The head of the Global Fund to Fight AIDS, Tuberculosis and Malaria has warned that innovative financial instruments and private sector mobilization are only of limited use when it comes to helping the world’s poorest people.
Speaking to Devex ahead of a summit in Paris this week, designed to strike a new pact between wealthy and low-income countries, Peter Sands said that getting multilateral development banks to stimulate private investment in low-income, conflict-affected countries “is not going to really work … because you are not going to get rational private capital investing significant sums in those parts of the world.”
A draft declaration for the Paris summit, drawn up by the French organizers and seen by Devex, reiterates the need for “new, innovative and stable sources of finance,” especially to tackle poverty and climate change. However, it is light on new financial commitments, and as Devex has reported, shareholders are themselves split over whether to inject new capital into, for instance, MDBs.
Sands told Devex Tuesday that the Global Fund, which largely operates through grants sustained by replenishment conferences every three years, is keen to expand its work with MDBs. He cited the potential for more collaboration on procurement and providing technical assistance alongside lenders like the World Bank.
However, Sands also cautioned that donors should also be “very realistic” about the limits of working through a system of loans rather than grants.
“If you are dealing with the plight of the very poorest — displaced people in war zones, children in the most poverty-stricken rural parts of Africa — there is no real private sector incentive [to invest],” he said. “That has to be an altruistic, greater good of humanity motivation that drives that kind of impact.