The Global Fund’s 33rd Board Meeting – Geneva, Switzerland, March 31-April 1, 2015

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Introduction

The Global Fund to Fight AIDS, Tuberculosis and Malaria held its 33rd Board Meeting on March 31-April 1, 2015, in Geneva, Switzerland. Nafsiah Mboi of Indonesia and Mireille Guigaz of France, the outgoing Chair and Vice Chair of the Board, respectively, presided over the meeting. The Board deliberated on a number of decision points including the appointment of the new Chair and Vice Chair. The Board agreed to the following decision points during the 33rd Board Meeting:

  • Appointment of Professor Christian Otu Onyebuchi Chukwu from the West and Central Africa constituency as Rapporteur for the 33rd Board Meeting.
  • Approval of the agenda for the 33rd Board Meeting.
  • Appointment of Norbert Hauser as Chair of the Board and Aida Kurtovic as Vice Chair of the Board to each serve a two-year term starting from the adjournment of the 33rd Board Meeting until the adjournment of the first Board Meeting in 2017.
  • Approval of the Global Fund’s Annual Financial Report for 2014, which includes the 2014 consolidated financial statements audited by Ernst & Young SA.
  • Approval of the Global Fund’s Statutory Financial Statements for 2014, which have been audited by Ernst & Young SA.
  • Appointment of Ernst & Young SA as the Global Fund’s external auditor for 2015.
  • Approval of the remaining targets for the 2014-2016 Key Performance Indicator Framework.
  • Approval of the framework for financing co-infections and co-morbidities of HIV/AIDS, tuberculosis and malaria, which follows an interim measure for the financing of Hepatitis C treatment.
  • Approval of reporting and location arrangements for the Global Fund’s Ethics Officer.
  • Appreciation of the outgoing Chair and Vice Chair of the Board.

Executive Director’s Opening Statement

Dr. Mark Dybul, Executive Director of the Global Fund, focused his update to the Board on the six Global Fund implementing countries he visited during the first quarter of calendar year 2015: Haiti, Honduras, Papua New Guinea, South Africa, Swaziland and Zambia. Dr. Dybul reflected on the Global Fund’s grants in each country and the remarkable results these innovative programs are achieving. In Haiti, for example, Dr. Dybul noted that a Global Fund-supported clinic treating cases of multidrug-resistant tuberculosis (MDR-TB) had achieved an 80 percent success rate in treatment, attributable to improvement in the country’s health care infrastructure. In Honduras, Global Fund programs have helped reduce malaria rates by 78 percent and have moved the country closer to elimination of the disease. In Papua New Guinea, Dr. Dybul highlighted the Global Fund’s strong partnerships with the government, faith-based organizations and the private sector to implement its grants. In addition to programmatic results and impact, Dr. Dybul assured the Board that the Global Fund remains focused on procurement reform and improving supply chain management, both of which are important to saving money and reducing risk.

Dr. Dybul also provided an update on the counterpart financing provisions included in the Global Fund’s concept notes. To date, through the concept note development process, countries have committed $3.9 billion in domestic financing for 2015-2017. The Global Fund anticipates that domestic financing commitments during 2015-2017 will increase as additional concept notes are submitted and approved. Mobilizing this domestic financing will help ensure program sustainability as implementing countries move along the development spectrum and transition from Global Fund support.

Selection of New Chair and Vice Chair of the Global Fund Board

The Global Fund named Norbert Hauser, a highly respected lawyer and international auditor, as the next Chair of its Board, and Aida Kurtovic, Executive Director of Partnerships in Health, as Vice Chair. Norbert Hauser brings extensive experience in government and financial supervision and an in-depth understanding of the Global Fund to his new position as Chair. He has served as a member of the German Parliament, Vice President of Germany’s supreme auditing institution, and External Auditor of the International Atomic Energy Agency and the Organization for the Prohibition of Chemical Weapons. In 2011, Mr. Hauser served on a high-level independent panel to review the Global Fund’s financial controls and operations, working to identify and recommend institutional improvements. In December 2012, he was appointed as the Global Fund’s interim Inspector General (IG), a role he held until September 2013. In his role as interim IG, Mr. Hauser transformed the Office of the Inspector General, increasing cost and workload efficiencies and reviewing and improving its investigative work.

