Finance scheme aims to speed up delivery of aid funding

A new public-private partnership aims to shrink the gap between donor pledges and aid disbursements 

A new public-private financial partnership aims to shrink the gap between donor pledges and aid disbursements to speed up the delivery of life-saving health supplies in poorer nations.

Pledge Guarantee for Health (PGH) will give short-term credit to developing nations so they can start using capital committed by donors before the funds are disbursed. This process can traditionally take up to 14 months.

Aid recipients using PGH will receive bridge financing equal to that pledged by the initial donor, to buy essential medicines, anti-malaria bed nets and other supplies.

Half the funds will be guaranteed by the US development agency USAID and the Swedish agency for development assistance (SIDA), with commercial banks guaranteeing the remaining 50 per cent.

“This builds on our efforts to partner with the private sector to help end preventable child death within a generation,” said Dr Raj Shah, administrator, USAID. “People around the world… [will] have access to life-saving vaccines, bed nets and other supplies that are delivered more quickly, cheaply and broadly than ever before.”

PGH began as a two-year pilot programme developed by the United Nations Foundation. Following the announcement of the funding guarantees at the close of last week’s GBCHealth Conference in New York, the programme will now have access to $100m in credit for aid recipients over five years.

“PGH works because it delivers aid faster, saving millions of lives,” said UN Foundation president and CEO Kathy Calvin. “While the financial mechanisms may be complex, the goal of PGH is simple: to quickly and effectively reduce deaths from easily preventable diseases.”

Developing countries will not only receive funds more quickly but, because their suppliers should receive prompt payment, are more likely to be able to negotiate price discounts. [Click here for an infographic on the benefits of PGH’s financing structure]

Members of the international coalition GBCHealth, which aims to promote global health, are among those participating in the five-year partnership. Companies such as the US-based Merck & Co and Switzerland’s Vestergaard Frandsen have agreed to offer discounts to aid recipients using PGH to purchase their health supplies.

“Leveraging innovative financing, we hope to help programmes achieve more impact with each deal, helping every donor dollar reach the end-user faster and with more value,” said Aron Betru, managing director of PGH.