Introduction
Despite notable strides, the world is still falling short of meeting the United Nations’ Sustainable Development Goals (SDGs). According to the 2024 SDG Report, only 17 percent of SDGs are on track to meet their 2030 targets. Alarmingly, the financing gap to achieve these goals has expanded dramatically, increasing from $2.5 trillion before the COVID-19 pandemic to $4.2 trillion in its aftermath (UN 2024). Of the seventeen goals, SDG #3: Health and Well-being is one of six flagged as facing “major challenges” in reaching its 2030 targets (UN 2024). The pandemic has further strained fragile health infrastructures, reversing progress in areas such as life expectancy and maternal mortality reduction (UN 2024).
Even prior to the pandemic, the financial landscape for global health was precarious. The World Bank estimated an annual deficit of $176 billion for its International Development Association (IDA), which supports health initiatives in the world’s poorest countries (World Bank Group 2019). The economic fallout from COVID-19 has exacerbated this situation, leaving many low- and lower-middle-income countries (LMICs) grappling with competing priorities. Low-income economies are struggling to prioritize investments in improving the health of their citizens versus paying off insurmountable debt incurred during the pandemic (IHME 2023).
Despite these challenges, the case for global health investment is strong. A study conducted by Arrow in Reference Arrow, Dasgupta, Goulder, Mumford and Oleson2012 estimated that the value of health capital exceeds the value of all other forms of capital combined (Arrow Reference Arrow, Dasgupta, Goulder, Mumford and Oleson2012). The recent COVID-19 pandemic starkly illustrated the profound societal, economic, and geopolitical consequences of inadequate health systems. New efforts to prepare for pandemics, increase coordination, and accelerate response have been piloted and implemented.
Despite the mortality and morbidity caused by COVID-19, the global health community has achieved demonstrable impact, an important reminder that progress is attainable. Life expectancy has improved by 23 years since 1950 (Schumacher Reference Schumacher, Kyu and Aali2024). Under-five mortality has decreased by more than 50 percent since 2000 (Azevedo Reference Azevedo, Banerjee and Wilmoth2024). A recent Lancet publication (Jamison Reference Jamison, Summers and Chang2024) emphasizes the potential for targeted investments to yield significant improvements in human welfare, including increased life expectancy and a 50 percent reduction in premature deaths by 2050.
Despite the evidence, financing gaps persist, and a pivotal question remains: How do we bridge this deficit? Given forecasted flatlining of development assistance and other major philanthropic sources (IHME 2024), it is imperative to explore alternative funding mechanisms to close this gap. Before addressing the “how,” it is essential to examine “why” this gap exists. Why is capital either missing, unavailable, or inaccessible, particularly in financing health in the Global South? A holistic understanding of these gaps can inform actionable solutions and frameworks to correct course. This is imperative if health targets and the 2030 SDGs are to be met in the next five years.
Unlocking health financing requires understanding various sources of capital and their accessibility in Global South markets. A deeper analysis is needed to determine why private capital – commonly leveraged in such sectors as energy and climate – remains underutilized in health. Harnessing these sources could diversify global health funding, catalyze public–private partnerships, and enhance sustainability through market-based solutions. However, the barriers keeping these sources locked are multifaceted and complex.
The global development community stands at an inflection point, facing imminent risks from geopolitical instability, environmental changes, and a shifting climate. This chapter explores these challenges and highlights the urgency of prioritizing human and planetary health. It argues that strengthening health systems now is essential to equipping humanity to navigate and overcome the risks ahead.
Understanding Current Health Financing: Traditional Sources of Capital
Four main sources of funding contribute to the majority of health financing for the Global South: domestic government funds, out-of-pocket payments, prepaid private spending, and development assistance for health (DAH) (IHME 2024). As described in the Institute for Health Metrics and Evaluation (IHME) Global Health Data Exchange (GHDx), government health spending is derived from domestic sources, which includes funding for public health infrastructure and government-provided social health insurance (IHME 2024).
Out-of-pocket payments comprise payments made by an individual for any health-related costs incurred by themselves or by their caretakers. Prepaid private spending comprises health spending sources from nonpublic programs that are funded prior to obtaining health care, such as private health insurance and services provided for free by nongovernmental agencies. DAH encompasses financial and in-kind resources that are transferred through international development agencies to LMICs for the primary purpose of maintaining or improving health. Despite the high visibility of DAH in the form of overseas grants from principally G7 governments and some philanthropic capital, the majority of health financing for both lower-middle-income and low-income countries comes from non-DAH sources as can be seen in Figure 4.1.
