How the Global Fund helped countries spend its grants faster

Global Fund Executive Director Peter Sands. Photo by: Stuart Isett for Fortune / CC BY-NC-ND

NAIROBI — In recent years, the Global Fund to Fight AIDS, Tuberculosis and Malaria has cracked down on countries that don’t spend grants fast enough — and while it has struggled with the issue of “absorption” rates in the past, countries are now on track to meet its targets.

With its efforts proving effective, it is intending to continue them through the next funding cycle.

Global Fund Executive Director Peter Sands spoke to Devex about the work that was involved in encouraging countries to spend grant funds within the three-year window.

“If the money isn’t being used, it isn’t having an impact,” he said. “Our raison d’être is to save lives, reduce infections, and ultimately end the epidemics. The money has to be used.”

In the past, many countries have had absorption issues — an inability to spend the funds they were granted within the project implementation period. That could happen for a variety of reasons, Sands said, including disruptive events such as elections or natural disasters; and a lack of institutional capacity and gaps in technical knowledge. When that happened, countries would routinely ask for extensions.

“The classic way countries fudge the figures is by extending the grant period,” he said. “We deliberately made it clear that there isn’t the option of infinitely extending in order to get to higher absorption levels, just because it took years to do so.”

Not all of the reasons behind low absorption rates are negative. For example, where the Global Fund has been able to negotiate lower drug prices than expected, that means there are additional funds in the project. In other instances, a country might attempt a new project that is more innovative than existing projects, but the implementation is not as straightforward.

“Of course, we don’t want countries to spend money on the wrong things, but on the other hand, we don’t want to allocate scarce resources to entities that aren’t actually going to use the money,” he said.

At the end of 2017, for the first time, countries were required to use up all of the funds or lose them. In addition to this, the Global Fund made efforts to ensure the Country Coordinating Mechanisms — the national committees that submit funding applications — are functional; that the design of the grants are sound; and that the principal implementers of the projects have enough capacity to spend the funds in a timely matter, he said.

For example, the Global Fund is investing in a program called CCM Evolution where it has analyzed why particular programs and countries have absorption issues, and is working to resolve these roadblocks.

Recent data shows “significant” improvements in the speed with which countries spent the funds, Sands said.

The Global Fund has a “grant absorptive capacity” target of 75% by 2022. This measures the ratio of actual grant expenditures versus the budgeted amount over a three-year period.

For expenditures made between 2014-2016, it stood at 66%, according to the Global Fund’s key performance indicators team. It currently stands at 75.4%, based on expenditures made between 2015-2017.

New data will be available this summer for the 2016-2018 period. Many countries received new funds in 2018, so this data could show a decrease in absorption rates, the team said to Devex in an email, but they expect it to level out to reach its target for 2022.

About the author

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    Sara Jerving

    Sara Jerving is Devex's East Africa Correspondent based in Nairobi. She is a reporter and producer, whose work has appeared in The Wall Street Journal, the Los Angeles Times, Vice News, Bloomberg Businessweek, The Nation magazine, among others. Sara holds a master's degree in business and economic reporting from Columbia University Graduate School of Journalism where she was a Lorana Sullivan fellow.