TCI’s Innovative Co-financing Model in Nigeria Leads States to Spend 88% of What They Committed

Sep 3, 2020

Contributors: Victor Igharo and Nneoma Anieto

TCI’s innovative co-financing model is explained in this new publication.

Nigeria’s state governments face increasing financial and operational pressures to meet the health and development needs of their constituents. These pressures are compounded by changes in the external funding environment, where donors are stepping back and seeking models to promote self-reliance and sustainability of the interventions they fund. Declines in donor funding globally present a substantial threat to development financing, especially in low- and middle-income countries, but also offer an opportunity to expand growth of non-donor sources of financing, especially through public financing and leveraged co-financing models (USAID’s Center for Innovation Impact 2019).

In Nigeria, The Challenge Initiative (TCI) has established a co-financing model that draws on learnings of previous health co-financing mechanisms such as those championed by Gavi, The Global Fund and World Bank. It promotes self-reliance of state governments and sustainability of TCI’s proven family planning and adolescent and youth sexual and reproductive health (AYSRH) interventions by partnering with state governments to leverage all available financial and non-financial resources to drive and sustain system-wide changes to improve access to family planning.

As a result of this strategy, nearly 88% of what the 11 TCI-supported Nigerian states committed was spent in the latest fiscal year (July 2019 – June 2020).

TCI Nigeria tracks commitments made by local governments (local contribution), the amount actually spent and the amount it contributed from the Challenge Fund (program delivery funds). The graph above shows results from fiscal 2020 (July 2019 – June 2020).

The objectives of TCI’s co-financing strategy are to:

  • Document, track and amplify progress and learning related to family planning financing, with particular focus on understanding state-level fiscal environments
  • Simplify state mechanisms for routine documentation of family planning expenditures to more readily unlock access to additional state-level funding
  • Explore and refine emerging metrics to measure state government progress in contributing to FP2020 commitments
  • Serve as a framework to guide partnership between government and non-state actors for strengthened family planning financing and programming at state levels

Through a collaborative process, TCI-supported states are awarded catalytic funds from its Challenge Fund to subsidize costs associated with implementing and scaling up high-impact interventions in family planning. During the following start-up, scale-up, and surge periods – which lasts about three years – states commit increasing proportions of the total funds dedicated to family planning programming, with a minimum matching benchmark of 25% in the first year, 33.3% in the second year and 50% in the third year. The ultimate goal is for states to match, and eventually exceed, TCI investments.

States are not required to obligate a fixed amount, and the total amount allocated may change from year to year based on priorities and available resources. The allocations also vary from state to state, given their unique realities. Any state shortfalls in meeting prescribed benchmarks will result in deductions from the state’s Challenge Fund reward for the next program year, while exceeding the benchmarks will unlock additional Challenge Funds to intensify program implementation, expand coverage and maximize potential gains.

TCI’s co-financing model in Nigeria.

With its focus on progressive increases in domestic financing, TCI Nigeria has learned that the following considerations are key in implementing and replicating it elsewhere:

  • Minimum threshold requirements in the first year are not demanded because of the mindset shifts required for engagement with TCI and the fact that it is somewhat difficult to determine fiscal capacity and systems readiness at the beginning of engagement.
  • There are constraints to defining and measuring the minimum threshold of funding outside of the approved budget lines (being the generally acceptable verifiable proof of fund allocation and releases). Because TCI expects partner states to explore all available domestic resources, pegging a ceiling to either the dedicated budget line or its external domestic resources secured outside of the budget line may be problematic.
  • The current measurement factors in additional external financing (such as bilateral donor support to states in the form of direct grants and loans) as they are actually counted as state counterpart funds. This means that the domestic contribution may appear higher than what it is in reality and the proportion of domestic funding may artificially seem to increase as TCI Challenge Funds decrease. To address this, TCI tracks cash releases through funding pipelines at different levels—budget line releases and other government allocations such as internally generated revenue and subventions; proportion of development grant and loans (such as World Bank’s Saving One Million Lives and Nigeria State Health Investment Project) allocated to family planning; and other intervention funds (such as Basic Healthcare Provision Funds) channelled directly through state government.
  • TCI qualifies what can be defined as state cash and in-kind resources—these exclude human resource cost of government, routine operations and maintenance cost, local travel and logistics. However, where government facilities such as training centers and consultant time are used to support implementation, they qualify as in-kind contributions.

The strategy has been structured to allow for easy adaptation and replicability beyond family planning and aims to be the mainstay for programs embracing the TCI’s approach to stimulate local ownership. The strategy, if used properly, can be a viable tool to build strong relationships among state actors (donors, implementers and government) and improve accountability in family planning financing.

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