Percentage of total health expenditure by source of fundings (2021 actual data).
Figure 4.1 Long description
The graph plots government, out-of-pocket, prepaid private, and D A H. The values are 0%, 23%, 12%, and 65% for H I C. 0%, 12%, 30%, and 58% for U M I C. 7%, 9%, 47%, and 37% for L M I C. 38%, 4%, 36%, and 21% for L I C, respectively.
As further seen in Table 4.1, 58 percent of total health financing for upper-middle-income countries comes from domestic government sources while for lower-middle-income countries it is 37 percent. Only 12 percent, or $9 billion comes from DAH, while for lower-middle income countries it is 7 percent, or $24 billion. Despite middle-income countries being home to roughly 70 percent of the world’s poor, as defined by living on less than $2.15 per day (World Bank 2022), the total DAH they receive is 0.4 percent of the total health financing available in high income countries. The total health financing available to high-income countries ($7.9 trillion) is roughly four-fold higher than all other countries combined ($2.2 trillion) (IHME GHDx 2024).
| World Bank Classification | ||||
|---|---|---|---|---|
| Sources of Financing | HIC | UMIC | LMIC | LIC |
| Government | 65% | 58% | 37% | 21% |
| Out-of-pocket | 12% | 30% | 47% | 36% |
| Prepaid private | 23% | 12% | 9% | 4% |
| DAH | 7% | 38% | ||
As evidenced by Table 4.1, DAH, despite the high visibility it receives, has historically been a small fraction of the total health financing available to the Global South. Unfortunately, this is not expected to change. IHME predicts that DAH peaked in 2021 at $84 billion and is not expected to reach this level again by 2030 or even 2050. Unlike other forms of aid, such as remittances, as will be discussed in the next section, DAH has not shown to be resilient to macroeconomics or national emergencies (Ratha Reference Ratha2023). LMICs have long known that DAH is neither the solution to the financing gap nor the answer to creating self-sufficiency (Moghalu Reference Moghalu2014).
Out-of-pocket and prepaid private financing account for a significant share of total health expenditures, comprising 40 percent in low-income countries, 56 percent in lower-middle-income countries, and 42 percent in upper-middle-income countries (IHME 2024). These costs are incurred directly by individuals and households and in most cases are not reimbursable. Out-of-pocket health expenses pose financial strain on individuals and households. Medical costs are often unexpected and are paid out of family savings (Qin Reference Qin, Hone and Millett2019). Out-of-pocket costs generally perpetuate inequalities, as access to health is contingent on one’s income level and ability to pay. While IHME expects out-of-pocket costs to decrease overtime for high-income countries, out-of-pocket costs are expected to continue increasing in LMICs (IHME 2024), further keeping quality health care out of reach for the world’s poor.
Domestic sources of financing, though steady in comparison to DAH (IHME 2024), continue to fall short of health financing needs. In 2010, the WHO estimated that providing universal health coverage will generally require governments to spend 5 percent of their GDP on health care (WHO 2017). Unsurprisingly, no low-income countries and only six lower-middle-income countries met the 5 percent benchmarkFootnote 1 (Human Rights Watch Reference Edwards2024). Traditional sources of capital, as explored in this section, are insufficient to achieve health-related SDG targets. To effectively advance health and well-being alongside economic growth, additional resources must be identified, mobilized, and integrated with existing funding mechanisms.
Integrating Nontraditional Health Capital Private Sources
Global health is highly siloed due to several systemic and structural factors. Key contributors include divisions between public and private health care systems, a disease-centric rather than a human-centric approach, and incohesive donor priorities (Hanson Reference Hanson, Brikci and Erlangga2022). At the core of these challenges lies the issue of fragmented health financing, which perpetuates these siloes and undermines cohesive global health efforts.
To begin with, the authoritative sources for health financing data, such as IHME’s GHDx and the WHO’s Global Health Expenditure Database, do not account for capital investments or private sources of capital fueling health. Though the reasons for this are logical and well documented – namely, that these databases lack methodologies to track private sector financing and cannot account for the financial returns on investments – this does result in a critical blind spot.
