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“Innovative” financing

By Kristof Decoster
on July 6, 2015

In a recent article in Foreign Policy, Philippe Douste-Blazy (quoted in the piece) champions once again ‘innovative financing’, a familiar concept for the global health community.  Among others, he refers to the airline levy implemented by a number of countries, which has raised “more than $2 billion to help fight HIV/AIDS, tuberculosis, and malaria” (for UNITAID), in less than a decade. He considers the participation of flyers “a step towards the globalization of solidarity” and a “potential fundraising solution for other world crises”.

I’m afraid he’s dead wrong on a number of issues, and especially on the way he frames innovative financing – as “painless solidarity contributions”. In his words: “It is absolutely painless for companies; it is not even the price of a coffee; it is nothing. But with 1 euro, you can save children from malaria.”  … ” By shaving small amounts of money off the top of existing financial transactions, the development world can gain money that won’t be missed anywhere else.”

(I understand where it all comes from – among others, from the business need to stay ‘competitive’ versus rivals in the sector. But it still doesn’t make sense.)

First of all, a rather obvious question: why would ordinary people always have to undergo ‘painful but necessary structural reforms’ but do solidarity contributions from the financial sector (or even frequent flyers) have to be ‘painless’?

Second: for the people with money in this world, 2 billion, even in less than a decade and with only 12 countries involved, is peanuts. These guys count in trillions –see also what’s considered necessary for implementation of the SDG agenda.

Third: his claim “… the development world can gain money that won’t be missed anywhere else”, misses the point. A lot of this “money that won’t be missed” actually harms sustainable production and consumption patterns (not to mention a fair(er) world), if left alone – even if it might be ‘good for economic growth’. So, instead of token contributions from ‘frequent flyers’ or speculating hedge funds, truly innovative financing for the post-2015 era has to steer key actors and all citizens towards sustainable consumption and production, eco-social economic activity, and global public goods.  I hope Addis will make this happen, or at least make a start.

Put differently: they (which includes many of us… ) should feel it. By way of example: ‘business class’ flyers who only pay a top-up of 4 euros in the current UNITAID scheme, what’s so ‘innovative’ about that? They hardly notice. Worse, they gain ‘points’ (by frequently flying) with many of these commercial airlines and other “Star Alliances”, and their kids can then fly “for free”. Well, just a silly example. With an understatement, speculation by hedge funds, Goldman Sachs et al is obviously far less “benign”, and certainly more “scheming”.

If we really want a sustainable and fairer world, post-2015 (instead of just chatting about it), I’m afraid ‘painless solidarity contributions’ won’t do. Even the OECD and IMF seem to understand this, lately – at least in some of their reports and publications.

Time to reframe ‘innovative financing’ for the Piketty and  Harari era, in other words. Among others, we could add a few words (like ‘resistance’, or ‘innovative financing for a more sustainable and fairer world’). Just consider how easily UHC opponents brand UHC as a ‘populist’ policy…  Transformative change is never ‘painless’. Truly innovative financing for the post-2015 era will thus hurt and will involve ‘structural reforms’.

Whether the Global Financing Facility and other new mechanisms fit the bill ? Let’s hope so.

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