1. We held oral evidence on 17 April 2012 with
the Secretary of State for International Development, the Rt Hon
Andrew Mitchell MP, about the Department for International Development's
(DFID) funding contribution to the Global Fund to Fight AIDS,
Tuberculosis and Malaria (referred to here as "the Global
Fund"). We also took evidence on that day from Mr Gabriel
Jaramillo, the new General Manager of the Global Fund, from Aidspan
(the Global Fund's independent watchdog) and from non-governmental
organisations (NGOs) representing the AIDS, TB and malaria communities.
This short report sets out our views following that session.
2. The Global Fund was created in 2002 to increase
funding to tackle three of the world's most devastating diseases.
It has earned a reputation over the past decade as an effective
international financing institution and claims to have helped
save millions of lives.
It currently provides about 65% of all international financing
for TB and for malaria and 21% for AIDS.
Mr Jaramillo told us that the Global Fund was "the one institution
that can link money to lives saved more directly than any other
that exists in the landscape".
The Secretary of State believed that the Global Fund had delivered
"extraordinary results over the past ten years".
DFID's Multilateral Aid Review (MAR), published in March 2011,
rated the Global Fund as one of the highest-performing multilateral
organisations, which gave "very good value" to the taxpayer
and had "very high standards for financial management and
this positive assessment, the Secretary of State announced that
the UKwhich is the Global Fund's third largest donorwould
"significantly increase" its contribution to the Fund.
This is in addition to £384m already pledged between 2012
and 2015. But, more
than a year since the MAR, DFID is yet to deliver these additional
funds or confirm how much it will contribute.
3. This delay has coincided with the worst period
in the Global Fund's history. In November 2011 the Global Fund
cancelled its eleventh round of grant-making ("Round 11"),
which would have involved some $1.5bn (£930m) in expenditure,
due to fears of inadequate funding. The global economic downturn,
negative media coverage regarding fraud by some grant implementers
(exposed in part, Aidspan argued, by the Global Fund's commendable
commitment to anti-corruption and transparency)
and earlier forecasting inaccuracies
contributed to the Global Fund reducing its estimate of likely
contributions from donors. Some donors such as Germany temporarily
The cancellation of Round 11 means that no new grants will be
approved until 2014, although $9-10bn (£5.6-6.2bn) will still
be spent over 2011-13 on existing contracts
and a new "Transitional Funding Mechanism" (TFM) will
continue funding "essential" prevention and treatment.
The UK has assisted the Global Fund during this difficult period
by bringing forward some of its contributions from future years.
4. Following the fraud reports, the Global Fund
set up a High Level Panel to review how it identifies and manages
risk in its grant-making. The reforms recommended by the Panel
were drawn together under a Consolidated Transformation Plan,
which the Board approved in November 2011 and is ongoing. In January
2012 Michel Kazatchkine stepped down as the Global Fund's Executive
Director, having effectively been pushed out by the Board.
5. We received a great deal of evidence from
NGOs expressing concerns about the short and medium-term implications
of the Global Fund's financial problems, particularly the cancellation
of Round 11, for people in developing countries. We were told
the cancellation of all new grants until 2014 posed a "significant
threat to millions of lives".
The Stop TB Partnership estimated that a quarter of a million
people would be left without TB treatment over the next two years:
it was stressed that TB was also highly contagious if left untreated.
The UK Consortium on AIDS and International Development believed
that the Global Fund and donors had "seriously underplayed
the consequences of the crisis": it estimated 55 countries
had been planning to submit Round 11 proposals for HIV programmes.
Analysis by the Roll Back Malaria Partnership estimated that more
than 300 million people would not receive long-lasting insecticidal
nets or malaria treatment, although the essential support provided
by the TFM might provide for 30 million people.
In general, the TFM itself was considered to be inadequate: it
was described as a "mechanism for the status quo, not for
scale up". Several
NGOs and other witnesses told us that DFID would struggle to meet
its objectives for AIDS, TB and malaria in the absence of further
funding (the Global Fund is the principle mechanism by which DFID
disburses funding for the three diseases).
The international community's achievement of the Millennium Development
Goals was also reported to be at risk.
6. Others, however, while appreciating the seriousness
of the situation, were less pessimistic. The Secretary of State
did not agree that the cancellation of Round 11 posed a significant
threat to millions of lives and stressed that the Global Fund
would continue to spend several billions of pounds in the coming
years. He argued that DFID would still meet its HIV, TB and malaria
objectives "partly through the Global Fund, partly through
bilateral means and partly through other means".
