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Global Fund Observer


Issue 256: 24 November 2014

GFO is an independent newsletter about the Global Fund.
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1. NEWS: At Global Fund's 32nd Board meeting, a focus on systems

The conclusion of the Global Fund's 32nd Board meeting since its inception in 2002 demonstrated a healthy maturation of the organization with an improved adherence to a systematic way of doing business. But lingering questions about impact, about equitability and about resource management remain, accompanied by concerns about the gaps in capacity and flexibility that the funding model has yet to overcome

2. NEWS: Main decisions made at Board meeting

This article provides a summary of the main decisions made by the Global Fund Board at its 32nd meeting in Montreux, Switzerland on 20-21 November 2014.

3. NEWS: Dybul says Global Fund must adapt to changing development landscape

The Global Fund will need to adapt to fundamental changes in the development and global health landscape, says Executive Director Mark Dybul. In his report to the Board, Dybul described several initiatives designed to help the Fund adapt. He also discussed initiatives to improve the impact of grants; to make better use of data to measure impact and plan programs; and to enable the Fund to respond to emergency health situations. Finally, Dybul provided an update on the creation of an integrated platform for the Fund’s financial information.

4. NEWS: Global Fund will need another $1.3 billion in resources by end-2017

The Global Fund will require an estimated $1.3 billion in additional resources to ensure continuity of services through 2017, due to the decision to allow some countries to shorten the length of grants approved under the new funding model -- assets that will likely be found from other countries' inability to absorb all of the funds they've been allocated.

5. NEWS: 2015 workplan and budget approved

The Board approved a detailed workplan for 2015, and a budget that holds the line on costs.

6. NEWS: Revised and Final Corporate KPI Framework Is Approved

A near-final version of the 16 Corporate KPIs was approved at the 32nd Board meeting in Montreux, Switzerland.  The indicators now have baselines (if relevant) and targets, with the exception of the indicator measuring human rights protection  which is promised for the next Board meeting. 

7. NEWS: Limited governance reform under way at the Global Fund

Based on the recommendations of the Working Group on Governance, and considerable discussion at their closed retreat, the Board of the Global Fund has agreed to create a fourth Board committee. The Transitional Governance Committee will steer the plan  moving forward on various aspects of fairly limited governance reform.   

8. NEWS: Update on Risk Management at the Global Fund

A risk policy and an over-arching enterprise risk management framework were approved at the 32nd Board meeting in Montreux. The leadership of the Fund has agreed that the portfolio risk index score of 1.86  (on a scale of 1 to 4) is appropriate.  The most common risks itemized in the organizational risk register were: poor program quality; treatment disruptions; inadequate grant oversight; Community, Rights and Gender-related risk; failure to deliver on mission; and failure to provide a new Secretariat culture.

9. NEWS: Global Fund adopts policy on compulsory treatment facilities

Aside from exceptional circumstances, the Global Fund will not finance activities in, or related to, compulsory drug treatment facilities. This new policy was among decisions included in the report of the Strategy, Investment and Impact Committee prepared for the Board meeting on 20-21 November. This article provides highlights from the SIIC report and from the reports of the Audit and Ethics Committee and the Finance and Operational Performance Committee.

10. NEWS: New approach at the OIG means fewer country audits and more audits of Secretariat processes

A new approach adopted by the audit unit of the Office of the Inspector General means a shift in emphasis from mainly compliance though country audits to a more balanced mix of compliance and internal audits of Secretariat processes. The 2015 workplan calls for 10 country audits to be performed. Six internal audits are planned, including one on the effectiveness of country coordinating mechanisms and one on the “robustness” of the current allocation methodology for the new funding model. This information was contained in the OIG’s progress report for the period January to October 2014.  

11. NEWS: Progress on recoveries has been slow

Little progress was made on recoveries of losses in the first half of 2014, according to a report prepared for the Board meeting on 20-21 November. However, the Secretariat is optimistic that the pace of recoveries will pick up. In another report, the OIG was critical of the record-keeping and tracking mechanisms at the Recoveries Committee. 

12. NEWS: E-marketplace endorsed as centerpiece of Global Fund's emergent sourcing strategy

Transformation of the way the Global Fund sources and buys the products needed to underpin its response to AIDS, TB and malaria will continue with the design and roll-out of a new electronic marketplace that seeks to be a transparent and cost-efficient platform for countries to purchase equipment and drugs.

13. NEWS: Ethics and integrity framework adopted

The Board adopted a new ethics and integrity framework and established a dedicated ethics function. A set of principles related to a code of ethical conduct for governance officials was also adopted. 


1. NEWS: At Global Fund's 32nd Board meeting, a focus on systems

Lauren Gelfand 24 November 2014

Systems approach should not undermine flexibility, equitability and rights, delegates say

The conclusion of the Global Fund's 32nd Board meeting since its inception in 2002 demonstrated a healthy maturation of the organization with signs of adherence to a systematic way of doing business. But lingering questions about impact, about equitability and about resource management remain, accompanied by concerns about the gaps in capacity and flexibility that the model has yet to overcome.

Most of these concerns were encapsulated in the lengthy and lively discussion that followed the presentation on 21 November of progress and lessons learned about the new funding model: the upfront allocations to countries of financial resources based on their burden of disease and ability to pay for their own response to AIDS, TB and malaria.

NFM lessons learned... or needing to be learned

Board delegations emphasized the need for greater simplicity within the NFM's processes and procedures. Equally they demanded that concept notes to apply for a country's share of the more than $12 billion in funds available through 2017 be based on more and better data, more rigorous analysis of needs and a more sound application of the Global Fund's methodology and ethos to national priorities -- balancing the needs of the most vulnerable against the responsibility to a wider population.

The theme of 'more' reverberated throughout the meeting: more emphasis on human rights, gender, community strengthening and key populations; more human resources in country to provide durable technical assistance to increase local capacity; more money overall to respond to the interventions laid out in countries' national strategic plans. How to find more, however, remained elusive.

Among the challenges highlighted by the TRP were the struggles countries are having to operationalize what they have identified as gender or community-level barriers to access to services.

The discussion around disease burden and controlling the spread of epidemics seems to have pivoted, one participant noted, away from high-burden countries to high-burden populations. Perversely, another said, it seems that the Global Fund's focus and resource commitment to those very  key populations has been somewhat of a disincentive for national governments. This has meant that governments have been reluctant to providing costed support for activities that target them.

What this has translated into, in many countries, is domestic resources not being directed towards the highest-impact interventions.

And so, as the TRP noted, the Fund is caught somewhat in a dilemma, trying to fund critical programmatic gaps so that impact is based very clearly on the basic provision of essential services while having very little room to incentivize innovation because of the limitations on funding.

This dilemma has been compounded by a number of decisions that, while derived from the best of intentions, would seem to be undermining the ability to achieve the Fund's overall goal: investment for impact to reduce the spread of AIDS, TB and malaria.

The encouragement of countries to develop their full expressions of demand in order to tap into incentive, or above-allocated funding, are not achieving their purpose, the TRP said. More than that, it is not favoring strategic investment decisions for impact across the portfolio, setting up an "unrealistic hope of resources that may undermine real prioritization and lessen the drive to mobilize domestic and other funding".

Continued alarm over the state of middle income countries

Nowhere is this drive to mobilize domestic and other funding more acute than among the middle-income countries bracing to transition away from Global Fund support. In a paper released to coincide with the Board meeting, Open Society Foundations warned of the need to consider the implications that the reorientation of the Global Fund's allocations methodology are causing for key populations in those countries.

"The main way that New Funding Model is at odds with human rights is that it abruptly curtails funding for the populations most systematically subject to human rights abuses. A failure to protect these groups from abuse will be disastrous for HIV program effectiveness, and also undermines years of Global Fund investments," the paper concluded.

Analysis of investments sought for future allocations

Board delegations were also keen to develop a more grounded understanding of the NFM as it was rolling out, asking for analyses on a range of topics in time for the next Board meeting. Among the issues of greatest interest were the value of the technical assistance being provided, which one participant noted succinctly would indicate whether the investment in TA helped improve the quality of the concept notes being developed and approved. Also topping the wishlist were investigations into the extent to which gender, human rights and community system strengthening were being integrated not only into the development of concept notes but into programming as well.

