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Panel Detail:

Monday, April 27, 2009
2:30 PM - 3:45 PM

Moving From Aid to Investment: New Models for Supporting International Development

Moderator:

Betsy Zeidman, Research Fellow and Director of the Center for Emerging Domestic Markets, Milken Institute

With 100 million more people below the poverty line, this is not the time for donors and private capital to back away from health needs of the developing world, according to Alice Albright. Rather, they should think of how different types of capital and donors can work together and leverage their services.

Moderator Betsy Zeidman noted how the unpredictable patterns of aid leave developing countries wondering if and when it will arrive. Jan Walliser noted the difficulty African nations face working with several hundred donors who are not coordinated and have not leveraged their services. Albright added that the donor environment does not help health care because each donor has its own reporting and monitoring requirements, further complicating aid delivery.

Dambisa Moyo, author of Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa said a fundamental problem with the aid culture in that donors don′t involve African governments. This removes incentives for the African government to participate in a meaningful way. The aid conversation should really focus on donor exit strategies and not short-term solutions that ultimately do not spur long-term development, she said.

In terms of long-term solutions for health-care needs, Gargee Ghosh said drugs and vaccines tend to be neglected with investment. She said grants are more effective in delivering health services to developing nations. About 50 percent of those providing health care are private entities, and there is a great opportunity for aid organizations to work with the private sector, Ghosh said.

Albright offered other solutions to access funding for health care. One is the International Finance Facility for Immunizations. The GAVI Alliance has used IFFIm to access the capital market for additional funding for government immunization pledges. These binding promises allow for long-term, predictable, funding commitments. Another solution is advance market commitments, which use up-front payments to encourage pharmaceutical companies to create vaccines more rapidly. In return, the pharmaceutical companies sell the vaccines at a lower price. However, Ghosh asserted, IFFIm is not an endless source of money.

Moyo said the solutions Albright mentioned do not address the fundamental problem that African governments need incentives to invest and underwrite such programs. Moyo said that unlike the Western view that African nations can access capital markets, other nations — particularly China — have a different attitude toward Africa that the West has failed to consider. Walliser disagreed, saying that African governments will not have easy access to capital markets and that most investors are looking to invest in Africa.

While the panelists had different perspectives on the best approaches to international development, they agreed that international aid requires a multi-faceted approach that considers donors, local governments, the private sector and civil society.

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