C Severo - May 11, 2006

Here are three options for resource mobilization:

1) Debt conversion: Experience in Tanzania has shown that Ministries must propose options for use of debt conversion. As recently as 2004=2005, only the Min Education had proposed a plan, while the Min Health had not. At that time, the AIDS Commission had missed the deadline for the annual proposal for use of debt relief. This shows that at least in some countries, the option and modalities for use of debt conversion are poorly known by program planners and that financial experts may not be targeting such funds strategically, a more concerted and systematic effort to advocate for this option for AIDS, TB and Malaria might be very rewarding.

2) Bank fees: As I wrote in an earlier entry on private sector involvement, movement of GF funds generates huge fees for the banking sector. Surely the GFATM could negotiate or tender with banks, or encourage/require PR's to do so, in order to reduce charges/increase transaction times. Banks would then "contribute" the lost revenue to the GFATM or to the country, and could count this as a charitable contribution or "social investment". Or perhaps some banks might really contribute financially, not just discounted fees.

3) Beer tax: Very preliminary discussions were engaged as early as 2004 regarding the possibility of a surtax on beer, the revenue to go for AIDS activities. This would be seen as a "sin tax", since excessive alcohol consumption and risky sexual behavior are often linked. A beer surtax would have many advantages: 1) high volume item so a very low tax would generate substantial income; 2) item used by the entire society, especially men, so does not focus on any one social class, 3) could be calculated based on sales figures by the beer wholesalers or brewers and thus collected at the source, rather than collected as with VAT at point-of-sales, 4) no chance that people will stop drinking beer, so a very sustainable source of revenue. Two other drinks might also be subject to such a tax (without the "sin" connotation), soft drinks (often distributed by the same wholesalers or distributers), and tea. In Tanzania in 1999, some tea growers had suggested a small surtax on tea per kilo at the source as a contribution to the AIDS work. While it is understandable that trend setters like the GAP or Armani would be the first of GFATM Red contributors, it would make sense and potentially generate huge revenues if a brewer like Guiness or Heineken or an African brewery would make the same sort of commitment, even at a rate of 1 penny per bottle, there would be significant revenue.

Moderator (this italicized section): Thanks for your extremely helpful suggestions, Catherine. They have all been forwarded to the secretariat's strategy and communications teams. The sticking point with your second point (Bank fees), as at when you mentioned it earlier, was the significant cost it would take to successfully negotiate with different global banks. However, when done at a national scale between revenue collectors and the banking sector, it seems feasible, since there will be little extra infrastructure needed to begin and facilitate these negotiations. And what do you think about the potential for the airline solidarity levy and the international financing facility? How else might they bring sustainability and predictability to the resource mobilization process?
_________________
Catherine Severo
Management Sciences for Health
Boston, MA, USA

C Severo assisted the CCMs of Tanzania and Zanzibar to prepare their proposals and complete preparations for signature for Rounds 2, 3, 4, 5.

medigist - May 08, 2006

Global fund should ensure all the amount collected and spent has balance. while disease mgmt should get 50% the other half should be spent on disease prevention including health education.
an innovative way is to ensure the participation of major companies across the globe. For example Mr.Mukesh Ambani of Reliance Industries can provide the raw material for making a few million mosquito bed nets. Iam sure he will not refuse global fund.
The indian postal department or the retail pharmacies in india (which i can arrange) should be apporoched for distribution of health education pamphlets.
Major drug manufacturers in india can provide drugs at cost price for the charity work carried out by global fund.
Infact we should spend time to involve all fortune 500 companies at least in some manner towards corporate social responsibility at the same time enhancing their corporate brand equity. We should be able to bridge the gap between required funds and the committed funding.
one word of caution---The regional director of Who-Searo rightly commented in health projects 65-80% of the money is going towards wage costs. We should identify these projects and bring down the cost. Involvement of heal;thcare media on reimbursement of production cost should be thought of to enhance effective use of scarce resorces.
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Sammi Fredenburg - May 13, 2006

I know it's the nature of the beast when it comes to many dollars like we're speaking of here, and collection and distribution taking place over a period of years. but dealing with pledges incoming and bonds from the IFF . . . . I'm trying to think in lines of potential. i've hesitated to post this because i don't want to come across unseemingly, or negative. In both cases we're dealing with the matter of trust and following thru on a promise, or the satisfaction of conditions such as lack of another 9/11 or katrina or major world conflict or such. i embrace the need for frontloading of funds from the likes of IFF; yet in the fickle world of financing we're at best to hope to break even with cost-of-living increases and anything above that is gravy. so, my response to potential is as to quantity and quality of gravy, hoping i'm understanding the question right.