How well the joint concept notes for countries with high co-morbidity between HIV and TB were being articulated and resulting into quality programming that did not sacrifice one disease for another was also identified as an area that required further study.

Finally, many delegations sought clarity on how the Global Fund was articulating its approach to health system strengthening -- particularly within states that are fragile, emerging from conflict or suffering from chronic instability.  The conflation of poverty, conflict and epidemic disease are having ruinous effects for the countries stricken by Ebola, more than one delegate noted, and highlighted the yawning gaps in human resource, infrastructure and health systems.

As one delegate soberly noted: "Ebola tells us that all progress made can be wiped out by a major disease epidemic".

[This article was first posted on GFO Live on 24 November 2014.]

To comment on this article, click here.



2. NEWS: Main decisions made at Board meeting

David Garmaise 24 November 2014

On 20-21 November 2014, the Global Fund Board held its 32nd meeting in Montreux, Switzerland. GFO was present, with observer status. The main decisions made at the meeting, in chronological order, were as follows.

(For precise wording of what the Board agreed, see the decision points document that has been posted here. Background documentation will also, in time, be posted by the Global Fund at the same location.)

2015 workplan and budget. The Board approved a corporate workplan and budget narrative for 2015. It also approved the 2015 operating expenses budget in the amount of $299.8 million, which includes $16.4 million for the Office of the Inspector General. [See DP03.] See also separate GFO article here.

Governance. The Board approved several changes in governance arrangements, including establishing a transitional governance committee and introducing measures to make Board and committee votes more transparent. The Board also approved in principle a reconfiguration of its existing standing committees, though these will not take effect until April 2016. [See DP05.] See also separate GFO article here.

Risk management. The Board approved a new risk management policy to replace the risk management framework that has been in place since 2009. The Board approved a new risk differentiation framework. [See DP11 and DP12.] See also separate GFO article here.

Losses and recoveries reports. The Board assigned to the Secretariat the responsibility for preparing reports semi-annually on losses an recoveries. Previously these reports had been prepared jointly by the Secretariat and the Office of the Inspector General (OIG). The OIG argued that this was inconsistent with its role as an independent auditor of Secretariat processes. The OIG will still report on the Secretariat’s progress on recoveries as part of the OIG’s regular progress reports. [See DP04.] See also separate GFO article here.

Ethics and integrity initiative. The Board adopted a new ethics and integrity framework. It also established a dedicated ethics function and approved a set of principles related to a code of ethical conduct for governance officials. [See DP09.] See also separate GFO article here.

Privileges and immunities. The Board has been concerned for many years that the failure to accord to the Global Fund privileges and immunities normally granted to international organizations exposes the Fund’s resources, staff and mission to serious risks and challenges. Limited progress has been made on this front. Consequently, the Board directed the Secretariat to devote dedicated resources to the task of acquiring privileges and immunities. It also asked its Finance and Operational Performance Committee and its Audit and Ethics Committee to oversee the process and to report annually to the Board on which countries have failed to grant privileges and immunities. Finally, the Board asked its chair and vice-chair to put together a group of donor and implementer representatives to advocate for the acquisition of privileges and immunities. [See DP06.]

Restricted financial contributions. The Board amended its restricted financial contributions policy to bring it in line with developments under the new funding model. Specifically, donors that wish to provide funding for a specific initiative in the register of unfunded quality demand may now do so. [See DP13.]

Market shaping. The Board decided to abolish the Market Dynamics Advisory Group. The Secretariat will be responsible to develop and implement strategic policies and initiatives on matters related to market dynamics. Responsibility for oversight will be split between the Strategy, Investment and Impact Committee and the Finance and Operational Performance Committee. [See DP08.] See also separate GFO article here.

Funding for hepatitis C (HCV). The Board decided that where there is currently an approved budget for HCV treatment within an existing Global Fund grant, the Fund may continue to fund such treatment up to the approved budget amount. This is an interim measure. The Strategy, Investment and Impact Committee is developing recommendations on the role of the Global Fund in financing treatment of co-infections and co-morbidities of the three diseases. The Board also called on partner organizations to put more money into financing HCV treatments, including within Global Fund grants. [See DP07.]

Corporate KPIs. The Board approved an updated corporate KPI framework and a number of performance targets for 2015. The remaining 2015 performance targets will be presented to the Board for approval at its first meeting in 2015. [See DP10.] See also separate GFO article here.


[This article was first posted on GFO Live on 24 November 2014.]

To comment on this article, click here.



3. NEWS: Dybul says Global Fund must adapt to changing development landscape

David Garmaise 20 November 2014

Emerging powers will play an ever-larger role in the global health arena

There will be fundamental changes in the environment in which development and global health have operated for more than 50 years, the Global Fund's executive director, Mark Dybul, told the Board to open its 32nd meeting on 20 November.

This is a world where emerging powers play a bigger role in the global health arena and where traditional, large-scale external investments remain important in some countries – but where there is a strong shift to increased domestic resources.

In his report, Dybul said that the Fund must determine what role it should play in the “development continuum” and assess what kind of Fund it wants to be in 15 years. How the Global Fund evolves and adapts to the changing landscape will influence how it is able to ensure impact in the fight against AIDS, TB and malaria.

In his report, Dybul also discussed initiatives to improve the impact of grants; to use data to measure impact and plan programs; and to enable the Fund to respond to emergency health situations. Finally, Dybul reported on the current status of the Secretariat’s finance step-up project involving the creation of an integrated platform for the Fund’s financial information. We report on these items below.

Regarding the development continuum, Dr Dybul said that some trends can already be discerned. For example:

  • A number of countries are transitioning from low-income to middle-income status. Already, middle-income countries (MICs) account for 70% of the world’s poor, 66% of HIV cases, 76% of TB cases and 54% of malaria cases.
  • MICs are better positioned to invest domestic resources for health. However, the resources invested are often insufficient and some populations are being left behind.
  • While some MICs and regions are making remarkable progress against the diseases, others are falling back.

To prepare the groundwork for its next strategy, the Global Fund has convened a Development Continuum Working Group, chaired by Anders Nordström, the Swedish ambassador for global health. The working group will examine questions such as:

  • How should the Global Fund support populations left behind, and engage countries where political will or financial support may be lacking?
  • How can countries be best supported as they transition from Global Fund support?
  • How can the Fund best operate in challenging operating environments?

The working group is expected to submit a report and recommendations to the Board in March 2015.

Currently, movement along the development continuum is largely defined by gross national income. But this system has its limitations, Dybul said, particularly in relation to health programs. As a result, the Global Fund will join GAVI, the World Bank, WHO, UNAIDS, UNDP, UNICEF and UNITAID in developing a new framework called the Equitable Access Initiative to integrate progress along the continuum specifically related to health.  

The panel is expected to meet in early 2015 to develop a workplan, and again in early 2016 to make final recommendations on a framework.

Dybul said that this framework will guide not only how technical partners and funders work with countries but also how they can anticipate their needs and accommodate them. This will require a look forward, to determine what it takes to progress, but also a look back at what systems have already been put in place to assist countries. Dybul said that the Global Fund is pursuing “several strands of work” to develop and strengthen these systems, including:

  • the Rwanda results-based financing pilot, with its emphasis on national systems, which the Fund hopes can be tried in other countries;
  • the Fund’s new innovation hub which will focus on improving procurement and supply chain management, financial and risk management and program quality
  • the piloting of some “cash on delivery” models.

With support from the Gates Foundation, the Fund and its partners are tracking cash-on-delivery strategies in different sectors, the results of which will feed into the pilots.

Key to supporting countries as they graduate from Global Fund support is access to the lowest possible prices for commodities, Dybul said. Again with support from the Gates Foundation, the Fund is exploring the possibility of creating an electronic market exchange that will become a clearinghouse for information on the prices and sales of health products.

Improving impact

As part of a special initiative on improving value for money, the Global Fund and its partners have been working in several countries on a process to strategically prioritize interventions to maximize the impact of grants. This process of allocative efficiency will require changes to the mix of interventions in a grant and to the proportion of the budget assigned to each intervention. To date, the countries involved are Armenia, Bangladesh, Belarus, Ethiopia, Jamaica, Kazakhstan, Kyrgyzstan, Moldova, Mozambique, Sudan and Ukraine.

