The Bread and Butter of Global Health Financing

Where will the global health community find more resources to support its agenda and achieve the Sustainable Development Goals? There are just two solutions to the financing gap—more money and money spent more efficiently. But in the search for resources, policymakers should not neglect what we would call “the bread and butter” of global health financing—donor co-finance and matching domestic finance.

The routine but neglected financing toolkit

In the health financing toolkit, there are two options that are boringly routine but which we argue are not widely or successfully pursued or standard:

• Donor co-finance, in which funding from multiple donors is pooled together for a single country program, i.e., the donors co-finance a project or program; this is sometimes called joint investment or joint donor finance.
• Domestic finance, in which donor spending is provided on a condition of measurable increases in a recipient country’s domestic spending or matching a portion of donor finance.

Language and terminology matters. Paradoxically, “co-financing” is used by global health initiatives (GHIs) to refer to the national governments’ portion that is added on top of external grants.

But we argue there is a “right way” to think about which is co-financing and who is the principal. The Global Fund and Gavi as GHIs ought to be the ones who are co-financing government priorities, not the other way around, i.e., country governments are co-financing the finance from the GHIs. If we believe in the principle of country ownership, domestic finance should be seen and labeled as primary and external donors should be the secondary, as the ones cofinancing.

Donor co-finance

Donor co-finance or joint donor investment is hard because it requires coordination between multiple donors. But if global health is willing to move a little slower in order to go a little farther together, then donor co-finance can allow for the advantages of different donors to complement each other.

What we propose here goes a step further than what was been called for by the Lusaka Agenda, which has narrowly focused on GHIs. Donors should discuss the array of financing options in multilateral development banks (MDBs), complemented by grant tools from Gavi and the Global Fund. In terms of scale and given the need, grant financing alone cannot be a starting point for any credibly sustainable solution to financing health (or broader SDG).

Dedicated coordinated facilities with a geographical, disease, or programmatic focus, can pool grants with loans, thus increase the concessionality and attractiveness of borrowing for health, especially on “health systems,” where disease- and technology-specific health funds have had less of an advantage given their well-known operating modalities (i.e. the majority is off-budget funding via disease programs managed by organizations and individuals with disease-, population-, or technology-specific expertise and networks).

The Global Financing Facility and the Pandemic Fund are already moving to work in this way (see section 5.2 here). The gains from a joint ex ante arrangement between, for example, both the Global Fund and the World Bank on health sector investments could crowd-in external resources without crowding out domestic funds. Countries are also demanding it—such as Nigeria, which established its first-ever health sector-wide approach (SWaP) in December of 2023, calling on all key donors to support it.

Implementing donor co-finance will require either strong country demand or donor mandates on boards to make these happen, including through conditions placed on funding pledges. What could this look like? The boards of both GHIs could require a minimum share of funds, especially those targeting higher-income countries, that are ultimately channeled in a coordinated way with a pre-set ratio, coupled with third-party independent evaluation for accountability. Without incentives (either carrots or sticks), coordination of funding for donor co-finance will likely be one-off and idiosyncratic to specific countries (or country leaders) and not highly prevalent (as it has been the case so far).

The biggest risk to donors doing things together is that things will take longer—but in theory the GHIs are well-placed and are proud of their “flexibility.” But the payoffs of integrated approaches could be large and outweigh those risks: reduced reporting burdens, reduced duplication of effort, greater transparency of domestic finance capacities, and so on. If designed well, independent evaluation of joint investment may improve understanding of the ways in which processes and administration are streamlined for greater cost savings and greater health impact. Probing the exact mechanisms of benefits to joint investment won’t be so easy to do by evaluation by randomized trial or quantitative methods. Thus, qualitative case studies that probe how joint investment succeeds or fails will be necessary to ensure learning of lessons from joint investment pilots.

Domestic finance and matching funds

Domestic finance and matching funds—sometimes also called country co-investment or confusingly called “co-financing” as we mentioned earlier—should be an easy one. Unfortunately, it has not been implemented in any serious way outside of the MDBs.

It is an open secret that in certain agencies such policies are de jure and not de facto, that is, written down as policy but not systematically implemented. Another way to put it is that they are ex ante and not ex post; they are in the agreements in advance but there is no follow-through on whether the country domestic finance amount has materialized. Among the global health initiatives (e.g. Gavi and the Global Fund), there are also differences in the “hardness” or execution of the domestic financing requirements. In a forthcoming CGD policy paper, we’ll share more about an analysis of these GHI policies and what can be learned from them—stay tuned!

While domestic financing should be an easy fix for agencies to better enforce, domestic financing requires an independent third-party evaluation on domestic health spending or better mechanism design of when and how donor money matches government money (and not the other way around as is the current norm).

Also needed is a better coordinated mechanism for tracking flows to countries, not to police but to help national and global planners assess additionality of funds. Individual donor agencies also lack transparency or insight on what other donors are requiring for domestic finance—thus returning to the first area of joint donor finance.

Attribution of results and performance to funding have been a key principle in global health over the last 20 years—and perhaps one of the strongest arguments for pursuing single-disease or vertical programs. But being able to assess the results and benefits of pooled funds—pooling donors and country funds—is the holy (still unattainable) grail. Understanding the value for pooled money can also empower local civil society, the media, and the legislatures or parliaments to hold their leaders to account.

Seventeen years on from this CGD report on healthcare resource tracking, little progress has been made on advancing these issues of domestic finance and donor co-finance. But there are some glimmers of renewed leadership, such as the World Bank and World Health Organization’s new Universal Health Coverage Hub as well as explicit references to tracing domestic financing flows in the draft pandemic treaty, as part of the Financing Coordination Mechanism. Donors have an opportunity to use their board seats to raise these issues and advance the global health community forward away from the status quo.

On top of the bread and butter of global health financing, there are also new avenues for financial innovation—stay tuned for our next blog. All options need to be explored in this era of “great incoherence.” Truly crowding-in resources will provide security on the chance that, as donor money levels off or drops, there will be government budget lines to pay for health worker salaries and for procuring essential commodities.

With thanks to participants at the World Bank’s Asia-Pacific Health Financing Forum in Colombo, Sri Lanka over June 25-27, 2024 as well as Clemence Landers, Nancy Lee, and Sanjeev Gupta for helpful comments.