More Health for the Money

Thursday, November 17, 2011

Aid from wealthy countries to fight disease and poverty in the developing world has saved countless lives over the past decade. Despite intensified financial efforts toward global health goals, progress seems to be impeded and slow as the 2015 deadline for achieving the Millennium Development Goals draws near.

A recent study by the OECD Development Assistance Committee shows “sobering” results on the Paris Declaration on Aid Effectiveness: Out of thirteen measurable targets, only one – coordinated technical cooperation – has been met. Progress to meet the 2015 health MDGs are being impeded in part due to aid ineffectiveness. As much as $0.28 is lost for every $1 of ODA, and the high volatility in aid adversely impacts patients and health systems.

After more than a decade of steady increases in funding for global health and development programs, foreign aid is flatlining, in many cases dwindling. This will leave millions without prevention and treatment in years to come.

The problems associated with conventional aid, however, extend beyond the funding gap. Among which: (1) traditional aid mostly involves short-term commitments which are inherently unpredictable and unstable, making it difficult for poor countries to plan ahead, and (2) aid is typically paid out against inputs rather than measurable results such as maternal and infant deaths, thus creating failed incentives for improved performance.

With the population of the world now topping 7 billion people, improving global health outcomes has increasingly become a concern in development agendas. In these hard economic times, we can no longer exclusively depend on the good graces of donor governments alone. Rather, we must think creatively about new ways to financially support global health and development goals, without relying on increasing rates of development assistance.

In recent years, scaled-up efforts towards innovative financing for global health have been put in place to effectively address these problems associated with traditional aid financing. The concept of innovative financing is that successful financial instruments in the private sector are recast to suit development objectives, and its goal is to bridge the resource gap and accelerate the procurement of essential health goods to the poor.

Examples of such initiatives include the International Finance Facility for Immunization, or IFFIm, which sells bonds on capital markets that are backed by the long-term commitment of a few donor countries; the Global Alliance for Vaccines and Immunizations, or GAVI, uses these funds to purchase childhood vaccines worldwide; and the advanced market commitment.

Source: Devex (link opens in a new window)