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Global Fund Observer


Issue 255: 13 November 2014

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1. NEWS: On time and in full deliveries improve to 68% for Global Fund health commodities

The Global Fund has improved its on-time and in-full delivery of health commodities purchased under the pooled procurement mechanism to 68% from its previous level of 38% due to improvements in the up-stream supply chain. Tackling the lag between the port of entry and the so-called 'last mile' is the next hurdle for the procurement team.

2. NEWS: NFM allocations: An Aidspan analysis

Aidspan presents a comprehensive analysis of the allocations under the NFM for 2014 – 2017 including a description of the impact of “over-allocated” and “significantly over-allocated” on totals for different countries and regions. The analysis also compares NFM allocation totals with funding disbursed under the rounds-based approach between 2010 and 2013.   

3. NEWS: OIG reveals financial irregularity in DRC, Burundi grants

The Office of the Inspector General has released two reports highlighting financial allegations against stakeholders in the Great Lakes, implementing programming supported by the Global Fund in Democratic Republic of Congo and Burundi. Stricter financial controls have already been imposed to mitigate future instances of fraud, bad management and collusive practices as the countries prepare for eventual disbursements under the new funding model.

4. NEWS: Ukraine president signs updated HIV national strategic plan

Ukraine's president has signed the country's national strategic plan, which lays out a roadmap for transitioning away from reliance on Global Fund financial support. Civil society, however, has expressed concern that the commitment to transition has yet to be supported by commitment to financing from state budgets.

5. NEWS: Global Fund grants unaffected by Malawi internal challenges

Investigations into alleged financial mismanagement by the head of Malawi's National AIDS Commission are continuing in the wake of the ouster of its executive director, but they should have no impact on the continuing administration of Global Fund HIV grants, Aidspan understands from government and Fund sources.


1. NEWS: On time and in full deliveries improve to 68% for Global Fund health commodities

Lauren Gelfand 13 November 2014

More than $1.2 billion in commodities purchased and delivered through pooled procurement in 2014

The Global Fund's procurement team has posted a nearly 100% improvement in its on-time and in-full deliveries of health commodities  bought under the pooled procurement mechanism from the manufacturer to countries' ports of entry, due to a streamlining of the up-stream supply chain and a more rigorous assessment of performance by manufacturers and purveyors.

The challenge now, according to Chief Procurement Officer Christopher Game, is making comparable strides in-country, along the so-called 'last mile' from the port to the network of public health facilities around the 123 Fund-eligible countries.

Some $1.2 billion in commodities was purchased by the Fund in 2014 using its pooled procurement mechanism, marking a four-fold increase over 2013 figures.

The table below illustrates the amount and the distribution of those purchases.





Grand Total

High Impact - Africa I

                               $124.0 m

                            $32.7 m

                      $.0 m

         $156.7 m

High Impact - Africa II

                               $337.5 m

                            $61.5 m

                    $1.0 m

         $400.0 m

High Impact - Asia

                                 $23.4 m

                            $22.2 m

                      $.7 m

           $46.3 m


                                 $28.0 m

                              $4.2 m

                    $2.1 m

           $34.3 m


                               $366.6 m

                         $185.5 m

                 $10.6 m

         $562.7 m

Grand Total

                                $879.5 m

                         $306.1 m

                 $14.4 m


Under the old system, enrollment in the voluntary pooled procurement (VPP) mechanism was somewhat of a misnomer as for many countries as it was a punitive measure taken following the revelation of financial mismanagement, fraud or impropriety. Now, however, despite concerns that it could be seen as limiting country ownership of the procurement process, pooled procurement is being touted as a market-friendly and cost-efficient solution to the needs for a steady supply chain of health commodities, including drugs, to Fund-eligible countries.

'On time and in full' is considered a gold-standard indicator in the measure of delivery performance by a supply chain. Because it looks at deliveries from the point of view of recipients rather than in suppliers, it is considered superior to other delivery performance indicators. Within the private sector, 80% OTIF is industry standard.

