House of Commons - DFID's contribution to the Global Fund to Fight AIDS, Tuberculosis and Malaria

DFID's contribution to the Global Fund to Fight AIDS, Tuberculosis and Malaria - International Development Committee Contents

Report

1. We held oral evidence on 17 April 2012 with the Secretary of State for International Development, the Rt Hon Andrew Mitchell MP, about the Department for International Development's (DFID) funding contribution to the Global Fund to Fight AIDS, Tuberculosis and Malaria (referred to here as "the Global Fund"). We also took evidence on that day from Mr Gabriel Jaramillo, the new General Manager of the Global Fund, from Aidspan (the Global Fund's independent watchdog) and from non-governmental organisations (NGOs) representing the AIDS, TB and malaria communities.[1] This short report sets out our views following that session.

2. The Global Fund was created in 2002 to increase funding to tackle three of the world's most devastating diseases.[2] It has earned a reputation over the past decade as an effective international financing institution and claims to have helped save millions of lives.[3] It currently provides about 65% of all international financing for TB and for malaria and 21% for AIDS.[4] Mr Jaramillo told us that the Global Fund was "the one institution that can link money to lives saved more directly than any other that exists in the landscape".[5] The Secretary of State believed that the Global Fund had delivered "extraordinary results over the past ten years".[6] DFID's Multilateral Aid Review (MAR), published in March 2011, rated the Global Fund as one of the highest-performing multilateral organisations, which gave "very good value" to the taxpayer and had "very high standards for financial management and audit".[7] Following this positive assessment, the Secretary of State announced that the UK—which is the Global Fund's third largest donor—would "significantly increase" its contribution to the Fund. This is in addition to £384m already pledged between 2012 and 2015.[8] But, more than a year since the MAR, DFID is yet to deliver these additional funds or confirm how much it will contribute.

3. This delay has coincided with the worst period in the Global Fund's history. In November 2011 the Global Fund cancelled its eleventh round of grant-making ("Round 11"), which would have involved some $1.5bn (£930m) in expenditure, due to fears of inadequate funding. The global economic downturn, negative media coverage regarding fraud by some grant implementers (exposed in part, Aidspan argued, by the Global Fund's commendable commitment to anti-corruption and transparency)[9] and earlier forecasting inaccuracies[10] contributed to the Global Fund reducing its estimate of likely contributions from donors. Some donors such as Germany temporarily suspended payments.[11] The cancellation of Round 11 means that no new grants will be approved until 2014, although $9-10bn (£5.6-6.2bn) will still be spent over 2011-13 on existing contracts[12] and a new "Transitional Funding Mechanism" (TFM) will continue funding "essential" prevention and treatment. The UK has assisted the Global Fund during this difficult period by bringing forward some of its contributions from future years.[13]

4. Following the fraud reports, the Global Fund set up a High Level Panel to review how it identifies and manages risk in its grant-making. The reforms recommended by the Panel were drawn together under a Consolidated Transformation Plan, which the Board approved in November 2011 and is ongoing. In January 2012 Michel Kazatchkine stepped down as the Global Fund's Executive Director, having effectively been pushed out by the Board.

5. We received a great deal of evidence from NGOs expressing concerns about the short and medium-term implications of the Global Fund's financial problems, particularly the cancellation of Round 11, for people in developing countries. We were told the cancellation of all new grants until 2014 posed a "significant threat to millions of lives".[14] The Stop TB Partnership estimated that a quarter of a million people would be left without TB treatment over the next two years: it was stressed that TB was also highly contagious if left untreated.[15] The UK Consortium on AIDS and International Development believed that the Global Fund and donors had "seriously underplayed the consequences of the crisis": it estimated 55 countries had been planning to submit Round 11 proposals for HIV programmes.[16] Analysis by the Roll Back Malaria Partnership estimated that more than 300 million people would not receive long-lasting insecticidal nets or malaria treatment, although the essential support provided by the TFM might provide for 30 million people.[17] In general, the TFM itself was considered to be inadequate: it was described as a "mechanism for the status quo, not for scale up".[18] Several NGOs and other witnesses told us that DFID would struggle to meet its objectives for AIDS, TB and malaria in the absence of further funding (the Global Fund is the principle mechanism by which DFID disburses funding for the three diseases).[19] The international community's achievement of the Millennium Development Goals was also reported to be at risk.[20]

6. Others, however, while appreciating the seriousness of the situation, were less pessimistic. The Secretary of State did not agree that the cancellation of Round 11 posed a significant threat to millions of lives and stressed that the Global Fund would continue to spend several billions of pounds in the coming years. He argued that DFID would still meet its HIV, TB and malaria objectives "partly through the Global Fund, partly through bilateral means and partly through other means".[21]

7. We questioned witnesses about future funding. Some donors, including the UK, are awaiting the completion of the Global Fund's reform process before committing significant new funds. Mr Jaramillo assured us that he was driving through the Consolidated Transformation Plan reforms. The Executive Management team has been slimmed down from six people to three.[22] He had re-assigned 75% of the Global Fund's resources to grant management of activities in the field—which was consistent with "best practice in the development world"—and had reduced administrative costs at the Global Fund's headquarters in Geneva, where he was "unclogging the pipes" following the build-up of ten years of rules and regulations.[23] Aidspan believed that Mr Jaramillo's performance to date had been "excellent" and the early signs of the reform process were "good", although there was room for improvement in areas such as the Global Fund's communications.[24] The Secretary of State told us that Mr Jaramillo was reforming the Fund "brilliantly", and was confident that the reforms would be completed by the end of 2012.[25]