7. We questioned witnesses about future funding.
Some donors, including the UK, are awaiting the completion of
the Global Fund's reform process before committing significant
new funds. Mr Jaramillo assured us that he was driving through
the Consolidated Transformation Plan reforms. The Executive Management
team has been slimmed down from six people to three.
He had re-assigned 75% of the Global Fund's resources to grant
management of activities in the fieldwhich was consistent
with "best practice in the development world"and
had reduced administrative costs at the Global Fund's headquarters
in Geneva, where he was "unclogging the pipes" following
the build-up of ten years of rules and regulations.
Aidspan believed that Mr Jaramillo's performance to date had been
"excellent" and the early signs of the reform process
were "good", although there was room for improvement
in areas such as the Global Fund's communications.
The Secretary of State told us that Mr Jaramillo was reforming
the Fund "brilliantly", and was confident that the reforms
would be completed by the end of 2012.
8. NGOs wanted DFID to announce its funding increase
during the next few months, that is without waiting for the reform
process to be completed. It was pointed out that the UK currently
held the Chair of the Global Fund Board, which gave it additional
influence over other donors.
Some organisations, including the UK Consortium on AIDS and International
Development and the UK Coalition to Stop TB, argued that DFID
should commit an additional £384 million (that is, double
the current pledge to 2015). This was thought to be a "fair
share" given the UK's size.
We were told that the G20 meeting in Mexico on 18-19 June 2012
would be an "ideal opportunity" to announce new funds,
creating a "catalyst" for other donors to follow.
NGOs expressed concern that DFID would continue to wait for a
year or more: "the longer the delay, the less likely any
additional funds will have an impact on achieving the MDGs".
Mr Jaramillo said that an increase by DFID would send a "fantastic
message to the world" and drive other countries to follow
9. We pressed the Secretary of State on DFID's
intentions. He reaffirmed that DFID would announce new funds "as
soon as we feel we have confidence that the money will be well
spent and that the British taxpayer can be assured that for every
pound of their hard-earned money they get 100% of delivery on
He said this would happen after, first, the Global Fund had completed
its reform process
and, second, DFID had concluded its own "mini-MAR" process
(to re-assess the performance of the multilateral institutions
DFID funds), which was likely to be in early 2013,
although he did not rule out an earlier announcement.
He did not give a specific figure but said that, if these conditions
were met, the UK could increase its contribution to the Global
Fund "very substantially" in 2013, 2014 and 2015, by
"up to double" the current £384 million pledge.
The Secretary of State added that he would seek to maximise the
contributions other donors provided to the Global Fund and so
would announce any potential increase "at a time which raises
the most amount of money for the Fund".
10. The Global Fund to Fight
AIDS, Tuberculosis and Malaria is an invaluable international
finance mechanism. It has been highly effective over the past
decade in tackling three of the world's most devastating diseases.
Good progress has been made but there is still much work to do
to eradicate these diseases in developing countries as far as
possible. We are therefore concerned about the Global Fund's recent
funding problems and the cancellation of all new grants until
2014. Given the nature of these diseases, we fear that many gains
achieved will be lost if the Global Fund does not overcome its
recent difficulties and return to full operation as soon as possible.
11. We are concerned at the
diametrically opposed views expressed in our evidence about the
potential impact of the cancellation of Round 11. If mistaken,
the NGOs views are alarmist; similarly, if mistaken, the Secretary
of State's view is complacent. We do not have sufficient evidence
(including from those developing countries affected) to come to
a conclusion about the full impact of the cancellation. But robust
data of this kind will be necessary. An independent impact-assessment
of the cancellation of Round 11endorsed by the Global Fund,
the Department for International Development, other key donors
and leading NGOsneeds to be undertaken to help inform future
policy and programming. We urge DFID to work with international
partners and NGOs to agree the scope of such a study.
12. The Global Fund is in need
of structural and management reform. We are concerned about the
findings of fraud by some Global Fund grant implementers, but
recognise that the Global Fund's welcome commitment to transparency
and anti-corruption helped to identify these malpractices. We
are impressed by the new General Manager of the Global Fund and
our evidence suggests that the Global Fund is making good progress
in reforming its management structures and monitoring of financial
risk. We believe that a speedy appointment of a permanent Executive
Director is important to instil confidence amongst donors.