Streamlining the up-stream supply chain -- which starts at the manufacturer level and ends, effectively, with the shipping agents commissioned by the Fund to ship products to various destinations -- required a new commitment to data management and analysis about performance, production and procurement to better anticipate where potential delays are likely to originate.

Since September 2014, the procurement team has been working with the Grant Management Division to review a new strategy to align the in-country priorities for improved supply chain efficiency with the global strategy.

"We are really keen to expand the PPM process, without depriving countries of choice and ownership," said Game. "So the more we are able to pay for directly to suppliers, the more we are in line with budgetary considerations, and the easier it is to flag anomalies, saving money down the road."

This internal review follows a more concerted effort by the Global Fund to work closely with other international organizations that procure and distribute health commodities. A memorandum of understanding has been signed with UNITAID to improve coordination around HIV and TB commodities; similar work is under way with the World Health Organization around malaria- related products.

It is hoped that this new approach can, over the course of 2015, be applied at the country level -- the downstream supply chain -- to mitigate the delays that can contribute to stock-outs of needed commodities.

Part of the strategy envisioned by the Fund to achieve the industry standard, as well as to improve deliveries along the 'last mile' is to help countries identify the elements of their supply chains that are working -- and build on those.

"We are really looking at African solutions for Africa," said Game. "We are looking where commonalities exist [at the regional level] and then recommending what is practical, and affordable."

Developing a best practice in supply chain management when there are so many elements that contribute to poor performance -- from technology to capacity to a lack of basic infrastructure -- is likely to take time and a sizeable investment in resources.

But for all of the coordination at the global level, supply chains are only as strong as their weakest link: and that link is, usually, at the country level. Whether it is the regulatory environment, a predatory tariff structure or institutional corruption, many countries where Global Fund money is being spent on commodities seem to have a number of elements conspiring to undermine any progress being made in improving efficiency or performance.

Some progress is being made in Africa. Zimbabwe, along with others, will be spearheading the Fund's mentoring program to underpin efforts to streamline the regulatory environment for health commodities,  and encouraging the alignment of tariffs and structures across regional bodies. 

[This article was first posted on GFO Live on 13 November 2014.]

To comment on this article, click here.



2. NEWS: NFM allocations: An Aidspan analysis

Kate Macintyre 12 November 2014

The Global Fund announced in March 2014 the existing pipeline and new allocations totals for all countries eligible to receive funding from the Fund.   This was the central element of the Global Fund’s new way of doing business.  Countries are no longer operating in the dark.  They know what the ceiling is.  And concept notes are written to that total. 

Aidspan’s team, headed by David Garmaise, has taken these total allocations figures and now present a basic baseline for all countries to know where they fit relative to their regions, their income levels, their disease burdens as well as other variables.  The paper, entitled The New Funding Model allocations: an Aidspan analysis, is available here on the Aidspan website as a PDF download.

The disease components that received the largest allocations were:

HIV: India ($560million) and Nigeria ($477million)

TB: India ($233million) and Pakistan ($175 million)

Malaria: Nigeria ($500million) and DRC ($419million).

Sub-Saharan Africa received nearly two-thirds of the funding, and no other region received more than 10% of the total allocations.  Breakdowns of allocations by region and disease component are also presented.

One chapter is devoted to explaining the effect of the over- or significantly over-allocated designation on any given country.  It should be noted that 45% of the components were given a designation of over-allocated, so this was not rare. The analysis will help countries and their advisors who want to understand the way funds were allocated.

The paper also compared allocation totals with disbursements between 2010 and 2013.  This allows for an approximation of which countries gained under the NFM and which countries saw a drop in total funding.  Interesting trends are revealed.

The NFM has two aims: to increase funding to the disease components that had high disease burden and to ensure that countries with the lowest ability to pay would also benefit.  We find several outcomes in this analysis that suggest these aims were achieved. 