8. NGOs wanted DFID to announce its funding increase during the next few months, that is without waiting for the reform process to be completed. It was pointed out that the UK currently held the Chair of the Global Fund Board, which gave it additional influence over other donors.[26] Some organisations, including the UK Consortium on AIDS and International Development and the UK Coalition to Stop TB, argued that DFID should commit an additional £384 million (that is, double the current pledge to 2015). This was thought to be a "fair share" given the UK's size.[27] We were told that the G20 meeting in Mexico on 18-19 June 2012 would be an "ideal opportunity" to announce new funds, creating a "catalyst" for other donors to follow.[28] NGOs expressed concern that DFID would continue to wait for a year or more: "the longer the delay, the less likely any additional funds will have an impact on achieving the MDGs".[29] Mr Jaramillo said that an increase by DFID would send a "fantastic message to the world" and drive other countries to follow its lead.[30]

9. We pressed the Secretary of State on DFID's intentions. He reaffirmed that DFID would announce new funds "as soon as we feel we have confidence that the money will be well spent and that the British taxpayer can be assured that for every pound of their hard-earned money they get 100% of delivery on the ground".[31] He said this would happen after, first, the Global Fund had completed its reform process[32] and, second, DFID had concluded its own "mini-MAR" process (to re-assess the performance of the multilateral institutions DFID funds), which was likely to be in early 2013,[33] although he did not rule out an earlier announcement.[34] He did not give a specific figure but said that, if these conditions were met, the UK could increase its contribution to the Global Fund "very substantially" in 2013, 2014 and 2015, by "up to double" the current £384 million pledge.[35] The Secretary of State added that he would seek to maximise the contributions other donors provided to the Global Fund and so would announce any potential increase "at a time which raises the most amount of money for the Fund".[36]

10. The Global Fund to Fight AIDS, Tuberculosis and Malaria is an invaluable international finance mechanism. It has been highly effective over the past decade in tackling three of the world's most devastating diseases. Good progress has been made but there is still much work to do to eradicate these diseases in developing countries as far as possible. We are therefore concerned about the Global Fund's recent funding problems and the cancellation of all new grants until 2014. Given the nature of these diseases, we fear that many gains achieved will be lost if the Global Fund does not overcome its recent difficulties and return to full operation as soon as possible.

11. We are concerned at the diametrically opposed views expressed in our evidence about the potential impact of the cancellation of Round 11. If mistaken, the NGOs views are alarmist; similarly, if mistaken, the Secretary of State's view is complacent. We do not have sufficient evidence (including from those developing countries affected) to come to a conclusion about the full impact of the cancellation. But robust data of this kind will be necessary. An independent impact-assessment of the cancellation of Round 11—endorsed by the Global Fund, the Department for International Development, other key donors and leading NGOs—needs to be undertaken to help inform future policy and programming. We urge DFID to work with international partners and NGOs to agree the scope of such a study.

12. The Global Fund is in need of structural and management reform. We are concerned about the findings of fraud by some Global Fund grant implementers, but recognise that the Global Fund's welcome commitment to transparency and anti-corruption helped to identify these malpractices. We are impressed by the new General Manager of the Global Fund and our evidence suggests that the Global Fund is making good progress in reforming its management structures and monitoring of financial risk. We believe that a speedy appointment of a permanent Executive Director is important to instil confidence amongst donors.

13. DFID is a key donor and reliable partner to the Global Fund whose commitment could unlock other funds. While we strongly support the Secretary of State's commitment to increase the UK's contribution significantly to the Global Fund, subject to reform, we are concerned at the continuing delay in providing these funds. A further delay until 2013, as indicated by the Secretary of State, may put the lives of people in developing countries at risk. We strongly urge the Department to do all possible to commit funds earlier by prioritising its assessment of the Global Fund ahead of, and separately from, its broader update of the Multilateral Aid Review.

14. It cannot be reliant on DFID to support the Global Fund while a number of other donors who have considerable resources are not doing likewise. Other donors need to commit new funds if the Global Fund is to return to full operation speedily. DFID should announce its additional funding at a time which raises the most amount of money from other donors. The G20 meeting in Mexico presents a good opportunity to do so, provided the Department's conditions are met and UK taxpayers' money is adequately safeguarded.

1 We also received written evidence from 24 organisations. We are grateful to all those who contributed to our inquiry. Back

2 Kofi Annan, Secretary-General of the United Nations announced the idea of a "Global Fund" in April 2001. Back

3 Ev 33. DFID has said that the Global Fund has helped save 7.7 million lives in 150 countries (HC Deb, 20 February 2012, col 520W). The Global Fund One Campaign says the Global Fund has helped save 6.6 million lives (Global Fund website, 2012, http://onemillion.theglobalfund.org.) The Global Fund is currently revising the methodology with which it makes these estimates. Back

4 Global Fund to Fight AIDS, Tuberculosis and Malaria, Review of HIV/AIDS, Tuberculosis and Malaria Landscape for the Global Fund Strategy 2012-2016, November 2011, pp 8, 14, 21. Back

5 Q 2 Back

6 Q 52 Back

7 Department for International Development, Multilateral Aid Review, March 2011, pp 88, 177 Back

8 Q 128m per annum in 2012, 2013 and 2014 (Q 48). Back

9 Q 37 Back

10 Q 27. In particular, uncertainties about whether the USA would contribute the full $4 billion it had committed over three years. Back

11 Q 13. Germany subsequently made a payment. Back

12 Ev 18, para 6 [DFID] Back