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Africa: Decisive Year for Global Fund
AfricaFocus Bulletin
May 9, 2012 (120509)
(Reposted from sources cited below)
Editor's Note
"We write as global health groups, communities affected by
HIV, TB, and Malaria, and researchers from around the world
to urge you not to undermine the founding principle of a
demand-driven Global Fund. We are united against proposals
to set 'envelopes' or 'allocations' for each country, which
would result in limited ambition, scaled back or skewed
plans, and ultimately a failure to get ahead of death and
new infections. Limiting ambition now will only cost more in
the future - in lives and money." - civil society letter to
Global Fund Board
The Global Fund to Fights Aids, Tuberculosis and Malaria
provides about 20% of all international financing for AIDS,
about 65% for tuberculosis and almost 60% for malaria. The
Fund has approved over $22 billion in grants in 150
countries, and it estimates that programmes that it supports
have saved over 8.6 million lives. Despite recent oftenmisreported
news stories about fraud in some of the Fund's
country programs, it has been an effective, innovative, and
transparent pioneer of new approaches to global public
health funding, responding to country initiatives and making
it possible to scale up responses.
Yet 2011 was, according to Bernard Rivers, editor of the
independent and highly respected Global Fund Observer, the
Fund's worst year ever. Its transparency, unequaled among
other funding agencies, backfired as poor public relations
failed to counter misleading news stories. And internal
management problems were exacerbated rather than solved by
the Fund's board.
It is too soon to judge the results from the appointment in
February of a new general manager, Brazilian banker and
development manager Gabriel Jaramillo. There is no doubt
that management improvements were and are needed, and there
are some indications that on this front he is making
progress. However, there are also serious policy questions
on which activists fear that "reforms" might serve to
enable backtracking on key features of the Global Fund's
positive innovations, to revert to more traditional aid
models where programs are planned based on donors' prior
commitments rather than on the results needed.
This AfricaFocus Bulletin contains two relevant documents,
as the Global Fund board meeting takes place this week in
Geneva. The first is a letter from civil society groups stressing
the importance of retaining the demand-drive funding model,
and the second a more extensive analysis of the current
situation of the Global Fund by Bernard Rivers.
The website of the Global Fund is at http://theglobalfund.org/en/
For previous AfricaFocus Bulletins on health issues, see
http://www.africafocus.org/healthexp.php
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Letter to the Global Fund Board
Background note, in addition to the Letter below, available
at http://icssupport.org/home/call-on-the-global-fund-board
May 2012
To the Global Fund Board:
We write as global health groups, communities affected by
HIV, TB, and Malaria, and researchers from around the world
to urge you not to undermine the founding principle of a
demand-driven Global Fund. We are united against proposals
to set "envelopes" or "allocations" for each country, which
would result in limited ambition, scaled back or skewed
plans, and ultimately a failure to get ahead of death and
new infections. Limiting ambition now will only cost more in
the future - in lives and money. Instead we must continue
the push for the boldest plans possible. We must focus, not
on limiting country strategies, but on impact in the short
term and ensuring predictable, sufficient funding is
available long term.
The Demand Driven Model is Needed to End the Crises: The
Global Fund is the most innovative, far-reaching, resultsdriven
health financing mechanism in the world. We remind
leaders that it was, in fact, born out of the failure of
other development institutions - largely funding "envelope"
driven - to respond to the three pandemics. World leaders,
including all G8 countries, committed to ensuring that no
???costed, credible??? plan would go unfunded.
Today we face a crisis of success: high quality proposals,
new science and quality implementation are making it now
possible to imagine the end of the AIDS, TB, and malaria
crises. We are disturbed by proposals that look backward to
the very models that have failed to end the pandemics and
urge the board to maintain the innovation and commitment to
scale embodied in the demand-driven model.
