A Primer on Global Health Financing beyond ODA and Global Public Investment | September 28 2021
This is summary of policy development and global-level discussions around reforms of Global Health financing to take it away from its current reliance on Official Development Assistance (ODA) and explore alternative models like Global Public Investment (GPI). It intends to help GFAN members catch up with these developments in order to be able to meaningfully contribute to the global conversation on these questions, consider entry points for GFAN through its replenishment advocacy in the next year and more broadly as global health advocates. It also provides a basis for members to engage in the movement for the co-creation of GPI.
GFAN and its members were involved in some of the early work leading up to the launch of Global Public Investment in 2017-2019. In particular Jonathan Glennie, author of The Future of AID, Global Public Investment, attended several GFAN calls and global strategy meetings and GFAN supported coordination of some regional conversations ahead of publication. GFAN discussions on the issue have centered on the belief of a majority of advocates that ODA budgets provide a ceiling to conversations with donor governments on how much money can be raised during a replenishment. They therefore can put a downward pressure on the Global Fund Secretariats “ask”, and a better framing of global health as global solidarity would be a helpful foundation to how we approach our work.
Many of the issues touched upon in this paper will be further discussed during one of GFAN’s Thought Leaders calls, scheduled for October 6th, 2021.
Global Health funding today
First, we want to establish some baseline facts about funding for health. The world as a whole spends somewhere around $10 trillion on health every year, with around 42% of that sum spent in the United States, 39% in all other high-income countries, and 19% in middle and low income countries. In high-income countries and upper-middle income countries, the majority of that spending is done by governments. In lower-middle income countries and low-income countries, the majority of spending is done by patients as out-of-pocket expenditures.
Development assistance for health (DAH) represents a small portion of total health spending. Prior to the pandemic, DAH had reached 40 billions a year in 2019. In 2020, it has jumped to 55 billions, according to estimates from the Institute for Health Metric and Evaluation, from the University of Washington. It still represented only around half a percent of total global health spending. It is however a non-negligible share of all health spending in lower-middle income countries, around 3% prior to the pandemic, and is crucial in low-income countries, where it represented around 25% of all health spending, on par with government spending standing at around 26%.
IHME data, from the University of Washington, identifies the largest contributors to development assistance for health funding in over the past 30 years. In 2020, the largest donors were the United States, at around $14 billion, followed by the Bill and Melinda Gates Foundation, at around $4.6 billion and the United Kingdom at around $4.3 billion. These funds are channeled through Global Health Partnerships, UN agencies, National and International NGOs, Foundations, bilateral aid agencies and other mechanisms. The largest in 2020 were the WHO, at 8.11% of total disbursement, followed by the Global Fund, at around 7.9%, and the Gates Foundation and UNICEF both at around 5.6%.
This funding system manages to redistribute billions of dollar every year, and has achieved impressive successes against a number of diseases. It has succeeded in mobilizing increasing amounts of funding since the 1990s, though its rapid growth after 2000 has slowed considerably since 2010. It was able to rapidly scale up in 2020 to face the COVID-19 pandemic, disbursing 37% more fund that year than in 2019. It was however already called overly complex in the mid-2000s, and has grown since. It reflects its history, with bilateral flows of aid corresponding to former colonial empires and the strategic national interests of donor countries.
What is Global Public Investment?
Global Public Investment (GPI) is a framework, a set of guiding principles, to help move foreign aid towards a new model of international funding for development. At its core, it proposes a paradigm shift. Foreign aid and Official Development Assistance (ODA) carry with them the idea of charity, of bilateral transfers from rich to poor and of a near-term final destination: once “development” has been achieved, transfers could stop. This reflects the current functioning of global health funding, where international transfers in the form of DAH represent a small fraction of health spending in all countries but the poorest. As more and more countries reach middle income status, they “graduate out” of aid and assistance.
GPI proposes that Foreign Aid and ODA can be more than a way to help some countries catch-up. The same way government spending is useful in all countries, regardless of wealth, so can be international investment. International cooperation and solidarity is valuable and useful beyond alleviating the worst effects of relative poverty. The usefulness of international public finance is obvious in the fight against many diseases which affect marginalized groups, in particular we think of HIV, TB and Malaria. Governments and private funders can be reluctant to engage with the most vulnerable, creating gaps regardless of a country’s GDP or development indicators. International finance has had to fill these gaps and should continue to even as countries get richer.
