Translating Evidence from Health to Agriculture Development Finance
Marco Schaferhoff, Open Consultants: Brilliant, thank you, David. Sarah Zoubek introduced the meeting and the objectives of this focus group discussion already. I think there are really two key objectives here. The first one is to discuss to what extent innovative mechanisms and approaches from global health can be translated to agriculture and food security. Then, to promote a dialogue on opportunities for more and better financing for agriculture and food security.
Very briefly, Sarah and Ammad already talked about the difficulties to reach SDG2. So what is the problem that we are talking about? What is a problem that we want to address? As we all know, the number of people suffering from food security has been gradually rising since 2014. Then COVID-19 aggravated the situation, and then the Russian attack on the Ukraine essentially created the biggest global food crisis since the Second World War. We have seen a substantial response by the international community. So by bilateral donors, by technical agencies, by multilateral funders, and by many others, but we still face significant challenges. So high food prices, they continue to be high. Supply chains continue to be disrupted and there are also large financing gaps.
We are referring here just to the ODA financing gap which CERAs 2030s report estimated at 14 billion. This is Official Development Assistance. And then an additional 19 billion by the governments of low- and middle-income countries every year. This is significant.
What questions do we want to address? First of all, to what extent can experiences from global health be translated to agriculture and food security? How relevant are particularly innovative approaches from global health, and what are key cross-cutting learnings? To address these questions, we have adopted a framework with four dimensions. We are looking at resource mobilization with a focus on IFI funding mechanisms, with a focus on the role of grants and grant-based mechanisms. Then what we call global functions. Gavin Yamey and I have worked on this significantly for global health. This is about data, global health R&D, global health leadership and then coordination with a focus on crisis coordination. Here we focus on some learnings from the accelerator that were set up by the global health community to address the COVID-19 crisis. There are clearly limitations to our paper. We totally acknowledge that countries are of course in the driving seats. Without more investment by low and middle-income countries in food security and agriculture, it will be very hard if not impossible to reach SDG2. But still, our study has a focus on the global architecture as mentioned by Sarah at the beginning. We also, of course, acknowledge that there are differences between food security and agriculture as a productive sector and global health. But we still believe that there are key learnings to discuss and to look at.
All right, so let’s go to funding mechanisms first. I would like to quickly show you two very important charts. What we can see here in the left chart is that health ODA since 2002 significantly increased and in 1999, 2000, the Gavi Alliance was formed. In 2002, the Global Fund to fight AIDS, TB and malaria has been launched. Since then, we have seen a massive increase in global health ODA from 8% of all ODA. 2002, the share of health out of total ODA almost doubled to 15%. As you can see in that chart, the COVID-19 pandemic has further increased global health financing in 2020 and 2021 to a new peak level. It is pretty clear that we see an even further increase in 2020.
For agriculture ODA, we’ve adopted here a very narrow definition. As you know, there are multiple definitions for agriculture and food security. This one really relates to agriculture. The paper includes multiple other definitions. For example, we also applied the OEC DAC definition of agriculture which includes rural development and fishery and forestry. There are also multiple other charts, in particular emergency food assistance. However, the picture is pretty similar. What we can see is that the share of agriculture out of total ODA has remained pretty much constant. So 3.5% in 2002 and 3.3% in 2021, there is an increase in absolute terms, but that increase is not very massive. In addition, other official flows, less concessional flows, have played usually a much larger role in agriculture than in health. But that has also changed. We don’t show that here, we can look at that later. In recent years, other official flows also driven by the COVID-19 crisis increased massively in global health from around 2 billion to 8 billion. Then traditionally, we see also much more private flows in health than in agriculture. If you would put everything together, ODA, OOF and private flows, I think the difference between the two sectors look even be more dramatic.