Better, Predictable Funding Does Not Require Allocations or
Envelopes or Ceilings: In November the Global Fund Board
decided on an exciting new Strategy for 2012-2016. This
includes a commitment to replace the "rounds" system with a
more flexible and predictable model, which is urgently
needed. However, this does not mean that the Fund should
simply begin dividing-up current available funds country-bycountry
based on some equation. Likewise, even country
allocations based on disease and poverty that are designed
to act as 'floors' that additional funding could be added to
would act as ceilings - regardless of the intention of the
model. This will have clearly negative consequences: instead
of countries putting game-changing plans together and
presenting these to the global community for support,
countries will feel pushed to program according to the
available insufficient budget. This is a model for failure
in the fight against infectious disease pandemics.
We draw your attention to alternatives, including the
attached points from civil society that could be the basis
for a rational new funding model to meet the needs of
changing times while retaining demand-driven focus
(http://icssupport.org/home/call-on-the-global-fund-board).
This can and should be implemented as discussions move ahead
on urgently needed new funding windows in 2012 and 2013, but
a top priority must be stoking, not limiting, ambition.
The Solution Is Flexible, Predictable Resource Models: If
the problem is insufficient (and insufficiently predictable)
donor funding then we call upon world leaders to create new
replenishment mechanisms. The total unmet "demand" expressed
to the Global Fund is little more than a rounding error in
global budgets - temporarily insufficient funding should not
mean abandoning the fight. Models that apportion the need
among those who can pay, that allow for multiple pledging
opportunities, and that promote peer-accountability among
donors are how the global community ensures sufficient
resources for its true priorities. Where are the serious
proposals in this area?
This is a moment of reckoning: will the Board and will world
leaders abandon their commitments to a new model of
development with success within our grasp? Or will we all
act together, with commitment, to end the crises of AIDS,
TB, and malaria? We urge you to maintain your commitment.
Submission to the UK House of Commons International
Development Committee for Its Evidence Session on the Global
Fund to Fight AIDS, Tuberculosis and Malaria
by Bernard Rivers
[Abridged: full text available at
http://www.aidspan.org/aidspanpublications]
17 April 2012
Preface
Aidspan (http://www.aidspan.org) is an international NGO
based in Nairobi, Kenya. Its mission is to reinforce the
effectiveness of the Global Fund. Aidspan performs this
mission by serving as an independent watchdog of the Fund,
and by providing services that can benefit all countries
wishing to obtain and make effective use of Global Fund
financing.
...
Aidspan and the Global Fund maintain a positive working
relationship, but have no formal connection. Aidspan does
not allow its strategic, programmatic or editorial decisionmaking
to be influenced by the Global Fund or by
relationships with actual or potential funders. Furthermore,
the Global Fund and Aidspan's funders bear no responsibility
for the contents of any Aidspan publication.
Aidspan thanks the UK Department for International
Development (DFID), The Monument Trust, Norad and Hivos for
the support they have provided for 2012-2015 operations.
Bernard Rivers ([email protected]), author of this
report, is the Executive Director of Aidspan.
More information on the UK House of Commons hearings can be
found at http://tinyurl.com/6pa36tb
1.Background regarding the Global Fund
In April 2001, Kofi Annan declared that there should be a
"war chest" of $7-10 billion per year to finance the fight
against AIDS. He proposed that much of this should be
raised, and then disbursed, by a "Global Fund."
Within less than a year, the Global Fund to Fight AIDS,
Tuberculosis and Malaria (http://www.theglobalfund.org) went
from concept to reality. The Global Fund opened its doors in
January 2002 with the stated objective of dramatically
increasing funding for the fight against three of the
world's most devastating diseases.
The Global Fund provides about 20% of all international
financing for AIDS, about 65% for tuberculosis and almost
60% for malaria. The Fund has approved over $22 billion in
grants in 150 countries, and it estimates that programmes
that it supports have saved over 8.6 million lives.