A separate report on lessons learned from the new funding model (NFM), also prepared for the Board meeting, described the outcomes of an allocative efficiency exercise conducted in Sudan. Prevention services among men who have sex with men went from 0% of spending in 2013 to 21% of the budget in the HIV concept note submitted in August.

Prevention services among female sex workers went from 8% to 17%. To compensate, budgets for other items, such as management support, were reduced. In Sudan, programs for the prevention of mother-to-child transmission of HIV went from 7% of the 2013 spending to 0% in the concept note budget because it was decided that PMTCT would be funded through the national budget instead.

Dybul said that achieving allocative efficiency will require attention to several challenges, beginning with a new focus on modelling for TB and malaria, and an ever-greater commitment to better data collection, management and analysis.

Putting data to use

The Global Fund is working to ensure comprehensive data from country to global level is available to measure impact, Dybul said, including encouragement of countries to increase investments in monitoring and evaluation systems. Partner organizations are mapping the resources that are available in countries to do M&E, while also assessing needs that can be covered by grant resources and those that can be covered elsewhere. In some countries, where there are gaps in data, the Fund is providing additional money through special initiatives.

Since 2012, the Global Fund and its partners have supported 20 countries to do epidemiological and impact analyses. In Nigeria, for example, an analysis completed in August 2014 examined the total number of people in need of services, current coverage, how services are packaged, and service availability – both nationwide and by state. The analysis also looked at what interventions were working.

In 2013 in Tanzania, through a health systems strengthening grant, the Global Fund reinforced the District Health Information System (DHIS). By March 2014, the DHIS platform had been installed in all the 165 districts in the country. Currently, DHIS is being extended to all hospitals to improve reporting and analysis of mortality data.

Health emergencies

To respond to health emergencies, the Global Fund has adopted a country-by-country approach. This requires a more nuanced understanding of the political, economic and social context in each country, Dybu said, and responding with flexibility.

In war-torn Syria, the Global Fund has worked with partners to develop delivery routes for antiretrovirals, to place more emphasis on vulnerable and internally displaced populations, and to prioritize testing and prevention of mother-to-child transmission of HIV.

In South Sudan, Dybul said, the main focus is on delivering essential medicines. In addition, there have been advances in strengthening health systems, better reporting and verification of programmatic results, and enhanced verification of antiretroviral stocks.

In Somalia, where the health system is barely functional, the Fund is disbursing grants to  principal recipients UNICEF and World Vision to support the rebuilding of infrastructure, training of medical staff and integrating the disease-specific programming into primary health care services, while contributing to health activities that prioritize maternal and child health.

In Pakistan, the only federal country in the world without a central ministry of health, the Global Fund is channeling its investments into provincial health and disease strategies.

Consolidating financial information

In early 2014, the Secretariat completed the migration of all financial information – covering 1,800 purchasing transactions and over 1,000 grants – into a new Enterprise Resource Planning Tool. “All of our financials are now in one single integrated data platform and are updated in real time,” Dybul said.

The Secretariat has also developed an online financial dashboard that includes status of contributions, grant expenses and disbursements, and operating expenditures. This tool, which allows a user to view the data in a variety of ways and to look at different levels of detail, will soon be made available to Board members, which should facilitate and improve oversight by the Board.

The Report of the Executive Director (GF-B32-02) is now available at The report on New Funding Model Lessons Learned (GF-B32-09) is also available at the same site.

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

[This article was first posted on GFO Live on 20 November 2014.]

To comment on this article, click here.



4. NEWS: Global Fund will need another $1.3 billion in resources by end-2017

Lauren Gelfand 24 November 2014

The additional money will likely come from efficiencies and underspends

The Global Fund will require an estimated $1.3 billion in additional resources to ensure continuity of services through 2017, due to the decision to allow some countries to shorten the length of grants approved under the new funding model -- assets that will likely be found from other countries' inability to absorb all of the funds they've been allocated.

This prediction was contained in a midterm assessment of the Fund's financial status prepared for the Board and delivered during the 32nd Board meeting concluded on 21 November in Montreux, Switzerland.

Revised figures show that disbursements for 2014 will equal some $3.1 billion: lower than forecast and due in large part to delays in the development and submission of concept notes by countries as they work to translate the new requirements of NFM proposals into robust and actionable concept notes. This lower disbursement will not result in any interruption to program continuity: on the contrary, it will allow for spending to keep pace with the roll-out of activities and sourcing of commodities for the three diseases.

Decreased spending in 2014 will likely be made up in early 2015 as more and more countries proceed to the grantmaking phase of the NFM. Estimated spending for 2015 is set to increase to $4.0 billion. By 2016, spending will increase to $4.1 billion, and in 2017, the remainder of the funds committed during the fourth replenishment in December 2013 -- another $3.9 billion -- will have been spent, according to the forecast presented by Chief Financial Officer Daniel Camus.

The accounting financial forecasting represents the latest step in the transformation of the Fund's fiscal discipline and fidelity to a Comprehensive Funding Policy that mitigates the risk of over-commitment and borrowing against future donations that was the hallmark of the Global Fund in its early years. That over-commitment was, in large part, why the existing pipeline of committed funds going into the fourth replenishment and into the NFM was more than $9 billion.

Still, challenges remain, including the reliability of the forecasting and the evolution of the corporate and financial culture within the organization. For example, better forecasting of the foreign currency market is needed so as to ensure there are fewer losses to fluctuations in the forex markets. Camus estimated that some $140 million in donor commitments have been swallowed in 2014 by the shifts in African currency markets against the US dollar. However, that $140 million in 'loss' can be balanced by an estimated $270 million saved in a tightening of procurement and sourcing procedures that focus on cost-control and market-shaping in the upstream supply chain.

Continued implementation of proper, professional best practice will mean even more savings, Camus emphasized, freeing up more resources to apply to those disease components eligible for incentive funding as well as to the register of unfunded quality demand.

Better best practices in finance management

Better cash management at the country level will also help improve the organization's overall bottom line. This is why country teams are working to ensure that financial transactions are timely and efficient, rather than letting money sit in bank accounts and risk further depreciation due to currency fluctuations.

The Fund will also work with countries identified as politically difficult, to find better ways to transact. There are several countries within the portfolio, Camus said, where international banks are refusing to operate -- leaving these vulnerable countries even more exposed to the risk of disbursement delays that can have an impact on programming.

"The world outside the Global Fund is there, so we need to equip ourselves with systems, teams and policies to respond to that," he told Aidspan on the margins of the meeting. "We need a technical edge to come to grips [with the wider geopolitical context in which the Global Fund operates]."

Countries in the sub-Saharan African region are those having the most trouble in putting their funds to work, based on the projections developed by Camus' team. This is due to historical difficulties in actually spending the money they receive as well as delays in disbursements due to what many countries have described as onerous reporting requirements. This combined inability to spend what they have but also identify what they need has made it imperative for the Fund's country teams to work more closely with their implementing counterparts -- an imperative that has yet to be fully realized. Financial management capacity-building may, therefore, be incorporated into the technical assistance being provided at country level during the next phases of the NFM, once grant-making begins.

Shortened grants

Some countries were approved to shorten the grant period due to the amount of the allocations they received for individual disease components -- an amount that would fall short of supporting existing programming for essential services. By shortening the grant period -- from three to two years, for example -- it would ensure their ability to 'frontload' their programming and pay for all of the services they would need to provide to the population.

But this then meant that there would be a gap in that third year -- a gap that carries with it a moral imperative to ensure that services would continue. This moral and money gap is projected to be worth some $1.3 billion. So where will that money come from?

As Aidspan understands based on extensive (and often bewildering) conversations around the Secretariat and with representatives from various Board delegations, the funds will be drawn from a number of sources:

  • cost savings and efficiencies within other grants, and within sourcing and procurement;
  • funds committed early under the fifth replenishment, set for mid-2016;
  • some $600 million that is likely to come in from high net worth individuals in 2016; and
  • money that will be left on the table by other countries that will be able to absorb their entire allocation during the allotted time period.

