2014 03 12 new funding model allocation external_short

Allocation Communication, March 2014

New Funding Model Country Allocations

1

12 March 2014


Total funding from Global Fund is increasing

• The total funds for allocation are 20% higher than what we have disbursed in the past.

- The total funds to be allocated to countries, available as of January 1, 2014 (including existing funds): US$ 14.8 billion

- Average implied funding level: US$ 3.7 billion per year

- This compares favorably vs. the average annual disbursement rates of US$ 3.2 billion. However, this is less than the higher rate of disbursement in 2013 of US$ 3.9 billion

• In addition, the Global Fund will allocate:

- US$ 950 million of incentive funding which will be awarded to ambitious programs that deliver impact in country – which increases the average implied funding level to above US$ 3.9 billion per year

- US$ 200 million for new regional grants and US$ 91 million to finish existing regional grants

This represents US$ 16 billion for countries

Key messages1

2


On average, most countries will receive more funds

• On average, countries will receive more funds from the Global Fund for this Replenishment period than they did in the past.

• In many countries, funds from the Global Fund include (only) existing funds that must be used for maximum impact

• For many countries, 2013 was a peak year for GF disbursements as the Global Fund ‘unstuck’ grants and a backlog of funds flowed to countries. This means that there will be a decrease in funding compared to 2013 levels.

2010 2011 2012 20130

1

2

3

4

5

DisbursementsUS$in bn

Key messages for countries1

3.12.6

3.33.73.9

3.2

2010-2013

(average)

2014-2017

(average)

3


Most countries are under-funded relative to need and should be ambitious in what they plan to achieve

In most countries, the allocation amounts (regardless of whether a country is over- or under-allocated) will still be insufficient to cover the gaps vs. real need

- Most countries are under-funded relative to their needs.

- This should not limit planning and ambition – to defeat the diseases, countries need to think creatively on how to use all resources available

The Global Fund is committed to working in partnership with countries, civil society, donors, technical partners to maximize impact

- By combining the skill and knowledge and determination of everyone responding to these diseases, we will find the best solutions

- By prioritizing and focusing on maximum impact, we may be able to achieve more in the future than seems possible today

Key messages1

4


Grant implementation period is flexible

The Global Fund will work flexibly with countries to determine the best strategy to invest for maximum impact, including adapting the implementation periods

• Less than 1 year on average to access funds (including country dialogue, concept note development, TRP and GAC reviews, grant-making Board approval)

• The typical duration of a grant is three years, but the Global Fund can work with countries to be flexible on timing, and to significantly shorten the timeline to maximize impact

• Timeline will be determined based on multiple factors including: - Ambition to achieve increased impact and sustain gains- Relative under-/over-allocation of countries - Alignment with national plans and schedules

• Country dialogue will be the main mechanism to determine the optimal grant duration.

Key messages1

5


• Funding requests are based on quality national strategies

• Resources are focused on targeting the right populations

• Decisions on the allocation of resources are based on evidence/data

• Costs can be driven down by optimizing procurement/supply chain

• Existing grants should be used as effectively as possible, ensuring that programs are regularly evaluated and grants reprogramed when it makes sense for maximum impact

• Any additional funding should be harmonized with existing funding; disease programs should be viewed in a holistic manner

• Donor funding should be coordinated and aligned in-country to avoid duplication/inefficiencies

Stronger resource prioritization is critical to achieving impact

Key messages1

Resources available to countries

Strategic investment for maximum impact

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Contents

7

Allocation Methodology


Allocation methodology

8

HIV(50%)

Malaria(32%)

TB(18%)

Band 1

Band 2

Band 3

Band 4

ApplyAllocation Formula

+ Qual.

Factors

Apply Qual.

Factors

(within Band)

Country allocation

Eligible Components

Total Amount

to allocate to

Country Bands

Global Disease Split

Indicative split from Global

Fund

HIV($25m)

HSS($15m)

TB($35m)

HIV($35m)

Malaria($30m)

TB($35m)

Final program split at country

level

Example: Country ATotal indicative funding

= $100m

Malaria($25m)

Allocation methodology2


How does the allocation formula work? (Part I)

Calculate a country share for each

eligible disease component

Apply qualitative adjustments to country share

1

2


9


How does ‘Minimum Required Level’ work?

