions, and long-term workforce expansion [34-37]. A country may therefore coordinate donor-supported workforce investments very effectively while still struggling to recruit and retain health workers because of fiscal constraints. The ability to finance and sustain the health workforce is therefore a practical test of financing sovereignty and illustrates the limits of coordination reforms when domestic fiscal capacity remains constrained.

Drawing on comparative evidence from Uganda, Ethiopia, and Rwanda, this paper examines whether national health compacts can reduce aid dependency and strengthen long-term financing sustainability. It argues that health compacts are valuable instruments for improving aid effectiveness, strengthening country ownership, and reducing fragmentation. However, they are not, by themselves, mechanisms for transforming health financing sources. Sustainable progress towards financing sovereignty requires complementary reforms that address domestic revenue mobilization, fiscal capacity, public financial management, and the long-term financing of health systems [21-30].

Methods     

Study design and analytical approach: this study employed a comparative policy analysis to examine whether national health compacts can contribute to reducing aid dependency while strengthening country ownership and financing sustainability. Comparative policy analysis is a useful approach for examining how similar policy objectives are pursued through different institutional arrangements and for identifying the factors that shape policy outcomes across settings [38,39]. The analysis was guided by the health financing functions framework developed by Kutzin and colleagues, which conceptualizes health financing around four interrelated functions: revenue mobilization, pooling, purchasing, and governance [1-3]. This framework was selected because it provides a structured basis for assessing whether national health compacts influence the underlying determinants of financing sustainability or primarily affect the governance and coordination of existing resources. The analysis also drew on internationally recognized aid effectiveness principles, including country ownership, alignment, harmonization, managing for results, and mutual accountability, as articulated through the Paris Declaration, the Accra Agenda for Action, the Busan Partnership, and the International Health Partnership (IHP+) [7-11].

Cases, data sources and analysis: Uganda, Ethiopia, and Rwanda were purposively selected as comparative cases because they represent different approaches to country-led health sector coordination. Uganda's Universal Health Coverage Health Compact (2025-2030) and Ethiopia's National Health Compact represent recent compact-based approaches, while Rwanda provides a longer-term comparator through its established Sector-Wide Approach (SWAp) and Health Sector Strategic Plan V [31-33]. The analysis drew on publicly available policy documents, international aid effectiveness frameworks, and health financing literature [14,15,25,26]. Comparative health financing indicators were obtained from the World Health Organization Global Health Expenditure Database (GHED), including external health expenditure, domestic government health expenditure, and out-of-pocket expenditure [40]. Findings were analyzed using the health financing functions framework and aid effectiveness principles to assess whether stronger coordination and governance arrangements were associated with measurable reductions in dependence on external financing [1-3,7-10]. Attention was given to the distinction between governance reforms and revenue mobilization, as well as the implications of health workforce financing for long-term financing sustainability [34-37].

Ethical considerations: ethical approval was not required because the study was based entirely on publicly available policy documents, published literature, and secondary health financing data. No human participants, personal information, or confidential records were involved in the analysis.

Results     

Comparative overview: the comparative findings were interpreted using the conceptual framework in Figure 1, which distinguishes the governance functions addressed by health compacts from the revenue mobilization functions that determine financing sovereignty [1-3,26]. This framework guided the assessment of whether improvements in coordination, alignment, and accountability were linked to measurable reductions in reliance on external health financing. The analysis shows that Uganda, Ethiopia, and Rwanda have adopted different institutional approaches to strengthening government leadership and coordination in the health sector, but all seek to achieve similar objectives: improved alignment of external financing with national priorities, stronger accountability, enhanced country ownership, and more effective coordination of development partner support [8-11,31-33].

While these arrangements differ in design and maturity, they share a common commitment to reducing fragmentation and improving the governance of health financing. Across the three countries, coordination mechanisms have created platforms for policy dialogue, joint planning, monitoring, and mutual accountability between governments and development partners. Uganda's UHC Health Compact and Ethiopia's National Health Compact represent recent attempts to institutionalize these principles, while Rwanda's long-established Sector-Wide Approach (SWAp) reflects a more mature model of government-led coordination [31-33]. However, the comparative analysis suggests that stronger coordination arrangements do not necessarily correspond with lower levels of aid dependency. Although all three countries have invested in country-led coordination and governance reforms, comparative financing indicators continue to show substantial reliance on external resources to support health sector expenditure [40]. This finding highlights the central argument of the paper: improvements in the governance of aid do not automatically translate into changes in the underlying sources of health financing.