"Based on what we know now, when we look through 2017 at all countries and grants and predict what they will spend based on capacity, we think that there is $1.3 billion they won't be able to spend," Camus said. "So we felt that it was a good idea to give approval for shortened grants for that 1.3 billion, and really, they're necessary because of the formula: there are critical gaps in-country and we cannot afford to leave them there. We don't want money sitting there, unused."

[This article was first posted on GFO Live on 24 November 2014.]

To comment on this article, click here.



5. NEWS: 2015 workplan and budget approved

David Garmaise 24 November 2014

Global Fund holds the line on costs

The Board has approved a detailed corporate workplan for 2015. The Board also approved a 2015 operating budget of just under $300 million.

Workplan priority areas

The Global Fund has established eight priority areas for the 2015 workplan, as follows:

Implement and optimize the funding model. The emphasis in 2014 has been on the allocations, country dialogues and concept note development. In 2015, the focus will shift somewhat to grant-making.

Greatly improve results and impact measurement. In 2014, approaches to measuring results and impact were significantly revised. These new approaches will begin to be implemented in 2015.

Increase value for money (VFM) and synergies of investments. The goal for 2015 is to make further gains on sourcing and procurement and to extend the VFM approach to other stages of the grant lifecycle.

Implement the new risk assurance measures developed in 2014.

Expand the scope of work on sustainability. In 2015, work on financial sustainability will continue. In addition, work will be done on how the Global Fund can best meet the needs of countries at different stages of the development continuum.

Strengthen governance. Many of the changes to governance structures approved by the Board at its meeting on 20-21 November will be implemented in 2015.

Upgrade capabilities and efficiency of Global Fund resources. Further enhancement of the Funds IT platforms will continue in 2015, with a particular emphasis on the grant management platform.

Prepare for new Strategy and the 5th replenishment. Although the new Strategy and the 5th replenishment are scheduled for 2016, most of the development work will occur in 2015.

Workplan priority and recurring activities

The largest section of the 2015 workplan is devoted to a description of priority and recurring activities for each of the strategic objectives and strategic enablers in the 2012-2016 Strategy. The following are some of the highlights:

  • As part of the Key Populations Action plan, the Fund will work with technical and civil society partners to support the meaningful engagement of adolescent girls and women in the country dialogues.
  • A methodology will be developed to shift resources from grants with low rates of expenditure to grants that are having a bigger impact.
  • As part of the Procurement for Impact initiative, an e-marketplace will be piloted that will give buyers access to negotiated prices that up to now have only been available through the pooled procurement mechanism.
  • The Global Fund will work with partners and manufacturers to establish three regional rapid supply centers. This will reduce the time it takes to resolve emergency product shortages from months to just a few weeks.
  • The Fund will work with countries on including technically sound human rights interventions in grants, mitigating human rights risks and managing complaints of violations.
  • In preparation for the 5th replenishment, the Fund will work with partners to update the resource needs assessment that was developed for the 4th replenishment.
  • The Partnership Forum will take place in 2015. It will likely consist of four regional fora held been April and October to seek input on the development of the 2017-2021 Strategy.

Day-to-day management of the portfolio of 348 grants forecast to be operational at the start of 2015 is the mainstay of the Secretariat’s work. Reviewing annual funding requests and progress updates, making commitment and disbursement decisions and dealing with the range of other activities supporting grant implementation and country level partnerships takes up more than 40% of the operating expense budget.

2015 operating budget (OPEX)

The Board approved a 2015 OPEX budget in the amount of $299.8 million, which is almost identical to the budget approved in 2014. Actual expenditures for 2014 are expected to come in at about $4 million below budget.

The OPEX budget has been stable at about $300 million since 2013; prior to that the budget had been going up each year, increasing from $226 million in 2009 to $308 million in 2012.

The 2015 OPEX budget includes $16.4 million for the Office of the Inspector General.

See Figure 1 for a breakdown of the 2015 budget by functional area.



Figure 1: 2015 OPEX budget by function


1.     Grant Management includes all Grant Management division except LFAs fees

2.     Support Functions and governance departments include: Communications, Legal, Finance, IT, Governance, HR, Sourcing, Administration, ED office and restructuring costs (HR); it excludes the Risk department.

Source: Global Fund document GF-B32-03

LFA (local fund agent) costs are budgeted at $54 million. Professional fees are budgeted at $38 million, down about 16% from 2014. Travel is budgeted at $23 million, up almost $3 million from 2014. Under the NFM, fund portfolio managers and other members of the country teams are expected to spend more time in the field than was the case under the rounds-based system.

Total headcount is 686, of which 303 are in the grant management area. Another 135 are in FISA (financing, sourcing and IT).

Documents containing the workplan (GF-B32-04) and budget (GF-B32-03) are available at

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

[This article was first posted on GFO Live on 24 November 2014.]

To comment on this article, click here.



6. NEWS: Revised and Final Corporate KPI Framework Is Approved

Kate Macintyre 24 November 2014

A final revised version of the corporate key performance indicators (KPIs) was discussed at the 32nd Board meeting.  Although the framework of 16 indicators had been approved by the Board in November 2013 (GF/B30/DP07), this edition showed minor revisions had been made to several of them, and most importantly, final methods of measurement, baselines and proposed were presented to the Board for approval. 

In the table below we summarize the KPIs, their indicators and the targets proposed. 

Table: List of corporate KPIs, with specific measures, baselines and targets



Specific Measures

Baselines and Targets


Performance against strategic goals

a) Estimated number of lives saved

b) Estimated number of infections prevented

a) 1.6m lives saved (2011)

b) 30m infections averted in 2011

a) 10m lives saved between 2012 - 16

b) 140m new infections prevented 2012-16)


Quality and coverage of services

a) ARV retention rate at 12 months

b) TB treatment success rate

c) Proportion of population at risk potentially covered by LLINs distributed

Proportion of population that slept under an ITN the previous night

d) Percentage of eligible adults and children currently receiving ART

e) Percentage of HIV-positive pregnant women who received antiretrovirals to reduce the risk of mother-to-child transmission

f) Percentage of HIV-positive TB patients given ART during TB treatment

g) Number of countries with validated population size estimates for female sex workers, men who have sex with men and, where applicable, injecting drug users

a) 76%

b) 86%

c) 47%




d) 36%


e) 66%


f) 67%



a) 80%*

b) 90%

c) 60%




d) 50%


e) 90%


f) 90%


g) 2014: 35 countries

2015: 45 countries

2016: 55 countries

*a) through f) are targets for 2016


Performance against strategic service delivery targets

a) Number of people alive on ARV therapy (annual target)

b) Number of TB cases treated according to the DOTS approach

c) Number of LLINs distributed

d) HIV-positive pregnant women who received antiretrovirals to reduce the risk of mother-to-child transmission

e) Number of indoor residual spraying services delivered

f) Cases with bacteriologically confirmed drug resistant TB treated with a second line regimen

g) People who received HIV testing and counseling and know their results

a) 3.5m


b) 2.5m

c) 62m

d) 383,000



e) 7.7m

f) 12,000



g) 34m

a) 7.3 m**


b) 21m

c) 390m

d) 2.7m



e) 26m

f) 260,000



g) 359m

** targets are 2012 -2016.a) is annual; the rest are cumulative.


Efficiency of Global Fund investment decisions

Alignment between investment decisions and country need; with need defined in terms of disease burden and ability to pay

2013 alignment score: 0.65

2014: 0.62


20% improvement in alignment over 2014 - 16


Health system strengthening

HIV, TB and malaria service availability and readiness rating: proportion of countries in which services SARA score improves by 5 percentage points or more over 2014 - 2016

2013: 3of 4 countries surveyed showed improvement of at least 5 percentage points in HIV,TB or Malaria Score. [Range was 1 - 13 percentage points over 12 to 37 months.]