13. DFID is a key donor and
reliable partner to the Global Fund whose commitment could unlock
other funds. While we strongly support the Secretary of State's
commitment to increase the UK's contribution significantly to
the Global Fund, subject to reform, we are concerned at the continuing
delay in providing these funds. A further delay until 2013, as
indicated by the Secretary of State, may put the lives of people
in developing countries at risk. We strongly urge the Department
to do all possible to commit funds earlier by prioritising its
assessment of the Global Fund ahead of, and separately from, its
broader update of the Multilateral Aid Review.
14. It cannot be reliant on
DFID to support the Global Fund while a number of other donors
who have considerable resources are not doing likewise. Other
donors need to commit new funds if the Global Fund is to return
to full operation speedily. DFID should announce its additional
funding at a time which raises the most amount of money from other
donors. The G20 meeting in Mexico presents a good opportunity
to do so, provided the Department's conditions are met and UK
taxpayers' money is adequately safeguarded.
1 We also received written evidence from 24 organisations.
We are grateful to all those who contributed to our inquiry. Back
Kofi Annan, Secretary-General of the United Nations announced
the idea of a "Global Fund" in April 2001. Back
Ev 33. DFID has said that the Global Fund has helped save 7.7
million lives in 150 countries (HC Deb, 20 February 2012, col
520W). The Global Fund One Campaign says the Global Fund has helped
save 6.6 million lives (Global Fund website, 2012, http://onemillion.theglobalfund.org.)
The Global Fund is currently revising the methodology with which
it makes these estimates. Back
Global Fund to Fight AIDS, Tuberculosis and Malaria, Review
of HIV/AIDS, Tuberculosis and Malaria Landscape for the Global
Fund Strategy 2012-2016, November 2011, pp 8, 14, 21. Back
Q 2 Back
Q 52 Back
Department for International Development, Multilateral Aid
Review, March 2011, pp 88, 177 Back
Q 128m per annum in 2012, 2013 and 2014 (Q 48). Back
Q 37 Back
Q 27. In particular, uncertainties about whether the USA would
contribute the full $4 billion it had committed over three years. Back
Q 13. Germany subsequently made a payment. Back
Ev 18, para 6 [DFID] Back
In December 2010 the UK brought forward £100m of its pledge
so that all proposals recommended for funding under Round 10 could
be approved by the Global Fund Board. In March 2011 the UK made
an additional contribution of £50m, to help with short-term
funding challenges. In November 2011 the UK brought forward another
£128m from the outer years of its pledge to try to help current
financing challenges and allow all approved Round 10 grants to
be signed. Ev 18, para 7 [DFID]. Back
Ev w35, para 15 [Stop AIDS Campaign, Malaria No More UK, Results
UK and White Ribbon for Safe Motherhood] Back
Unpublished data from March 2012. Cited in the UK Coalition to
Stop TB's written evidence (Ev 36, para 19). As an example, the
UK Coalition to Stop TB told us that Tanzania relies on the Global
Fund for about 40% of its TB funding and its grant will finish
in November (Q 31). Back
Q 31 Back
Q 33 [UK Consortium on AIDS and International Development] Back
For example, UK Consortium on AIDS and International Development
(Q 36), Dr Patricia Nkansah-Asamoah (Ev w27), World Vision UK
(Ev w36), Stop AIDS Campaign (Ev w30) Back
Qq 35-36 [Roll Back Malaria Partnership; UK Coalition to Stop
Qq 46-47 Back
DFID [Ev 23, para 44] Back
Qq 3, 16 Back
Q 38 Back
Q 45 Back
For example, the Stop AIDS Campaign, Malaria No More UK, RESULTS
UK and the White Ribbon Alliance for Safe Motherhood (Ev w35,
para 17). The post is held by Simon Bland, a senior DFID official
who serves independently while Chair of the Board. Back
Ev 38, para 7; Q 43. See also Ev w35, para 19. Back
Ev 38, para 7 [UK Consortium on AIDS and International Development
(TB/HIV Working Group)]. See also Ev w35, para 19. Back
Qq 42, 44 Back
Q 22 Back
Q 52 Back
The Secretary of State said that the Global Fund needed to reform
its management structures to reflect that it had matured over
the past ten years from being an "emergency programme"
to a "more steady-state funder of country-based solutions"
(Q 52). Back
He said "it will be that analysis of whether or not the British
taxpayer will get value for money for this investment that will
determine what could be a very significant uplift" (Q 52).
DFID expects to complete the assessments in three batches between
January and September 2013 with a report published in October
2013. Multilateral Aid Review, Department for International Development
website, November 2011, www.dfid.gov.uk. Back
Q 64. Back
HC Debs, 20 February 2011, col 520W. See also Q 66. Back