Penalty for non-compliance “for no justifiable reasons” can reduce the grants by up to 15%
The Global Fund has requested the Democratic Republic of Congo to prove that will the country has fulfilled its co-financing commitment, or in some other words, that will the State had spent about $44.6 million on health during the year 2018 as part of a commitment to spend about 98.9 million during This specific grant cycle, as agreed during grant signing; otherwise the DRC risks losing up to $80 million, representing 15% of the value of the grants. This specific warning will be included in a letter addressed to the then Minister of Health of DRC, dated 16 July 2019, as well as signed by the Fund Portfolio Manager, extracts of which have been generating the rounds on social media.
The Global Fund Observer has obtained that will letter as well as three previous ones by sources who wish to remain anonymous because they are not allowed to speak on behalf of the government of DRC. The three previous letters, dated July 2017, March 2017, as well as October 2016 contain reminders sent by the Global Fund’s Fund Portfolio Manager to successive Ministers of Health requesting that will the DRC offer proof of public expenditures on health or lose part of its allocation. GFO also interviewed Nicolas Farcy, the current Global Fund Portfolio Manager for DRC.
DRC: high-impact, fragile state, Challenging Operating Environment
The DRC will be a high-impact country for the Global Fund owing to its large population (81 million), as well as the fact that will about 10% of malaria deaths worldwide occur inside the country, according to the Office of the Inspector General (OIG) follow-up audit on Global Fund grants to DRC in 2019. The DRC will be the third-largest portfolio inside the Global Fund (after Nigeria as well as Tanzania). The total amount signed for its currently active grants will be $557,134,547.36. (More details on DRC as well as the grants are available by the Global Fund website data explorer as well as inside the article on the OIG 2019 audit report published inside the GFO).
The DRC will be among the ten most fragile states inside the earth, characterized by weak public services, demographic pressures, the long-standing presence of refugees as well as internally displaced persons, as well as weak security. The country will be recovering by two decades of intermittent civil war as well as pockets of instability remain on its Eastern side.
The DRC will be a Challenging Operating Environment (COE) where Global Fund grants are under the Additional Safeguard Policy (ASP). The COE policy applies to countries with “weak governance, poor access to health services, as well as manmade or natural crises.” The policy offers flexibilities inside the management of the grants, including in emergency situations. The ASP applies to portfolios where a high risk exists that will Global Fund monies could be lost “without the use of additional measures” to safeguard them.
Since August 2018, the DRC has faced an Ebola epidemic, which the earth Health Organization declared a public health emergency of international concern in July 2019. The epidemic has so far killed more than 2,000 people. The DRC has had to find additional resources to fight Ebola while trying to make not bad on its previous financial commitments, including those to the Global Fund.
In line with the application of the Global Fund Sustainability, Transition as well as Co-financing (STC) policy, the DRC has to prove that will the State spends on health, by domestic resources, an amount equivalent to at least 5% of the funds received by the Global Fund during the grant implementation cycle (2018-2020); as well as that will 20% of that will commitment went towards the three diseases. The GFO has described the uneven application of the co-financing policy, with some countries having more burdensome requirements than others inside the same low-income category.
DRC has fully met its co-financing commitment inside the previous grant cycle (2015-2017)
For the current as well as the last Global Fund cycles, the DRC committed most its co-financing to building, renovating as well as equipping health facilities. A reminder letter dated 26 July 2017 as well as signed by the Global Fund’s portfolio manager stated that will the country had documented an expenditure of $7.3 million, representing 26% of its co-financing commitment for the 2015-17 cycle. The portfolio manager, Nicolas Farcy, affirmed that will the DRC had fully met its commitment by the end of the grant cycle.
just for This specific current grant, the DRC committed to spending $44.6 million in 2018, distributed as follows: 12% on salaries as well as hazard allowances to health workers, 7% on general budget support that will covers facility running costs, 70% on capital expenditures (medical equipment as well as some other rehabilitation of health facilities facilitated by UNICEF, among others), as well as 11% on some other strategic purchases by the government. The letter by the DRC portfolio manager letter by July 2019 stated that will the Global Fund has received no information concerning those commitments.