2014-2016: 60% of countries show an improvement of at least 5 percentage points in SARA score


Alignment of supported programs with national systems

Percentage of investments in countries where Global Fund support is reported on national disease strategy budgets

2014: 87% of High Impact countries reported Fund grants on a national budget; disease strategy or health sector budget in mid-2014 when weighted by allocation

2015: 90%


Access to funding

a) Time from final concept note submission to Grant Approval Committee recommendation

b) Time from Grant Approval Committee recommendation to grant signing

c) Time from grant signing to first disbursement


From submission of final CN to first disbursement

a) forCN submitted 2014: 75% grants take 10 months or less

b) forCN submitted 2015: 75% grants take 8 months or less


NFM implementation (temporary KPI)

Amount of grant expenses for the transition to the NFM committed to annual schedule of country demands

2013: $0.6bn in grant expenses committed in 2013 against a forecast of $0.4bn

2014: UP to USD 1.9bn over 2013-14 period

2015: KPI to be phased out


Effective operational risk management

Portfolio Risk Index: QUART operational risk rating for eligible grants weighted by grant budget

2013: 1.9 (High Impact Countries)

2014: 1.9 (High Impact Countries)

2015: Portfolio risk index within 10% of 2013 baseline (range1.7 to 2.1)


Value for money

Spend reduction in commodity purchases within pooled procurement mechanism for equivalent commodities at equivalent quality and volume

2013: 13% reduction in spend

Reduce spend by 8% per year 2013-2015 for equivalent commodities at equivalent quality and volume


Grant expenses forecast

Percentage of forecast grant expenses made to schedule

2013 Corporate Expenditure Rate (CER) -grant expenses 1.44

At each reporting period (2014 - 16):

·Actual grant expenses within10% of forecast

· CER-grant expenses within range 0.9 to 1.1


Human rights protection

Percentage of human rights complaints against Global Fund supported programs successfully identified through risk assessment tools; and resolved through Secretariat policies and procedures.

To be submitted for approval March 2015

To be submitted for approval March 2015


Resource mobilisation

a) Actual pledges as percent of replenishment target

b) Pledge conversion rate. Actual contributions as a percentage of forecast contributions

a) n/a

b) 2013: 97%

c) USD15bn in pledges

d) 2014-16: 100% forecast contributions received at each reporting period


Domestic financing for AIDS, TB and malaria

Percent of programs accessing funding where government contributions meet minimum counterpart financing thresholds.

2013: 96% of renewals and early applicants met minimum counterpart financing thresholds

2014: 90% of programs meet threshold

2015: 90% of programs meet threshold


Efficiency of grant management operations

Opex rate operating expenses as a percentage of grants under management

2013: 2.3%

2014: below a 3% max

2015: below a 2.75% max


Quality of management and leadership

Management and Leadership Index

2013: 76% of items on the management quality survey received favourable responses

2014: 78% of items on manager quality survey receive favourable responses

2015: To be submitted to Board March 2015

These KPIs, which have seen considerable work in the last year,  are intended to be one of the main vehicles for measuring progress towards, and achievement of, the strategic objectives under the 2012 – 2016 strategic plan.  Experts joined the Board’s committees and constituencies, its technical and funding partners to produce “visible and measurable” indicators that are mapped to the Strategy.

All the indicators have now been defined and the majority have baselines (where relevant) and targets.  Two indicators – human rights protection and quality of management and leadership - remain unfinished in terms of targets for 2016.  These two will be completed for submission to the March Board meeting in 2015.   

All the other 14 indicators now have purposes, methodologies and limitations briefly (sometimes very briefly) described in the framework.  

Aidspan comment:  the development of the KPIs has been long and complex, and it is good that there are now 16 relatively clear indicators to measure the Fund’s own progress towards their strategic objectives for 2016. 

That said, more information must be made available to accompany this framework to explain how several of the KPI’s will actually be measured. 

For example, KPI 4: “Efficiency of Global Fund investment decisions” is an “alignment score” with a range from 0 to 1. A lower score means higher alignment, but it is not clear how this will be measured. The Fund has said it will use the same or similar qualitative factors that it used to adjust its allocations to countries.  The exact way that these factors are used has not been made public under the allocations model, so cannot be made public under the KPIs -- which makes it difficult for those outside the Secretariat to understand the indicator.

Since the allocations under the NFM are the main decisions taken to meet country needs (as defined by disease burden and ability to pay) it again begs the question as to how the Fund arrives at this measure of  'efficiency'.

Perhaps we are not alone in our confusion, as the framework reports in the limitations section of this indicator that work is now underway to test a "complementary measure of investment decision efficiency".   

One of few composition changes is described in a footnote to indicator #2: quality and coverage of services.  Initially these concepts were to be measured as separate indicators, but as two of the three measures were to be the same for both coverage and quality, the decision was taken to merge the indicators into one.   This indicator now has seven sub measures.

As reported earlier, the indicators will be reported semi- annually or annually from next year.

Information for this article was taken from Board Document GF-B32-24a, Corporate Key Performance Indicators Narrative. This document is posted on the Global Fund website at

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

[This article was first posted on GFO Live on 24 November 2014.]

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7. NEWS: Limited governance reform under way at the Global Fund

Kate Macintyre 24 November 2014

Planning for a plan

Governance reform is amongst the last of the recommendations originally made by the High Level Panel in November 2011.  With a wide mandate for reform, the Board convened an eight-member working group on governance in early 2014.

Using fairly comprehensive advice from the Inspector General’s review of governance at the Board (GF-OIG-14-008), extensive consultations amongst constituencies and members of the Board, the Working Group presented its findings to the full Board at their retreat in Montreux, prior to their 32nd Board meeting. This article reports only final outcomes of the deliberations as well as the topics under the Governance Plan for Impact (GF/B32/08-final).

The Governance Plan predicates its recommendations on prior reforms in areas including Board function, risk management and the role of the Partnership Forum; the voting structure; transparency of Board and Committee votes; institutional memory management; legal status;  lifecycle and constituency management. Implicit within the plan is an overarching effort to ensure the quality of the interventions by implementers on the Board.

Governance Functions:

The Board has six functions: strategy development, governance oversight, commitment of financial resources, assessment of organizational performance,  risk management and partnership engagement/resource mobilization and advocacy.

The final governance structure should be presented for approval by the committee in November 2015. It will comprise of the full Board, a coordinating group and three committees. The existing permanent committees will be reconfigured as:  1) a Finance and Audit committee (which merges all finance and audit functions under one committee, a standard for many similar organizations); 2) a Strategy and Operations committee (essentially the SIIC); and 3) an Ethics and Governance committee.

To handle the transition for Board reform, a temporary Transitional Governance Committee will be formed.  This will be a six-member temporary committee to be dissolved in March 2016 once the enhanced structure is in place.

This temporary committee will have five responsibilities:   

·         to oversee and advise on key governance functions

·         to develop methods and oversee the performance assessments

·         to finalize the enhanced governance structure

·         to develop key components of a comprehensive governance structure

·         to develop a proposal for the future Board structure

Further terms of reference were provided to the Board and were approved as described in the governance plan GF/B32/08 – revision 2 (Annex 2).  

Assignment of responsibility among the existing standing committees -- the Audit and Ethics Committee, the Strategy, Investment and Impact Committee and the Finance and Operations Committee -- will remain until the “enhanced governance structure” is in place.

An amended terms of reference for the Board's leadership were set out in the Annex 5 of the Governance Plan.

The Board, after some debate during the retreat, reaffirmed that the chair and co-chair of the Board will be term-limited after two years.

Cross-cutting activities of the Board:

The working group’s proposal to the Board to oversee activities such as risk management, an assessment of organizational performance and the reaffirmation of the role of the Partnership Forum was summarized and approved, as shown in the following schema. 

From GF/B32/08-final – figure 5.

The Board approved a recommendation by the working group that requires acceptance of the responsibility for risk management at each level of the governance structure. All committees will contribute to the management of risk, and each committee must be fully appraised of the risk universe. The Chief Risk Officer is responsible for the consolidation and presentation of risk report to the Board twice annually.

Separately the Board requested the provision of an assurance report outlining the CRO's independent view on the robustness and effectiveness of the Secretariat’s risk management and mitigation activities to maintain an acceptable risk profile. This is also independent of a  request that the Inspector General also provide a risk assessment report.

Assessing the Global Fund’s Organizational Performance:

The Board agreed that key performance indicators will be considered at all Committee levels and presented as a clear way of measuring process towards the Strategic Objectives of the Global Fund.  It was also agreed that the development of KPIs to monitor the 2017-2021 strategy will be an integral part of the strategy development process and build on lessons learned from the current framework.

Voting Structure:

There were mixed reactions to what was presented by the working group. The end result was that there were no changes to the voting structure approved by the Board, but this could be further considered by the Transitional Governance Committee.