So what we can see here in that slide, is multilateral grants in the health sector. And again, what we can see is that since these large financing mechanisms, Gavi, the Global Fund, Unitaid product development partnerships and others were launched around the millennium. We’ve seen a significant increase in multilateral health grants. Gavi and the Global Fund have therefore also been called proto institutions of global health because the raised the profile substantially of the sector. They created new governance structures based on public and private partnerships, so boards and other committees. They provide accessible funding for governance without increasing debt. They allow for direct funding to non-governmental implementers like affect communities, key populations, NGOs, other UN agencies. They enabled procurement and market shaping for commodities. So from our perspective, these mechanisms really made a difference to global health. There are important critiques to that, as we ourselves pointed out. They’ve also increased the verticalization and to some extent the fragmentations of efforts because they are organized around specific diseases like HIV, TB and malaria or product like vaccines.
So if we now compare that with the agriculture and food security space, what we see is essentially that multiple studies, but also our key informants, highlight that there is more need for multilateral grants for agriculture and food security. There’s a recent ODI study which includes a survey with 30 LMIC governments. One key message from that study is that agriculture is often seen as a soft sector as it does not generate enough revenue to service loans. One key finding or key point of that study is that a pro-poor agenda requires more grant funding. This paper also makes a case that concessional lending for hard agriculture projects, so large-scale commercial infrastructure related projects, are suboptimal for small holders and SMEs. And, that more grants could particularly be required for medium term interventions to bridge the transition gap between the short term humanitarian response and a longer term agriculture development response.
That was also finding from our key informant interviews who made the case that grants could be used to increase the resilience of systems and to boost production of smallholder farmers with interventions that do not have an immediate effect but possibly within one year. That includes, for example, buying fertilizers, contingent cash based programs, including for unexpected events, more technical support, digitalization, local information system. So that was one key point that was raised during the interviews: grants could play such a key role for these specific purposes. Studies and key informants also mentioned including our 2019/2020 study that Sarah Zoubek mentioned, that grants are needed to unlock commercial finance. That there is more need for blending and matching finance.
And then finally, what we also see is that especially the COVID-19 crisis has substantially increased the debt of countries. There are real concerns about future debt servicing. As you can see on the right side of the slide, the general government debt in low- and middle-income countries as a percentage of GDP increased on average by 11 percentage points. That’s highly significant and constrains lending for agriculture even if these loans are highly concessional. What we’ve also seen, especially in the past two or three years in response to COVID and the Ukraine crisis, is that multilateral financing, and grant financing for agriculture has increased so that institutions provided more grants to address the crisis compared to previous years.
Coming now quickly to resource mobilization before I pass this on to Gavin. One thing that we have also seen in health is that there were significant examples of innovative financing mechanisms. I think the most known one is probably the International Finance Facility For Immunization, IFFIm, which issues vaccine bonds to front load resources. It has a quite significant donor base. I think a dozen of high-income countries contributed to it. And between 2006 and 2021, it has almost mobilized 8 billion in additional financing. We’ve also recently seen some donors using it in response to COVID, including for vaccine development and delivery. The second substantial mechanism is Unitaid’s airline levy which also mobilized 2.5 billion since 2006. The Global Fund has adapted to health initiative which essentially was used by 10 countries and three donors to cancel debt. In return, the countries invested over 200 million in domestic financing in the health service delivery. And then we have advanced market commitments and advanced purchase commitments, for example, the Ebola stockpile. So these mechanisms are a little bit different because they incentivize manufacturers to develop and produce vaccines tailored to LMIC needs, and then guarantee initial purchase price and quantity. So an important incentive mechanism.
There are also less successful examples. For example, the Pandemic Emergency Financing Facility. That path was closed I think last year or the year before because it wasn’t seen as very successful. There are also other issues with some of these mechanisms. So for example, if we look at Unitaid, most of the funding from the levy comes from France. I think it is 98% of these 2.5 billion because there are political hurdles for other countries to adopt such debt.
We also have examples of innovative financing in agriculture and food security. I think most significant is the ACRE Agriculture Insurance to protect smallholder farmers in case of extreme weather events. Between 2014 and 2020, that has dispersed over 180 million to smallholders in response to such events. So this is significant, but then what we find is that most other mechanisms like impact bonds, Debt Swap, also the Better Cotton Growth Innovation Fund which is a fee-based mechanism, that these funds remain small so that they have not brought to scale. At the same time, we find multiple studies including from high-level panels which explore these mechanisms further, including Texas, but also insurance mechanisms bonds, which come to the conclusion that these could be stated and that there are substantial potential. So, now I turn it over to you, Gavin.
