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By partnering with the World Bank in an innovative way, Rotary has successfully leveraged its funding for polio eradication, contributing to success towards one year without polio in Nigeria and in Africa. This post, the second in a series on partnerships, innovation, and evaluation, explains how the innovative polio buy-down mechanism has worked.
Last month, Africa achieved a key milestone towards polio eradication, with no case of polio observed for a full year. It will still take a few weeks for the World Health Organization to officially certify this milestone, and for the region to be declared polio-free, no polio cases should be observed for a period of three years. Still, tremendous progress towards polio eradication has been accomplished. Just a few years ago, hundreds of cases of polio were observed annually in Nigeria. The country achieved its first full year without polio on July 24, 2015. This will leave only Afghanistan and Pakistan on the list of polio-endemic countries.
As noted in a recent post on the World Bank health blog, achieving one year without polio in Nigeria required persistence and courage. In some areas, professionals and volunteers who led the polio campaigns risked their life: Boko Haram assassinated nine polio vaccinators two years ago in the north of the country. Vaccinators had to rely on “hit and run” tactics to reduce exposure to risk, vaccinating children quickly in the morning and leaving the area by the afternoon. (For an understanding of the role of a wide range of people at the heart of polio eradication (in the case of Afghanistan), see the great slide show provided by the Global Polio Eradication Initiative.)
The polio campaigns also required great effort and creativity from multiple agencies, including through an innovative buy-down mechanism implemented by the World Bank and funded by the Bill and Melinda Gates Foundation, as well as Rotary International and the U.S. Centers for Disease Control via the U.N. Foundation. (The Gates Foundation and Rotary International are the two largest donors worldwide towards polio eradication over the last 30 years.) Partnership with the government of Nigeria, the World Health Organization (WHO), and UNICEF, among others, was also crucial to the success of the campaigns.
How did the polio buy-down mechanism work? The basic idea was for the World Bank to fund polio eradication projects through concessional IDA (International Development Association) loans. In the case of Nigeria, two projects worth $285 million, including additional financing, were implemented over the last dozen years. The projects included clauses that allowed loans to Nigeria to become grants if the country achieved a high level of polio immunization coverage. In other words, if the immunization targets indicated in the loans were achieved and verified independently through in-depth audits, the government would receive grant funding for polio eradication without the need to repay the loans.
For the government of Nigeria, this was potentially a great deal. And for the Gates Foundation and the Rotary Foundation of Rotary International, this was also a pretty good investment. In general, investments towards polio eradication have been shown to be fairly cost-effective. But with the buy-down mechanism, these investments were especially cost-effective.
Due to the concessional nature of IDA loans (long-term zero or low-interest loans which grace repayment periods), for every dollar contributed to the buy-down, the actual amount of resources that could be transferred to the government for the polio campaigns was two times larger. The buy-down funds were transferred by the Gates Foundation and Rotary International (in the case of Rotary in partnership with the United Nations Foundation) to the World Bank at the start of the project, and used to repay the loan at the end of the project if the target immunization rates had been achieved.
Through this buy-down mechanism, the Gates Foundation and Rotary International were able to offset all future loan repayment obligations with a much smaller amount of funding to pay back IDA than the face value of the loans granted to Nigeria. Again, one dollar invested by these private donors generated about $2 for polio eradication in Nigeria, with a similar mechanism in place for Pakistan. The mechanism also had built-in incentives to encourage strong implementation performance by the government of Nigeria since the loans would be transformed into grants only if the specific immunization targets were to be achieved.
At the time of the first buy-down mechanism for polio, then-World Bank President James. D. Wolfensohn stated, “The partnership to buy-down loans to grants on the basis of good performance is an example of the innovative thinking occurring in the private sector and the World Bank about how to increase finances for the fight against global diseases. This financial innovation is bringing the goal of a polio-free world one large step closer to becoming reality.”
Could similar buy-down mechanisms be applied in other areas? That was probably the hope when this innovative mechanism was created for polio a dozen years ago. It seems however that with few exceptions the idea has not yet been replicated much in other development areas, even if it has been mentioned in a number of reports, including in a Results for Development report on education.
A number of conditions have to be met for this type of buy-down mechanism to be successful. But in the case of polio, it has been successful, enabling the Gates Foundations, individual Rotarian donors through the Rotary Foundation, the United Nations Foundation, and the World Bank to achieve higher impact towards polio eradication than would have been the case otherwise.
A brief on polio in Africa and the buy-down mechanism is available here.
This post is reproduced with minor changes from a post published by the author on September 2, 2015 on the World Bank’s Financing for Development blog at http://www.fin4dev.org/.