Comparative health financing performance: to assess aid dependency, health financing indicators were analyzed using data from the World Health Organization Global Health Expenditure Database (GHED) [40]. The results are presented in Table 1. The findings reveal important differences in health financing composition across the three countries. External health expenditure accounts for 44% of current health expenditure in Uganda, 27% in Ethiopia, and 37% in Rwanda, indicating varying levels of reliance on donor financing [40]. Uganda remains the most aid-dependent, while Ethiopia records the lowest share of external financing. Rwanda occupies an intermediate position despite having the most mature coordination arrangements [33,40]. These findings challenge the assumption that stronger coordination mechanisms necessarily result in lower aid dependence. Despite differences in governance arrangements and compact maturity, all three countries continue to rely substantially on external resources to finance their health systems [40].

Differences are also evident in domestic financing. Domestic expenditure accounts for 73% of current health expenditure in Ethiopia, compared with 63% in Rwanda and 56% in Uganda [40]. Rwanda additionally records substantially higher government health expenditure per capita (US$25) than Uganda (US$10) and Ethiopia (US$8) [40]. Out-of-pocket expenditure remains high in Ethiopia (46%) and Uganda (32%) but is substantially lower in Rwanda (4%) [40]. This suggests stronger financial protection in Rwanda despite continued reliance on external financing. Overall, the findings indicate that improvements in coordination and governance may strengthen stewardship of health financing but do not by themselves reduce aid dependency. Sustainable financing ultimately depends on stronger domestic resource mobilization, fiscal space, and public financial management reforms [21-30,40].

Comparison of health compact and coordination arrangements: the principal characteristics of the three country arrangements are summarized in Table 2. The comparison demonstrates that Uganda and Ethiopia are still in the early stages of implementing their compact arrangements, making it premature to attribute changes in financing outcomes to these reforms [31,32]. Rwanda, by contrast, offers insight into the longer-term effects of sustained coordination. While the country has achieved notable improvements in alignment, accountability, and government leadership, this has not been accompanied by a corresponding reduction in dependence on external financing [33,40]. The comparison therefore supports the view that coordination reforms primarily influence how external resources are managed rather than where those resources originate. Health compacts appear to strengthen aid effectiveness, but evidence that they independently reduce aid dependency remains limited.

Lessons from earlier compact reforms: evidence from the International Health Partnership (IHP+) provides important context for interpreting current health compact reforms. Evaluations of IHP+ found greater progress in aligning development partner programmes with national health plans than in integrating financing through government budgeting and public financial management systems [8,10,11]. The experiences of Uganda, Ethiopia, and Rwanda broadly reflect these earlier findings. While coordination, alignment, and accountability mechanisms have strengthened, there is limited evidence that such reforms have substantially altered the overall composition of health financing [31-33]. This suggests that improvements in governance are generally achieved more readily than reductions in aid dependency.

Health workforce financing as a test of financing sovereignty: health workforce financing provides one of the clearest illustrations of the distinction between aid effectiveness and aid dependency. Development partners frequently support pre-service training, in-service education, technical assistance, and short-term workforce programmes, while governments remain responsible for financing salaries, pensions, and long-term workforce expansion [34-37]. As a result, countries may successfully coordinate donor-supported workforce investments while continuing to face difficulties recruiting and retaining health workers because of domestic fiscal constraints. In many settings, the primary challenge is not workforce production but the availability of sustainable public financing to absorb trained personnel into the health system [34-37].

This distinction is particularly important in an era of fiscal tightening and declining external assistance. Although health compacts can improve coordination around workforce planning and accountability, they cannot directly generate the domestic revenues required to finance recurrent wage obligations. Health workforce financing therefore represents a practical test of financing sovereignty. Sustainable workforce financing ultimately depends on domestic fiscal capacity, public financial management, and government budgetary priorities rather than coordination mechanisms alone [21-30,34-37].

In many low- and middle-income countries, the ability to recruit and retain health workers is further constrained by macro-fiscal policies, including public sector wage bill ceilings and broader fiscal consolidation measures. Consequently, even where development partners support workforce training or transitional financing, governments may be unable to absorb health workers into the public payroll because of binding fiscal constraints. These challenges lie beyond the scope of national health compacts and require coordinated action by ministries of finance and broader public financial management reforms to ensure sustainable workforce financing [22,23,25-30].

Main finding: the comparative analysis indicates that national health compacts primarily strengthen the governance of aid through improved coordination, accountability, and country ownership [7-11,31-33]. However, evidence from Uganda, Ethiopia, and Rwanda suggests that these gains do not automatically translate into reduced dependence on external financing [33,40]. The findings therefore support the central argument of this paper: health compacts can improve aid effectiveness, but sustainable reductions in aid dependency require complementary reforms that strengthen domestic resource mobilization, fiscal space for health, and public financial management [21-30].