From the beginning, the Global Fund has had an astonishing
range of supporters, from AIDS activists to US Republican
Senators. This is largely because the Global Fund operates
differently from traditional forms of foreign assistance: It
uses a model that emphasizes control over grants by
recipients, and it uses a business-like approach. The Global
Fund's board includes not just donor governments, but also
developing country governments, the private sector,
foundations, non-governmental organisations (NGOs), and
people living with the three diseases. The programmes to be
funded are designed and run by the recipient countries,
usually without the Global Fund telling them what it
believes is in their best interest. Grant approvals are
based purely on feasibility and technical merit, with no
consideration given to ideological factors. With some
grants, significant portions of the money are passed through
to grass-roots NGOs. Overhead costs are kept to a minimum,
with the Global Fund having no offices apart from the head
office in Geneva. And the grants are "results-based,"
meaning that if the results promised by recipients are not
delivered, the grant may be terminated and the money
diverted to more effective programmes.
This no-nonsense, no-frills approach was aptly summarized by
Richard Feachem, the Global Fund's first Executive Director,
in six words: "Raise it. Spend it. Prove it." However, the
sequence is really "Spend it. Prove it. Raise it." The Fund
has to spend its money effectively. Then it has to prove
that the expenditure had led to good results. Then it has to
point to those results to persuade donors to give more.
2.Background regarding Aidspan
I am the founder and Executive Director of Aidspan
(www.aidspan.org), an NGO which serves as an independent
watchdog of the Global Fund. Aidspan has existed almost as
long as has the Global Fund, and was set up in the belief
that an organisation with as much money and power as the
Global Fund needs ongoing scrutiny of its practices and
results. I have had observer status at Global Fund board
meetings since 2004; I have known most of the Fund's senior
managers and many of its board members; and I have visited
many Global Fund-financed projects in the field. Aidspan's
activities include publishing Global Fund Observer (GFO), a
free email-based newsletter which has nearly 10,000
subscribers. Aidspan has a dozen staff and is based in
Kenya.
In November 2011, DFID committed to provide Aidspan with 1.3
million British pounds spread over the subsequent four
years. This funding will cover about 22% of our budget
during that period.
Aidspan does not allow its strategic, programmatic or
editorial decision-making to be influenced by the Global
Fund or by relationships with actual or potential funders.
Thus, neither the Global Fund nor DFID was consulted
regarding the contents of this testimony.
In brief, Aidspan's attitude is that the Global Fund is a
unique and crucial institution, and we want nothing more
than for it to be successful and effective. And we admire
donors such as the UK that are willing to "put their money
in the Global Fund pot" without requiring that their money
is earmarked for particular countries or projects.
Over the years, the Global Fund has performed quite well.
But any institution can improve its impact by 10%, or 5%, or
surely 1%. It is those possible improvements that we look
for.
3. 2011, the Global Fund's worst year
The Global Fund recently celebrated its tenth anniversary.
The year 2011, which ended with the Fund's Board forcing the
Executive Director to resign, was the Fund's most difficult
to date.
The stage was set for the Global Fund's problem-filled 2011
when the Fund said in late 2010 that it needed $13-20
billion to meet anticipated demand for 2011-2013 (up from
the $9.3 billion it received during 2008-2010), but donors
pledged only $11.7 billion.
Then in January 2011 the Associated Press published an
article entitled "Fraud Plagues Global Health Fund," based
on public reports from the Global Fund's Office of the
Inspector General (OIG). The story took off like wildfire.
Alarmed, some of the Global Fund's donors held back on
delivering their promised contributions pending clear action
by the Fund to deal with fraud.
The OIG's findings on fraud, although much less significant
than was suggested by the AP, were obviously important and
required action. But the OIG made little distinction between
outright fraud and multiple lesser crimes (such as grant
recipients documenting their expenditure using photocopies
rather than originals). These and other instances of OIG
rigidity led to a very difficult relationship between the
OIG and Secretariat.
Somewhat shell-shocked by the media and donor response, the
already risk-averse Global Fund further tightened its
procedures, leading for a while to a slow-down in
disbursements. Even when implementers received their
disbursements, they were sometimes nervous about spending
the money for fear that they would inadvertently violate
some Global Fund rule.
Meanwhile, the Fund set up a High Level Panel to review how
the Fund identifies and manages risk in its grant-making.
The Panel issued a report in September that was daunting in
terms of the number of things it said need fixing.
The downhill trajectory continued when the Global Fund,
having launched "Round 11" (its eleventh round of grantmaking)
in August 2011, cancelled it three months later
because of inadequate funding.
