Fw: Africa: Decisive Year for Global Fund

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    For a version of this Bulletin in html format, more suitable  for printing, go to  http://www.africafocus.org/docs12/gf1205.php,  and click on "print this page."    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 often-  misreported 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    ++++++++++++++++++++++end editor's note+++++++++++++++++    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, results-  driven 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-by-  country 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 decision-  making 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 (Bernard.rivers@aidspan.org), 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 grant-  making) 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 start-  up 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 risk-  minimisation. 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 micro-  managing 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.    AfricaFocus Bulletin can be reached at africafocus@igc.org.  Please write to this address to subscribe or unsubscribe to  the bulletin, or to suggest material for inclusion. For more  information about reposted material, please contact directly  the original source mentioned. For a full archive and other  resources, see http://www.africafocus.org    ********************************************************