Gavin Yamey, Center for Policy Impact on Global Health: Thanks, Marco. So Marco has talked about what I think has been quite impressive. Resource mobilization in global health, including from 2010, the so-called golden decade for global health when aid tripled. As you saw, that was through a combination mostly of grant-based mechanisms, Global Fund, Gavi and then more recently innovative mechanisms like IFFIm and the airline levy. I want to turn now to coordination. Coordination has always been this sort of thorny issue in global health and surely in other development sectors as well. There’s always been this tension between, you know, it’s wonderful that there are so many initiatives, let a million flowers bloom, great creativity and energy. But at the same time, as Marco talked about, it creates problems, adjudication, fragmentation and inefficiency.
In February, 2020 when it became clear that COVID-19 was going to cause global health, social and economic devastation, the World Bank, Muhammad Pate, the head of health nutritional population contacted our center and said could you kind of drop everything and put together a paper on how we’re going to vaccinate the world? How are we going to manufacture vaccines? How we’re going to distribute them? It’s quite telling that two months later a new unprecedented coordination mechanism was in place. There really hadn’t been anything quite like the access to COVID-19 Tools Accelerator, Act-A.
Act-A, broadly speaking had four main hubs. One for treatment, one for diagnostics, one for vaccine and one that was supposed to be about health systems strengthening. It was pretty inclusive, but perhaps not as inclusive as it could have been. It had a principles group that had all the leads of those four pillars together with industry UNICEF, the Gates Foundation, and worked in partnership with government civil society as well. The resource mobilization was successful. It was jointly branded, fundraising was joined. There was an investment case, and I think quite an interesting fair share model, actually. The model was to contribute. You certainly had to be over particular income threshold, but it wasn’t just your GDP per capita. It was also how much would you benefit from global COVID control. If you were a country that would benefit a lot from controlling the pandemic through things like imports and exports, et cetera, you were expected to pay more. It was, I think quite an interesting role of it. For countries that probably weren’t able to pay as much, you could also contribute in kind, for example, by donating doses.
I’ve written a lot on global vaccine inequity. It’s a big passion of mine, but you have to also acknowledge that this was not only the fastest vaccine ever developed in history. Months, four years, this was less than a year. It was actually the fastest vaccine rollout in history of any vaccine, unprecedented in scale. There were giant inequities. Those inequities were a lot to do with vaccine nationalism and hoarding. Supply was limited to begin with, but then by 2022, supply was no longer the issue. That led to a new partnership, COVID Vaccine Delivery Partnership. Early 2022 when it became clear that there were 34 countries that still had coverage of less than 10% and supply wasn’t the issue, it was much more around kind of delivery, coordinating doses at the right time, a new partnership, UNICEF, WHO and others focused on reaching those 34 countries. Again, with tremendous success actually. I mean, there are still some countries that are lagging behind, but there are now only 18 countries with coverage less than 10% from a highly focused initiative.
Where are the barriers in the delivery chain? Marco led the independent evaluation of that day. Some of the recommendations coming out of that to develop joint R&D platform for technology transfer, knowledge exchange, priority setting. This is one of those other thorny issues in global health. We always say that we need better coordination of R&D. We’ve got efforts all around the world that aren’t coordinated. What we really need is a seamless process where the world says these are the biggest global Health R&D needs, and then we look at the pipeline and we see kind of what’s looking the most helpful. Then we say, okay, how much money is it needed to get these promising looking products out? Okay, now let’s get the money together. We don’t have that. We need that. We do need much better involvement of lower middle-income countries, and there needs to be a mechanism with access to a credit line to ensure funding on day one of the next pandemic. There shouldn’t be delays. There needs to be a high level political panel that can track progress, remove political barriers. And then, this more recent mechanism that I mentioned, the COVID Vaccine Delivery Partnership which has performed well. We need a mechanism like that for future pandemics. There is a need, you know far more about this than I do, and studies have shown that there is a similar need for stronger and more efficient coordination between the Rome-based agencies, the financial ecosystem.