• The last 4-year (2010-2013) disbursement data available at the end of 2013, with a 25% reduction

• The existing grant pipeline remaining undisbursed as of 1 January 2014**

The MRL is the greater of the

following


• A number of countries have historically received more funding than the allocation formula provides (based on disease burden and ability-to-pay)

• MRL is a provision for ‘graduated reductions’: the countries that would receive a lower allocation instead get their ‘Minimum Required Level’ (MRL)*

* Countries may be reduced below their MRL, due qualitative adjustments

** This includes: (1) committed funding that remains undisbursed; (2) uncommitted transition funding of the new funding model approved by the Board; and (3) uncommitted rounds-based funding (whether or not Board approved). Any such funding not yet approved by the Board will be adjusted by performance-based funding criteria and for Board-mandated savings.

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Under/over allocated components

11


• Significantly over-allocated components (150% above original allocation) are not eligible for incentive funding.

• The Global Fund will work with over-allocated countries to take steps to move towards a more appropriate allocation in the future

Transfer

Allocation after MRL adjustment(e.g. large Phase II grant signed in 2013)

Original allocation formula amount

Under-allocated country

Allocation after MRL adjustment

(e.g. low past disbursement, low

existing grant pipeline)

Over-allocated country

Original allocation formula amount

Allocation Communication, March 2014 12

Determine country disease allocation

Determine total notional funding

amount per country

3

4

Aggregate all country allocations to their

relevant band

5Notional funding

amount for country A

Notional funding amount for country B

Notional funding amount for country C

Band 1

Band 2

Band 3

Band 4

How does the allocation formula work? (Part II)



Country band composition


13

Disease Burden

Inco

me

Lower Higher

Low

er

Band 1

Band 3Band 4

Band 2

GNI per capita US$ 2,000

Lower-income, higher-burden

39 countries

Higher-income, higher-burden

11 countries

Lower-income, lower-burden

18 countries

Higher-income, lower-burden

55 countries

0.26 composite

score

US$ 1.1bn US$ 1.5bn

US$ 0.9 bn US$ 11.3 bn

US$ 83 million of incentive funding

available for Band 3





Band 4 countries have incentive

funding calculated into their allocations

Hig

her


The notional country disease allocation resulting from the allocation formula is further adjusted based on a number of qualitative factors

Any adjustments made have to be offset by other adjustments in the same band.

The majority of the qualitative adjustments, (except external financing, minimum required level and WTP) are made within the Band

Qualitative adjustments

The formula amount is decreased to 70% before application of qualitative factors

1

2

3



How qualitative adjustments affect the allocation

Criteria Allocation impact

External Financing

Minimum required level

Performance

Impact

Increasing rates of infection

Risk

Absorptive Capacity

Willingness to Pay

Maximum decrease or increase in allocation of 50%

The higher of the two totals: total of past 4 years’ disbursement data reduced by 25% or total existing pipeline

Increase of up to 25% for good/exceptional implementation

Increase or decrease of up to 15%

Increase of 5%

Increase of up to US$ 1 million

Decrease (no defined amount)

15% of the allocation is conditional upon government’s willingness to make an additional investment into the disease program

Adjust- ments

to formula

Adjust-ments during

CD

Other considerations Decrease (no defined amount)

Adjust-ments within Bands



Example: Over-allocated disease component

18.5

90.983.6 84.6

Allocation through allocation process ($M)

*Note: Qualitative factor adjustments include those for performance, impact, increasing rates of infection, risk, absorptive capacity and other considerations

396% increase to be at 75% of past

disbursements

7% decrease for B1 performance rating and

limited / no impact

$1M increase for other considerations


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Example: Under-allocated disease component

35.1

16.9 17.2

25.8

Allocation through allocation process ($M)

~52% decrease because did not have high past disbursements /

existing funds

~2% increase for performance, impact, increasing rates, etc

~8M increase for other considerations.


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Appendix


Parameters for disease burden indicators


Indicator Proposed specification

HIVburden

[People with HIV]data from 2012

TBburden

[1 * HIV negative TB incident cases], [1.2 * HIV positive TB incident cases], [8 * estimated MDR-TB incidence], [0.1 * 50% of estimated number of people with known HIV positive status]data from 2012

Malariaburden

[1 * cases], [1 * deaths],[0.05 * incidence rate], [0.05 * mortality rate]data from 2000, indicators normalized

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Ability-to-pay factor


LIC

s

0 2,000 4,000 6,000 8,000 10,000 12,000 14,0000.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

Ability-to-pay factor Eligible countries as of 2013

Counterpart Financing Thresholds

GNI per capita, Atlas method

Ability-to-pay factor

0.95

LMICs UMICs

20

2014 03 12 new funding model allocation external_short

Healthcare

allocation communication

allocation of resources

allocation methodology2

countries key messages1

allocation formula work

total funding

maximum impact

global fund hiv