Neglected Tropical Diseases Program Sustainability: Innovative Mechanisms for Private Sector Engagement
May 31st, 2018
In the last 10 years, donors including the United States Agency for International Development (USAID) and the World Health Organization (WHO) have provided significant funding to combat neglected tropical diseases (NTD) in West Africa, resulting in a realistic goal of control and elimination by 2020. In an era of shrinking budgets for NTD surveillance and interventions, programs must look past traditional donor sources to fund disease control and elimination efforts. Without financial sustainability, countries will face delays in disease control and elimination. Increasingly, programs and governments are looking to the private sector to help bridge this funding gap. While not a panacea, innovative financing mechanisms such as development impact bonds (DIBs) may provide new avenues to help national Neglected Tropical Disease Programs (NTDP) engage the private sector.
Access operational capital. DIBs (also known as social impact bonds, or SIBS) are essentially complex contracts or agreements, whereby a payer will provide a designated level of compensation to an organization once a specified outcome or impact has been achieved (and verified). While this may be a relatively simple results-based contract between a traditional government- or donor-payer and a conventional non-profit program or service provider, it offers interesting opportunities to incentivize private-sector involvement. For instance, the private sector could provide the upfront capital that enables the service provider to achieve the outcome (e.g., reducing disease incidence, or increasing the number of vaccines administered). The Gavi Financing Facility for Immunizations, which raises funds from capital markets for “vaccine bonds,” with long-term government commitments, is one example of such a mechanism. The proceeds are used to fund Gavi programs.
Increase donor appetite by shifting or sharing risk. By providing upfront capital, the private sector may shift the risk of failing to achieve results away from the government, increasing the government’s (or other payer’s) appetite to enter into such agreements. For example, the United Kingdom’s Department for International Development (DFID) is developing a DIB in Uganda that aims to control rabies and sleeping sickness, with the idea that social investors will fund the control interventions, and DFID will repay investors when control has been achieved to a pre-determined level. In such scenarios, the private sector may receive its capital back, sometimes with a return, which serves to increase its interest in funding such schemes, while the public sector only funds health interventions that are ultimately successful.
Maximize private sector benefits to catalyze funding. Another way that the private can become involved in a DIB is to act as the payer in the DIB. For instance, Goodbye Malaria: Mozambique Malaria Performance Bond is a DIB that seeks to prevent malaria in Maputo province. Much of the funding comes from Nandos, the international restaurant chain, as well as other corporations. The corporations benefit from these mechanisms through high visibility of their charitable giving, and in many cases, increased productivity of workers who are beneficiaries of the program. Additionally, since DIBs are only paid out when impact is achieved, it simplifies the process of highlighting the impact of philanthropic donations in annual reports or to the public.
Manage for impact. One of the notable benefits of a DIB is that, when payments are dependent on results, impact must be measured, tracked, and managed. In the case of NTDs, this means that embedded in the mechanism itself is the necessity to track population outcomes and to quickly shift strategies when initial approaches are not successful. DIBs, therefore, also provide a degree of operational flexibility for organizations to change course and innovate to increase their effectiveness. In the case of NTDs, this benefit is compounded, as any disease resurgence would be quickly detected, preventing backslide. However, it is also imperative to recognize that measuring impact can require significant expenses when surveillance systems are not already in place or functioning well, or where verification is necessary to validate the accuracy of reported results.
While DIBs hold considerable potential to unlock funding, they are complicated mechanisms that require significant coordination among many actors. However, the time is right to test whether this sort of mechanism may enable programs to finally achieve disease control or elimination.
Restructure existing funding to enable private sector engagement. While NTDPs work to mobilize resources, there is an opportunity to restructure current funding in a way that may allow for private sector investment. Because of the progress already achieved toward disease elimination, NTDPs will not need the same level of funding in the next five to ten years that they receive today, which means that it is the right time to identify and test opportunities to leverage existing funding and persuade the private sector to engage in disease elimination efforts. Whether by providing the capital necessary to achieve disease elimination or by pooling funds with donors, private sector investors stand to benefit from the publicity of philanthropic giving and from a healthier workforce.
Identify local or international private sector actors to engage. One of the most difficult challenges in structuring a DIB is identifying and motivating private-sector participants. Programs should look toward local industries or international companies with which they have a relationship or who may have a strategic interest in eliminating NTDs in their geography. Deloitte, a partner in the USAID-funded, FHI 360-managed END in Africa Project, engaged in partnership and advocacy planning workshops with the national NTDPs in Cote d’Ivoire, Togo, and Ghana. From those workshops, the programs mapped their ecosystems, including non-traditional donors, and identified targeted lists of private sector actors to engage. In Cote d’Ivoire, the NTDP identified the national Coffee and Cocoa Counsel as a potential partner, as the entity works geographically in coffee- and cocoa-growing districts where populations are at high risk for NTDs.
Consider intermediate steps. DIBs can be complicated. If the right participants are not immediately apparent, NTDPs can still take steps toward harnessing innovative financing mechanisms. For example, programs can tighten up their financial data collection and analysis, financial management systems, and impact measurement to demonstrate that their approach is effective and to prepare for private sector investment. They could also look at establishing pay-for-results or performance bonus structures into their current programming, to allow for operational flexibility and program innovation.
As international donor funding for NTD elimination decreases, it is imperative that programs break out of the status quo, try new approaches, and engage new partners. Already, Cote d’Ivoire and Ghana are on that path. Engagements with regional financial institutions and national companies have helped the NTDPs in both countries begin to think about new modes of partnership with the private sector. FHI 360 and Deloitte continue to provide capacity building to NTDPs as these mechanisms require the thoughtful engagement of strategic new partners by programs that are prepared to deliver measured results.
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