Agriculture is also fragmented. We see this in global health a lot. There are lots of small uncoordinated projects. The key informants who we interviewed indicated that there needs to be both longer term investments coordinated with some of these, you know, short term responses. And there have been some, there has been creativity there have been some new forms of coordination in the food system, The Global Alliance. The Food Systems Hub, the Good Food Finance Network, but relatively small scale.
Marco and I over the years have been, I think one of the few kind of research teams focusing on what we’ve been calling global functions. A term that we first introduced in The Lancet Commission on Investing in Health That was chaired by Larry Summers 10 years ago. We’re actually doing a 10-year anniversary report this year. And this term can also be called Common Goods for Health. It’s really talking about activities whose benefits go beyond the boundaries of individual nation states. So providing global public goods like international health regulations, generating and sharing knowledge and intellectual property sharing, and for global health market shaping. Market shaping is an extraordinarily powerful global public good. By pooling demand for vaccines, by saying to drug companies: we’re going to buy hundreds of millions of doses. For many countries, that has driven prices down and it has also brought new products to the market because of a guaranteed purchaser. Managing cross-border threats. Obviously, preparedness, antimicrobial resistance and fostering global health leadership and stewardship. We’ve been tracking how much financing has been going to these global public goods. About a fifth of all ODA for health. It’s significant, although not enough. One thing I think that is important as a sort of underpinning to all of these global functions, is data, data, data. We have a reasonable evidence base in global health thanks to data and that has also increased donor investments by trusting where the money is going. We are now in discussions in the global health community about the pandemic treaty, about a high level political council, a global health threats council and a new pandemic fund has been established at the World Bank. It is calling for 30.1 billion of new financing per year, every year, forever, because we will have a next pandemic.
In agriculture, recent studies have indicated that there needs to be better investment in data research and development transfer of new technologies. Policy innovation is key, generating new policies and sharing successes and failures. Selective needs identified by studies, the high level panel of experts on food security and nutrition identify the need to harmonize data collection worldwide. That panel plus the global donor platform for rural development recommended investing in data and evidence collection and wide distribution, including South-South distribution. And just as I mentioned before, a lot of studies are suggesting larger investments in research that needed to identify policy relevant food system solution to increase the efficiency of value chains, develop climate resilient and low carbon food productions and then new technologies, tech transfer and policy innovation.
Next slide. Oh, here we go. The conclusions. Actually, the key conclusions are printed out as a little reminder to start to stimulate some of the discussion. Four big areas then are around resource mobilization. From help, we significant new funding from traditional donors. Sometimes through new governance mechanisms, proto institutions and sometimes through innovative financing. Investment in data and evidence, having the results focused helped with fundraising. There are some examples that Marco presented with innovative financing in agriculture where they tend to be more scale grant-based mechanisms. Super important in global health. Additional multi-level grant funding for small holders appears to be critical. Lending is more difficult. Then this, the importance of marrying the medium and short-term coordination. Coordination at day has been somewhat of a game changer and may have some lessons for joint resource mobilization and agriculture and code DP may have lessons for delivery, a really focused attention on delivery. And then, on the global function side, there’s been significant to investment in data research, product development, sharing of IP, including, for example, through the medicine patent pool. Similarly, there is a need for further investments in agriculture and food security around data, R&D, tech transfer, colonization of standards.
Wrapping it up are our final recommendations. Building on the value of innovative financing mechanism, scaling those up, joint fundraising strategies in response to global food crisis. We have seen that work. Sort of an arms race between initiatives during COVID and global health. Increased multilateral grant-based financing, new coordination mechanisms. Coordination between global and regional organizations. Certainly in global health, as I tell my students, they’re very bored of hearing it. It really is regions, regions, regions, regions. If you look at Africa CDC, for example, they are now arguably the most important player in global health. And finally, increased investments in global functions. Particularly data. Thank you.