Mrs. Kurtovic also brings a deep knowledge of the Global Fund and global health to her new role. Since 2005, she has served as Executive Director of Partnerships in Health, a non-governmental organization in Bosnia and Herzegovina that builds health knowledge and skills by educating and training primary care providers. Mrs. Kurtovic has been an active member of the Global Fund’s Board since 2012 and for the past year has served on the Global Fund’s Strategy, Investment and Impact Committee, which oversees the organization’s strategic direction to ensure optimal impact and performance. She is also a member of the Global Fund’s Country Coordinating Mechanism in Bosnia and Herzegovina, the committee that works on the ground to guide Global Fund-sponsored programs in-country.

Office of the Inspector General (OIG) Update

At the Board Meeting, the OIG issued its first “Annual Opinion on Governance, Risk Management and Internal Controls of the Global Fund.” The report found that the Global Fund has improved its maturity over time and that governance, risk management and internal control processes have largely been defined through institutional policies. However, the report noted that these policies are not yet applied consistently and are not yet fully embedded in everyday management practice across the organization. The report highlighted many of the improvements made during the restructuring of the Global Fund Secretariat over the last two years, including more resources allocated to the grant management division and improved financial data management and oversight.

Mouhamadou Diagne, who joined the Global Fund as its IG in mid-March 2015, and Katie Hodson, acting IG following the departure of former IG Martin O’Malley, provided the Board with a general update on the OIG’s work in 2014 and plans for 2015. In 2014, the OIG released a total of 25 reports and cleared the backlog of “legacy” cases pending from the 2009-2012 time frame. The OIG is almost fully staffed with only two vacancies left to fill; once these positions are filled, the OIG will be a staff of 48 professional auditors and investigators. In 2015, the OIG will be conducting six internal and 10 country audits. The internal audits will be focused on strategy and impact controls, grant-making under the New Funding Model, the effectiveness of Country Coordinating Mechanisms, and the current methodology used to allocate funds. The 10 country audits will focus on the following countries, which cover a combined 24 percent of the 2014-2016 allocation across the three diseases: Chad, Ghana, Honduras, Indonesia, Nigeria, Pakistan, South Sudan, Tanzania, Uganda and Uzbekistan.

2014 Financial Performance: End of Year Results

Daniel Camus, Chief Financial Officer (CFO) of the Global Fund, updated the Board on a range of 2014 financial performance issues, including pledges and contributions, grant expenses and disbursements, and foreign exchange losses. Mr. Camus noted that actual cash receipts in 2014 were lower than expected due to administrative delays and/or donor accounting practices. The Global Fund received commitments of $3.4 billion in contributions in 2014, while $3.2 billion had actually been received by the end of 2014. The Global Fund anticipates the remainder will be received in 2015. As a result of unanticipated delays during the transition to the New Funding Model, actual grant spending in 2014 totaled $2.46 billion, a 23 percent reduction from 2013 and 25 percent lower than the Global Fund’s 2014 forecasts. Broken down by disease, in 2014, $1.477 billion was spent on HIV/AIDS and HIV/TB programs; $585 million on malaria programs; and $410 million on tuberculosis programs. However, the Global Fund assured the Board that these reductions have not disrupted services in-country. Finally, the issue of losses due to foreign exchange rates was discussed at length. In summary, the depreciation of many European currencies compared to the U.S. dollar resulted in a loss of $292 million in 2014.

The CFO and the IG provided the Board with an update on the 2014 OIG budget, forecasted spending vs. actual. In 2014, the OIG spent $12.031 million and its forecasted budget for 2015 is $16.3 million, the variance is due in large part to the OIG being almost fully staffed and a robust plan to conduct a range of internal and country audits throughout the year.

Update on Concept Note Submission and Approval Process/Technical Review Panel

The Global Fund projects that approximately 260 concept notes will be submitted during the allocation period, Windows 1-8. In 2014, 111 concept notes were submitted and reviewed by the Technical Review Panel (TRP) in Windows 1-4, of which, 75 percent are currently in the grant-making stage. Fifteen new grants were signed in 2014, nine of which received disbursements totaling $243.5 million. In 2014, a total of $2.88 billion was disbursed in 1,400 transactions.

