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What Makes Aid Funding Effective?

Recent criticism and praise of foreign aid strategies helps highlight what works and what doesn’t

Nicole Wheeler
Sep 1 · 8 min read

Over $150 billion is put into foreign aid spending every year. Aid is especially important for governments in low-income countries, where it often exceeds 20% of their total expenditure. This has to be split between different priorities and strategies and naturally, some strategies are more effective than others.

With so much at stake in human lives and money, it’s important to look back and reflect on what worked and what didn’t. In the last month, several insiders have commented on the efforts of major health funders and their strategies. While there have seen some exemplary successes, major shortcomings have also been identified.

Intervening too late

The West African Ebola outbreak of 2014–2016 claimed 11,000 lives, cost an estimated US$53 billion, and caused the collapse of health systems in the area. The outbreak left the global health community with some thinking to do — how had this outbreak got so out of control, and what could we do better next time?

The world’s largest public lender, The World Bank, responded by launching a Pandemic Emergency Financing Facility (PEF). This innovative scheme aimed to engage the private sector, by offering “pandemic bonds”. Under the scheme, investors buy bonds which pay around 13% interest annually. In return for this generous interest, investors take the risk that a pandemic will occur during the bond period, and their bond will be spent fighting it. If this doesn’t happen, investors are paid back.

Now we’re facing the world’s second largest outbreak of Ebola in the Democratic Republic of the Congo (DRC), which has persisted for 13 months and caused 1,800 deaths. The World Bank has announced that it will release up to $300 million to fight the outbreak. However, this money won’t be coming from the bonds. So far only $31 million has been paid out from the bonds to fight outbreaks, while investors have been paid $75.5 million in premiums, and an unknown amount in interest.

The bonds were so attractive to investors because the probability of payout in response to a pandemic was so low. While the second Ebola outbreak seems like the kind of scenario that deserves funding, it doesn’t quite meet the requirements, yet. Olga Jonas worked as an economist at the World Bank for three decades. She went through the World Bank’s 386-page prospectus for the bonds to figure out exactly what their terms were, and why they didn’t apply to this outbreak.

It was a good deal for investors, but not for global health.
— Olga Jonas, Nature World View

For an outbreak to receive funding, it needs to have a confirmed death toll of 250, which is well below the toll caused by the current outbreak, but it also needs to have caused 20 confirmed deaths in a second country. Compared to the original West African outbreak, the DRC is a much larger country (spanning 2.3 million square kilometers), with more people. This requirement for the outbreak to have spread to a second country creates a serious issue for outbreak management. The sooner resources are deployed to prevent the spread of disease, the more effective an intervention is, and the lower the cost to human life. Requiring the disease to already have spread across borders places a barrier to infection response that guarantees the death toll will be higher.

Tragically, current triggers guarantee that payouts will be too little because they kick in only after outbreaks grow large.
— Olga Jonas, Nature World View

Former World Bank chief economist and US treasury secretary Larry Summers speculated that the initiative was driven more by a desire to advertise creativity in engaging the private sector in global health funding, than a genuinely good funding model.

A success story

In contrast, a success story has emerged in the form of a program to eliminate neglected tropical diseases (NTDs). NTDs are a group of 20 mainly parasitic and bacterial infectious diseases. They affect over 2.7 billion people globally, and cost more than 350,000 lives each year. On top of the cost to human life is a huge burden of disability and economic disadvantage.

NTDs have been an enormous global health burden for a long time because they were neglected and we didn’t have good strategies for eliminating them. But beginning in the ’80s, two key developments began to change things. The first was the discovery that five of the most common NTDs could be treated using medications that were already in use in the veterinary sector or for treating other human diseases. Even better, these medications could be given once a year en masse to prevent infections in at-risk populations. The second development was a commitment from pharmaceutical companies to donate enough of these drugs to make this mass treatment happen.