Discussion     

Principal findings and contribution to literature: this study examined whether national health compacts and related coordination mechanisms can contribute to reducing aid dependency in health systems. Findings from Uganda, Ethiopia, and Rwanda indicate that health compacts are valuable governance instruments that strengthen stewardship, partner alignment, and accountability. However, they do not directly address the structural determinants of aid dependency. The principal contribution of this study is the distinction between the governance of financing and the sources of financing. While existing literature emphasizes aid effectiveness, country ownership, and alignment as important determinants of health system performance [1-3,7-11], less attention has been paid to whether improvements in aid governance translate into financing sovereignty. Applying the health financing functions framework, this study demonstrates that health compacts primarily influence governance functions through improved coordination, accountability, and policy coherence [1-3,37]. Sustainable reductions in aid dependency, however, depend largely on domestic resource mobilization, fiscal capacity, and public investment in health [21-30].

National health compacts as an evolution of aid effectiveness reforms: national health compacts should be understood as the latest phase in a broader sequence of aid effectiveness reforms that include the Paris Declaration, Accra Agenda for Action, Busan Partnership, and International Health Partnership (IHP+) [7-11]. These initiatives sought to address fragmentation, strengthen country ownership, and improve alignment of external assistance with national priorities [5,6,10]. The experiences of Uganda, Ethiopia, and Rwanda suggest that contemporary health compacts have succeeded in strengthening coordination and government leadership [31-33]. Nevertheless, the persistence of substantial external financing across all three countries indicates that coordination reforms alone do not fundamentally alter the composition of health financing. This finding is consistent with earlier IHP+ evaluations, which reported greater progress in programme alignment than in integrating external financing into government financial management systems [8,10,11].

Governance strengthening does not equal financing independence: a key finding of this study is that stronger governance arrangements should not be equated with reduced aid dependency. Rwanda illustrates this particularly well. Despite having one of the region's most mature government-led coordination systems, external resources continue to account for a substantial share of health expenditure [33,40]. This finding suggests that improvements in coordination and governance do not necessarily translate into reduced dependence on external financing. Strong governance can improve efficiency, accountability, and resource allocation, but it cannot by itself generate additional domestic revenue. Financing sovereignty therefore depends on broader fiscal, economic, and political factors that extend beyond coordination mechanisms [21-30].

Domestic resource mobilization as the critical pathway to financing sovereignty: the findings suggest that domestic resource mobilization remains the primary pathway to financing sovereignty. The continued reliance of Uganda, Ethiopia, and Rwanda on external financing despite differing governance arrangements highlights the importance of expanding fiscal space for health through stronger revenue generation, improved public financial management, and greater prioritization of health within government budgets [21-30]. Health compacts can support these efforts by improving accountability, transparency, and coordination. However, they are most likely to contribute to long-term financing sustainability when implemented alongside broader fiscal reforms that increase domestic financing capacity.

Limitations: this study has several limitations. First, the analysis relied exclusively on publicly available policy documents, published literature, and secondary health financing data, without primary interviews or stakeholder perspectives. Second, Uganda's and Ethiopia's national health compacts are still in the early stages of implementation; therefore, the findings should be interpreted as an assessment of the underlying theory of change and early institutional arrangements rather than demonstrated long-term impacts. Finally, although the World Health Organization Global Health Expenditure Database (GHED) provides the most widely used and internationally comparable estimates of health financing, National Health Accounts may incompletely capture some off-budget external financing. Consequently, the reported estimates of external health expenditure should be interpreted as indicative measures of aid dependence rather than precise estimates [40]. A more detailed assessment of aid alignment using the on-plan, on-budget, on-treasury, on-parliament, on-account, and on-audit framework was beyond the scope of this study and represents an important area for future research.

Policy implications: the findings of this study suggest that national health compacts should be understood primarily as instruments for improving aid effectiveness rather than as standalone mechanisms for reducing aid dependency. While compacts can strengthen government stewardship, partner alignment, and accountability, they do not directly address the revenue mobilization challenges that ultimately determine financing sustainability [1-3,21-30].

For governments, this implies that compact implementation should be linked more explicitly to domestic financing reforms. Beyond coordination objectives, health compacts should incorporate measurable commitments related to domestic resource mobilization, public financial management, budget execution, and sustainable financing of recurrent health system costs. Integrating compact priorities into national budgeting processes and medium-term expenditure frameworks would help strengthen accountability for domestic financing commitments and improve alignment between policy ambitions and available resources [21-30].

