Pledge Guarantee for Health

The Solution

Innovative financing mechanisms for global health have been put in place to effectively address 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.

The Pledge Guarantee for Health (PGH) is a financial tool that borrows several ideas on trade finance developed by the commercial sector, but applies it to the procurement of health commodities like anti-malaria bed nets, contraceptives and medicines, enabling grant recipients to obtain short-term, low cost commercial credit on the basis of pending aid commitments. A donor serves as a guarantor to lending institutions and manufacturers to ensure they will be paid on time and in full. This stretches the value of the donor dollar and hastens the delivery of these commodities to the people who need them.