Then came a final nose-dive when the Global Fund Board,
after reviewing the events of the prior year and conducting
an in-depth assessment of the managerial performance of the
Fund's then Executive Director (ED), concluded that he had
to go. After the ED ignored strong suggestions that he
resign, the Board resolved to appoint a General Manager to
whom all top management would report, leaving behind a role
for the ED that was "to be determined." For two months, the
Global Fund floundered almost leaderless. Of the seven
members of the Executive Management Team that ran the
Secretariat, only three were present and productively
engaged during this period.
...
Finally, on 24 January 2012, the ED announced his intention
to resign. On the same day, the Fund announced that the new
position of General Manager would be filled by Gabriel
Jaramillo, a former banker who specialises in management and
turn-rounds and who had served on the High Level Panel.
4. What needs to change
The Global Fund performs vital work affecting millions of
lives. The Fund cannot afford to have a second year like
2011, and might be permanently damaged if it did. Here are
six areas in which, in my view, changes need to be
implemented.
(a)The Global Fund must install first-class management
The recently-departed Executive Director's managerial
misjudgements started several years ago, when his approach
led to several highly-capable department heads leaving the
Fund, and when some of the new department heads he recruited
were disappointingly weak. This led, over time, to serious
reductions in morale and effectiveness lower down in the
organisation.
Both of the Executive Directors that the Global Fund has
hired over its first decade were charismatic leaders; but
neither had much interest or natural skill in the art of
management. The Global Fund is not an entrepreneurial startup
or a university department or a think tank. It is a vast
meat-grinder that disburses $3 billion annually, employing
600 staff and working its way through an administrative
budget of $370 million. It needs to be led by managerial
heavy-hitters.
Current state of play: Since the start of February, the
Global Fund has been led by Gabriel Jaramillo. He certainly
hit the ground running. He has removed some members of top
management; he has informed 140 of the 667 staff that their
jobs have been eliminated; and he has created 82 new jobs in
the area of grant management. There have been some
complaints about how some aspects of this were handled, but
that is hardly surprising. By definition, it's too soon to
know what the net effect will be. But the decision-making
has been both firm and speedy.
(b) The Global Fund must become less bureaucratic
The Global Fund needs to turn away not only from its
pre-2011 attitude (which was, at least in the earlier years,
"here's lots of money - get on with it") but also from its
OIG- inspired 2011 attitude (which was "don't forget to
submit all those workshop sign-up sheets"). The OIG's job is
to identify fraud and, where possible, to eliminate it; in
other words, it is to minimise risk. Mr Jaramillo's job is
to maximise the number of lives saved as the result of the
Global Fund's grants. This requires, among many other
things, risk-management; but that is not the same as riskminimisation.
Thus, there is an inevitable tension between
the OIG's role and the General Manager's role.
Putting this a different way, the Global Fund needs to shift
from being a "cashier demanding receipts" to being "an
investor demanding results". The cashier/receipt mentality,
triggered primarily by the work of the OIG, has led to
excessive bureaucracy and minimal trust. The
investor/results mentality can lead to greater trust and
more impact. But of course, excessive trust can be abused;
there must be verification.
Furthermore, a strong case can be made that what should be
verified is the number of people with improved health, not
bean-counter items like the number of people attending
workshops.
If the Fund can succeed in making these shifts, it can
become less bureaucratic, and there's even a chance that it
could achieve the long-lost vision that it promoted in 2002
??" "simplified, rapid, innovative and efficient."
Current state of play: It's too soon to know whether the
Global Fund will succeed.
(c) The Global Fund must explain itself more clearly
The requirements that developing countries have to follow
when applying for or implementing Global Fund grants are
very complex. This is to a large extent inevitable; you
can't expect just a two-page application form if you're
applying for tens or hundreds of millions of dollars.
But the fact remains that the Global Fund does a terrible
job of explaining itself to the world. Why is it that "The
Beginner's Guide to the Global Fund" (which is available in
a 50-page version and in 8-page and 2-page summary versions)
was written and published by my own organisation, Aidspan,
rather than by the Global Fund? Why is it that nearly 10,000
people have to subscribe to our newsletter Global Fund
Observer (GFO) in order to learn about developments that the
Global Fund has not explained, or has explained in a
confusing manner?
