GAVI has been a leading force in innovative finance for development, pioneering several mechanisms that have helped immunise children in the world’s poorest countries
International Finance Facility for Immunisation
One of the key initiatives launched by GAVI is the International Finance Facility for Immunisation (IFFIm), which converts long-term government commitments into immediately available cash resources by issuing bonds – “vaccine bonds” – on the capital markets.
IFFIm was created in 2006 to rapidly accelerate the availability and predictability of funds for GAVI’s immunisation programmes. This has enabled GAVI to nearly double its spending on immunisation programmes.
IFFIm is backed by the governments of the United Kingdom, France, Italy, Norway, Australia, Spain, the Netherlands, Sweden and South Africa, which together have pledged to contribute more than US$ 6.3 billion to IFFIm over 23 years. These long-term government pledges are used to repay IFFIm bonds. Brazil has pledged to become IFFIm’s 10th donor.
With this solid financial base and the World Bank as its Treasury Manager, IFFIm is rated AAA / Aaa / AA+ by FitchRatings, Moody’s Investor Service and Standard & Poor’s.
Front-loading through vaccine bonds supports country-driven programmes
The conversion of long-term commitments into immediate cash produces a “frontloading” effect that is ideal for vaccination procurement and delivery. Having resources today ensures a near-term positive impact on public health that strengthens and protects future generations.
The proceeds of vaccine bonds help ensure predictable funding for GAVI programmes. It means GAVI can frontload funds when necessary for rapid roll-out of new and underused vaccines.
For example, IFFIm funds have enabled GAVI to stimulate country demand for the five-in-one pentavalent vaccine, enlarging the size of the market, attracting new manufacturers and reducing prices.
Vaccine bonds also provide investors with a socially responsible investment opportunity. IFFIm vaccine bonds have proved remarkably popular with institutional and individual investors, raising US$ 3.6 billion since IFFIm’s inception in 2006.
Strength of IFFIm highlighted in independent evaluation
In June 2011, health care consulting firm HLSP released an independent evaluation of IFFIm that strongly commended its financial model and results. The report noted that not only do IFFIm-funded investments generate “extremely good returns,” but also that the health impact is considerable – likely saving more than 2.1 million lives to date.
The report focused on IFFIm’s cost-effectiveness, particularly the benefits of front-loading and its impact on creating large-scale immunity. It also highlighted the benefits of reduced vaccine prices.
“IFFIm funds have been spent on activities which have delivered, or seem likely to deliver, extremely good development returns ... we estimate that the benefit cost ratio is likely to be at least 3.5:1,” the evaluators note.
“The model is clearly robust having emerged from the financial crisis relatively unscathed ... The case for further investment through IFFIm is strong.”
The Advance Market Commitment
The Advance Market Commitment (AMC) accelerates the development and manufacture of vaccines for developing countries at affordable prices. In an AMC, donors commit funds to guarantee vaccine prices.
These commitments provide manufacturers with an incentive to develop or build manufacturing capacity for urgently needed vaccines. In exchange, companies provide the vaccines at a price affordable to developing countries in the long-term.
In June 2009, the governments of Italy, the United Kingdom, Canada, the Russian Federation and Norway, as well as the Bill & Melinda Gates Foundation, launched the pilot AMC against pneumococcal disease with a collective US$ 1.5 billion commitment. GAVI endorsed a budget of up to US$ 1.3 billion for the period 2010-15 to help fund the cost of vaccines.
In December 2010, Nicaragua was the first country to introduce pneumococcal vaccines through the AMC. To date, 16 countries have rolled out the vaccine, and another 21 countries have been approved for funding by GAVI.
GAVI Matching Fund
GAVI continues to work with partners to explore new ways to advance GAVI’s mission, building on each other’s strengths and capacities to galvanise initiatives and enhance collaboration.
The GAVI Matching Fund is a major new private sector programme designed to raise US$ 260 million for immunisation by the end of 2015.
Under the initiative, the UK Department for International Development (DFID) and the Bill & Melinda Gates Foundation have pledged about US$ 130 million combined (£ 50 million and US$ 50 million, respectively) to match contributions from corporations, foundations and other organisations, as well as from their customers, members and employees.
The GAVI Matching Fund is a different type of innovative finance vehicle, demonstrating the power of collaboration through private sector actors to raise awareness and empower private individuals and companies to have an impact on global health programmes.
Since its launch in June 2011, the GAVI Matching Fund has attracted six private institutions to make significant pledges to GAVI’s immunisation programs. They are the ARK Foundation (an international charity), the Children’s Investment Fund Foundation (CIFF), Comic Relief, the “la Caixa” Foundation (the philanthropic arm of the large Spanish bank), Anglo American plc and J.P. Morgan.
Clearly, such private sector involvement can make a significant contribution to global health, and not just through donations. Corporations also can share their business competencies to help solve development issues and bring their advocacy skills to bear. Former MTV Networks CEO Bill Roedy, for example, has become an envoy for GAVI, promoting the Matching Fund to many large enterprises.