In 2003, the WHO published a report which shifted the focus of controlling these diseases away from individual diseases and toward strategies that would impact all of them. The at-risk populations for the different NTDs often overlap, and sometimes the same drug can be used to treat multiple diseases, so a scaling up of effectiveness could be achieved by focussing on multiple diseases at once. The goal was to implement a strategy that would treat >1 billion people affected by these diseases in >100 countries worldwide.

In response to advocacy and published arguments that these strategies would have a major impact, US Congress agreed to donate $15 million to USAID, to run a program targeting NTDs. The program aimed to support the scale-up of existing strategies targeting the elimination of those five NTDs that made good candidates for mass treatment — lymphatic filariasis, trachoma, onchocerciasis, schistosomiasis, and soil-transmitted helminthiasis.

This initiative was small compared to other global health programs, but it proved to be catalytic.

Investment by the US was followed by investment from the UK. The Bill & Melinda Gates Foundation, which was already supporting a lot of the work underlying NTD management and elimination, increased its commitments even more. Then, pharmaceutical companies saw the opportunity and tripled the number of drugs they made available each year, providing more than 2.6 billion tablets globally in 2017.

By the third year of the project, the countries involved in the program had beaten their original 5-year targets for their NTD programs. This success encouraged the US to increase its investment in the program from $15 million to $100 million each year, enough to support to more than 25 countries, providing over 391 million treatments to roughly 192 million people in 2016 alone.

The initial steps towards approaching these targets are largely the same for each country and disease:

  1. identify where the infection or disease is found
  2. implement mass drug administration in all areas where the disease is endemic
  3. assess how the intervention is progressing to decide when to stop MDA
  4. carry on with surveillance and re-evaluate later to make sure that the decision to stop was correct

Over the course of eleven years, USAID’s NTD program provided over 2.3 billion preventive treatments, reaching as many as 190 million people per year. 253 million people across 18 countries are no longer considered to be at risk of lymphatic filariasis, and 102 million people across 15 countries are no longer thought to be at risk of trachoma. With an estimated commercial value of $19 billion for the medicines donated by pharmaceutical companies, this leveraging led to around $26 in donated medicine for every $1 spent by the US.

Estimates of the economic and health impact of the intervention are already impressive (the number of age-standardized Disability Adjusted Life Years these diseases cost is reported to have dropped for each NTD by 13-45%), but the full impact of the program impact is yet to reveal itself. What is clear is that quantifying the value-for-money and return-on-investment of this program’s funding will encourage continued investment in NTD targeted global health programs.

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What can we learn?

It’s worth noting is that we’re looking at two very different types of infectious disease targeted by the World Bank pandemic bonds and the NTD elimination program. Pandemics are unpredictable, making it hard to know where and when to deploy resources. NTDs are endemic, with relatively predictable rates of disease, making strategizing much easier. Still, there are some generalizable principles that apply to good funding, originally laid out by the World Bank itself:

Support good, pre-existing ideas and infrastructure — the NTD investment was designed to support programs that were already up and running, but needed more support. This gives some indication that there’s local support for the program, and that it’s overcome the initial challenge of implementation.

Have a clear end in mind, and track progress — providing money and not monitoring or managing its use appears to be a poor strategy. The funding plan for the NTD program was detailed and had been built up over a long time. It also had clear, measurable indicators of success.

Funding should be a catalyst for growth — the US initially invested because a strong argument for funding had been made, and other funders quickly followed suit. Confidence in the project grew as more players committed to it and measurable progress was made.

Coordination between donors— in the words of the World Bank: “different donors like to “plant their flags” on something tangible. In the cases of successful assistance, we tend to find strong partnership among donors with a focus assistance donors on larger transformations, not on individual projects and flags”.

Trying to reinvent the wheel when it comes to global aid is risky. Supporting change that’s already gaining momentum locally, and would benefit from scaling up appears to be a safer, more effective strategy.

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Nicole Wheeler

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A bioinformatician and data scientist at the Centre for Genomic Pathogen Surveillance, Wellcome Sanger Institute.