It was confirmed that individual constituency votes at the Board level will be systematically recorded, and a summary report included in the public Board documents on the website.  Voting at Committee level will be systematically recorded, and a summary report made available internally.

Despite concerns about the installation of the live-streaming of Board meetings, such as the effect it might have on the openness of discussions on the Board, it was agreed that the current process of lives-streaming for all delegations to the Board would continue, and that consideration to making this live-streaming public would be considered over the next year.

Institutional Memory Management:

The Board approved that an annual report will be provided by the Office of Board Affairs  containing a) the full register of Board decisions and b) the status of implementation.

Elevating the Implementer Voice:

The Board approved a roadmap developed for the Implementer Bloc by Management Sciences for Health, and assured them that there would be adequate support for the implementation of the roadmap and workplan.

As an observer said about the outcomes of this Governance Plan: “this is a refinement of the existing structure, rather than a major change in the governance of the Global Fund.”  With the Governance Plan for Impact now largely approved for action, and the transitional  committee charged with oversight of the implementation of the plan, the Global Fund at least has a “plan to plan” for moving ahead. 

[This article was first posted on GFO Live on 24 November 2014.]

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8. NEWS: Update on Risk Management at the Global Fund

Kate Macintyre 24 November 2014

At its meeting on 20-21 November, the Board approved a new risk management policy to replace the Risk Management Framework it had adopted in 2009. The Board also adopted a risk differentiation framework: a way to identify risk tolerance or risk appetite.

The risk management policy and the risk differentiation framework are two of the six inter-related elements of the Enterprise Risk Management Framework. The other four elements are:

·         governance arrangements around risk management

·         operational risk management

·         the organizational risk register

·         internal controls applied to Secretariat processes

All six elements of the Enterprise Risk Management Framework are discussed in Annex 1 to Board Document GF-B32-13 Risk Management Policy. The risk management policy itself is contained in Annex 3 of the same document.

According to the Secretariat, for the most part the policy codifies risk management practices that have been put in place, or significantly strengthened, over the past three years, so its approval will not have a material impact on risk management practices.

The risk differentiation framework covers both the operational risks related to the Secretariat’s management of the grant portfolio and the risks inherent in the Secretariat’s various supporting functions.

The Global Fund’s portfolio risk index (PRI) will be adapted to determine acceptable levels of risk in the grant portfolio. (The PRI is the aggregate of all individual grant risk assessments in the Fund’s portfolio weighted by the annual budget amount. The current value of the PRI is 1.86 (2014). The Global Fund says that the acceptable range is +/- 10% which, given the current value, is 1.7 – 2.0. A PRI target is set annually as part of the Fund’s key performance indicator (KPI) process.).  To give some perspective the portfolio risk index for 2013 was higher at 2.01.

Countries in the grant portfolio have been categorized into four levels – very high, high, medium and lower – based on a composite of indicators designed to measure the contextual risk in each country. Fifteen countries have been classified as very high; 25 as high; 50 as medium and 36 as lower.

Next, within each contextual risk category, thresholds have been established across individual grants; the country disease portfolio; and the overall country portfolio. Acceptable risk threshold ranges have been established for each of these entities.  These ranges are illustrated in Figure 1.


Figure 1: Risk threshold levels

Source: Global Fund Board document GF-B32-14

The Global Fund says that when these risk threshold levels are applied to the more than 180 grants for which detailed risk assessments are maintained, 30 are outside the ranges (14 above and 16 below) (see Figure 2, left hand column). In addition, 14% of disease portfolios and 7% of country portfolios are outside the risk threshold ranges.

Figure 2: Risk threshold levels

Any grant, disease portfolio or country portfolio outside the risk threshold ranges will be reviewed by the Regional Operational Risk Committee for a decision on the appropriate course of action. This could mean more intense management or control, which would be designed to reduce the underlying risk exposure; accepting the higher (or lower) risk levels; or some combination of the above. It is designed to make the management of risk as realistic and logical as possible. 

In its decision on the risk differentiation framework, the Global Fund re-affirmed that it does not tolerate corruption, fraud, misappropriation or abuse of any kind in its grants. 

With respect to the Secretariat's supporting processes, the degree of risk is measured by assessing the state of compliance of each main process with the COSO Framework, the standard for internal control that has been adopted by the Global Fund.

Reports on how the Global Fund is performing with respect to managing risk will be prepared for the Board twice a year.

Linked to risk management, the Chief Financial Officer, Daniel Camus, in his report on the Fund’s operational budget (GF-B32-03), said that for 2015 the proportion of the OPEX being spent on cost of control and assurance was $75 million.  This is made up of the cost of LFAs and Risk and OIG. As Camus says, this proportion can be seen as high or low, but it is in the nature of the Global Fund’s model of not having permanent country presence that the cost of risk management is relatively high.  

For all of the emphasis on risk management at the global level, many countries are having trouble absorbing the new requirements and accommodating the controls and oversight that the new framework requires. In a report, the French civil society group Solthis highlighted some of the challenges confronting countries as they work to meet the Fund's stringent controls. With case studies from Guinea, Niger, Mali and Sierra Leone, Solthis examined the extent to which program implementation has been affected by risk management protocols. 

Other criticisms expressed to GFO by several participants said that they thought the process of operationalizing the risk management in terms of getting results was slow.  A fellow-observer said there had been no independent verification of the risk assessment  - i.e., no parallel assessment by the inspector general.  Ideally, one assumes, this means that the Board may expect a report from the Risk Management department and a separate report from the OIG: both independent assessments of the operational risks on a semi-annual basis.

The paper on Risk Management Policy (Document GF-B32-13) and the paper on Applying Risk Differentiation (GF-B32-14) are available at  Other documents related to risk that will be available at the same site are the Report on Risk Management (GF-B32-12) and Global Fund Risk and Assurance Policies (GF-B32-14). More information on the COSO Framework is available here

[This article was first posted on GFO Live on 24 November 2014.]

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9. NEWS: Global Fund adopts policy on compulsory treatment facilities

David Garmaise 24 November 2014

Board Committees report on recent decisions

Under a new policy adopted by Strategy, Investment and Impact Committee (SIIC), the Global Fund shall not, as a general rule, finance any activities in, or related to, compulsory treatment programs or facilities where individuals are detained without due process; where torture or cruel, inhumane or degrading treatment is practiced; or where medicines and treatment regimens are not scientifically sound or approved.

However, the SIIC decided that in exceptional circumstances the Fund may provide services – such as life-saving treatment provided by voluntary, community-based treatment programs – to detainees of compulsory treatment facilities as long as the services are provided outside of the facilities.

The information on the new policy regarding compulsory treatment facilities was contained in the report of the SIIC prepared for the Board meeting on 20-21 November. The Audit and Ethics Committee (AEC) and the Finance and Operational Performance Committee (FOPC) also provided reports for that meeting.

In January 2014, the Global Fund announced that it was ending funding for HIV treatment services operating in compulsory drug treatment centers in Viet Nam (see GFO article).

Audit and Ethics Committee

The AEC approved the 2015 key performance indicators (KPIs) for the Office of the Inspector General (OIG). There are 10 KPIs, including the following:

·         audit and investigation workplans are at least 90% achieved;

·         the stakeholder engagement models (described in the OIG’s Communications Strategy) are adhered to; and

·         staff turnover does not exceed 10%.

The AEC endorsed a revised 2014 budget for the OIG in the amount of $17.2 million, down from the $20.5 million which was originally approved. For the 2015 OIG budget, the AEC endorsed an amount of $16.4 million.

The AEC reported that it has approved (a) an amended Procedure for Retention and Dissemination of Confidential Information; (b) the external audit plan for 2014; and (c) the 2014 interim financial report, including the interim condensed consolidated financial statements. The AEC said that the preparation of interim financial statements is a noteworthy improvement in financial reporting and transparency.

Finance and Operational Performance Committee

The FOPC approved amendments to the human resources policy framework modifying the grading and salary structure of the Fund; and modifying how termination indemnities are calculated when positions become redundant.

The FOPC established a Remuneration Group and appointed four FOPC members to the group. The group will evaluate proposals for salaries that exceed the Fund's salary threshold of CHF 245,000 (roughly US$ 270,00) per annum.

