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Public-Private Partnership, Marketization of Foreign Aid
PARK, Eunice
Ewha Womans University
Graduate School of International Studies
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Table of Contents
I. Introduction
II. Literature Review
i. Enhancement of Aid Effectiveness
ii. Market Mechanism (Public-Private Partnership) in Health
iii. Theoretical Framework
III. Methodology and Research Design
IV. Empirical Analysis
i. Historical Background on Development of GAVI
ii. Market Mechanism in GAVI
iii. Comparison among EPI, CVI, and GAVI
V. Conclusion
Reference
Annex A. Gross national income per capita 2009, Atlas method and PPP
Annex B. Guidelines for Applications
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I. Introduction
The 1990s were a critical period of time regarding the issue of global public-private
partnerships (GPPP). Several initiatives involving collaboration across sectors arose with an
objective of overcoming “failures” of the market and “ineffectiveness” of public health
services. A global approach of public-private partnerships (PPP) for health development had
been counted as a new solution to the problem of health service provision to the world,
especially to the disadvantaged population (Reich 2002). With continued discussion on aid
effectiveness in the 2000s through several high-level forums, PPPs are more commonly
found in various foreign assistance programs and projects. The private sector involving in the
public services brings the market mechanism into the field. One example of GPPP is the
Global Alliance for Vaccines and Immunisation (GAVI), incorporating key agencies and
institutions involved in immunization and development.
With continued discussion on the significance of PPP, several researches have been
done to review the historical background, investigate the logic, and evaluate the effectiveness.
Nonetheless, previous researches have limitations in comparative analysis for effectiveness
evaluation. To overcome the limitations of the previous works, the case of GAVI and the
former approaches of public services and attempts for PPP regarding vaccine and
immunization are reviewed in this piece of research. To investigate the operation mechanism
of GAVI and compare, there are questions to be asked. (1) What operation mechanism of
GAVI reflects market mechanism? (2) Is the market mechanism in public services (in this
case, PPP) more effective than the public services provided only by the public sector? It is
argued in this paper that critical operation mechanisms are based on market mechanism and
that it led to greater effectiveness in comparison to previous health program delivered without
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the private sector.
Justification of this research is its implications derived from a case, GAVI, in
discussion of market mechanism in public service and enhanced aid effectiveness. Measuring
the operation mechanism of GAVI and implying greater effectiveness are expected to shed
light on the future projects and programs for better effectiveness of similar projects.
II. Literature Review
i. Enhancement of Aid Effectiveness
Debate on Development and Aid Effectiveness
Whether foreign aid has been fostering development in developing countries is one
of the most compelling notions in our time and society. Jeffrey Sachs is a renowned
economist who has positive outlook on eradication of poverty. In his book, The End of
Poverty, extreme poverty - defined as incomes of less than 1 dollar per day by the World
Bank - can be eliminated globally with well-planned development aid (Sachs 2005). On the
other hand, William Easterly is highly skeptical towards the current trends of foreign aid. In
his book, The White Man’s Burden, he points out the possible flaws at the local level and how
ineffective the aid is being used (Easterly 2006). Dambisa Moyo also has doubts in the
current system of aid. In her book, Dead Aid: Why Aid is Not Working and How There is a
Better Way for Africa, she exposes the inconvenient truth of aid’s fostering of dependency,
encouraging corruption, and perpetuating poor governance and poverty (Moyo 2009). Peter
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Boone is also critical about the current status, viewing the history of large aid flow as to date,
a major failure (Boone 2005).
Enhancement of Aid Effectiveness
To move on from the aid “failures”, various scholars are putting emphasis on the
enhancement of aid effectiveness. On top of Sachs’ emphasis on more aid from the donor
countries, operation mechanisms are often called for change. Easterly puts emphasis on the
role of donors as “searchers” than “planners” who consider the local circumstances of
developing countries (Easterly 2006). He argues how top-down approach has failed and thus,
bottom-up approach should be pursued as an alternative for enhanced aid effectiveness.
Boone asserts that to have a real impact on extreme poverty, aid needs to be much more
carefully targeted, allocated on the basis of good scientific evidence of its effectiveness and
delivered through well-designed institutions (Boone 2005).
