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Co-financing for health and development – an affordable innovation

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school children in EthiopiaUNDP has piloted a co-financing methodology in the area of HIV, health and social protection in four sub-Saharan African countries: Ethiopia, Malawi, South Africa and Tanzania. Photo: UNDP in Ethiopia

The implementation of the post-2015 development agenda will call on countries to be more resourceful than ever, including improving efficiencies and leveraging increased domestic resources in innovative and cost-effective ways. How can innovative financing find critical synergies between the Sustainable Development Goals (SDGs), while saving money?

The answer lies in investing in high-value interventions that hit multiple targets, across different sectors, at once.

Because the MDGs may have unwittingly encouraged a vertical approach to development planning, and thus financing, such ‘structural’ interventions have been under-resourced and under-implemented. They were often ignored also due to lack of data demonstrating that they really work.

Now we have a growing body of evidence that presents a compelling case. Successive evaluations of cash transfer programmes, for example, starting with the Zomba trial in Malawi, provide strong evidence that small monthly cash transfers not only keep girls in school, thus benefiting the education sector, but prevent unwanted teen pregnancies (an important health outcome) and reduce HIV transmission by around two thirds.

Yet government ministries such as health, social welfare and education tend not to account for the multiple benefits of interventions when they evaluate programmes for cost-effectiveness. As the values of the impacts (e.g. girls remain in school, HIV infections averted, unwanted pregnancies averted) accrue across multiple sectors, the willingness to pay of each benefiting sector is usually less than the cost of the intervention. Hence the intervention remains undervalued and lacks investment. Indeed, combining financing streams would either achieve the same intended outcomes across sectors through spending less, or achieve greater impacts with the resources already being spent.

What is needed is a practical method for planners and budget holders to identify such high value interventions and adequately pay for them. An innovative co-financing method, adapted by UNDP, has been described as ‘a significant methodological breakthrough for economic evaluation of multi-sectoral interventions’. The method calculates the costs and benefits of interventions across sectors and weighs the values of the impacts to those participating sectors.

UNDP, with funding from the Government of Japan, and in partnership with the Economic Policy Research Institute and the STRIVE Research Consortium, has piloted this co-financing methodology in the area of HIV, health and social protection in 4 sub-Saharan African countries: Ethiopia, Malawi, South Africa and Tanzania.

As we build stronger data sets and understand further the causal linkages between health outcomes and their social determinants, the relevance of co-financing for the SDGs will only increase, particularly because co-financing does not require additional resources or increasing capital investment. It merely involves an approach to achieve a better, more efficient allocation of resources across sectors.

The Conference on Financing for Development in Addis Ababa is a unique opportunity to secure the resources we need for the well-being of people and planet. Through determining the right policies, including innovative methods of (co-)financing for development, we can achieve our aspirations to end extreme poverty by 2030 and also ensure healthy lives for all. Achieving such ambitious goals is not just about the need for more resources overall, it’s about spending what we do have more effectively and efficiently. We can afford no less.

Development Finance HIV and health Sustainable Development Goals Ethiopia Malawi South Africa United Republic of Tanzania Japan Millennium Development Goals Pedro Conceição Mandeep Dhaliwal Douglas Webb