The FOPC made several changes to the Fund's investment framework, including permitting the inclusion of equity securities in the long-term portion of the Fund’s portfolio (up to a maximum of 10% of the value of the portfolio).

The FOPC also adopted a set of principles for liquidity management, including endorsing the use of cash advances to facilitate day-to-day operational needs and authorizing the potential use of bank overdrafts and credit.

Also approved was the use of hedging instruments to manage foreign exchange risk including: forward or option contracts, SPOT transactions, and swap contracts. Unlike forward or option contracts, SPOT transactions are settled the same day or within a few days. A foreign exchange swap allows sums of a certain currency to be used to fund charges designated in another currency without acquiring foreign exchange risk.

Finally, the Secretariat provided the FOPC with some information on a new innovative financing mechanism that could assist resource mobilization: development impact bonds. According to the Center for Global Development, DIBs provide up-front funding for development programs by private investors, who are remunerated by donors or host-country governments and who earn a return if evidence shows that programs achieve pre-agreed outcomes.

The SIIC Report to the Board (GF-B32-27), the AEC report to the Board (GF-B32-25) and the FOPC Report to the Board (GF-B32-26) are available at

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[This article was first posted on GFO Live on 24 November 2014.]

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10. NEWS: New approach at the OIG means fewer country audits and more audits of Secretariat processes

David Garmaise 20 November 2014

In 2015, OIG will evaluate the allocations methodology and the effectiveness of CCMs

The OIG’s audit unit has adopted a new approach that involves less reliance on compliance through country audits and more emphasis on (a) internal audits of Board and Secretariat business processes and (b) “ex-ante audit” input on developing processes. (An ex-ante audit is one that is conducted while a process is being planned.)

The OIG said that the new approach is “designed to answer high-level questions of value to the Board.”

This information was included in the OIG progress report released during the Global Fund Board meeting on 20-21 November.

The shift in emphasis resulted in a restructuring of the audit team. Seven staffers left in 2014. Recruitment to fill the resulting vacancies took longer than expected, which meant that for much of the year the audit unit functioned at less than 50% of its approved head count.

In addition, some internal audits of existing Secretariat processes had to be postponed because sufficient data was not yet available, and some country audits had to be cancelled due to security concerns. Audits of grants in Guinea and Liberia have been indefinitely postponed due to the Ebola epidemic.

As a result of the staffing constraints and the postponements, the audit unit will issue 15 reports in 2014 instead of the 21 originally planned; eight audit reports are anticipated before the end of 2014, according to outgoing Inspector General Martin O'Malley.

Regarding country audits, so far this year reports have been issued on Guinea-Bissau and Myanmar. The OIG plans to release additional reports on Ecuador, Rwanda, Ethiopia, Sudan and Kenya. With respect to internal audits, a report on governance has been released, and three other report are planned: on sourcing, on financial controls and on IT controls. (The OIG informed Aidspan that although the fieldwork for all of the above audits will be completed in 2014, some of the reports may not be issued until the first quarter of 2015.)

The audit unit’s 2015 workplan includes internal audits on the effectiveness of country coordinating mechanisms and the “robustness” of the current allocation methodology for the new funding model (NFM). It also includes four internal audits: on Global Fund strategy and impact, on grant-making under the NFM, on key performance indicators and on internal controls.

Ten country audits are planned for 2015: in Ghana and Nigeria (both in the Grant Management Division’s High Impact Africa 1 region); in Tanzania and Uganda (both in High Impact Africa 2); in Pakistan and Indonesia (both in High Impact Asia); and in Honduras, Uzbekistan, Chad and South Sudan.

The audit unit expects to spend 20% of its time on ex-ante audit work. Examples of this work are involvement in the Grant Approvals Committee and the Risk and Assurance Committee; and participation in the design of new initiatives such as the results-based financing pilots and Procurement for Impact.

Investigations unit

The OIG said that it has almost cleared the backlog of “legacy” cases – i.e. cases dating back to 2009-2012. In 2013, 156 cases were closed; another 45 cases were closed in 2014 (up to 28 October). Some of the closures were the results of investigations being carried out and reports issued; other cases were closed by memos when the OIG determined that that a full investigation was not warranted.

The OIG said that it started 2014 with 60 active investigations (half of which were classed as “legacy”) and that it expects to finish the year with 44 investigations underway.

Complaint reporting continues to rise. To date in 2014, 122 complaints have been received, up 50% from same period last year. Despite the increase, the OIG said, all complaints are now screened and responded to within 48 hours. The OIG is working with the Secretariat to integrate human rights violations complaints into current complaint handling procedures.

For 2015, the OIG predicts that it will start 35 new investigations, 20 of which it expects will be completed in 2015.

In 2015, for the first time, the Investigations Unit plans to undertake proactive interventions to complement its reactive investigations of allegations of fraud and abuse. The OIG told Aidspan that this will likely involve undertaking country missions to assess any weaknesses that present a potential risk of fraud and abuse. For example, the OIG said, procurement is an area that carries a high risk of collusion and possible fraud. Using data from previous investigations and audits, the OIG will help country teams identify weak points or certain recipient profiles that raise red flags.

The 2015 workplan also calls for whistle-blowing communications and whistle-blower protections to be enhanced; and for fraud awareness materials to be developed for a campaign targeting internal and external stakeholders.

The OIG is also expanding its reach to investigate and consider alleged human rights abuses, predicated on the development of a stronger outreach arm and the establishment of more rigorous but accessible procedures.

Other items

“Agreed management actions (AMAs)” have replaced recommendations in OIG audit and investigation reports. Instead of simply issuing a report with recommendations, the OIG now discusses proposed recommendations with the Secretariat before the reports are finalized. The OIG and the Secretariat usually come to an agreement concerning what actions are appropriate to address the recommendations; these actions are then included in the final reports.

The OIG is tracking the implementation of the AMAs. It said that good progress has been achieved in the last several months. “Open” AMAs (i.e. ones that have not yet been fully implemented) have dropped from 136 in July to 86 in October.   

The OIG said that over the last year, it has been tracking five key control issues arising from previous audits and investigations: combined assurance; accountability framework; recoveries; grant closures; and document retention and record keeping. At this point, detailed follow-up work has been completed on two of the five areas. Good progress has been made concerning combined assurance, the OIG said, but progress regarding recoveries has been slow (see separate article on recoveries).

The OIG Progress Report, January to October 2014 (GF-B32-06) and OIG Status Update on Agreed Management Actions (GF-B32-07) are available at

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

[This article was first posted on GFO Live on 20 November 2014.]

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11. NEWS: Progress on recoveries has been slow

David Garmaise 24 November 2014

OIG criticizes record-keeping and tracking mechanisms at the Recoveries Committee

Little progress was made on recovery of losses in the first half of 2014. Recoveries for legacy cases –  those prior to 1 January 2014 – stood at 28% at 30 June vs. 25% on 31 December 2013.

This information was contained in a report on losses and recoveries to 30 June 2014 prepared for the Board meeting on 20-21 November.

The recoveries process requires turning decisions from the executive director (following recommendations from the Recoveries Committee) into firm commitments from the recipients concerned. “This is resource-intensive work in many cases and requires skillful handling,” the report said.

Since the inception of the Fund, through 30 June 2014, a total of $29.2 million has been recovered in 23 cases, and written commitments for a further $7.7 million have been obtained, leaving a balance of $66.7 million still to be recovered as of 30 June 2014.

In total, of the amounts deemed to have been misused, 45% has been recovered in cash or with written commitments to repay in place.

The Secretariat is continuing to pursue an additional 54%, using as leverage the continued access by a country to further funding allocations.

The Fund expects that the outlook for recoveries will improve in the second half of 2014 as some larger cases are resolved. Since the 30 June report was prepared, reimbursement agreements worth $10 million have been signed with the governments of Djibouti, Central African Republic and Mali; and $1.3 million has been recovered from Malawi and Madagascar.

Resource allocations under the new funding model (NFM) provide additional leverage. The signing of new grants under the NFM is conditional on there being significant progress towards recovering funds found to have been misused.