As a means to enhance aid effectiveness, private sector has been considered since the
Monterrey Consensus in 2002. Especially for financing for development (FfD), new
development partnership based on a framework of mutual accountability arose with urgent
need for enhanced collaboration among all stake holders to promote sustained economic
growth (UN 2002). In 2004, the United Nations Development Programme (UNDP) published
Unleashing Entrepreneurship - Making Business Work for the Poor, providing implications of
importance of the private sector engagement, recommending the major actors to modify
actions and approaches to enhance the ability of the private sector to advance the
development process (UNDP 2004).
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ii. Market Mechanism (Public-Private Partnership) in Health
Definitions of Public-Private Partnership
Tang, Shen, and Cheng (2009) discuss how the European Union (EU) created a new
focus on private-sector involvement (PSI) in 2005 to assist the government in meetings its
priorities, building on the clear recognition that public funds are limited. They distinguish the
PSI into two forms of outsourcing and PPPs (Tang, Shen, and Cheng 2009). Most literature
deals with PPPs in terms of domestic partnership. Discussion on domestic PPPs in this paper
is limited to the debate in the U.S. Yet, it is certainly relevant to PPPs in other countries and
global partnerships. The biggest difference is the actors and the scope of implementation of
the PPP projects. Whereas domestic PPPs are between the government and the private sector
within a country, GPPPs are among more actors including international organizations, states,
and the private sector in the global community, across national borders.
Emergence of Public-Private Partnership in Health
Several organizations in public health established partnerships with private sector
organizations around the year 2000. When the market fails to distribute health benefits to
people who need them– especially to people in developing countries– partnerships between
public and private organizations are often seen as offering an innovative method with a good
chance of producing the desired outcomes (Reich 2002). Despite the fact that PPPs do have
problems, the reason why they became prominent is mainly due to rising advocacy for public
health problems to be solved by non-governmental organizations in the international policy
agenda (Reich 2002).
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There has been a historical change over time. Weaver and Dennert (1987) refer to the
1930s when local economic development was a national concern for policymakers. There
were assessments of the role of metropolitan areas in the national economy, and policymakers
tried to generate urban-based jobs for the unemployed. During the 1950s and 1960s, they say
that economic growth and development became the central preoccupation of a new
generation of economists and planners who defined economic development as a matter for
national macroeconomic policy. Until late 1970s, there had been minimal collaboration
between public and private sectors within the UN or the international development system
(Buse and Walt 2000a). In the 1970s and 1980s, relationships began to change with more
donors seeking collaborators from the private sector.
Yet, it was not until the 1990s that a number of changes occurred in the context of
international cooperation for health. Radelet and Levine (2007) viewed the early 1990s, when
the cold war ended, as the time when many foreign aid programs lost their reasons and much
of their political support and encountered increasing criticisms. In response to the criticisms,
donors sought changes, and the most radical and dramatic cases were the establishment of
new institutions such as GAVI to deliver aid in fundamentally different ways than traditional
agencies (Radelet and Levine 2007). The importance of global collaboration among different
agencies is stressed in the Initiative for Vaccine Research (IVR) R&D report of 2005, which
says "the global control of infectious diseases requires global and continuous collaboration,
coordination of regulatory agencies and development of vaccines to prevent all diseases, as
well as a sustainable economic system to support these initiatives."
Advantages and Disadvantages of Public-Private Partnership
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There are literatures both for and against PPP. Yet, most literatures evaluate PPP
based on the potential benefits and costs rather than either strongly supporting or criticizing
PPP. Nonetheless, literatures supporting PPP focus on the benefits that derive from its
efficiency and financial stability. On the other hand, literatures against PPP focus on the risks
that derive from complexity, the nature of PPP projects, in comparison to either the public or
private sector working alone.
One of the advantages of PPP is that it saves resources. Fiscal problems of the state
that can be mobilized by private funding for public services alongside the significant changes
expected to be made (Bovaird 2004). Bovaird points to positive future prospects, referring to
evidence that many companies while continuing to be profit-oriented are interested in, and
even committed to, taking the corporate social responsibility aspects of their activities more
seriously. It improves provided services and generates revenue or other indirect financial
benefits.
