Opinion: 5 realities and 5 opportunities for global health financing

The tectonic plates of global health finance have shifted. Probably forever.

The tremors have been felt for some time. In low- and middle-income countries, COVID-19 accelerated calls for local solutions rather than relying on foreign aid. By the end of 2024, many major donors had announced cuts to aid budgets, with some closing their development ministries, citing the need to align development with foreign policy.  

Then, on Jan. 20, the tremors became an earthquake. President Donald Trump fired the starting gun on cuts to U.S. official development assistance, which will have deep consequences for global health.

Understanding funding realities

As we stand in the remains of the global health architecture, we need to be clear-eyed about what has gone, what is still standing, and what needs to be built.

First, we need to be honest about what’s in front of us:

1. Big aid has peaked: COVID-19 was the high-water mark for bilateral aid spending outside of conflict zones. Aid has always reflected global geopolitics; both the economics and the politics have now changed.

2. Aid will not disappear completely: Humanitarian assistance, targeted grants for the poorest communities, and aid for global public goods will remain relevant. Unfortunately, aid aimed at furthering donors’ national interests or transactional deals is also becoming more common.

3. Private investment cannot fill all gaps: While investment is vital to support economic growth and many services, it cannot replace most grant funding in sectors such as public health. To pretend otherwise is wishful thinking.

4. Pressure on domestic resources is mounting: Even though aid is a minor part of national budgets, governments will need to find additional funds for crucial programs such as HIV and sexual health. Some will find new independence, but many will face shortfalls.  

5. We will need to do more with less: Spending will need to be more frugal — and more targeted. The burden of noncommunicable diseases, such as cancer and diabetes, is stressing health systems. These will need to be addressed while defending gains against HIV, malaria, and tuberculosis.

This is an uncomfortable reality, imposed suddenly and without transition or regard for human cost. People will die because good institutions will be weakened.

Many leaders in Africa and elsewhere are responding to this reality by leading calls for the continent to shape its own health agenda, focusing on domestic — rather than donor — priorities.

But how will this be funded? The pressures that have led to declines in donor funding — sluggish economic growth, heavy debt burdens, and fiscal scarcity — are magnified elsewhere.

Yet, we are already seeing some positive moves. In April, the Africa Centres for Disease Control and Prevention set out the unprecedented health financing crisis facing African countries. But it also advanced a three-pillar strategy of domestic financing, innovative finance, and blended finance to help fill gaps left by donors — and more importantly, to build resilient health systems for the 21st century.

Building the new financing landscape

Next week, at the Fourth International Conference on Financing for Development taking place in Sevilla, we will see the contours of the new financing landscape begin to emerge. Here are five ideas that those in Spain should consider:

1. Innovative finance can be more innovative: We should learn from the success — and failures — of the past 25 years. Innovative finance can be more proactive, not just to mobilize capital, but to address failures in entire markets. Insurance, guarantees, bonds, and structured finance can leverage system-level change. The International Finance Facility for Immunisation and MedAccess are examples.

2. Be more ambitious with blending: Blended finance that combines grant with capital can take diverse forms and be highly effective, as a recent publication by British International Investment shows. It reaches the parts that other capital cannot reach. But there is a shortage of suitable grant funds for these vehicles. Grant donors should allocate more to blended vehicles for leveraged impact.

3. Pool for economies of scale: Pooled procurement is a proven method to ensure supplies and reduce costs of medical products, as UNICEF, Gavi, the Vaccine Alliance, and the Global Fund to Fight AIDS, Tuberculosis and Malaria have shown. New private pooling platforms offer scope to leverage the combined buying power of government, private providers, and faith-based NGOs.  

4. Tackle debt: More than 3.3 billion people live in countries that spend more on servicing debt than on health or education. Debt for health swaps are incredibly effective, as the Joep Lang Institute has documented. It is now time to extend the reach beyond European sovereign creditors.

5. Implement smarter taxes: African states collect only 15.6% of gross domestic product in taxes, roughly half the Organisation for Economic Co-operation and Development average. A higher tax take is correlated with better government services, but how to tax is also important. Sin taxes such as excise on alcohol, tobacco, and sugary drinks can reduce chronic disease as well as raising revenue.

None of this will be easy. Despite the tremors, the size and power of the earthquake was unexpected. But history is written in real time. Over the coming months we need to move quickly to fill the gaps left by donor funding — but also build the foundations for a new era of sustainable health financing.  

To learn more about market shaping for global health, please visit our website www.medaccess.org.