Pledge Guarantee for Health
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| The Challenge |
| The Solution |
With the population of the world topping 7 billion people by the end of 2011, improving global health outcomes has increasingly become a concern in development agendas. In these hard economic times, we can no longer exclusively depend on the good graces of donor governments alone. Rather, we must think creatively about new ways to financially support global health and development goals, without relying on increasing rates of development assistance.
In recent years, scaled-up efforts towards innovative financing for global health have been put in place to effectively address these problems associated with traditional aid financing. The concept of innovative financing is that successful financial instruments in the private sector are recast to suit development objectives and its goal is to bridge the resource gap and accelerate the procurement of essential health goods to the poor.
That is why, through the leadership of the Bill and Melinda Gates Foundation, the Reproductive Health Supplies Coalition, Dalberg Global Development Advisors, and the United Nations Foundation, the Pledge Guarantee for Health (PGH) was born in 2009 as an innovative financing mechanism aimed at providing bridge financing to grant recipients on the basis of pending aid commitments. This mechanism leverages both Letters of Credit and Supplier Credit through bank guarantees backed by the Bill and Melinda Gates Foundation so that health supplies can be shipped ahead of time while the normal processes of transferring donor funding for a particular commodity is worked out.
By mitigating the resource gap, the value of donor aid is maximized by smoothing out the unpredictability and instability of the funding source. PGH delivers value for money by removing the risks in the procurement process that lead to price premiums and emergency production. In public health terms this results in faster, more efficient purchasing of life saving commodities, while also empowering governments with leverage to negotiate reduced per-item costs.
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UN Foundation CEO Kathy Calvin and PGH profiled in inaugural issue of new Global Health and Diplomacy Magazine |