PPP can also be time-efficient in the procurement process, consolidating many
activities into a single solicitation(Little 2011). For instance, instead of arranging financing,
hiring a designer, soliciting construction bids, overseeing construction of the project, and
ensuring maintenance and repair over its life cycle, a PPP requires only the identification and
retention of a qualified entity or team that can provide the package of services in need (Little
2011).
Regardless of the benefits deriving from PPP, there are risks and costs to be
considered. There may be substantial political and democratic costs in addition to the benefits
of efficiency and service improvements in some policy areas (Flinder 2005). Flinder
concludes with more weight on the concerns from possible risks that the state has to consider
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when introducing PPPs, based on evaluation of a number of PPPs with efficiency, risk,
complexity, accountability, and governance. Problems like high costs in tendering, complex
negotiation, cost restraints on innovation and differences on conflicting objects among the
project stakeholders (Li, Akyntoye, Edwards, and Hardcastle 2005).
Much of the risk of a PPP project comes from the complexity of the arrangement
itself in terms of documentation, financing, taxation, technical details, sub-agreements and
etc. involved in a major infrastructure venture, while the nature of the risk changes over the
duration of the project (Grimsey and Lewis 2000). The range of risks can be usefully divided
into five categories: construction risk (related to design problems, building cost overruns, and
project delays); financial risk (related to variability in interest rates, exchange rates, and other
factors affecting financing costs); performance risk (related to the availability of an asset, and
the continuity and quality of service provision); demand risk (related to the ongoing need for
services); and residual value risk (related to the future market price of an asset) (IMF 2004).
Yet, these risks are not unique to PPP projects, but rather present in all public, private, and
PPP projects. Since there is a limited scope of parts where PPPs are concentrated on, the risks
of PPPs tend to have certain characteristics, though overlapping with for both public and
private projects.
Successful and Sustainable Public-Private Partnership
For a PPP project to be considered successful and sustainable, there are some
conditions to be met (Kanakoudis, Papotis, Sanopoulos, and Gkoutzios 2007). First, it should
be based on formation of strong partnership. Second, it should be publicly accepted. Third,
the management should be transferred from public to private sector. Last, meritocracy should
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be guaranteed along with performance evaluation during the contract procedures.
Several literatures point out some critical success factors in PPP. Considering
political structure or environment, good governance (Frilet 1997) and government support
(Zhang, Wang, Tiong, Ting, and Ashley 1998) are identified. Sound economic policy, such as
available financing market (McCarthy and Tiong 1991) and effective risk allocation (Grant
1996). "Soft critical factors" like social support (Frilet 1997), commitment (Stonehouse,
Hudson, and O’Keefe 1996), and mutual benefit (Grant 1997) as the success factors for PPP
projects.
iii. Theoretical Framework
The research questions in this paper are to analyze the market mechanism found in
the GAVI operation mechanism and indicate the enhanced effectiveness of vaccination
projects that began in 1974, when WHO initiated The Expanded Programme on
Immunization (EPI). Questions are as follows: (1) What operation mechanism of GAVI
reflects market mechanism? (2) Is the market mechanism more effective in comparison to
public services?
Based on the literature review, an analytical framework has been extracted to discuss
the market mechanisms in GAVI in its supply of health services based on demands and its
financial system. Details indicate how GAVI has adapted market mechanism into its
operations and have been relatively more successful considering its paths. Based on the
market mechanism of GAVI, the coverage of five major vaccines – Hepatitis B vaccine (hepb
3), Hib vaccine (hib 3), Measles (MCV), and Diphtheria Tetanus and Pertussis (DTP)
vaccines (DTP 1 and DTP 3) – supported by GAVI are measured in the year span of from
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1980 to 2011, dividing the period into pre-GAVI and post-GAVI at the year 2000 to show
improvement in effectiveness.
III. Methodology and Research Design
This research paper is designed for a discussion on PPP with a case study, based on a
qualitative approach. It first overviews the historical context of development of GAVI,
analyzes the market mechanism (demand and supply matching and financing system) within
GAVI, and compare EPI, CVI, and GAVI in terms of conditions and effectiveness.