Remittances – money or goods that migrants send back to their home countries – are also an overlooked source of funding that, as discussed subsequently, is a significant and stable source of support for many living in the Global South (Ratha Reference Ratha2023). This section will attempt to summarize notable sources of capital that have been missing in the discourse and the potential for these sources to fill the financing gap.
Four main sources of nontraditional capital will be explored as significant opportunities to augment traditional funding. These four were selected based on market capitalization, or potential market capitalization, and relevance to health in the Global South. They comprise corporate social responsibility (CSR) coupled with environmental, social, and governance (ESG) funding; remittances; impact investments; and blended finance.
While community-based financing, crowdsourcing, and social insurance schemes are worth exploring, limited data exclude them from this chapter. Venture capital, though valuable for early-stage, high-growth innovations, is also out of scope due to its smaller market capitalization. However, the opportunities and challenges associated with venture finance are analogous to impact investing, which is discussed in detail.
CSR and ESG
CSR refers to the mostly voluntary actions that companies undertake to positively impact society reflecting a belief that businesses have a responsibility to make social and environmental impact alongside economic returns. In 2013, India became the first and only country to mandate CSR under the Companies Act, requiring companies meeting specific thresholds to allocate a minimum of 2 percent of their average net profits from the preceding three years to CSR activities (The Companies Act 2013). A key requirement of the Companies Act is that CSR funding must go to locally registered entities in India. This provision was key to promoting localization and alignment with domestic priorities.
In India, CSR generated roughly $1.2 billion in 2014, which has grown to $3.1 billion in 2021 (Singh Reference Singh2024). According to a recent analysis, roughly 30 percent of CSR funds in 2021 were dedicated to health, the largest sector recipient of CSR funds, with education as second (Singh Reference Singh2024). As described previously, the four traditional forms of health financing in India amounted to $106 billion in 2021 (IHME 2024). This implies CSR funds, within a decade, have grown to represent approximately 1 percent of India’s total traditional health financing. Though currently a small share, as DAH declines, CSR offers a growing, sustainable, and domestic source of health financing.
Globally, CSR is not mandated but is actively promoted in high-income countries such as the United States, EU nations, Japan, and the United Kingdom through voluntary reporting frameworks and advocacy. Middle-income countries such as Brazil, Indonesia, China, and South Africa also encourage CSR. Notably, in South Africa, publicly listed companies on the Johannesburg Stock Exchange must report on their CSR activities as part of compliance with the King IV Report on Corporate Governance (PWC 2017).
Despite its widespread adoption, CSR faces challenges in measuring and tracking its impact, as evaluation frameworks vary widely. Over the past two decades, CSR has evolved into the broader ESG framework, particularly in high-income countries. Driven by investor demands for long-term sustainability and responsible investing, ESG integrates sustainability into core business operations rather than treating it as a separate or philanthropic activity. This enables greater transparency and accountability (Kaźmierczak Reference Kaźmierczak2022). In addition, ESG benefits from better-defined normative guidance and regulations, such as the UN guidance on reporting, monitoring, and evaluation of impacts, though many argue that enforcement of regulations still requires strengthening (OECD 2023).
ESG investments have shown growing interest in addressing health equity. For instance, global corporations such as JPMorgan Chase have invested $250 billion toward improving health outcomes and equity via improvements in health infrastructure and technology solutions (Renjen Reference Renjen2022). However, the lack of robust data reporting infrastructure in LMICs combined with the lack of alignment on health metrics to track and measure limits the ability to quantify ESG’s contributions to health outcomes, particularly in resource-constrained settings. Addressing these gaps presents a significant opportunity to unlock additional ESG investments for health.
The future success of CSR and ESG in contributing to global development goals will depend on the establishment of global standards for alignment with sustainable development priorities, robust frameworks for monitoring and evaluation, and greater transparency in reporting outcomes. India’s decade of experience with mandated CSR provides a compelling model, having successfully mobilized approximately $3 billion in additional financing annually (Singh Reference Singh2024). This demonstrates the potential of structured and regulated CSR programs to unlock substantial resources.
Other countries, particularly in the Global South, should explore similar approaches while tailoring them to their unique contexts. Facilitating South-to-South knowledge exchange through communities of practice can accelerate learning and adaptation of successful strategies. Strengthening these elements not only enhances the effectiveness of CSR and ESG but also ensures they become powerful tools for channelling additional resources to underfunded regions and sectors. By prioritizing these advancements, significant new avenues for financing sustainable development in the Global South can be unlocked.