So far in 2015, a total of 32 concept notes have been submitted in Window 5 and are currently undergoing review by the TRP. The table below shows the value of disease components reviewed/estimated throughout the entire concept note review process. Windows 1-5 represent 70 percent of the total allocation value.

 GF Board Update 33 B

Finalizing the Global Fund’s Corporate Key Performance Indicators

During the 30th meeting of the Global Fund Board in November 2013, a Corporate Key Performance Indicator (KPI) Framework for 2014-2016 was approved. A framework of 16 indicators was developed in consultation with key partners such as WHO, UNAIDS, PEPFAR, PMI, the World Bank, and other donors, civil society and academia. At the 32nd Board Meeting in November 2014, a KPI Framework was updated with currently available performance targets for 2015, and the remaining 2015 targets were presented and approved by the Board at the 33rd Board Meeting. Also during the 33rd Board Meeting, 2014 performance assessments or progress updates for 11 KPIs were provided to the Board for review – 10 of the 11 KPIs were assessed as “strong performance.” The KPI 11: Grant expense forecast was below target, mainly due to delays in the submission and approval of concept notes. In addition, the Board approved performance targets for the following three KPIs: KPI 6: Alignment with national reporting systems; KPI 12: Human rights protection; and KPI 16: Quality of management and leadership.

Global Fund Policy on Co-infections and Co-morbidities of the Three Diseases

At the 32nd Board Meeting, an interim measure was approved to allow for treatment of the Hepatitis C virus where there is a currently approved budget for such treatment within an existing Global Fund grant. Following the 32nd Board Meeting, the Strategy, Investment and Impact Committee met to discuss a range of options for financing co-infections and co-morbidities (COIM). During the 33rd Board Meeting, the SIIC recommended and the Board approved a framework for financing COIM that supports a country-led process and ensures that Global Fund financing remains targeted at HIV/AIDS, tuberculosis and malaria. The Global Fund will consider financing a COIM intervention when a strong investment case is presented that achieves maximum impact within the current country context and results in extending the life expectancy, preventing and/or reducing mortality and morbidity of people living with HIV/AIDS, tuberculosis or malaria.

Strategy Development and Partnership Forums

As the Global Fund continues to identify priorities for its 2017-2021 strategy, the Secretariat will be convening a series of Partnership Forums to bring together a range of stakeholders as a means of collecting feedback and input on the new strategy. In addition to an online e-forum that will be open to the public from mid-April to the end of May 2015, the Global Fund is organizing three in-person consultations between May and September 2015: in Addis Ababa, Ethiopia; in Bangkok, Thailand; and in Latin America (date and location to be announced). These three forums are key to ensuring that the strategy development process is inclusive and participatory.

Update on Resource Mobilization and the Global Fund’s Fifth Voluntary Replenishment Campaign

Christoph Benn, Director of External Relations, briefed the Board on the Global Fund’s ongoing fundraising efforts during the current Fourth Replenishment cycle. Since the launch of the current Replenishment round, the Global Fund has secured an additional $130 million in pledges from the public sector; $42 million from the private sector including Product (RED), the M•A•C AIDS Fund, Goodbye Malaria and Comic Relief; and has been generating interest from high net-worth individuals (HNWI) from countries such as India, Indonesia, Myanmar, Philippines, South Africa, Thailand and Vietnam, in supporting country-specific unfunded quality demand projects..

Planning for the Fifth Voluntary Replenishment is underway. The Global Fund anticipates a number of key Replenishment milestones over the course of the next year and a half, including: a Replenishment campaign “kickoff” event during the UN General Assembly in September 2015; the Global Fund’s Pre-Replenishment meeting in Tokyo, Japan, on Dec. 17, 2015; and finally, the Replenishment Conference to be held in Q2 or Q3 of calendar year 2016 (exact date/location to be confirmed).

Conclusion

At the meeting’s conclusion, Nafsiah Mboi and Mireille Guigaz formally handed over the leadership of the Board to Norbert Hauser and Aida Kurtovic. The Board members gave thanks to the outgoing Chair and Vice Chair and welcomed the new leadership. The 34th Board Meeting will be held from Nov. 16-17, 2015.