Even the Fund's press releases have at times been confusing.
When the Global Fund had to cancel Round 11, the Fund's
press release did not mention the words "cancel" or "Round
11". Just as bad, the Fund did not make it clear that over
the previous year, donors had not reduced or cancelled their
pledges to the Fund, as was widely believed. The primary
cause of the abrupt reversal regarding Round 11 was the
Fund's fear that donors might reduce or cancel their
pledges, either because of donor concerns about Global Fund
problems, or because of the economic difficulties that many
donors were experiencing. The Fund therefore introduced a
more conservative forecasting methodology, which led it to
estimate that it could only be sure of about $10 billion in
income during 2011??"2013, rather than the approximately
$11.5 billion that it had originally projected. A
significant factor here was that the Fund was not sure that
the US would contribute the full $4 billion over three years
that the US had announced in 2010. (In fact, it's now
looking increasingly likely that the full $4 billion will be
provided by the US.) The reduction in the Global Fund's
revenue forecast from $11.5 billion to $10 billion over
three years may not sound large; but it had a drastic
impact, because the $1.5 billion reduction was almost
exactly equal to the anticipated cost of Round 11. And the
Board had long since determined ??" rightly ??" that new
grants (such as would have been provided under Round 11)
have to be assigned a lower priority than keeping existing
grants going. At the time of the cancellation of Round 11,
the Global Fund knew that the costs during 2011-2013 of
continuing and renewing its existing grants came to about
$10 billion. Which left no certain money for Round 11.
Yes, this is modestly complicated. But an organisation that
handles many billions of dollars ought to be willing and
able to explain such matters clearly. The fact that the Fund
did not do so left much confusion within the Global Fund
community.
Current state of play: The Global Fund is looking for a new
Communications Director. Maybe that will lead to better
press releases. But I've seen no evidence that the Fund
plans to improve the clarity and effectiveness of its
broader communications with the thousands of people who are
involved in applying for and implementing its grants.
(d) The Global Fund must determine whether its grants are
more susceptible to fraud than are those of other
international donors
The January 2011 AP story that started the Global Fund's
terrible year was based on fraud identified by the OIG (and
reported at the Fund's website) in just four small countries
out of the 150 that receive Global Fund grants. Yet the
story had the unproven headline "Fraud Plagues Global Health
Fund."
What the Global Fund should have done - and it's not too
late - is to commission an independent group of experts to
estimate, based on the available data, how extensive fraud
is across the entire Global Fund grant portfolio. The
question is not is there fraud?; it is how persistent is
fraud? And the follow-up question is: how does the Fund's
fraud problem compare with that of other multilateral and
bilateral funding agencies?
Of course, that second question will be very hard to answer,
because no international funding agency - not the World
Bank, not DFID, not USAID, not anybody - is as transparent
as the Global Fund is about the fraud it unearths. Indeed, I
sometimes think - perhaps unfairly - that some agencies
would prefer not to know, let alone to publish, which of
their grants have led to some leakages through fraud.
(e) The Board of the Global Fund must be made leaner and
more effective
The Global Fund needs a smaller board made up only of
members who are competitively chosen, who spend some years
in the role, who fully prepare for and attend all board and
relevant committee meetings, who become accustomed to
working with each other, and who each accept personal
accountability for the results. This is how it is done in
the corporate world, and it usually works. If this requires
some board members to be paid, that option should be
considered.
At present, some board members who represent multiple
countries are chosen by those countries based on each
country's position in the alphabet. These board members, and
certain others, are often insufficiently informed and
engaged. This has led to a board that focuses on a mix of
putting out fires (which is clearly necessary) and micromanaging
the Secretariat (which is not). There is a huge
middle area - involving thinking proactively about areas of
risk and of potential improvement - that hardly ever gets
discussed. The Board is only rarely a source of strength. It
needs to become one on a permanent basis.
