The World Bank’s Pandemic Emergency Financing Facility (PEF) has sent a further $30 million to aid the Democratic Republic of Congo’s (DRC) response to the Ebola outbreak.
The $30 million disbursal comes from the Pandemic Emergency Financing Facility’s (PEF) cash window, not the insurance window that is backed by the pandemic catastrophe bonds and reinsurance market capital.
It takes the total committed from the pandemic risk facility to $50 million, following a $20 million committent made back in February.
The funding will support the DRC’s 4th Strategic Response Plan (SRP4), covering the period from July to December 2019.
The World Bank explained, “As a quick-disbursing mechanism, the PEF is capable of transferring funds within days of approval from the Steering Body. These much-needed resources are helping close the financing gap for emergency frontline health responders through the end of September 2019, by when additional pledged funds are expected to become available.”
The latest $30 million payout from the cash window is being paid directly to the World Health Organisation (WHO), at the request of the Government of the DRC. It’s part of a much larger $300 million financial package announced by the World Bank recently.
“WHO is very grateful for the World Bank’s support, which fills a critical gap in our immediate needs for Ebola response efforts in DRC, and will enable the heroic workers on the frontlines of this fight to continue their lifesaving work,” commented Dr. Tedros Adhanom Ghebreyesus, Director-General, World Health Organization. “We keenly await further funding from other partners to sustain the response through to the end of the year.”
“The World Bank is working closely with WHO, the Government of DRC, and all partners to do everything we can to put an end to the latest Ebola outbreak,” added Annette Dixon, Vice President, Human Development at the World Bank. “The partnership between our organizations and the Government is critical for responding to the emergency as well as rebuilding systems for delivery of basic services and to restoring the trust of communities.”
The World Bank’s pandemic facility has come under some criticism in development circles, given the parametric triggers have not been breached to allow the insurance window to payout some of its insurance-linked securities (ILS) and reinsurance capital backed financing.
These questions, while targeted at the PEF generally, often fail to discuss the fact that the pandemic facility tries to capture and respond to all possible global pandemic threats, hence the single country outbreak of the Ebola virus in the DRC has not met its requirements for triggering.
Designing a parametric trigger mechanism that can work for multiple pandemic diseases, from flu to Ebola, taking into account all factors related to transmission, spread and disease specific differences, is incredibly difficult and the emergence of some basis risk was likely at some stage during the facilities’ lifetime, at least for the first iteration of it.
As of late August there have been almost 1,700 confirmed deaths from the Ebola outbreak in the DRC, far above the levels of deaths required for the triggering of the World Bank’s IBRD CAR 111-112 catastrophe bond, that backs the Pandemic Emergency Financing Facility (PEF).
However, the parametric trigger requires cross-border spread and growth factors before it can pay out. This could still happen, but so far the DRC and its neighbours appear to have been effectively managing borders, while the region of Africa where the border appears most porous is actually a very challenging region for people to travel in.
Whether a failure in the design of the trigger or not, the facility has demonstrated value by paying out this now $50 million towards the Ebola response in the Congo as part of larger World Bank commitments.
The World Bank is set to redesign the PEF in a version 2.0 iteration currently being worked on, which should see triggers revisited and redesigned where appropriate.
Also read:
– Ebola outbreak declared international emergency by WHO.
– World Bank links catastrophe & pandemic risk finance for the Maldives.
– Ebola outbreak crosses border, risk of pandemic cat bond triggering rises.
– PEF 2.0 pandemic risk transfer facility targeted for 2020 by World Bank.
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