Remittances
Remittances refer to the money or goods that migrants send back to their home countries. These funds are a vital source of income for millions of households worldwide and especially in LMICs. According to the World Bank’s 2023 brief on migration and development, remittances to the Global South amounted to $656 billion (World Bank 2023). This is roughly threefold the total overseas direct assistance (ODA) in the same year. Unlike ODA, remittances remained resilient during the recent COVID-19 pandemic and the 2008 financial crisis (Ratha Reference Ratha2023).
It is estimated that 75 percent of remittances are used to cover essential necessities such as food, medical expenses, school costs, and housing. The remaining 25 percent is expected to be used as savings or investments (United Nations 2019). While the proportion of remittances used for health care in LMICs is not widely studied or well documented, several small studies indicate a positive correlation. One study found that households receiving remittances allocate more funds to primary health care expenses compared to households that do not receive remittances (Frank Reference Frank, Palma-Coca and Rauda-Esquivel2009). A meta-analysis found that remittances had a positive effect on health care utilization in three out of the five countries studied; Armenia, Ecuador, and Mexico (Awojobi Reference Awojobi2019). In Sri Lanka, children living in households that received remittances were found to have higher birth weight (Ratha Reference Ratha2009).
There is compelling evidence that remittances are associated with accelerated poverty reduction, improved access to education and health services, and economic development (United Nations 2019). Global stakeholders have recognized the outsized role remittances play for the Global South. Yet many obstacles impede financial flows.
According to the World Bank, the average cost of sending $200 overseas was 6.4 percent, or roughly $13 (World Bank 2023). For reference, the SDG target is 3 percent (Edwards Reference Edwards2024). Global efforts to reduce remittance costs include global competition in the remittance markets, improving access to bank accounts, and avoiding exclusivity between transfer companies and post offices (Malpass Reference Malpass2022).
Increasing digital banking and digital transfer is also expected to decrease costs. As of today, digital channels make up less than 1 percent of all transfers – the rest are still cash (Malpass Reference Malpass2022). The World Bank continues to advocate for remittance services and calls for greater efforts to increase the financial inclusion of poor people and improve access to correspondent banking for new money transfer companies (Malpass Reference Malpass2022). Policies that decrease the cost and increase the flow of remittances are needed to unlock this critical and resilient source of capital for the Global South.
Impact investing
Impact investing involves channelling capital into ventures that generate measurable social or environmental benefits alongside financial returns. The Global Impact Investing Network (GIIN) estimates that the market reached $1.571 trillion by 2023, with a compound annual growth rate of nearly 18 percent over five years (Hand Reference Hand, Ulanow, Pan and Xiao2024). Approximately 57 percent of impact investments are directed to the Global South, with health care comprising 9 percent of total impact investments (Hand Reference Hand, Sunderji and Pardo2023). This implies that health care investments in the Global South represent around 5 percent of the total impact investing market, equivalent to $80 billion. For comparison, global DAH peaked at $84 billion in 2021 (IHME 2024).
Despite its scale and comparability to DAH, impact investments are not typically accounted for in global health funding analyses due to reasons discussed previously. Consequently, impact investments are not integrated into global health ecosystems and thus run the same risks as other forms of siloed financing: duplication of efforts, inefficiencies, fragmented health systems, and parallel data systems (Brown Reference Brown, Rhodes and Tacheva2023).
Although impact funding directed at emerging economies has increased, many investors remain hesitant to allocate capital to the Global South, favoring investments in the Global North (Hand Reference Hand, Sunderji and Pardo2023). A significant barrier is the widespread perception of risk and instability associated with emerging markets. While the validity of these perceptions varies by local context, the generalized view of emerging economies as high risk continues to impede efforts to mobilize capital and drive meaningful impact in the Global South (Economist 2024). For example, the cost of capital in Africa is 16 percent, which is roughly three times higher than in the Global North (Dato Reference Dato, Dioha and Hessou2024).
The Economist referred to this disparity as the “African premium,” highlighting the financial penalty imposed by capital markets in Africa. As Gagan Gupta stated in The Economist (2024), “The concept of risk is completely invented to ensure that investment doesn’t come to Africa.” A critical gap in assessing true risks is the lack of high-quality data and the infrastructure needed to collect it (Economist 2024). In the absence of reliable data to challenge these perceptions, misguided beliefs about risk persist.
