Opinion: Now is not the time for the World Bank to step back on pandemic financing

In the thick of the coronavirus crisis, surrounded by its devastating human and economic cost, we need to do more — not less — to better financially prepare for the next outbreak.

However, the World Bank has chosen this moment to shelve the Pandemic Emergency Financing Facility, or PEF — a scheme designed like insurance to help the world’s poorest countries deal with large-scale, cross-border disease outbreaks. This represents a major step backward in protecting people and economies from pandemics, at just the time when we need international financing institutions to step up.

The PEF was an experiment — one that is now being widely criticized, but one that we should improve on, rather than discard. Progress is, after all, built on failure.

The PEF’s intention was broadly right. The fallout of COVID-19, and of the Ebola crises before it, demonstrates the importance of early action for disease outbreaks. Asking for funds after a crisis has started leads to crucial delays and can have disastrous consequences. Evidence from the Ebola outbreak in West Africa from 2014 to 2015 suggests that speeding up the response by one month could have prevented more than half the cases in Sierra Leone and substantially reduced the overall cost.

It is undeniable that the PEF had major defects, but these could be fixed in the future, given the right approach.

There have been many criticisms. Firstly, it moved too slowly. By the time the PEF paid out $196 million for COVID-19, the virus already had a hold in most countries.

Early in a health outbreak, it is often difficult to assess whether there is a risk of it becoming a pandemic. The PEF had a choice of whether to be set up to trigger early — running the risk that sometimes it would overreact — or wait until it was clear that the outbreak would definitely become a pandemic. The PEF chose the latter, with seven different conditions that all had to be met at the same time for the insurance to be triggered.

Future pandemic financing should be designed much more simply, to pay out more frequently and more quickly to respond to small outbreaks rather than run the risk of coming in too late. This would require more funding but would be worth it.

Secondly, the PEF did not pay out that much money in relation to the premiums: $196 million for COVID-19, while donors paid $115 million for three years of cover.

Ordinarily, for an extreme, low probability event, insurance should pay out quite a lot more than the premium. But in this case, the payout was limited because the scientists involved agreed that there was a high likelihood of a pandemic during the three years of cover, either from a coronavirus or from one of the many other viruses that were also covered.

Nonetheless, public-private-people partnerships in insurance have an important part to play in responding to disease outbreaks. As we are seeing this year with the decision by the U.S. to suspend contributions to the World Health Organization, international political commitments to pay can break down just when you need them the most.

Market-based insurance will be more expensive and more limited than commitments by international donors to pay whatever is needed and whenever it is needed, but it is protected from political risks and could be faster and more reliable for rapid response to small outbreaks that have pandemic potential.

Also, in a world where aid budgets are being slashed as the global economy is on a downward trajectory, it seems naive to have a vision for future pandemic financing that relies largely on donor countries making large deposits into ring-fenced funds.

Finally, the PEF did not help get countries ready for disasters. It arranged surge financing but did not make sure that countries’ health and response systems were prepared to take that money and respond quickly to a pandemic. It also did not involve governments or civil society in a meaningful way to ensure that countries had sensible plans in place.

However, this approach could be changed. Institutions like African Risk Capacity, the World Food Programme, and the Start Network all demonstrate that it is possible to link insurance for crises with concrete planning and capacity-building across low- and middle-income countries, engaging governments and civil society in the process.

More than 18 million people have contracted COVID-19 since the pandemic began, and every single person on the planet has been affected by its fallout in some way. Now is not the time to drop the baton on financial planning for future outbreaks, epidemics, and pandemics.

The PEF had flaws, but it wasn’t beyond hope. Its replacement — the Health Emergency Preparedness and Response Multi-Donor Fund — is smaller, with reduced scope and ambition, just when we need to see the opposite.

Most global public health experts agree that pre-committed pandemic funds are a good idea. If the World Bank is stepping back at this critical juncture, then another financial institution needs to step up. But the question is: Who?

The global aid system is built on banks that are not good at early, fast action for crises. Over the last decade, the World Bank’s Crisis Response Window has taken an average of 398 days between a crisis starting and the first dollar of funding flowing.

We now need something different — a new type of organization — that looks more like an insurer with development aims and that can be held to account to ensure fast response to outbreaks with pandemic potential.

The PEF tried to build an ark in the middle of dry land on a sunny day. COVID-19 has shown it to be too small and far from watertight. The ambition should have been more clearly focused on early response to stop outbreaks from becoming pandemics, and the design and build should have been better.

But our global experience of the last six months shows that we really need our governments and international institutions to make better investments in planning for pandemics and crises. Insurance has an important role to play in shaping a global discussion about who is protected, against what, how the protection will work, and who will pay. Now is the time to take our experience with the PEF and build back better.