All information on GAVI, the International Finance Facility for Immunisation
(IFFIm), and EPI (WHO) is extracted from their websites. 1 Statistical data are from OECD
Statistics, World Bank Statistics, and WHO Statistics. 2
IV. Empirical Analysis
i. Historical Background on Development of GAVI
The Expanded Programmes on Immunization (EPI)
EPI, a WHO project was initiated in 1974 and established in 1977 through a World
1 GAVI http://www.gavialliance.org/ ; EPI (WHO) http://www.who.int/ ; IFFIm http://www.iffim.org/
2 OECD Statistics http://stats.oecd.org/ ; World Bank Statistics http://data.worldbank.org/ ;
WHO Statics on Immunization Coverage http://www.who.int/immunization_monitoring/data/en/
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Health Assembly resolution to ensure that all children in all countries benefited from life-
saving vaccines, targeting diphtheria, whooping cough, tetanus, measles, poliomyelitis and
tuberculosis. When the programme began, the disease still threatened 60% of the world's
population and killed every fourth victim, but EPI successfully increased immunization in
developing countries. Accessibility to vaccination is almost universal, as evidenced by 95%
coverage of BCG (Bacillus Calmette-Guérin, a vaccine against tuberculosis)–the first
vaccination after birth. Significant gaps remain, however, in achieving full vaccination at the
right age and intervals (UNICEF Bangladesh 2008).
During the 1980s, however, results were faltering with significantly dropping
coverage in many countries. Moreover, Hepatitis B vaccine, which was relatively inexpensive,
was not being taken up by developing country governments as part of their immunization
programs, with an estimated 30 million children not getting their basic immunizations, which
could have prevented millions of deaths (Chee, Molldrem, Hsi, and Chankova 2008). Global
progress on MCV (Measles-containing vaccine) coverage and DTP3 (Diphtheria-tetanus-
pertussis) immunization coverage indicates how the immunization coverage has changed over
time.
The Children’s Vaccine Initiative (CVI)
Aware of the problems derived from EPI and the limitation of a program only run by
public sector, the immunization community came up with an alternative, CVI. Unlike EPI,
CVI was a PPP project that brought together all the major participants in the international
health community – scientists, national and international health bureaucrats, foreign aid
donors, and the International Federation of Pharmaceutical Manufacturers Associations
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(IFPMA) (Muraskin 2002). The partners involved in CVI were WHO, UNICEF, UNDP,
World Bank, Rockefeller Foundation, and vaccine manufacturers involved at the Task Force
Level and Product Development Team (Buse and Walt 2000b).
Yet, the CVI failed to make major progress because of unresolved issues among the
partner organizations (between the public and private sectors) and lack of sustainable funding
(Chee, Molldrem, Hsi, and Chankova 2008).First of all, bringing members of the public and
private sectors together was a challenge for CVI. While the public health, both national and
international, viewed their work as a calling to benefit mankind, especially taking the
advantage of vaccines, the private sector had a totally different approach: focusing on the
search for profit especially based on intellectual property rights (IPRs) (Muraskin 2002).
IFPMA was given the second ranking position in the task force of secretary, one of CVI’s
leading proponents of private-public cooperation (Muraskin).
Moreover, lack of sustainable funding was another critical problem. A working group
of representatives from UNICEF, WHO, the World Bank, the Rockefeller Foundation, and
industry was set up, to develop proposals, but the resulting plan lacked detail, human capital,
and financial capital. Due to unresolved problems, however; WHO announced that the CVI
would be dismantled and terminated by the end of the year, just before the high-level meeting
for discussion on official launching of CVI (Milstien, Kamara, Lydon, Mitchell, and
Landry2008). Without a specific plan afterwards, everything went back to the initial stage of
WHO-oriented EPI, with a break-up of the effort for a global alliance for children’s
vaccination.
However, CVI is not simply considered as a failure but rather a stepping stone for the
long attempts to be realized through GAVI. The descending entity GAVI is largely based on
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CVI in terms of main objectives and goals, structure, actors involved, etc. Failed compromise
in CVI eventually led to another motivation for a global alliance.
The Global Alliance on Vaccine and Immunisation (GAVI)
The international community has established a business model that not only finances
the introduction of new vaccines in developing countries, but also reshapes the vaccine
market through GAVI. Launched in 2000, GAVI is a public-private global health partnership
of developing countries, donor countries, multilateral organizations, vaccine industry, and
civil society under a common mission of commitment to saving children’s lives and
protecting health by increasing access to immunization in developing countries.