This lack of robust data infrastructure is a key barrier to mobilizing investment capital in the Global South, as impact investments require rigorous baseline evidence, reliable monitoring systems, and governance frameworks to validate financial and social returns (GIIN 2019). Furthermore, measuring health outcomes, as will be discussed in a subsequent section, is inherently complex and lacks alignment across investors and global health stakeholders. This contributes complexity in measuring and reporting health impact and ultimately the performance of impact funds.
Without strong demand or signals from investors, countries in the Global South are not incentivized to prioritize building the required infrastructure to absorb such investments, creating a self-reinforcing cycle of limited investment and weak data systems. This cycle needs to be broken to unlock greater investment capital into emerging markets (Hand Reference Hand, Sunderji and Pardo2023).
Examining the sources of capital that fuel impact investment funds provides insight into the risk profiles of those funds. Pension funds represent the largest share of impact investment financing, accounting for approximately 20 percent of total contributions. Other contributors, such as foundations and high-net-worth individuals – often associated with a stronger focus on generating social impact – each contribute around 3 percent to these funds (GIIN 2023). Notably, pension funds are predominantly allocated to market-rate investments. In contrast, high-net-worth individuals are nearly twelve times more likely to finance below-market-rate investments (GIIN 2023).
Such preferences underscore the need for targeted advocacy and education to align investor priorities with opportunities for impact in emerging economies. Addressing these disparities offers a critical avenue to unlock greater investment potential in the Global South and improve sustainability.
Governments and philanthropy also play an important role in promoting investments for certain social causes. They can also foster interagency partnerships to catalyze grant capital to de-risk private sector investment.
Blended Financing
As described in Chapter 1, blended finance is an innovative approach that strategically combines these funding sources to create a “capital stack” – a structure that mitigates risk and attracts private sector participation by aligning different investors’ risk tolerance and return expectations (Zelenczuk Reference Zelenczuk2023).
Blended finance fills the financing void for initiatives with high social impact potential that are too large to be sustained by public or philanthropic funds alone and yet are not lucrative enough to attract venture capital or private equity. These investments often carry significant risk, making them commercially unfeasible due to prohibitively high capital costs. By blending different types of capital in customized proportions, blended finance structures ensure that each investor’s goals are met while enabling projects that would otherwise struggle to secure funding (Convergence 2022).
In 2022, a first-of-its-kind Africa-focused blended finance fund was created to provide debt and mezzanine financing to scale locally led health enterprises in Africa (see also Chapter 3). The fund, known as the Transform Health Fund, was the result of more than three years of fundraising and negotiations that ultimately led to a final closing of $111 million, exceeding its original $100 million target (AfricInvest 2024). More than a dozen institutions provided commercial capital including development finance institutions such as the United States Development Finance Corporation (DFC) and the International Finance Corporation (IFC); corporate partners such as Merck & Co; philanthropic partners and foundations such as the Skoll Foundation, Grand Challenges Canada, and UBS Optimus Foundation; impact investors such as the Global Health Investment Corporation (GHIC); and several others (AfricInvest 2024).
The interest and momentum by so many partners can be credited, first, to the concessionary capital provided by the USAID as a $1 million grant, second to the catalytic investment from the DFC in the form of a $10 million equity investment (DFC 2022), and third to philanthropic contributions. These concessionary and catalytic capital sources helped lower the overall cost of capital for the investment. DFC, specifically, played the role of a first-loss investor, agreeing to absorb potential losses in the blended finance structure, helping reduce the risk for other investors. As a result of this creative structuring, the Transform Health Fund successfully crowded in funding from more than a dozen financing institutions and is one of the largest locally focused and locally managed health funds in Africa.
While there are many instances of successful blended financing approaches in global health, less than 6 percent of all blended financing deals are in the health sector (Convergence Primer 2025). One barrier to the volume of health-focused blended financing deals is that many relevant partners in the global health sector lack knowledge and expertise to identify, structure, and implement blended financing approaches (Convergence Primer 2025). Similar to challenges with impact investing, blended financing also lacks evidence and benchmarks for risk-adjusted returns resulting from blended finance transactions. Without concrete data, perceived risk often outweighs actual risk – an issue that, as discussed earlier, disproportionately affects investments in the Global South (Economist 2024). Lastly, unlike various other forms of financing discussed, blended financing inherently involves multisectoral partnerships across diverse stakeholders. Structuring bilateral deals is complex on its own. Multilateral deal structuring can be even more tedious and time consuming, requiring patience, trust, and leadership buy-in. Overcoming these challenges will require not only stronger data and evidence but also capacity-building efforts to equip stakeholders with the tools to effectively navigate blended finance structures and unlock their full potential for global health.
