Global Fund Strategy for increased domestic financing

Satellite Session: Where is the Money?? Challenges & opportunities in mobilizing Increased Domestic Financing

Melbourne, 23 July 2014

Dr Christoph Benn

Director, External Relations Division

Global Fund

Context of the 5th Replenishment

Is the period of sustained rapid DAH growth over?

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5

10

15

20

25

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DAH including resources channeled through GF from 1990-2012 in 2010 US$ Billion

Financing Global Health 2012: The End of the Golden Age? Seattle, WA: IHME, 2013

July 2014Melbourne

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Need significant progress in other areas of financing for health: domestic financing, private sector partnerships & innovative finance mechanisms

Context of the 5th Replenishment

ODA projected to increase in 2014 & then stabilize

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

80.13 B

108.30 B 105.42 B

104.92 B

122.78 B

120.56 B

129.07 B134.67 B

126.95 B

2013 2014 2015 2016

138.4 B

Net official development assistance 2004-13 & projections for 2014-16 (in current US$ billions)

OECD: http://www.oecd.org/newsroom/aid-to-developing-countries-rebounds-in-2013-to-reach-an-all-time-high.htm

ODA in 2013 rebounded & reached $ 134.8 B despite economic pressure on donors but likely to stabilize after 2014 critical to ensure appropriate share for health

Setting global targets for health financing in line with UHC

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• No single roadmap to achieve targets, this is a country-by-country process

• Primary role of external financing is to fill the gap in the short and medium term for some low- and middle-income countries.

Governments encouraged to:

• spend at least 5% of GDP on health,

• ensure government health expenditures (GHE) of minimum $86 per capita

Røttingen JA et al, Shared responsibilities for health A new global framework for sustainable health financing, Chatam House WG 2 on Health Financing, May 2014

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Key challenges & opportunities

• Value for Money: As the resource landscape is changing, focus is now more on improving health program efficiency and effectiveness which calls for both “more money for health and more health for money”

• Domestic Advocacy: a large part of any increase in public funding for health will need to come from governments, therefore need to develop a convincing business and advocacy case for increased / sustainable public commitment to programs

• Sustainability: Domestic public spending should continue as economic growth continues, however it will not be sufficient to address all the health needs. Therefore, still a need for external resources in the short to medium term as well as to explore PS partnerships & other innovative mechanisms.

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GF domestic financing strategy

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GF strategy for increased domestic financing for health

1. Implement NFM policies linked to domestic

financing (Counterpart financing & willingness-to-

pay)

3. Advocate for political leadership & for realization

of Government commitments

2. Support domestic resource mobilization

efforts (priority countries) with help of partners

1. Implement NFM policies linked to domestic financing (CF & WTP)

• Country needs assessment/ target-setting & support the buy-in process

• Options of tools/mecha-nisms for innovative financing

• Documentation & dissemination of Best practices

• Advocacy plan with key messages by GF, Donors, partners, private sector and CSOs

• Revive co-champion-ships and identify other champions

• Leverage key national/ international events & platforms

• Support countries on CF/WTP (guidance & tools, country dialogue)

• Review country compliance with CF & monitor WTP commitments

• Track at grant & portfolio levels

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New funding model: Counterpart financing aims to mobilize domestic resources

Mandatory minimum requirements of counterpart financing

• Minimum threshold contribution (LI-5%, Lower LMI-20%, Upper LMI-40%, UMI-60%)

• Increasing government contribution to disease programs and health sector

• Reliable disease and health expenditure data

‘Willingness-to-pay’ commitment to further incentivize

• Additional co-investments by government in disease programs in accordance with ability to pay

• Realization of planned government commitments

• 15% of allocation is contingent upon meeting WTP commitments

Core Global Fund principles: Sustainability, Additionality, Country Ownership

Africa has made commitments & countries are demonstrating progress• Abuja Declaration on HIV/AIDS, TB and Other

Related Infectious Diseases, 2001: Heads of State commit to spend at least 15 % of budgets on Health

• Addis Ababa, African Union roadmap on shared responsibility and global solidarity for AIDS, TB and malaria response, 2012. AU endorsed Roadmap on Shared Responsibility and Global Solidarity for HIV, TB and Malaria and the Pharmaceutical Manufacturing Plan

• Tunis Declaration on value for money, sustainability and accountability in the health sector, 2012. Governments commit to enhance value for money, increase accountability, improve sustainability of health resources and fight corruption.

• Abuja AU Special Summit Declaration on HIV/AIDS, TB and malaria, 2013. Calls for countries to honor the 2001 Abuja Declaration and other health commitments.

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Health as % of total government expenditure, 2011

Rwanda 23.7%

Malawi 18.5%

Zambia 16.0%

Togo 15.4%

Tanzania 11.1%

South Africa 10.0%

Botswana 8.7%

Nigeria 7.5%

Kenya 5.9%

Source: UNAIDS, Oxford Policy Management, Et al.

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In sum, the Global Fund is working with countries and partners to:

• Leverage GF resources to encourage increased Government commitment to disease programs & related health systems strengthening

• Improve data quality and accessibility for both domestic and international health funding

• Identify and address rigid budgeting practices, allocative inefficiencies that are obstacles to the reallocation of revenues towards health

• Nurture political leadership --► ongoing work on multi-dimensional advocacy and messaging to ensure health is given top priority at national and international levels

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Conclusions

• Health expenditures should keep pace with economic growth

• There is no single blueprint for increasing domestic funding for health

• Lessons learned and best practices should

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Overview of CF & WTP in new funding model

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Domestic resource mobilization support to 5 priority countries in 2014-16

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Innovative ways of raising domestic resources and potential gains

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Source US$ billions

75% of an alcohol levy 3.9

Contributions from high-revenue enterprises 2.4

Airline levy by all African countries 1.7

2% of public sector budgets earmarked for AIDS 2.4

Mobile phone levy 2.0

1% income tax levy earmarked for AIDS 3.1

But how to 1) sell these ideas and 2) ring-fence the funds?