MALARIA ELIMINATION IN ZANZIBAR - Soper Strategies
MALARIA ELIMINATION IN ZANZIBAR - Soper Strategies
MALARIA ELIMINATION IN ZANZIBAR - Soper Strategies
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Endowment/Trust Fund<br />
Another form of IFH that has been proposed recently and<br />
is commonly used in other contexts such as universities and<br />
foundations is an endowment (trust) fund (Lane and Glassman,<br />
2008; de Ferranti et al., 2008). Typically, there is some core<br />
level of endowment, established with funds from donors and<br />
from government, that is not used for funding, but is invested to<br />
generate interest income used to fund recurring costs. Depending<br />
on the size of the endowment, the level of returns and the costs that<br />
need to be covered, the interest income may go partly to recurring<br />
costs and partly to reinvestment in the core endowment fund.<br />
Figure 33 illustrates the concept of an endowment. Panel A<br />
shows the level of funding for malaria programs that may prevail<br />
in the absence of innovative financing such as an endowment<br />
fund. Funds for ZMCP would remain high and potentially<br />
increase for the next several years, but as malaria becomes less of<br />
a public health burden in Zanzibar, donors are likely to switch<br />
to other funding priorities and ZMCP funding is likely to fall<br />
significantly. Panel B illustrates the potential funding under an<br />
endowment. The endowment would be set up with substantial<br />
funds jointly by the Zanzibar government and donors and<br />
would not be drawn down from year to year. Rather, malaria<br />
funds would come from the investment income generated by the<br />
endowment. It is preferable that some of this interest income be<br />
reinvested back into the endowment so that, as illustrated, the<br />
level of endowment funds and the corresponding investment<br />
income generated from it are gradually increasing. It is important<br />
to note that there may be years when the endowment makes little<br />
or no money from its investments. One way to deal with this is<br />
to ensure other types of financing for malaria programs in case<br />
investment income is down. The other possibility is to allow<br />
some drawing down of the endowment in years when investment<br />
income is low as long as, in years when investment income is<br />
high, some of that income is re-invested into the endowment.<br />
FIGURE 33: ILLUSTRATION OF POTENTIAL IMPACT OF A <strong>MALARIA</strong><br />
ENDOWMENT<br />
A. FUND<strong>IN</strong>G WITHOUT <strong>IN</strong>TERVENTION<br />
B. FUND<strong>IN</strong>G WITH TRUST FUND<br />
3 | Financial Feasibility<br />
An endowment fund is used in the South Pacific island nation<br />
of Tuvalu. The fund was created with contributions from several<br />
partners, including the Tuvalu government, Australia, Japan and<br />
the UK. Proceeds from the fund go toward recurring costs in the<br />
government budget as well as infrastructure and other economic<br />
development projects. The trust fund has a financial advisory<br />
committee and a governing board composed of representatives<br />
from each of the contributing nations and chaired by a Tuvalu<br />
government member. Acceptable uses of the funds are specified<br />
in the founding treaty and the fund is audited annually. Other<br />
examples of health endowment funds are the Bhutan Trust<br />
Fund, which funds essential drugs and vaccines, and the USAID<br />
Profamilia endowment in Columbia, which funds health facility<br />
upgrading (Lane and Glassman, 2008). USAID, which had been<br />
funding family health programs in Columbia, granted this $6<br />
million endowment to provide a continuous source of funding<br />
before withdrawing traditional aid. Zanzibar could use this model<br />
to appeal to traditional donors such as PMI who are considering<br />
withdrawing funding. Contributing to an endowment fund that<br />
facilitates future funding for malaria control would likely be seen<br />
by the global health community as the most responsible way for<br />
a donor to initiate withdrawing funds from a program it has<br />
heavily supported.<br />
One of the most appealing aspects of an endowment fund<br />
is that it promotes financial autonomy and sustainability.<br />
Although this financing mechanism reduces the dependence of<br />
government program funding on foreign aid, it does not replace<br />
it with a perfectly stable and predictable source of financing.<br />
Disbursements from the trust to the government are vulnerable<br />
to market conditions, so some way of supplementing the interest<br />
income in down years must be put in place. The way the Tuvalu<br />
government has dealt with this is by ensuring that a portion of<br />
the investment income earned in up years is re-invested in the<br />
fund and can be drawn on in years when investments fall short.<br />
An endowment fund could be an excellent way for Zanzibar to<br />
secure long-term financing for its malaria program. Contributing<br />
toward an endowment may be an attractive option for ZMCP’s<br />
donors since it would allow them to make a one-time contribution<br />
to Zanzibar’s malaria future that would generate continuous<br />
benefits. This would likely be even more attractive to donors if<br />
the Zanzibar government also pledged an initial investment in<br />
the fund. A good starting point for an endowment in Zanzibar<br />
would be a matched-funds model, as used in the Bhutan Trust<br />
Fund, in which donors match the level of funds invested in the<br />
endowment by the Zanzibar government.<br />
An endowment such as this can only provide an effective financing<br />
solution if the funds are protected by law to go toward malaria<br />
prevention. and if there is adequate accountability in the use of<br />
funds. It is also essential that a plan be in place for funding the<br />
ZMCP in years when investment income is down. A safe setup<br />
for the endowment would be for Zanzibar to follow Tuvalu’s<br />
model and reinvest its positive investment income in the fund<br />
until a target level is reached. The target level should be set so<br />
that it is high enough to generate sufficient expected investment<br />
income to fund revolving ZMCP costs (or some pre-determined<br />
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