The central tenet of GPI is the creation of a structure that would be funded by national contributions from all countries, with the size of the contribution commensurate to their wealth, and that would redistribute these funds on the basis of need. Such a mechanism would ensure an equitable collection and distribution of funds, side-step many of the issues of bilateral aid programs, and its global scale would allow us to mount effective responses to global challenges, such as climate change, pandemic preparedness, and UHC. These GPI structures would be governed transparently and be accountable to both donors and receivers of funds. Such structures would have greatly benefitted the world had they been in place when COVID-19 first took prominence on the world and global health stages.
What changes could GPI principles bring to Global Health Financing?
It is essential to stress how GPI differs from the current health funding status quo:
- Rather than dividing the world between donor countries and receiving countries, a system built around GPI principles would gain legitimacy by making all countries both contributors and beneficiaries – though some countries would receive more than they would contribute, the same way certain regions in a country receive more tax money than they contribute.
- Bilateral aid-relations, often the legacy of the colonial era and mingled with geopolitical considerations leading to waste and poor optimization, would be replaced by a network of global solidarity. GPI’s sustainable structure would incentivize long-term commitment, allowing for programs to sever themselves from the shackles of two to three years funding cycle and short-term myopia.
- Participatory governance and transparency would allow for a holistic approach. International public investment will be better placed to prioritize programs, and ensure that resources go to those most in need of them.
GPI, the Global Fund and Pandemic Preparedness
Pandemic preparedness and response (PPR) is precisely the type of global issue that can only be efficiently addressed through a long-term, equitable global response. Investments in PPR pay-off over a longer time-frame than the typical funding cycle, requires equity in investment as the whole is only as safe as the weakest link, and its success will benefit all. That makes a GPI-scheme especially well-suited to PPR.
Global Health Partnerships, and in particular the Global Fund, already embody some GPI principles. The Global Fund has co-funding requirements, and fundraises in some receiving countries, so grants are not entirely one-way. The Global Fund board is inclusive of a wider range of stakeholders than many funding agencies. More importantly, the Global Fund centralizes public contributions and decides internally – based on country driven requests – on how to allocate funds, rather than allowing donors to earmark their contribution. The fact that an institution that challenges the traditional foreign aid paradigm has nevertheless been successful in raising large-scale funding – in fact becoming in less than 20 years the largest single manager of global health funding – proves that GPI principles are not unrealistic.
However, the funding model of the Global Fund relies on constant advocacy around replenishment and has a limited capacity to guarantee sustainable funding. This is at odds with GPI principles, and whether states would be willing to commit funding over to a Global Fund-like entity over longer periods of time remains to be seen.
Questions for GFAN to consider
With replenishment a little over a year away and much work and attention on the importance of establishing new paradigms to “build back better” as we hopefully emerge from the critical phases of COVID19, are there practical ways for GFAN members to utilize the principles of GPI in its resource mobilization advocacy for the Global Fund?
Almost since the beginning of the COVID pandemic, key actors such as the Global Fund, the WHO and other global health institutions have been talking about the need to invest in ending COVID globally “beyond ODA”. As advocates, we have all been in a room/on a zoom call with a government official saying something like: “Well, if we give you an increase of funding who will we take it away from? There is a limited budget?”. Budgets are limited but spending on COVID has burst those limits wide open – on domestic responses, but also on Development Assistance for Health. Does GPI give GFAN’ers a useful framework or language to adopt a “beyond ODA” effort as a needed approach to the 7th Replenishment?
There are many conversations about the need to address the root causes of structural and racial inequity, to decolonize global health and the individuals and organizations leading it. Does GPI provide us with a framework to discuss fiscal space and resource needs in a more equitable, egalitarian way that gets away from a “former empires/colonies” focus and the unhelpful language of “relative/hierarchical development” currently in use?
Some useful links to GPI Resources
Expert Working Group on Global Public Investment: https://globalpublicinvestment.org/
Jonathan Glennie, The future of Aid, Global Public Investment
Devinit Blog series on GPI after COVID.