For development partners, the findings reinforce the importance of supporting country-led financing transitions rather than focusing exclusively on programme alignment. As external assistance becomes increasingly constrained, partner investments should place greater emphasis on strengthening domestic financing capacity, including public financial management systems, health workforce planning, institutional capacity development, and expenditure efficiency [23-30,34-37]. Such investments are essential for ensuring that gains achieved through externally funded programmes can be sustained over time.

The findings also highlight the need to expand the way health compacts are evaluated. Traditional measures of success have focused largely on alignment, coordination, and mutual accountability. While these remain important, future monitoring frameworks should also assess progress in domestic resource mobilization, financing sustainability, workforce absorption, budget integration, and reductions in vulnerability to external financing shocks [7-11,21-30]. This would provide a more comprehensive assessment of whether governance reforms are contributing to long-term health system resilience. Finally, health compacts should increasingly serve as platforms for managing financing transitions as development assistance declines. Compact implementation should include clear transition plans, agreed financing milestones, and mechanisms for tracking domestic replacement financing. Without these measures, health compacts may remain useful coordination tools but have limited influence on the underlying drivers of aid dependency (Table 3) [15-20].

Conclusion     

National health compacts represent an important evolution in efforts to strengthen country ownership, improve development partner alignment, and enhance accountability within health systems. Building on earlier aid-effectiveness reforms, these arrangements are intended to improve the governance of external assistance through stronger coordination, alignment, and mutual accountability [7-11]. Evidence from Uganda, Ethiopia, and Rwanda suggests that such mechanisms provide a framework for improved stewardship and partner coordination, although their effects on fragmentation and financing outcomes remain uncertain in recently adopted compact arrangements [31-33]. However, the findings of this study indicate that improvements in aid governance should not be equated with reductions in aid dependency. Despite differences in the maturity and design of their coordination arrangements, all three countries continue to rely substantially on external financing to support their health systems [40]. The evidence therefore suggests that aid effectiveness and aid dependency are closely related but distinct dimensions of health system performance.

Using the health financing functions framework, this study argues that national health compacts primarily strengthen the governance function of health financing through improved stewardship, accountability, and policy coherence [1-3]. By contrast, sustainable reductions in aid dependency depend largely on the revenue mobilization function, including stronger domestic resource mobilization, expanded fiscal space for health, improved public financial management, and sustained government investment in health systems [21-30]. The continued challenge of financing the health workforce further illustrates the limits of coordination reforms when domestic fiscal capacity remains constrained [34-37]. These findings are particularly relevant in a period of declining development assistance and growing pressure on countries to finance health systems through domestic resources [15-20]. In this context, health compacts can provide an important platform for managing financing transitions and strengthening accountability, but they cannot substitute for the broader fiscal and political reforms required to achieve financing sustainability.

The central conclusion of this paper is that national health compacts are best understood as instruments for improving the governance of aid rather than the source of health financing. Their long-term contribution to financing sovereignty will depend on whether gains in coordination and accountability are accompanied by meaningful progress in domestic resource mobilization, public financial management, and sustainable financing of recurrent health system costs. Only through the combined pursuit of governance reforms and financing reforms can countries progressively reduce aid dependency and advance towards resilient, domestically financed Universal Health Coverage [1-3,21-30,37].

Competing interests     

The author declares no competing interests.

Authors' contributions     

Zikanga Bernard Jackson conceived the study, developed the methodology, conducted the literature and policy review, curated and analyzed the data, interpreted the findings, prepared the tables and conceptual framework, and drafted and revised the manuscript. The author has read and approved the final version of the manuscript and accepts responsibility for its content and integrity.

Acknowledgments     

The author acknowledges Seed Global Health, the Ministry of Health Uganda, and development partners involved in the Uganda Universal Health Coverage (UHC) Health Compact (2025-2030) for their contributions to the policy dialogue and context that informed this study. The views expressed in this paper are those of the author alone and do not necessarily reflect the views, policies, or positions of the acknowledged institutions or imply their endorsement of the study's findings or conclusions.

Tables and figure     

Table 1: comparative health financing indicators for Uganda, Ethiopia and Rwanda (2023)

Table 2: comparative characteristics of national health compacts and sector coordination arrangements

Table 3: policy and implementation framework for strengthening financing sustainability

Figure 1: conceptual framework: from aid governance reform to financing sovereignty; source: developed by the author based on the health financing functions framework

References