GAVI’s Board is composed of WHO, UNICEF, the World Bank, the Bill & Melinda
Gates Foundation, governments of donor governments and developing countries, research
and technical health institutes, the vaccine industry of industrialized countries and developing
countries, civil society organizations, and some independent individuals. The first Board
Chair of GAVI was Dr. Gro Harlem Brundtl and from WHO who set goals of 1) improve
vaccine infrastructure in low-income countries; 2) help poorer countries procure vaccines
against hepatitis B (hep B), Haemophilus influenza type B (Hib), yellow fever and safe
injection equipment; and 3) secure research and development financings for diseases
prevalent in poor countries.
GAVI is funded by governments, corporations, foundations, and private individuals;
76% of GAVI’s funding comes from governments and 24% comes from the private sector.
GAVI’s donors vary from governments of developed countries to civil society organizations
and philanthropic foundations. GAVI aims to focus its support on the least developed
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countries (LDCs) in the world. Thus, it provides a list of countries eligible for GAVI support
based on GNI per capita below or equal to 1,520 USD (according to the World Bank data
available for the latest year) and conditions for different types of support in relation to the
proposals of the country and qualifications. GAVI has been contributing to a rise in the
number of children immunized, reducing the cost of a child’s immunization and saving
millions of lives from deadly diseases by supporting development of new and underused
vaccines, immunization services, health systems funding platform, health system
strengthening, and civil society organizations.
ii. Market Mechanism in GAVI
Demand and Supply Match
At the core of market mechanism lays an economic model of supply and demand.
GAVI is providing vaccines to developing countries based on the needs of the recipients. It is
clearly an ideal approach that has moved away from the long history of donor-oriented aids.
GAVI first provides a list of countries eligible for the support based on GNI per capita below
or equal to 1,520 USD according to the World Bank data available for the latest year. (See
Annex A. Gross national income per capita 2009, Atlas method and PPP.) Then, they set
conditions for different types of support in relation to the proposals of the country and
qualifications. Currently, there are 57 eligible countries and 16 countries have recently
graduated.
After setting the conditions and limitations, GAVI opens the support application to
all eligible countries so they can seek for what they are in need of with ownership. There are
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detailed conditions and policies requiring the developing countries to be conscious about and
report on. (See Annex B. Guidelines for Applications.) In 2012, two more modalities (the
Funding Request Template and the Common Proposal Form) of funding for Health Systems
Strengthening (HSS) have been introduced for the recipient countries to have more flexibility,
ownership, and autonomy in programming GAVI support in accordance to their own needs
and to maximize the impact of their HSS funding and activities. The Health Systems Funding
Platform (the Platform) aims to improve the way external funders support countries to
strengthen their health systems, in alignment with national plans.
By pooling the demand from developing countries for new and underused vaccines
and providing long-term, predictable financing to meet the demands from recipient countries,
GAVI’s objective to create a healthy vaccine market affordable for all is realizing. It not only
helps attract new vaccine manufacturers, including an increasing number of suppliers based
in emerging markets, but increases healthy competition and, as a result, drives vaccine prices
down. It is positively forecasted that is the key to achieving GAVI’s mission on healthy
vaccine market, providing sufficient supply of high quality, appropriate vaccines at low and
sustainable prices. GAVI’s initial impact is evidenced by the changing production and supply
base. Price drops of hepatitis B monovalent vaccines – from USD 0.56 in 2000 to USD 0.18
in 2010 per dose – and hib-containing, as well as rotavirus and HPV vaccines illustrate how
such algorithm can eventually influence the entire vaccine market (Chee, Molldrem, Hsi, and
Chankova 2008).
Financing through IFFIm
How GAVI is funded is rather unique and sustainable. It is quite heavily relying on
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private sector, hoping to overcome the historic limitations to development funding for
immunization. 37% of the GAVI’s funding from 2000 to 2010 by proceeds is from innovative
finance, like IFFIm and the Advance Market Commitment (AMC). 63% of the funding is
direct contributions, including grants and agreements from donor governments, and personal
and private sector philanthropy facilitated by the GAVI Campaign.