Unlocking Capital: Challenges and Opportunities
The preceding sections explored the potential of augmenting and integrating four traditional forms of health financing – domestic government funds, out-of-pocket payments, prepaid private spending, and DAH – with nontraditional private capital to help close the health financing gap. However, significant challenges remain in unlocking and integrating these sources, despite their potential to diversify funding and drive financial growth.
These challenges can be categorized into three key barriers: financial and market-based barriers, data and measurement barriers, and policy and advocacy barriers. To effectively unlock and catalyze new sources of capital, all three must be addressed.
Overcoming Financial and Market-Based Barriers. As discussed, many investors remain hesitant to invest in the Global South due to both real and perceived risks. This reluctance impacts credit ratings, raises the cost of capital, exacerbates the debt burden of many LMICs, and ultimately hinders the latter’s participation in global markets. To address these challenges, effective risk mitigation instruments must be deployed, including political risk insurance, credit guarantees, and first-loss guarantees.
Blended finance should be leveraged to use public or philanthropic capital to de-risk private investments, thereby expanding the pool of market-rate investors in the Global South. Foreign exchange volatility remains a major concern for overseas investors, disproportionately affecting middle-income countries with high external debt and economic instability (Prasad Reference Prasad, Rajan, Birdsall and Rojas-Suarez2004). To mitigate this, multilateral banks such as the World Bank, the Asian Development Bank, and the African Development Bank, along with international financial institutions such as the International Monetary Fund, should take the lead in establishing facilities to hedge against foreign exchange volatility.
Finally, given the proven impact and resilience of remittances, transaction costs for cash transfers must be reduced, and digital transfer mechanisms must be made more accessible to a broader segment of migrants (Francois Reference Francois, Ahmad, Keinsley and Nti-Addae2022).
Overcoming Data and Measurement Barriers.A significant hurdle to increasing capital investments in health is the misalignment of expected outcomes and the insufficient infrastructure to effectively measure them (Economist 2024). Economic metrics, such as gross domestic product (GDP) and gross national income (GNI), are often used as proxies for health outcomes because they are easier to measure and widely available. GDP, for example, quantifies the monetary value of goods and services produced within a nation, while GNI incorporates both domestic and international income. The appropriateness of GDP as a proxy for health outcomes warrants scrutiny, as the relationship between economic growth and population health outcomes is complex and dependent on several factors including wealth distribution, health infrastructure, and rates of industrialization (Patterson Reference Patterson2023). Even Simon Kuznets, the creator of GDP, cautioned against its use beyond the measurement of economic activity (Costanza Reference Costanza, Hart, Kubiszewski and Talberth2014).
Using GDP has several flaws. First, economic growth, while promoting health in some cases, “does not by itself improve population health generally speaking” (Patterson Reference Patterson2023). GDP primarily reflects market-driven activities, whereas many determinants of health – such as public health infrastructure, education, environmental quality, and cultural factors – are not directly tied to economic output. In some cases, economic growth driven by industrialization and urbanization has had negative effects on population health, leading to pollution, the spread of communicable diseases, and lifestyle-related noncommunicable diseases (Patterson Reference Patterson2023).
Second, GDP is an aggregate measure that conceals disparities within countries. This is particularly problematic for middle-income countries, which house 70 percent of the world’s poor but also exhibit significant economic inequities (Nassiri-Ansari and Lehtimäki 2024). These disparities often mean that despite higher GDP classifications, substantial portions of the population lack access to adequate health care. A further paradox is that having a higher GDP classification and “graduating” into middle-income World Bank status renders them ineligible for aid from most bilateral and multilateral aid agencies.
Many organizations have proposed alternatives to GDP, including the Probability of Premature Death (PPD) – the likelihood of dying before age seventy (Jamison Reference Jamison, Summers and Chang2024). PPD is linked to life expectancy at birth while also accounting for improvements in survival across all age groups under seventy. Another increasingly recognized measure is the Multidimensional Poverty Index (MPI), which assesses deprivation rather than development and has been implemented by the UNDP and fifty governments (Nassiri-Ansari Reference Nassiri-Ansari, Lehtimaki and Schwalbe2024).