As we're seeing in the united states right now, government leaders make commitments to have the numbers shaved in the congress and senate. we involved in OXFAM and ONE/MPH and DATA are noisily contacting our senators and representatives about such matters now. were a major corporation to be devastated or the stock market to crash, would these pledges be compromised? how understanding would the IFF be were pledges not satisfied and bonds due? The gap between writing the checks and cashing them, could this be shortened or eliminated? would it be better to ask for a $10 bill now than be promised a $20 bill later? funds in Global Fund coffers would eliminate or at best reduce the need for frontloading projects and incurring bonds, especially considering should penalties accrue if not satisfied on time and budget. it's hard to think of in line with lives being in the balance today.

again i'll visit the potential of an "economic peace corps" to provide tangible commodities and services in addition to and in lieu of cash funds. Years ago, i'm not sure today, The United Way had other's corporate executives on that company's payroll that were assigned for one year temporary duty with The United Way, then return to their corporation. their expertise and experience is valued, and they leave before burnout, and have the satisfaction of contributing. i'm not sure how much of global fund takes up payroll, but even if contributions from public and private sector could come from this avenue, the dollars could go further. Or recruiting retired executives, giving them the honor of reinvesting themselves for the world's good. Economic and business graduates - were governments to forgive school loans (smaller in scale by far than aid needed) for graduates who would serve a stint overseas, similar to the military reserve, we could contribute engineers, medical personnel, economists, business majors, ________ (fill in the blank) into the mix.

Thanx, stay close,

sammi fredenburg

May 12, 2006

Thanks Loverne. Your suggestions are very insightful and should definitely be considered- especially that of seeking local solutions. However, the modalities for availing public health insurance in developing countries differ considerably from those in developed countries. For instance, while most people in developing countries are covered through their employers, developing country governments may have to bear the cost of health insurance as a social service because it is common to have unemployment rates of over 30 percent in these countries, while the informal and unrecorded economy employs a major proportion of the labour force. Typically, individuals in these countries, based on their average incomes, do not have as much negotiating power with insurance companies as their developed country counterparts, further supporting the case for collective bargaining by strong representatives , eg. governments . The government budget for this alone may tend to equal or exceed the current health budget ( a tough idea to sell), even while countries struggle to increase their budgets to respond to the three diseases, and to strengthen health systems. In one African country for example, a public insurance scheme would cost about 10% of its current budget, which is more than the country's entire health budget percentage. Exchange rate differences, the subsequent impact of foreign aid on developing country budgets and the current need for huge capital injections into low-income economies are just a few more arguments for additional funding of health interventions in developing countries from external sources.

Thanks again, we look forward to receiving more of your thoughtful suggestions.

Loverne Scott-Heron - May 11, 2006

Question: The Global Fund - Partnership E-Forum | Forum Index -> Debt conversion, International Finance Facility, airline solidarity levy, etc. - how might they add resources, predictability & sustainability ?

Answer:
While the idea of having different kinds of funds such as the Global Fund to tackle the burden of diseases such as HIV, Malaria, etc. is useful, I often wonder if such mechanisms in themselves are not counter-productive to the achievement of healthcare for the masses in developing countries.
The issue is, why do we expect these funding mechanisms to play such a major role in healthcare delivery?
Should we not be looking at the root of the problem?
Should we not be more adamant about seeking local solutions for.eg.
policies ensuring that each individual in each country has healthcare insurance coverage and also making it mandatory for companies to ensure health insurance coverage for their employees.
Perhaps the money being channelled from private companies into these funding mechanisms such as the Global Fund could be better used in this regard.
Loverne Scott-Heron
Copenhagen

Guest - May 09, 2006

Much can also be sourced from share banks (the unclaimed dividends- what are they used for? We can sponsor the legalisation of this money for disease prevention and eradication). Levy from football competitions. Agreed local manufacturing industry, oil companies etc. can do a lots.

Recycle of money recovered from countries, organisation and CSOs not well spent. Some moneys were also recovered from Big People in country.

Financial and financially related contributions from proffessional bodies, CSOs, local communities even the market women. Ultimately, judicious spending of money in any place at any time is very important.

May 08, 2006  

To date, the Global Fund has received close to US$ 9 billion in pledges from governments, the private sector, private foundations, and individuals. Nearly US$ 5 billion has been committed to programs in 131 countries. However, it is estimated that approximately US$ 3 billion is necessary in 2006 to fund the renewals of current grants as well as to launch a new round of funding. A number of innovative financing mechanisms have been launched with a view to bridging the gap between the funds needed and the funds pledged and received so far. These include the International Finance Facility, Global Fund debt conversion, airline solidarity levy, etc. The ability to mobilize resources in a predictable and sustainable way is of particular importance to the Global Fund.

Question: Innovative financing mechanisms – what is the potential of innovative financing mechanisms (e.g. International Finance Facility, Global Fund debt conversion, airline solidarity levy, etc.) and how might they bring additional resources, predictability and sustainability to the Global Fund’s resource mobilization?

To read more about these mechanisms and respond to the question, please click here:

http://www.theglobalfund.org/en/funds_raised/innovative_financing/

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