International Development CommitteeWritten evidence submitted by Gabriel Jaramillo, General Manager of the Global Fund to Fight AIDS, TB and Malaria

I deeply appreciate the United Kingdom’s leadership on global health and in the growing consensus that by saving lives, innovative and accountable international health programs contribute directly to stability, economic growth, and security throughout the world. In my view, this is the best return on investment you can find anywhere.

At the Global Fund, we are currently in the process of transforming our organization to deliver on investments even more effectively than in the past. As a result of the challenging financial environment, we need to be even more efficient, more careful about risk and more focused on results than ever before. In the past, we have enjoyed a highly effective partnership with DFID, and we share a common vision and passion for treating and preventing disease. We ask for your continued support of the UK’s financial contributions to the Global Fund, and I personally pledge that we will ensure it is an outstanding investment. I would like to update everyone on the current situation at the Global Fund.

Comprehensive Transformation

Under the leadership of our board and with strong input from the UK delegation, the Global Fund launched a comprehensive transformation late last year that is aimed at increasing the efficiency and effectiveness of its operations. We are making it simpler and speedier for countries to apply for grants. We are improving on-the-ground oversight and management of grants so that implementation by partners is more efficient. We are enhancing transparency in procurement and price negotiations. We are strengthening financial and fiduciary controls. But our core values and principles have not changed. We believe in accountability, and we have a strong and independent Inspector General. We are committed to transparency. We publish full audit report findings on our public web site—an unprecedented step in this field. We have zero tolerance for misuse of funds. When instances of fraud are suspected or confirmed, we act swiftly to suspend or terminate programs, refer alleged wrongdoers for prosecution, impose additional safeguards and relentlessly pursue recovery of misspent funds.

Outstanding Results

While we are a forward-looking institution, we keep a perspective on how far we have come. Ten years ago the world was confronted with an unprecedented crisis: six million people were dying every year from AIDS, tuberculosis and malaria. Not only did these diseases cause unimaginable human suffering but they also destabilized communities and regions around the world, with severe consequences for the economic development of the countries most affected. Tragically, these deaths were avoidable and preventable as treatment and prevention was available for those who could afford it.

In the face of these threats, in 2002, the U.K. government recognized the gravity of the situation and helped create the Global Fund. With the support of the U.K. and other donors, the Global Fund has approved $22.6 billion for programs in 150 countries, and its programs have saved millions of lives. A full 8.6 million people have been treated for tuberculosis. Most African families are now protected from malaria through 230 million insecticide-treated nets. More than 3.3 million people are receiving AIDS treatment through Global Fund-supported programs.

With the help of DFID and other aid programs, these services are achieving real and measurable impact. AIDS deaths have decreased worldwide from 2.1 million per year in 2001 to 1.8 million in 2009. HIV incidence has dropped by more than 25% in 33 countries since 2001. TB incidence has fallen in five out of the six WHO regions. Malaria infections have declined by 50% or more in a dozen African countries. As a direct result of U.K. and other donor investments, we are within striking distance of wiping out mother-to-child transmission of HIV and, with enough will and resources, we could potentially end malaria as a public health problem by 2015. These goals were unthinkable even a few years ago.

Innovative Principles

The Global Fund is a leader at using innovative principles:

1.We maximize country ownership by letting nations design their own programs, while holding them accountable for effective implementation. We do not pre-allocate funding to specific countries or diseases but respond to genuine demand, taking into account the quality of proposals, disease burden and income indicators. This approach has resulted in a distribution of programs across regions that broadly corresponds to the burden of disease. In addition, the Global Fund insists that lower and upper middle income countries contribute 35 % and 65 % of program costs, so that we can support the countries that need funding most and can most effectively use it while taking into account their ability to contribute.

2.We partner effectively with a wide range of private-sector organizations that provide valuable resources and increase awareness (like Chevron and the Bill and Melinda Gates Foundation), and provide invaluable expertise on implementing programs (like Coca-Cola, with its skills in supply-chain management in remote areas).

3.We involve civil society in all aspects of its operations, including local non-governmental organizations and faith-based organizations.

4.We remain purely a financier of health programs with a small administration to keep costs as low as possible.

5.We insist on performance-based funding to make sure that resources are only invested in high-performing grants that achieve concrete results. Disbursements are dependent on reporting on the achievement of results against preset targets. Numerous measures are in place to secure cost effectiveness in implementation of funded programs. Some of these include the Enhanced Financial Reporting and Program and Quality Reporting mechanisms and the recent introduction of the voluntary pooled procurement mechanism. These initiatives aim to transparently record and provide data (including on standardized unit costs) to implementing countries and development partners. That supports them in reforming their procurement and health information management systems and achieving economies of scale in their purchases.

6.We operate with an unprecedented level of transparency and accountability. The Global Fund is a signatory to the International Aid Transparency Initiative.

UK Support

The UK has positioned itself as the Global Fund’s third largest donor based on cumulative contributions paid to date (USD $ 1,662 million). While the UK has not made a pledge for the Fund’s third replenishment (2011–13), it made a multi-year commitment of £1 billion for the period 2008–15 through an MOU and it provided much-appreciated support at critical junctions in 2010 and 2011 through additional contributions and frontloading from future periods. Here is a funding overview:

UNITED KINGDOM

Funding Overview	Contributions			Pledges
	2001–05	2006–07	2008–10	2011–13	Total
Amount (GBP) (millions)	196.0	250.0	461.0	384.0	1,291.0
Amount (USD equivalent) (millions)	347.3	312.8	571.2	598.8	1,830.1

The United Kingdom has done more than contribute to the Global Fund. It has done more than take part in the creation of the Global Fund and in the formulation of its key principles, designed to make it one of the most transparent, accountable, and results-driven multilateral organizations in the world. It plays an active leadership role on the Global Fund’s board, guiding the current transformation through the Chairmanship of the Board, first by Mr. Martin Dinham and currently by Mr. Simon Bland.

Value for Money

In difficult economic times, hard choices have to be made. We believe that resources allocated to the Global Fund represent excellent value for money. The multilateral aid review conducted by DFID in 2010–11 came to the same conclusion. After conducting a rigorous review of 43 international organizations to which the UK contributes, they found that the Global Fund was one of only nine to give “very good value” to the taxpayer and which will legitimately receive increased funding despite sizeable budget reductions. The review found that the Global Fund’s “standards for financial management and audit are very high,” and that the Fund’s decision to “require recipients to publish procurement data has been a major driver for a range of innovations in transparency.”

We believe that we are the world’s most powerful weapon against AIDS, TB and malaria, and a reduction in our resources would directly result in lives lost. But the stakes are actually much higher than that. We now stand at a crossroads. If the U.K. maintains its leadership and continues to leverage the support of other donors, we can turn the corner and severely reduce the incidence of these three diseases. That will decrease the future need for funding, as it increases stability, growth and security around the globe. But if we pull back at this critical moment, human suffering will increase and long-term growth and stability will be impaired. If we lose momentum, it will require even more costly investments in the future to get back on track. For these reasons, we urge this committee to support the continuation of strong financial support by the UK for the Global Fund.

May 2012