The International Finance Facility for Immunisation (IFFIm) was set up in 2006 to
rapidly accelerate the availability and predictability of funds for GAVI's immunization
programs based on long-term pledges from donor governments to sell something called
‘vaccine bonds’ in the capital markets, making large volumes of funds immediately available
for GAVI programs. The World Bank serves as Treasury manager and IFFIm funds GAVI for
program implementation (Figure 1).
Figure 1. Operation Logic of IFFIm
IFFIm has transformed GAVI’s financial landscape, nearly doubling GAVI’s funding.
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It benefits from USD 6.3 billion in donor contributions over 23 years from the governments
of the United Kingdom, France, Italy, Norway, Australia, Spain, The Netherlands, Sweden
and South Africa. Their long-term pledges support the issuance of vaccine bonds, which have
been issued in various markets - from London 2006 to Tokyo in 2010, – and proved
remarkably popular with institutional and individual investors who want a market-based
return and an ethical investment opportunity (Table 1 and Figure 2). IFFIm has been rated
AAA/Aaa/AA+ by FitchRatings, Moody's Investor Service and Standard & Poor's based
principally on: the high credit quality of its donors and their legally binding commitments; its
politically compelling mandate to support immunization and vaccination in developing
countries; its conservative financial policies and financial and risk management by the World
Bank.
Table 1. Donors’ Grant Agreement
Country Amount Committed
USD Equivalent Currency of Pledge
United Kingdom USD 2,980 mil. (over 23 years) GBP 1,630 mil.
France USD 1,719 mil. (over 20 years) EUR 1,239.96 mil.
Italy USD 635 mil. (over 20 years) EUR 498.95 mil.
Norway USD 264 mil. (over 15 years) USD 27 mil. & NOK 1,500 mil.
Australia USD 256 mil. (over 20 years) AUD 250 mil.
Spain USD 240 mil. (over 20 years) EUR 189.50 mil.
The Netherlands USD 114 mil. (over 8 years) EUR 80 mil.
Sweden USD 38 mil. (over 15 years) SEK 276.15 mil.
South Africa USD 20 mil. (over 20 years) USD 20 mil.
Source: IFFIm, 2012
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Figure 2. Donors’ Grant Agreements
iii. Comparison among EPI, CVI, and GAVI
To compare and contrast EPI, CVI, and GAVI, the conditions to be met for successful
PPP have been reviewed. The conditions for a PPP project to be considered successful and
sustainable and the critical success factors in PPP have been evaluated. According to the
conditions for successful and sustainable PPP, GAVI can be viewed as a successful case and
GAVI indicatively has the concerned success factors. For additional measurement of
effectiveness, vaccine coverage of selection of five major vaccines supported by GAVI has
been elaborated in detail. Moreover, the vaccine coverage tracking shows how the global
vaccine coverage has improved since GAVI had been founded.
Successful and Sustainable PPP
For a PPP project to be considered successful and sustainable, it should 1) be based
on formation of strong partnership, 2) be publicly accepted, 3) have its management
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transferred from public to private sector, and 4) guarantee meritocracy along with
performance evaluation during the contract procedures.
Table 2. Successful and Sustainable PPP
EPI CVI GAVI
(Strong) Partnership Not applied Weak Strong
Publicly Accepted Yes Yes Yes
Management Transferred Not applied No Yes
Meritocracy Yes Yes Yes
Considering the four main conditions for a successful and sustainable partnership,
EPI, CVI, and GAVI similarly were publicly accepted and operated based on meritocracy. Yet,
they differed in terms of strong partnership and transferred management. EPI does not apply
for both conditions since only the public sector provided services. CVI failed due to weak
partnership and that management could not have been transferred. GAVI, on the other hand,
was based on strong partnership among the actors from both public and private sectors and
that management had been transferred to the non-public sector. GAVI adopted the structure
from the public sector such as WHO and UNICEF, and transferred the other management to
the newly established body and the other actors. Thus, GAVI can be viewed as a successful
case.
PPP Success Factors
For a PPP project to be successful, there are some critical success factors. 1) Good
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governance, 2) government support, 3) Sound economic policy, such as available financing
market, 4) effective risk allocation, 5) social support, 6) commitment, and 7) mutual benefit
are considered as the success factors for PPP projects.