Aidspan hopes that this analysis, which is based entirely on open data from the Global Fund itself, will spark more discussion and debate about the allocations model and process.  This innovative mechanism that will provide over 100 countries, with more than 300 disease components, with targets for funding for their three epidemics must be analyzed closely. 

Lessons are being learned even in this early stage of the roll-out of the NFM. This analysis supports the necessity of continuous learning.  To do this the Fund must be as transparent and open as it can be in releasing comprehensive data, without risking a compromise of privacy or legality.  

[This article was first posted on GFO Live on 12 November 2014.]

To comment on this article, click here.



3. NEWS: OIG reveals financial irregularity in DRC, Burundi grants

Aurelie Fontaine 13 November 2014

Countries early-adopters of Fund's more holistic approach to risk management

After years of fraud, collusive practices, bad management, over-charging, falsification of documents and other financial irregularities in procurement and payroll management, the Global Fund has put into place a series of fiduciary controls to mitigate further financial risks in Democratic Republic of Congo (DRC) and Burundi.

The Great Lakes countries were the subject of two recent reports from the Office of the Inspector General: the latest in the backlog of 'legacy cases' held over during the transition of inspectors general since 2012.

Burundi has implemented some 11 grants since 2003, with disbursments totalling $189.84 million across three disease components. Global Fund grants support ARV treatment for 33,000 people, and have facilitated the purchase and distribution of 8.2 million treated bed nets. Another 41,600 smear-positive TB cases have been detected.

Published on 17 October, the Burundi report (update is here) also implicated the principal recipient, the secretariat of the National Council for the Fight Against AIDS, in collusion with Diagnostica: the main culprit in the fraudulent procurement practices documented between 2005 and 2013. Diagnostica was responsible for a series of financially improper transactions, including forged certificates, over-charging for equipment and delivery of products to Global Fund-supported programs that did not meet specifications.

The OIG has, as a result, recommended that the Fund seek to recover $283,068 from the Burundi program.

The level of financial irregularity in neighboring Democratic Republic of Congo was significantly higher, according to the report published a week later (update is here), with a recommended recovery of $1.4 million from the UN Development Program, which served as principal recipient on tuberculosis grants between 2007-2010. UNDP's management of sub-recipients in DRC has already been subject to an OIG audit (see article here), underscoring the challenges confronting most organizations trying to work in the unwieldy operating context precipitated by years of civil strife and massive population displacement.

UNDP was not directly implicated in the fraud; rather, the culprits were a cadre of sub-and sub-sub recipients who colluded amongst themselves to overcharge and falsify documents .

Among them was the National Program for the Fight Against TB, which was unable to provide supporting documents to the OIG to justify $1.3 million in procurement expenses -- a sum first verified in 2011 by the local fund agent. Some $180,000 has already been reimbursed by UNDP to the Fund. UNDP has also since suspended its work as a PR in DRC, with the activities it was supervising shared among the remaining PRs, including the Ministry of Health.  

Since mid-2012, additional oversight of SR activities has been mandated and extensive reviews are conducted on a regular basis to monitor financial activities. For the MoH, a fiduciary agent now co-manages all financial transactions and reporting. The Fund is in negotiations currently with GIZ to serve as fiduciary agent after the first agent's performance was found wanting.

 The scope and extent of financial impropriety observed in both countries demonstrates the need by the Fund to both expand and tighten its financial controls to ensure that grant money is spent appropriately in these two countries which, like the rest of the Great Lakes region, bear high burdens of disease due to the endemnicity of malaria, the high degree of poverty and the fragility of the states.

Both countries are among the early-adopters of improved risk management practices that the Fund has been rolling out over the past three years. A new Risk Management Policy is expected to be approved at the upcoming 32nd meeting of the Global Fund Board, with these practices at its foundation. The new policy also endorses a widening of oversight of financial transactions to include, at appropriate times, the country coordinating mechanism, the Fund's country team, LFA and technical partners as well as various Secretariat committees.

