USAID s role in the changing world of development finance. September 14 th, 2017 Washington, DC

Transcription

1 USAID s role in the changing world of development finance September 14 th, 2017 Washington, DC

2 The Landscape of Development Finance Is Changing Trends in development finance to and within developing countries ( ) Domestic public resources Domestic private resources Int l private resources Int l public resources Tax and other public revenues, domestic debt Gross fixed capital formation (excluding FDI) by private sector, private credit provided by domestic banks, market capitalization. International, private transfers (private development assistance remittances), FDI and other int l private capital flows (bank lending, equity, and bond portfolio flows) ODA, Other Official Flows (OOF) and South-South Cooperation (SSC)

3 Trends in Global Health Financing Growth in development assistance for health (DAH) observed and potential ( ) Avg. Annual Growth in Development Assistance for Health (DAH) ( ) % 1.8% Estimated annual external financing needs for key health areas ( )

4 Capitalizing on New Trends in Development Finance

5 Capitalizing on New Trends in Development Finance Today s landscape of development finance is more fluid and nuanced. There exists a broad spectrum of capital that represents a diverse range of social and financial interests

6 Capitalizing on New Trends in Development Finance Emerging Themes: I. Traditional development assistance is taking new forms II. Private investments and other non-donor sources of financing are increasingly generating social impact III. Donors, governments, private and philanthropic funders are transacting across an increasingly diverse financial landscape

7 How USAID is Applying Non-Traditional Approaches These trends have not gone unnoticed by USAID USAID has made investments in domestic resource mobilization and private sector engagement USAID has also been applying a range of nontraditional tools and approaches to: 1. Leverage additional sources of funding 2. Utilize funding in a more efficient or effective manner

8 USAID s Non-Traditional Financing Tools

9 USAID s Non-Traditional Financing Tools

10 USAID s Non-Traditional Financing Tools

11 USAID s Non-Traditional Financing Tools

12 USAID s Non-Traditional Financing Tools

13 Applying Social Insurance: Lulama The Challenge and the Opportunity Ensuring access to affordable, quality medicines is one of the most enduring challenges in global health especially in rural and hard to reach areas Pharmacies and drug shops play an important role in the health sector They are often the first point of contact with the health sector Inadequate business skills, poor systems and lack of access to working capital are all critical barriers Lulama is an innovative financing partnership that provides working capital and technical assistance to pharmacies in underserved communities, improving access to quality and affordable medicines.

14 The South Africa Pilot Target 30 peri-urban or rural pharmacies in Gauteng region Implement an integrated solution that provides: Access to credit from a QA distributor and extended payment terms (90 days vs. standard 30 days) Access to a product basket Business and stock/logistics management training Pilot will run for 9 months (end October 2017) and test: Demand for this intervention Improved access to medicines If business models stabilize Pharmacies are able to repay credit Absa Providing bank accounts to pharmacists Pharma Co Providing products and services to the basket of success Imperial Providing logistics and stock management training to pharmacists Pharmacy Pharmed Providing distribution to point of sales and credit Absa Providing enterprise development to pharmacists USAID Paid insurance premium to enable lending to participating pharmacies

15 USAID s Non-Traditional Financing Tools

16 USAID s Non-Traditional Financing Tools

17 USAID s Non-Traditional Financing Tools

18 USAID s Non-Traditional Financing Tools

19 An Advance Purchase Commitment (APC) to accelerate the development of Zika diagnostics Description APC reduces manufacturer risk to incentivize development of rapid, low-cost, point-of-care Zika virus (ZIKV) and multiplex diagnostics The Challenge Developing a ZIKV diagnostic is complicated by the short time the virus stays in the body, and by crossreactivity with other viruses present in ZIKV-infected countries R&D costs APC can reduce R&D risk for LIC Products High-income Market R&D Cost Recovery HIC Sales Manufacturers invest in R&D because they can recoup costs from sales Revenue streams are known and predictable CII s Activities With UNICEF, CII launched the USAID s first APC to accelerate development and scale-up of rapid in vitro ZIKV or multiplex diagnostics USAID provided $10M to guarantee the purchase of diagnostics over the next 3 years First tender issued; second tender will be released in early 2018 to ensure market competition and incentivize continued development of ZIKV and multiplex diagnostics R&D costs Low-Income Market R&D + APC Cost Recovery Same R&D costs, but unknown demand and lower prices Most manufacturers cannot recoup R&D costs and thus avoid GH R&D APCs de-risk GH R&D investment by guaranteeing purchase of a minimum volume of product LIC Sales ensuring manufacturers higher likelihood of cost recovery By creating market incentives for private sector R&D, 15 million ZIKV tests could fill a critical diagnostic need over the next 3 years

20 Thank You!