Table 3. PPP Success Factors
EPI CVI GAVI
Good Governance Yes Yes Yes
Government Support Yes Yes Yes
Economic Policy (Availability of Financial market)
No No Yes
Effective Risk Allocation Not Applied Not Applied Yes
Social Support Yes Yes Yes
Commitment Yes No Yes
Mutual Benefit Not Applied Partially Yes Yes
Considering the seven critical success factors for a PPP project, EPI, CVI, and GAVI
all have good governance, government support, and social support. Though it is difficult to
evaluate on CVI due to lack of actual performance coming from failure, it is presumed to
have good governance, government support from the donor partner countries, and social
support that EPI had had previously. Nonetheless, GAVI evidently is different from EPI and
CVI in terms of economic policy, especially on access to financial market. GAVI also had
effective risk allocation, which were neither quite applied to EPI for its public sector-oriented
projects nor CVI for its failure in the initial stage. EPI and GAVI both had strong
commitment based on their objective though CVI could not continue with its initiative. GAVI
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has strong mutual benefits among stakeholders while EPI does not apply due to absence of
partnership. CVI seemed to have mutual benefit in the beginning but eventually failed to
meet a consensus, which indicates lack of mutual benefit. Hence, GAVI can be evaluated as a
PPP that has the success factors, unlike the previous approaches of EPI and CVI.
Vaccine Coverage
To measure and compare effectiveness of EPI and GAVI’s vaccine provision
programs, vaccine coverage is significant. The coverage of selection of five major vaccines
supported by GAVI – Hepatitis B vaccine (hepb 3), Hib vaccine (hib 3), Measles (MCV), and
Diphtheria Tetanus and Pertussis (DTP) vaccines (DTP 1 and DTP 3) – has been elaborated in
detail. The year span is from 1980 to 2011 which will be divided into pre-GAVI and post-
GAVI at the year 2000 to show improvement in effectiveness for analysis.
0
10
20
30
40
50
60
70
80
90
100
1980 1984 1988 1992 1996 2000 2004 2008
hep B
Hib3
MCV
DTP1
DTP3
GAVI
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Figure 3. WHO-UNICEF Estimates of Vaccine Coverage 3
According to WHO-UNICEF estimates, global vaccine coverage has been increasing
in general. The coverage constantly rose from 1980 to 1990, thanks to WHO who initiated
EPI. It was not too difficult to pull up the coverage from very low coverage of 10-30% and
up. However, in the 1990s, the coverage increase stopped and began to drop, except for Hib
vaccine which was not provided at all until 1992. With the establishment of GAVI in 2000,
the coverage began to increase again. Hib vaccine coverage rose up to 40% in 2010.
Considering the fact that it is difficult to pull up the coverage as it gets higher, GAVI can be
viewed as a program with greater effectiveness, in comparison to vaccine provision by the
public sector, WHO, from 1980 to 1990. The vaccine coverage tracking distinctively shows
how the global vaccine coverage has improved since GAVI had been founded, overcoming
the stagnation found during the 1990s.
V. Conclusion
This research paper has examined the market mechanism in health services (vaccine
provision) and its effectiveness with the case of GAVI. PPP is an alternative approach to the
problems and failures that arose from public sector-only programs in the 1990s.
GAVI clearly had adopted market mechanisms in its operations which showed
greater effectiveness and success in comparison to the public sector’s vaccine provision. Also,
3 WHO-UNICCEF Estimates (as of July 2012)
http://apps.who.int/immunization_monitoring/en/globalsummary/timeseries/tswucoveragerota_last.htm#
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GAVI clearly had the success factors for PPP. Especially, the coverage of five major vaccines
supported by GAVI has been increasing, regardless of the already-high coverage of around
70-80%.
Discussion of market mechanism in public service and enhanced aid effectiveness
can be drawn from this research, implying that public services in collaboration with private
sector has a fine chance of turning out to be a success. Special concerns on the needs of the
partner countries and the innovative financing measures of GAVI are likely to be applied in
similar programs and projects that can involve both public and private sectors. Especially the
social interest bonds that IFFIm is issuing can be developed further under the concept of
social finance sectors.
Enhancing aid effectiveness has been an unresolved problem in the field of
development for a long time. Involving other actors and innovating the market may be a bold
but a reasonably realistic way to stepping forward to a better future.
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