Current state of play: Over the last few months, the Global
Fund has redesigned its board committee structure. And its
Audit and Ethics Committee now has a majority of its members
who are independent of all board delegations. These are
encouraging developments. But I've seen no sign yet of plans
to reduce the size of the board, to increase the calibre of
its membership, or to improve the quality of its discourse.
(f) The Global Fund must re-examine certain aspects of its
transparency policy
Two admirable components of the Global Fund model - an OIG
that is determined to root out fraud, and a world-class
transparency policy - have produced, when combined, some
unanticipated consequences. The OIG discovered fraud among
certain grant implementers; the Global Fund posted the
findings at its website rather than hiding them in a safe as
most aid agencies do; the press went wild; Global Fund
donors worried about how their taxpayers would feel about
funding grants for corrupt implementers; donor pledges were
put on hold; and Global Fund growth stalled. This cycle will
repeat itself unless the Board is able to devise a policy
that permits the Fund to better manage the repercussions of
transparency without sacrificing the underlying principle.
Current state of play: By the end of 2011, the OIG was
supposed to have completed at least 48 country-level audits.
But thus far, it has only published reports on 20 of these.
It has published no reports during the past six months. I
imagine that this is not just the result of over-work; it is
the result of trying to work out how to have audit and
investigation reports that are transparent but that don't
lead to firestorms.
5.Two lingering concerns
I have a concern that under Mr Jaramillo, with his corporate
numbers-oriented background, the Global Fund may start
insisting that each of its grants demonstrates measurable
impact, rapid results, high value for money and low risk. At
first, that sounds eminently sensible. But if such an
approach is implemented, the Global Fund will change
significantly. The Fund will have to reduce its grants for
health systems strengthening (because the payback from such
investments in terms of lives saved is indirect and delayed
and therefore hard to measure). It will have to reduce its
grants to countries with weak data systems (because those
countries can't compile reliable data proving the lives
saved). It will have to reduce its grants to countries with
weak governance (because the risk of "grant leakages" will
be too great). And it will have to reduce its grants to
countries with low total burden of disease (because the
Fund's overhead per life saved in such countries will be
higher than in high-impact countries).
I also have a concern that the Global Fund will shift
towards an "allocative model", in which it determines in
advance a maximum amount of money to give to each country,
based on the burden of disease in that country and the
amount of funding available in that country from other
sources, including the country's own government. Again, at
first that sounds eminently sensible, and certainly it
should be given serious consideration. But such an approach
would, again, lead the Global Fund to change significantly.
The Fund's traditional model has involved a "bottom up"
approach, in which each country decides its priorities and
how to achieve them programmatically, and then makes a case
to the Global Fund for what areas need support. If the
Global Fund goes for an allocative model, there is a risk
that the Fund could become more of a "top down" organisation
which decides not only how much money it wants to give to
each country, but what kinds of projects it wants that money
to finance. This is much closer to the traditional bilateral
aid model; but it is not the traditional Global Fund model.
6. Looking forward
So where now? The Board has asked Mr Jaramillo to serve not
only as General Manager for up to a year, but also as the
Global Fund's interim leader until a global search for a new
Executive Director is launched and completed. Mr Jaramillo's
current task is to get the currently somewhat dysfunctional
and traumatised Secretariat rapidly up to speed.
There's a real chance that the difficulties of the past year
will end up being seen as the darkness before the dawn. If
the Global Fund can push out its Executive Director,
hopefully it is also willing to make other important though
less dramatic changes. The Fund could take inspiration from
the GAVI Alliance (formerly, the Global Alliance for
Vaccines and Immunisation). In mid-2010, GAVI went through a
major management overhaul, which included the departure of
its CEO and the appointment of a new one six months later.
Then GAVI announced in early 2011 that it had suspended
grants to four countries because of suspected fraud. Yet in
mid-2011, donors committed 15% more funding than GAVI had
asked for. It can happen.
AfricaFocus Bulletin is an independent electronic
publication providing reposted commentary and analysis on
African issues, with a particular focus on U.S. and
international policies. AfricaFocus Bulletin is edited by
William Minter.
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