With a high chance of a pandemic destabilising societies and economies in the next 10-15 years, the World Bank Group has partnered with the G7 to create
a rapid-financing facility to counter the threat
Jim Yong Kim is the 12th President of the World Bank Group. Under his leadership, the organisation has established twin goals: ending extreme poverty by 2030 and boosting shared prosperity for the poorest 40% of the population in developing countries.
As the G7 leaders prepare to gather in Ise-Shima, Japan, the world faces overlapping challenges as complex and vexing as at any time in recent memory. From market volatility to terrorism and massive refugee flows, the threats to human well-being and global stability are growing.
The need for more effective systems and tools to manage risks has never been more imperative. Although there has been important progress on tackling some of the systemic challenges that require collective leadership – such as with the historic Paris Agreement on climate change – we have not done enough on others, such as pandemics. The G7 summit represents an opportunity to address this gap.
Pandemics are one of the most certain uninsured risks in the world today. Recent economic work suggests that the annual global cost of moderately severe to severe pandemics is roughly $570 billion, or 0.7% of global income. According to the World Health Organization (WHO), there is a high probability that the world will experience a severe outbreak in the next 10 to 15 years that could destabilise societies and economies. A severe pandemic like the 1918 influenza could cost 5% of global gross domestic product (GDP).
Every country, regardless of income, must increase its investment in preparedness. Countries need resilient health systems that can deliver quality universal primary care, public health services and regional networks that can take disease surveillance and detection to scale. These investments are priorities for many G7 bilateral assistance programmes and for World Bank Group support through the Global Financing Facility and the International Development Association, our fund for the poorest countries.
Breaking the crisis cycle
Infectious disease outbreaks are inevitable and can quickly overwhelm any health system, particularly in the world’s most vulnerable countries. As with Ebola and now with the Zika virus, an outbreak in a remote area can quickly become a deadly crisis. The world continues to follow the same pattern: money is not brought to the table until a major outbreak hits an explosive point. Without a strong system in place, the world will simply continue to move from crisis to crisis.
The World Bank Group is doing something to change this. With G7 support, the World Bank Group is ready to launch the Pandemic Emergency Financing Facility (PEF). We have worked with WHO and a wide range of partners to design an innovative, insurance-based financing mechanism that will leverage resources from wealthy countries, capital markets and the insurance industry. In the event of a severe outbreak, the facility will release money swiftly to poor countries and international responders based on a predetermined, transparent set of criteria. It also will have the flexibility to respond to unknown pathogens that we cannot yet predict.
By stemming an outbreak before it reaches pandemic proportions, we will save untold thousands of lives. We will also keep the cost in the millions rather than the billions that donors now have to spend on response and recovery, and the billions – or potentially trillions – in lost GDP. This is a smart, cost-effective use of public and private capital with a high return on investment.
Improving response times
The world already has well-developed global tools and mechanisms to respond quickly to natural disasters. Yet pandemics differ from natural disasters in a vital way: we cannot change the magnitude of an earthquake, but we can control the severity of an epidemic. Money and support delivered at the right time can save lives and economies. If the PEF had existed in 2014 during the Ebola outbreak, we could have mobilised $100 million as early as July to accelerate the response. Instead, relying on pass-the-hat financing meant that money on that scale did not begin to flow until three months later – during which Ebola cases increased tenfold.
This facility will complement WHO’s enhanced capability for early response and encourage countries to comply with the International Health Regulations. It will improve modelling and forecasting of future disease outbreaks, and it will ultimately reduce the cost of response by encouraging better pre-positioning through the certainty of financing.
As one veteran of the smallpox eradication campaign said, “Outbreaks are inevitable. Pandemics are optional.” There are already worrying signs that
the world is forgetting the lessons of Ebola. With the launch of the PEF, G7 leaders will take an important step towards managing one of the world’s
most lethal human and economic risks.