From the article:
At this October’s conference for the Global Fund — a partnership founded in 2002 to fight Aids, tuberculosis and malaria — all eyes will be on whether its funding target of $14bn for the next three-year cycle can be met. But about 95 per cent of the fund’s contributions comes from donor governments. When it comes to malaria, some are exploring whether private sector investment might make a larger contribution to the wider battle against the disease.
As “impact investing” gains momentum, instruments are being developed that generate funding to tackle global problems while also delivering a financial return. But finding the right mechanisms has not been easy.
“There’s a business opportunity in the private sector [with] providers of healthcare and drugs,” says Joan Larrea, chief executive of Convergence. Her global network focuses on blended finance, which aims to use public or philanthropic capital to spur on private investment. “But it’s such a human issue that it needs a large public sector element.”
Tackling malaria requires long-term funding. “Even when there are no cases, you have to maintain the spend, and if you don’t it comes back,” says Amanda Glassman, chief operating officer at the Center for Global Development, a US think-tank. She points to Venezuela, where a collapse in healthcare has contributed to a resurgence of the disease.
The geographic spread of malaria makes it hard to attract private investment, says Peter Sands, executive director of the Global Fund: “You will get companies [investing] where they have significant concentrations of employees in intensive malaria-endemic areas. But it’s difficult to galvanise that in any systematic way since you’d have to do it over a larger area than is relevant for any individual company.” $14bn Three-year funding target for organisation battling Aids, TB and malaria.
Another financing obstacle is the fact that when malaria is controlled or eliminated, everyone benefits — not just the investors who paid for the intervention. “There’s a significant free-rider problem,” says Mr Sands.
One investment mechanism intended to combat these problems is the development impact bond. This is a pay-for-performance contract in which “outcome funders” — usually governments or international donors — commit to paying investors a return when an initiative’s goals are met.
An example was Mozambique’s malaria bond underwritten in 2013 by backers including Nando’s, the restaurant chain. If the intervention funded by the bond reduced incidence by 30 per cent in three years, investors were to be repaid their initial outlay plus 5 per cent. If not, they were to receive 50 per cent of their principal with no interest.
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