USAID: a new Development Impact Bond for health

USAID ADMINISTRATOR MARK GREEN’S REMARKS AT AN UNLOCKING THE POTENTIAL OF DEVELOPMENT-IMPACT BONDS EVENT AT THE WORLD ECONOMIC FORUM

Steigenberger Grandhotel Belvedere Davos, Switzerland

For Immediate Release

Thursday, January 25, 2018
Office of Press Relations
Telephone: +1.202.712.4320 | Email: press@usaid.gov

 

MS. GUSTAFSSON-WRIGHT: My name is Emily Gustafsson-Wright.  I am a scholar at the Brookings Institution in Washington, D.C.  I’ve had the pleasure of researching impact bonds for the past four years, and I have been following the Utkrisht Impact Bond since its inception.  So, it’s quite an honor to be here.

So, as many of us know, there have been some tremendous progress in maternal and child health over the past two decades thanks in part to the Millennium and Sustainable Development Goals.  However a huge challenge remains.  For example, according to a recent report, 30 million newborns are expected to die between now and 2030.  That’s a shocking number, 30 million newborn.  Tackling this challenge and the other SDGs will require new tools, partnerships, and innovation to fill the estimated $2.5 annual — $2.5 trillion annual investment gap to achieve the Sustainable Development Goals.

Today’s conversation will focus on one area of innovation that is often overlooked, financing.  Our panelists who represent the different partners in the Utkrisht Impact Bond will talk about an innovating finance mechanism that’s hopefully more sustainable and is definitely outcomes driven.  Specifically, we will discuss the private sector’s role in helping countries to achieve their goals for better healthcare for their citizens.  And after the panel, we’ll have an opportunity for questions from all of you.

Before we begin the panel discussion, I am pleased to introduce USAID Administrator Mark Green.  He joins us today to represent [inaudible] in government and leadership in innovative development financing.

Prior to joining USAID, Administrator Green served as U.S. Ambassador to Tanzania from 2007 to 2009.  More recently he served as President of International Republican Institute as President and Chief Executive Officer of the Initiative for Global Development and Senior Director at the US Global Initiative — the Global Leadership Coalition.  Prior to serving as U.S. Ambassador, he served four terms in the U.S. House of Representatives representing Wisconsin’s Eighth District.

So I’m guessing you’re used to this kind of weather coming from Wisconsin, is that right?  So, please, Administrator Green, I welcome you to the stage.

ADMINISTRATOR GREEN: Okay, thank you. So, I’m used to the snow, but not the mountains. Green Bay is flat.  Welcome everyone.  To begin with, I want to thank MSD for Mothers for hosting us this morning and, of course, for their partnership of the development impact bond that we’re here to discuss.

I’m often asked what excites me most as USAID Administrator.  Technology, of course, which is allowing us to reach places and design tools that we could not have imagined just a handful of years ago.  But while technology seems to grab most of the attention, I honestly think that the most exciting development is the emerging relationship between private enterprise and development community.  Leaders in both sectors are finally figuring out how to take advantage of the unique capabilities that each has and apply them to challenges that neither could take on fully alone.  Problems that once seemed insurmountable.

For years, whether we realized it or not, USAID, and other donors, saw donors, NGOs and governments as the most important, if not the only drivers of progress.  Private enterprise was something to keep at a distance or perhaps to bend to our will.  We welcome donations, always welcome donations (laughter) and we’re even willing to contract with the private sector to obtain businesses and services and goods, a little more.  And today, that’s all changing.

At USAID, we’re reaching beyond contracting and grant making to collaborating, co-financing, co-designing programs, tools, initiatives.  We’re rethinking how international development initiatives are designed and tested and financed and rolled out.  We’re embracing the creativity and entrepreneurship that the private sector brings.  We’re embracing the notion that the private sector, not donors and government, will be the ultimate drivers and sustainers of development and we know that we need to reenvision our role accordingly.  We’re embracing along with enterprise-driven development and launching initiatives alongside companies like UBS and partners like MSD for Mothers.

I recently returned from India where despite significant improvements, the country still accounts for 20 percent of the maternal and child deaths globally.  Every year, more than one million Indian children die from complications and illnesses for which there are known and affordable treatments.  The state of Rajasthan, in particular, has one of the highest maternal and neonatal mortality rates in that entire country.  Every year, 80,000 babies die because of inadequate medical care.

The state’s remote rural communities and urban slums have few places where mothers can go for quality healthcare.  They turn to local healers, neighbors who often work with harmful or expired medications and hospitals that lack trained medical staff or the necessary equipment.  To address this, we partnered with our host and launched a new Development Impact Bond for health.  The world’s first targeting maternal and newborn health.

This bond is specifically designed to reduce the number of maternal and newborn health, newborn deaths in Rajasthan.  It is the largest and most ambitious of its kind.  Expected to enable up to 600,000 pregnant women to access improved care with potential to save 10,000 moms and newborns.

Okay, so how will it work?  Under this new model, private capital funds, the initial investment, and we pay only when the development goal is achieved.  In this case, UBS Optimus Foundation will raise capital from its private investors and front the money needed to insure about 400 private health facilities that can meet quality healthcare standards.  Teams will then work at each of these 400 facilities to help appropriately train staff and make life-saving equipment and medicines available.

Each facility will undergo rigorous review to ensure that they have met all of the proper accreditation standards.  Only if and when the facilities meet the accreditation standards, will USAID and MSD make payments to the UBS Optimus Foundation.  This means we only pay if the project is a success.

This level of accountability is wonderful.  It’s what American tax payers expect, but more importantly, it’s what those we serve in the developing world deserve.  But perhaps the thing that excites me most about this partnership is that if successful, and we believe it will be, the government of Rajasthan will scale the approach throughout that state.  The government of India will carry this work forward.

Since the day I arrived at USAID, I’ve said very simply that the purpose of foreign assistance must be to end the need for its existence.  I believe the truest form of friendship and compassion comes with helping others to provide for themselves.  Our assistance must be designed to empower people, communities, and economies to self-reliance.  And because of that, I also believe the future of international development is, indeed, enterprise driven.

As we launch new enterprise driven development programs and in particular programs built on innovative, private financing mechanisms, we see that once proven, they’re easily picked up and carried forward by others with limited additional support from us.  As we look to the long term, truly sustainable development we all seek, we must look at these tools and how they can be effectively developed and scaled.

This is our first health impact bond.  I’m quite sure it won’t be our last.  It is a step forward toward a more sustainable and increasingly country-lead approach to maternal and child health.  It is also a symbol of what is just the beginning of a new approach to development at USAID.

This Development Impact Bond is just the beginning of what is already a growing new suite of innovative development finance tools that can accelerate and catalyze progress.  Help us achieve our development goals and ultimately play a small part in one day, yes, ending the need for foreign assistance.

With that, I’ll turn it over to the smart people in the room (laughter).

I’ll turn it over to Dr. Gustafsson-Wright to lead a deeper dive of the DIB and the other innovative financing tools that are being tested around the world.  Thank you very much.  It is an honor for me to be here.

Last updated: January 25, 2018

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