This consolidated approach to risk management includes enrollment in the pooled procurement mechanism for purchase of all commodities.  Burundi has been part of the PPM since 2013; DRC was first enrolled in 2012 for HIV commodities and 2014 for TB commodities.

As new grants are implemented from 2015, both countries will also have the opportunity to select new SRs -- with the risk management controls already in place -- and adjust their financial and programmatic oversight based on what has been learned in the interim. A complete reform of the Congolese CCM is expected by the end of 2014, which should also improve controls.

Both countries will also see an improved, more muscular LFA involved in risk management that goes beyond the financial, to respond to human resource, sustainability, political, supply change and security concerns.

Read this article in French. Lire l'article en français.

[This article was first posted on GFO Live on 13 November 2014.]

To comment on this article, click here.



4. NEWS: Ukraine president signs updated HIV national strategic plan

Tinatin Zardiashvili 13 November 2014

Ukrainian President Petro Poroshenko in early November officially adopted the country's national strategic plan for its HIV response (2014-2018), which includes a roadmap for the gradual transition away from reliance on Global Fund financial support.

Under the new funding model allocations announced in March 2014, the Fund will contribute $137.3 million to the national HIV response from 2014-2017: what is expected to be the last significant contribution from the Fund to Ukraine as it moves towards a model that devotes a greater share of resources to countries with high burdens of disease and low ability to pay.

This represents a comparative decrease in support for the country compared to previous grants signed under the rounds-based approach -- a decrease that civil society activists are concerned will not be made up by a proportional increase in domestic funding.

One of the problems, according to Pavel Skala, the associate director for policy and partnership at the International HIV/AIDS Alliance in Ukraine, is that the political crisis that has engulfed Ukraine in the last year has slashed the amount of money available for health programming. Equally concerning is the plummeting value of the Ukrainian currency, the gryvna, and disproportionate inflation fuelled by the political crisis.

 “Because of the economical crisis in Ukraine, the state commitment to the national program was cut in half," said Skala. "So if we look at what has happened historically in terms of state financing for HIV programs, we are likely to see even greater cuts, which means we will not be able to talk about any kind of stability."

The current budget underwriting the national strategic plan is some $400 million, meaning that the Global Fund's support represents about one-third of the total costed need.

It is inevitable, Skala adds, that some activities will be dropped from the plan for at least the first year due to financial constraints -- particularly those activities related to prevention activities for the most vulnerable groups.

Even prior to the political crisis, support for these programs was controversial and advocates found themselves squaring off in parliament against legislators leery of committing already limited funds to respond to the needs of drug users and others on the margins of society.

There has always been a provision in the national strategy that if there is not enough money, prevention programs will be dropped in favor of ensuring there are no gaps in coverage and treatment, Skala said. One recent example occurred just months ago when the state's procurement tender for anti-retroviral and TB drugs collapsed for want of funds and Global Fund principal recipients, including the Alliance-Ukraine, scrambled to find $5 million to complete the transaction: money that was ultimately taken from treatment and prevention programs.

That's the Catch-22 of the HIV response, Skala said: harm reduction is always underfunded but ultimately results in higher treatment costs as more people need to take ARVs.

Still, the new NSP does represent a significant milestone in the collaboration between government and non-government organizations during a particularly tumultuous period in Ukraine, the eastern part of which is playing reluctant host to thousands of Russian troops with reports of thousands more massing on the border.

Work began on the development of the NSP in early 2013 before submission for parliamentary approval. The deteriorating political situation in the country caused significant delays, and the subsequent government change in February 2014 meant that consultations had to begin again, resulting in further delays. Ultimately, however, there was little change to the draft first submitted in 2013, and the approval process has been relatively smooth.

