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Transitioning Private Sector Engagement in Afghanistan

March 6, 2023

For the last seven years, Abt Global has implemented private sector engagement strategies to improve access to health products and services in Afghanistan. When USAID’s Sustaining Health Outcomes through the Private Sector (SHOPS) Plus project ended in 2022, Abt continued and expanded the work with the USAID-funded Local Health System Sustainability Project (LHSS). But with the Taliban takeover, the transition encountered significant challenges as international support dropped for the donor-dependent public health system—making private sector contributions all the more important.

Soumitra Ghosh, who served as chief of party under SHOPS Plus and retained his role under LHSS, sat down to reflect on his experience and discuss how Abt’s work in Afghanistan has evolved following the transition.

Can you tell me a little bit about the LHSS Afghanistan Activity?

In Afghanistan, LHSS uses a combination of financial and technical support to strategically expand the scale, quality, availability, and affordability of health products and services covering family planning; maternal, newborn and child health; tuberculosis; nutrition; and non-communicable diseases. LHSSS provides grants to for-profit and not-for-profit organizations and healthcare providers in the urban and peri-urban areas of USAID’s five large priority provinces.

How has the LHSS Activity expanded Abt’s private sector engagement in Afghanistan?

The Afghan Social Marketing Organization (ASMO) is a leading provider of family planning and maternal and child health products in Afghanistan, and under SHOPS Plus, we focused on increasing its impact and viability. We provided technical assistance to ASMO to increase access to and demand for priority health products and improve cost recovery to sustain activities. We also provided training and mentoring to strengthen ASMO’s technical, financial, and organizational capacities to improve sustainability. LHSS continues to work closely with ASMO to to further expand its health products’ geographic coverage and availability, generate demand for those products, and strengthen its organizational capacity for more significant impact and resiliency.

In addition to ASMO, LHSS is working with eight other private for-profit and not-for-profit organizations to increase geographical coverage and availability of health products, improve health service provision, and test innovative models of delivering critical health services. We’ve already identified these organizations and plan to issue grants and move forward with implementation by March 2023.

What challenges has the LHSS Afghanistan Activity faced and what strategies has the project used to overcome these challenges?

LHSS has faced many challenges in its first six months of implementation and is working closely with ASMO to identify and implement mitigation strategies. For example, the Taliban takeover in August 2021 led to a significant financial crisis. Currency depreciation, rampant inflation, and a liquidity crunch in the banking system have led to a cascade of adverse economic consequences. Simply put, it is difficult for consumers to afford products and for businesses to stay afloat. LHSS is working closely with ASMO leadership to price its products appropriately by taking inflation and prices of competitive products into consideration and co-developing and implementing product cross-subsidization strategies. These help ensure products remain affordable and in demand.

ASMO is also facing significant delays in procuring and importing its heath products caused by factors ranging from slower customs clearance to fewer cargo flights. The result is more frequent and prolonged stockouts that limit access in the market and impact ASMO’s ability to generate the income needed to sustain operations. LHSS is working with ASMO to adjust procurement forecasts by increasing buffer stock and procurement lead times while exploring opportunities to improve efficiencies through pooled procurement strategies.

Taliban-imposed restrictions on health promotions and women models in media campaigns disrupted ASMO’s ability to increase awareness of and generate demand for its products. The recent decree banning female staff from working in NGOs further threatens the feasibility of using women-friendly channels for targeted social behavior change initiatives. LHSS is helping ASMO focus on social media and other channels to disseminate health messages and continues to explore how these restrictions will impact new grantees.

Finally, while the private health sector is extensive and serves a sizable proportion of the LHSS’s priority population, LHSS faces challenges in engaging them in program activities. Quality of care is reportedly low, with a disproportionate focus on secondary and tertiary care over health promotion and preventive services. Pharmacies fill critical gaps in private sector service provision, but referral systems for onward care are weak or non-existent. And none of the facilities report into the national health management information system. The result is a failure to demonstrate the true contribution of the private sector to national health outcomes. Small and medium-sized facilities also lack financial viability and access to the financing required to stay afloat. LHSS is working with the eight potential partners to identify relevant capacity gaps affecting their business models and co-developing strategies to address them.

What strategies has the LHSS Afghanistan Activity adopted to ensure that clients can access priority health products and services through the private sector?

Our theory of change maintains that if the organizations we team with have stronger capacity and an expanded role, then the private health sector in the project locations will offer priority health products and services at greater scale, more affordably, and with improved quality. This, in turn, will enable organizations such as ASMO to sustainably scale up or adopt improved business models, products, and practices to serve the end users better.

What do you see as opportunities to strengthen the role of the private sector to address critical health gaps?

I see many opportunities to strengthen the role of the private sector. For example, a significant proportion of the population already seeks services from the private health sector, as evidenced by the fact that more than 77 percent of Afghanistan’s total health expenditure comes out of pocket. Key private sector actors can expand access and availability of priority health products and services by covering populations residing in the untapped urban extensions, slums, and district areas. They can do so through partnership with private pharmacies, midwives, and hospitals and by using telemedicine services. The private sector also needs to coordinate care better and ensure the quality of its products and services. LHSS can help the sector gain access to the financing and resources required to address supply-side gaps in human resources, training and skills building, equipment, and monitoring. We could also help address high user fees, particularly for poorer populations, through demand-side financing strategies, including patient welfare and referral schemes, using short-term cash payments and vouchers.

Lastly, inadequate stewardship has led to a highly fragmented private health sector. Establishing or strengthening private provider networks can address this fragmentation. Networks hold the promise of expanding the scale of private practice, promoting delivery of uniform health services to a broad market, and offering efficiencies in achieving national public health objectives. LHSS is working with grantees across Afghanistan to co-design and implement sustainable solutions to these opportunities, including engaging regional TA experts for capacity strengthening support.

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