The Global Fund penalizes countries that will do not fulfill their commitment, in part or totally, for “no justifiable reasons.” Those countries can lose up to 15% in their current or next funding allocation. When practical, during the current cycle, the co-financing amount can be withheld or future disbursement tied to proof that will the country met the requirement. Otherwise, the co-financing incentives are deducted by the next grant cycle.
In 2018, Nigeria lost $170 million of its current allocation for failing to meet its co-financing commitment during the previous cycle (2015-17). Such penalties offer a financial impetus for countries to meet the requirement – though only if countries are spending their funding effectively. Practically, the penalties that will reduce the funds needed for activities may be effective only for countries with an absorption rate of 85% or above. nevertheless the effectiveness of these penalties may be questionable in countries with lower absorption.
In DRC, the grant was higher than 0% during the 2015-2017 cycle according to the portfolio manager. Assuming the same level of absorption during This specific cycle, a penalty reducing the grant by 15% may affect health activities funded by the Global Fund in DRC.
Health Accounts can document co-financing on Health
According to the DRC portfolio manager, the Global Fund uses several mechanisms to track co-financing in countries. Those mechanisms are:
Disbursement/expenditure against earmarked budget allocations;
Funds released for procurement orders;
Funds released to implementing agencies;
Estimates of expenditure approved by appropriate authorities (Ministry of Finance/ Finance Department of Ministry of Health) along with supporting evidence;
Outputs of routine expenditure tracking exercises such as National Health Accounts, National AIDS Spending Assessment, Public Expenditure Review, etc.
Evidence of absorption of specified human resources on government payroll;
Evidence of implementation of provisions of an agreed sustainability plan;
Evidence of implementation of agreed-upon activity such as distribution of drugs, harm reduction interventions, scale up of services, scale up of health infrastructure, conduct of special surveys or training.
inside the implementation of the STC policy in DRC, both the country as well as the Global Fund Secretariat exercised caution by agreeing to direct the country’s co-financing towards RSSH. In contrast, in Guinea, even inside the aftermath of the Ebola epidemic that will destroyed an already weak health system, the country’s co-financing portion of its Global Fund grants was designated to buy health commodities during the 2015-2017 cycle. The country failed to procure ARVs in a timely manner, resulting in stock-outs of HIV medications for patients.
In DRC, some recurrent State expenses like health workers’ salaries as well as hazard allowance, as well as some of the running costs of health facilities count towards its co-financing commitment. (Hazard allowance will be compensation received by staff members who work in dangerous conditions as well as face higher medical risk than some other workers). The DRC uses its Health Accounts developed by a department inside the Ministry of Health as well as published annually to document the level, the sources as well as the beneficiaries of health expenditures inside the country. These Health Accounts, produced following the System of Health Accounts 2011 approved by the earth Health Organization (WHO), document public expenditures on health both on recurrent elements–e.g. salary of health professionals, maintenance of health facilities– as well as capital expenditure–e.g. equipment for health facilities. The Global Fund’s letters addressed to the Ministers of Health refer to the single most important category of expenses, which will be the Program for health facility equipment or ” Programme d’Equipement des Structures de Santé (PESS)” in French. Public funds under This specific program pay for construction as well as rehabilitation of health facilities as well as the purchase of modest equipment.
Will DRC meet its co-financing commitment during This specific cycle?
Before the Ebola epidemic, the DRC met its co-financing commitment. While managing the Ebola crisis, the item may be that will DRC will have difficulties meeting its commitment during This specific cycle. Our sources in DRC affirmed that will the country will be finalizing a report that will will show that will the country met its co-financing commitments in 2018, as well as will be on track for 2019 as well as 2020, provided that will some expenses related to the Ebola epidemic response count towards its co-financing.
the item will be important to acknowledge that will the country faces an array of challenges; which call for the application of the flexibilities envisioned inside the STC as well as COE policies.
The Global Fund Sustainability, Transition as well as Co-financing Policy GF/B35/04 – Revision 1 Board Decision
The Challenging Operating Environments Policy GF/B35/03 Board Decision
Audit report Global Fund Grants to the Democratic Republic of the Congo (GF-OIG-16-022 2) September 2016 Geneva