The NSP includes a plan for the handover of responsibility for the continuing treatment of some 63,800 people currently on ARVs. According to the NSP there are an estimated 230,000 adults  in Ukraine who are HIV positive.

The future of the existing opioid substitution therapy (OST) program -- considered a role model for many other countries looking to implement harm reduction activities as a way to control the spread of the epidemic -- however, remains in question. A previous iteration of the OST program covered 20,000 people; now, there are only 7,800 enrolled in a program funded by the Global Fund. The target, according to Skala, is to get those numbers back up to 20,892 by 2017.

"If the political goodwill is the problem, we are ready to advocate and lobby on behalf of the interests of hundreds of thousands of people," he said. "But if there is no money, we can only ask the international community -- and ask for flexibility from the Global Fund."

The fact that the roll-out of the NFM coincided with Ukraine's upheaval was terribly unfortunate timing, Skala said, while emphasizing that under normal conditions it makes sense for Ukraine to envision an exit strategy for Global Fund support. "The bureaucracy of the Global Fund cannot keep pace with the huge changes that have happened in our country," he said. "We may be still considered a lower middle-income country, but the economic realities on the ground are a far cry from that."

[This article was first posted on GFO Live on 13 November 2014.]

To comment on this article, click here.



5. NEWS: Global Fund grants unaffected by Malawi internal challenges

Owen Nyaka 11 November 2014

The ouster and delayed replacement of the head of PR National AIDS Commission should not affect implementation, Fund says

Investigations into alleged financial mismanagement by the head of the Malawian National AIDS Commission are continuing in the wake of the ouster of its executive director, but they should have no impact on the continuing administration of Global Fund HIV grants, Aidspan understands from government and Fund sources.

Dr Thomas Bisika was asked to step down in early October so that investigations into financial irregularities that have occurred under since he began his tenure in 2010 could proceed.

NAC board chair Marah Kumbweza Banda told Aidspan in written responses to emailed questions that the necessary "structures and processes [remained] in place to ensure continuity of Global Fund operations".

The NAC was one of two principal recipients of Global Fund HIV grants implemented in Malawi since 2003. An audit by the Office of the Inspector General released in 2012 (see article here) covering the period 2003-2010 found some $3.9 million in ineligible and unsupported expenditures by the NAC: an amount that, gradually, has been paid back. An outstanding balance of some  $938,000 in reimbursed funds  was paid in July 2014 (see article here). NAC has also not received disbursements from the Fund directly since 2012, beyond a $1million payment to the UN Development Program through the NAC, to pay salaries of medical doctors working as UN volunteers.

Efforts to mitigate fiduciary risk in Malawi have been ongoing since 2011 and will remain in place as the country develops its plans to allocate the nearly $575 million in Global Fund support made available under the new funding model (NFM).

All commodities procured for the response to the three diseases are purchased under the Fund's pooled procurement mechanism; a discrete bank account from which Global Fund monies alone are disbursed has also been set up.

Similar financial controls have been imposed on Fund disbursements to the other PR, the Ministry of Health. A fiscal agent was contracted in 2013 to review all transactions, co-sign payments and ensure that adequate financial and administrative procedures are in place.

The Global Fund has never at any point in time suspended its financial support to Malawi. Just like any other country, systemic weaknesses are bound to be there but what matters is a clear demonstration that the country has put in place measures to address them and reduce the magnitude of financial and program risks," said Banda.

No immediate successor to Dr Bisika has been announced. Jockeying for position has begun in what is being seen as a highly political process, according to media coverage in the Malawian capital Lilongwe.

Marriam Mangochi, a former NAC senior official currently working in the presidential office, was appointed to serve as interim director. Her posting, however, was suspended without indication as to why after just a week, in favor of replacement Davie Kalomba.

Owen Nyaka is a member of the International HIV/AIDS Alliance network of key correspondents.

[This article was first posted on GFO Live on 11 November 2014.]

To comment on this article, click here.



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