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Bridge financing for health

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  • 1. CONFIDENTIAL Bridge Financing for Global Health: Maximizing Donor Aid through Domestic Innovative Financing Pledge Guarantee for Health Overview Addis Ababa - November 2013
  • 2. CONFIDENTIAL F4D’s focus is to leverage innovative financing to bring about funding efficiency in the product and service markets of international development • Bilateral/Multilateral Donors Products • Foundations • Sovereign/National • Private Sector • Hybrids (SMOs) Services Funding 2
  • 3. CONFIDENTIAL In a resource constrained world, there is a need to recapture the value we lose due to inefficiencies Advocacy Procurement Mobilization T.A./Training 3
  • 4. CONFIDENTIAL PGH uses bridge financing to address cash flow problems in development Advocacy Procurement Mobilization T.A./Training Commercial bank Funding source 4 Donor funds arrive and pays bank (e.g. Donor) 2 1 Commercial bank supplies Letters of Credit (and payment) on behalf of MoH Guarantor Guarantees 50% of donor funding 3 1 MOH uses Letters of Credit to purchase order, manufacturer delivers supplies Manufacturer (e.g. Pharmaceutical company) Ministry of Health / Civil Society (PGH customer) 4
  • 5. CONFIDENTIAL PGH uses bridge financing to address cash flow problems in development Advocacy Procurement Mobilization T.A./Training 5
  • 6. CONFIDENTIAL PGH uses bridge financing to address cash flow problems in development Advocacy Procurement Mobilization Advisory T.A./Training Transactional A Procurements Without Transactions Nigeria Comoros Islands Ethiopia Zambia B Policy Advancements Senegal D C Pricing Discounts Facilitated Transactions Ethiopia Philippines 6
  • 7. CONFIDENTIAL PGH intends to promote knowledge transfers that will enable sustained interventions Advocacy Procurement Mobilization T.A./Training 7
  • 8. CONFIDENTIAL The PGH value proposition is already starting to see quick wins Leverage private capital to smooth donor funding flows Reduce business risk for suppliers to incentivize investments in increased quality, affordab ility and access Increase procurements that have greater value for money baked in Accelerated Empowered Efficient Ability to rapidly issue bridge funding while waiting for donor disbursement to avoid stock-outs which can have dangerous impacts on both patients and the community Allow buyers to remove inefficiencies in the procurement process that cause suppliers to price in premiums (e.g. better payment certainty, pooled procurement, etc) Increase aid effectiveness With better control of the procurement timing recipients will be able to avoid emergency production and delivery which are costly and come at the expense of additional beneficiaries 8
  • 9. CONFIDENTIAL PGH’s M&E methodology is routed in a theory of change driven on delivering value for money in both Health and Financial systems irrespective of deals a) Advocacy Output: Outcomes: 1a/b/c: $ saved, extra product procured (i.e. Comoros) Health System Value-for-Money b) NonGuarantee Deals Impact Indicators: 2a/b/c: Health/social impact (deaths averted, CYP) 3a/b/c: Supply chain speed (time to delivery, time to disbursement) $ mobilized (i.e. Philippines) 4a/b/c: Financial efficiency ($ mobilized per Guarantee $) c) Guarantee Deals (i.e. Zambia, Ethiopia) Financial System Value-for-Money 5a/b/c: Financial scale (Net $ mobilized) 11
  • 10. CONFIDENTIAL With the help of our partners we are well on our way 9