A 2024 report summarized sixty-five proposals for augmenting or replacing GDP (Jansen Reference Jansen, Wang, Behrens and Hoekstra2024). Investors can and should take the lead in identifying practical, investment-relevant indices. Metrics tailored to investment needs – paired with initiatives to standardize and share performance data – can help drive greater capital flows to underserved regions. Investors are well positioned to lead this dialogue, but domestic governments and philanthropic institutions must also invest in strengthening national health data systems. This includes capacity-building initiatives, such as training programs, to foster a data-driven culture that prioritizes robust data collection, analysis, monitoring, and evaluation (GIIN 2019; Economist 2024).
Overcoming Policy and Advocacy Barriers. As discussed previously, the health sector is highly fragmented and siloed. Though efforts to coordinate have been plentiful, they need to further center around the needs and priorities of the Global South. Public–private partnerships need to evolve to allow governments to set the health agenda. Once these have been set, the government, with the ministry of health in the lead, should determine the partnership structure and roles and responsibilities. Donors and philanthropists should be willing to provide flexible funds that governments can apply toward their domestic priorities and to augment domestic sources of financing.
Financial policies must also become more inclusive. For example, the US Securities Exchange Commission still restricts private investments to accredited investors with a net worth that exceeds $1,000,000 or an annual income more than $200,000. This accreditation was first introduced in 1982 to define individuals with enough financial sophistication to be able to participate in private markets (Schulp Reference Schulp2023). This policy is highly discriminatory and creates unnecessary barriers, particularly for Global South investors, to access private capital markets. Policies such as this need to be changed to be more inclusive.
As discussed previously, advocacy and educational efforts need to target those managing impact investing funds, and in particular pension funds, to increase awareness of the opportunities for impact in the health sector. Global South governments, in partnership with implementing partners, need to identify and create business cases for bankable initiatives that have both impact and financial return potential. Efforts to matchmake investors and investable projects are needed through increased discourse. Capacity building is needed on both sides: for investors to understand the opportunities and risks in the Global South and for investees to build the necessary infrastructure, implement robust metrics, and understand what attracts investors. Many partners including the International Finance Corporation (IFC) and the World Bank have hosted convenings to spark such dialogue; however, the global community needs to translate dialogue into action by executing more deals and sharing lessons learned across the sector. Government incentives, particularly from G7 nations, should also be implemented to encourage investors to diversify their investments into the Global South, take calculated risks, and align investment strategies to the SDGs.
Call to Action
Unlocking the potential of innovative health financing requires addressing interconnected financial, data, and policy barriers that hinder investment flows into the Global South. By deploying risk mitigation instruments, enhancing measurement frameworks, and reforming discriminatory financial policies, we can catalyze greater investment into health systems, close the financing gap, and be back on track in reaching health-related SDGs. Multilateral institutions, governments, philanthropic organizations, and the private sector must unite to develop tailored financial tools, robust health data systems, and equitable policies.
Bridging the health financing gap requires unlocking new sources of private capital while addressing significant financial, data, and policy barriers. Financially, risk mitigation tools such as political risk insurance, credit guarantees, and blended finance must be deployed to attract investors to the Global South. Additionally, multilateral banks must create facilities to hedge foreign exchange volatility, and digital remittances must be made more accessible and affordable.
To overcome data barriers, investors need standardized, investment-appropriate health metrics that capture the complexity of health outcomes. Domestic governments should strengthen national health data systems to provide reliable, timely data, fostering investor confidence. Collaborative efforts are essential to develop indices that reflect health progress and investment potential.
Policy reform is critical to creating inclusive financial markets that enable broader participation from Global South investors. Public–private partnerships must align with national health priorities, with donors offering flexible funding. Advocacy efforts should engage impact investors, while capacity-building initiatives must support both investors and investees.
Immediate action from governments, financial institutions, and the private sector is essential to mobilize sustainable health investments and achieve global health equity. These efforts will not only attract funding but also empower LMIC governments to take ownership of their health systems. The path forward requires decisive action: breaking down silos, aligning priorities, and fostering collaboration to close the health financing gap and improve outcomes for billions.
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