The Global Fund said that recovery cases from 2014 and beyond should be more straightforward because of new processes to determine what is recoverable and to collect the recoveries. These include having country teams review draft and final OIG reports, and take action to mitigate immediate operational risks to avoid further losses. Country teams are now empowered to propose additional actions to make a final determination of the recovery amounts. The country teams are also responsible for extracting commitments for repayment, and collecting them.

Observations from the OIG

In a report on the status of agreed management actions (formerly “recommendations”) stemming from reports on audits and investigations, the Office of the Inspector General (OIG) noted the lack of progress in recoveries, and added that record-keeping and tracking mechanisms at the Recoveries Committee level are basic, incomplete and non-standardized.

The OIG also observed a lack of formal tracking of non-OIG related recoveries or reporting to the Board of recovery activities, management adjustments or write-offs not stemming from OIG reports, which may be due to Board decisions on losses and recoveries only referencing OIG-related recoveries.

Finally, the OIG noted the absence of any procedure outlining the respective roles and responsibilities of the FISA department (Finance, IT, Sourcing and Administration) and the Recoveries Committee in exchanging information about recoveries. The OIG said that this is needed to ensure that recoverables are booked in a timely manner in the accounting records, and that there is no confusion or delay regarding the reporting of payments.

The OIG said that these issues are symptomatic of an absence of a dedicated recoveries officer and a lack of prioritization of recoveries at the country team level. The OIG noted that the Secretariat has included a full-time recoveries officer in its 2015 budget.

Responsibility for preparing recovery reports

In May 2011, the Board directed the Secretariat and the OIG to jointly prepare a report prior to each Board meeting on losses and recoveries. Since then, the OIG has expressed concerns that this requirement conflicts with the independence of the OIG which is required to provide assurances on all aspects of the Secretariat’s activities, including the recoveries process. Consequently, at its meeting on 20-21 November, the Board revoked its earlier decision and decreed that the Secretariat alone will prepare the reports on losses and recoveries. An amended decision point was unanimously approved.

The OIG will continue to play its usual assurance role by tracking implementation of agreed management actions and by reviewing recoveries as part of its audit function.

The Losses and Recoveries Report (GF-B32-25) and the OIG Status Update on Agreed Management Actions (GF-B32-07) should be available shortly at The decision on the responsibility for preparing the losses and recoveries report was contained in the Communication on Status of Recoveries (GF-B32-17), which is also available. 

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

[This article was first posted on GFO Live on 24 November 2014.]

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12. NEWS: E-marketplace endorsed as centerpiece of Global Fund's emergent sourcing strategy

Lauren Gelfand 24 November 2014

Sourcing cost-savings of more than $270 million announced

Transformation of the way the Global Fund sources and buys the products needed to underpin its response to AIDS, TB and malaria will continue with the design and roll-out of a new electronic marketplace that seeks to be a transparent and cost-efficient platform for countries to purchase equipment and drugs.

Further development of the e-marketplace is part of the new approach to market-shaping unanimously approved by the Board during its 32nd meeting held 20-21 November in Montreux, Switzerland.

An estimated 66% of all Global Fund grants are spent on the acquisition of things: drugs, equipment, vehicles and other products directly or indirectly used by a country to fight the three diseases or strengthen its health system. Any improvement in the way those things can be acquired means more money can be spent on saving lives.

Cost savings of more than $270 million have already been recorded in 2014 by streamlining procurement procedures, Chief Procurement Officer Christopher Game told Aidspan -- and even more savings are likely before the end of the year, freeing up assets to be spent on the purchase of even more commodities.

These efficiencies are due to market-shaping tenders initiated for long-lasting insecticide-treated bednets for malaria control and for the purchase of artemisinin combination therapies for malaria treatment.

Further market-shaping is anticipated in the next three years across the three disease components and ordained by the decision passed by the Board. Market dynamics will now be overseen by a joint working group drawing members from the Strategy Investment and Impact Committee as well as the Finance and Operational Performance Committee, resulting in the dissolution of the Market Dynamics Advisory Group that was in place since 2011.

Central to the market-shaping objectives is the design, development and testing of the e-marketplace: a new tool being developed to track pricing, supply and distribution logistics for all of the commodities bought using Global Fund resources in eligible countries. The e-marketplace will be an extension of the pooled procurement mechanism that leverages larger volumes to access better prices, shorter manufacturing lead times and more timely deliveries of the life-saving commodities needed for the fight against the three diseases.

Describing the envisioned e-marketplace as a so-called price comparison tool for drugs, diagnostics and nets, the Fund's executive director, Mark Dybul, said that it could revolutionize the way money is spent in public health.

The laudatory vision of the Secretariat was not shared in equal measure among implementing countries or Board delegations, however. They expressed concerns that it would limit country ownership and restrict a country's ability to choose what it wanted to its own specifications. Others expressed fear that some or all of a country's allocations would remain with the Fund -- and not be transferred to in-country bank accounts for spending at a national program's discretion in line with its approved spending plan.

Of greatest concern to many implementers, Aidspan understands based on conversations that took place on the margins of the Board meeting, is that the new tool will concentrate control and management in the hands of the Secretariat without developing an indigenous capacity or improved awareness of best practice for procurement at the country level: something desperately needed in many of the countries where the Fund operates.

Other technical advisors are also worried about quality assurance processes and the ability of manufacturers to effectively and cost-effectively scale to meet the increased demands.

The new, committee-based working group will, therefore, have to contend with those issues as it watches the development of the e-marketplace tool, the roll-out of which is expected in 2015. Other areas of oversight for the working group will include price and quality forecasting, quality assurance, the existing pooled procurement mechanism, improved operational management of supply chains including product shortages and the progress of agreements made with technical partners also heavily invested in procurement.

[This article was first posted on GFO Live on 24 November 2014.]

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13. NEWS: Ethics and integrity framework adopted

David Garmaise 24 November 2014

Dedicated ethics function established

The Board has approved an ethics and integrity framework for the Global Fund and has established a dedicated ethics function. The Board also approved a set of principles related to  a code of ethical conduct for governance officials. The Board directed the Audit and Ethics Committee (AEC) to develop the code for presentation to the Board at its March 2015 meeting.

This is the first stage of the Fund’s Ethics and Integrity Initiative. The second stage will involve integrating the principles of ethics and integrity into Global Fund operations; establishing compliance mechanisms; and providing detailed guidance for governance officials, staff and other stakeholders on their obligations under their respective codes of ethical conduct. (Some ethical codes already exist, such as the Code of Conduct for Suppliers.)

A paper prepared for the Board meeting on 20-21 November said that “as a result of the diversity of interests and perspectives represented by the Global Fund’s stakeholders, it is of particular importance for the organization to operate in a balanced, ethical, collaborative, transparent and open manner.”

Internal assessments determined that there is currently only limited basic awareness of ethics and of the value of ethics and integrity within the Global Fund. Additional wider consultations revealed that current ethics-related policies are not integrated in any holistic way with other policies and activities, and that there is a significant need for a code of conduct at the board and committee level. The Secretariat’s Risk Management Department said a lack of commitment and adherence to integrity and ethical values increases the risk of inappropriate activities by staff and key stakeholders which, in turn, could result in poor decision-making and even misuse of funds.

The approved framework articulates the Fund’s core ethical values and policies, and describes the roles of responsibilities at each level of the organization for embedding ethics into operations.

The principles adopted by the Board related to the code of ethical conduct state,

“While Governance Officials’ representation responsibilities to constituencies are to be respected, they are ultimately obligated to work with the best interests of the Global Fund in mind. Governance Officials must act with an understanding that the Global Fund’s direction is shaped through compromise between varying constituency interests.”

The ethics function will be led by led by an ethics officer. The core mandate of the ethics function is to provide assurance on the extent to which the Global Fund has fully and effectively implemented its ethics and integrity-related policies, codes and requirements. The resources proposed for the ethics function, along with its position within the organisation, will be decided during the second stage of the ethics and integrity framework.

To oversee the work on ethics and integrity, the Board had previously established an Ethics Steering Committee chaired by the vice-chair of the AEC and composed of AEC members, senior Secretariat staff and the Inspector General.

The ethics and integrity initiative is described in a paper prepared for the Board (GF-B32-18), which is available at

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

[This article was first posted on GFO Live on 24 November 2014.]

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This is issue 256 of the GLOBAL FUND OBSERVER (GFO) Newsletter.

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