ARTICLES

Geneva (dpa) - Government bonds are generally attractive to the
layman investor as they are relatively safe. The saver can profit
while not fretting over the markets.

An initiative which has been getting off the ground in the past
two years is trying to help those investors sleep even easier,
knowing their money will go to the developing world to immunize
children.

When buying the new "vaccine bonds," people will be lending money
to the 10-year-old Global Alliance on Vaccines and Immunisation
(Gavi), a public-private partnership that includes governments,
international agencies and the private sector.

"We are in a hurry to save lives," said Dan Thomas, a deputy head
of Gavi. "What can be a better investment?"

The alliance says it requires more money than donors annually give
to reach its goals of stopping preventable deaths.

"What tends to happen," said Gargee Ghosh at the Bill and Melinda
Gates Foundation, "is that donors are quite sporadic."

While the Gates Foundation gave seed money for Gavi, Ghosh
explained, it knew mechanisms would have to be found to keep it
afloat.

"It was always clear Gavi would need more money for its
immunization mission than what was coming from donors," she added,
noting that the immunization programmes for the world‘s poor had a
bill of 30 billion dollars.

The answer, which came into existence in 2006, largely at the
initiative of Gordon Brown, the current British premier, has a heavy
name: The International Finance Facility for Immunization (IFFIm).

IFFIm issues bonds and sends the capital to Gavi, giving the group
accelerated and predictable access to cash. So far, it has raised 1.6
billion dollars, and is expecting more after announcing another
issuance of 71 million dollars to resident of Britain this month. The
bonds yield 16 per cent over five years.

"The money for vaccination is needed sooner rather than later,"
said HSBC banker Malcolm Prince, who helped design the Vaccine
Investment Plan. "This saves children‘s lives."

Ghosh said she was "tremendously excited" about the bond issuance.

By 2015, the timeframe for the United Nations‘ Millennium
Development goals, including the commitment to reduce by two-thirds
the under-five mortality rate, IFFIm wants to raise 4 billion
dollars. Gavi has already vaccinated 213 million children, preventing
an estimated 3.4 million premature deaths.

"We go into the world‘s capital markets and mobilize money today
from bonds for frontloading vaccinations," IFFIm Chairman Alan
Gillespie said. "This is firmly committed money."

The seven governments involved, including Britain, France, Spain
and South Africa, have backed the bonds, and the funds are overseen
by the World Bank, giving them a sovereign AAA rating.

Gavi gets the money now but governments can space out their
donations.

"This mechanism turns small pledges over 20 years into immediate
large amounts of money," said Thomas at Gavi.

One criticism, made by Germany, was that the programme required a
multi-year commitment which then left the donor no flexibility to
change course.

The bonds, though, can make things more cost effective, since
long-term planning allows for utilizing cheaper options and the
faster children are immunized, the fewer people will contract
diseases, lowering the overall cost to health systems.

Also, said Prince at HSBC, by creating demand, the prices of
vaccines were dropping. A hepatitis B vaccine, part of the Gavi
project, dropped from 1.11 dollars to 0.71.

"Because of the extra demand, there are now six competing
(companies)," he said. "Competition is a key element to bringing
prices down."

Donors were testing other methods to bring down pricing, including
committing to market prices for vaccines being developed.

Also, the Taskforce on Innovative International Financing has been
set up to find new ways to fund health projects.

Anders Nordstrom, with the Swedish government‘s development arm,
said the taskforce was finalizing options and would present a report
in May. Ideas were being floated as well for water and sanitation
projects.

Gavi, while not using amounts of money that would shock the folks
cobbling together bailout packages, it is still huge as far as
charities go. But what about smaller charities who don‘t have the
money to make money?

One possibility might be private equity funds which could then
distribute smaller donations, though the idea was still being
hammered out.

A financial expert half-jokingly said the inventors of the complex
credit swap devices connected to the financial meltdown should be
located and put to work on innovative financing mechanisms for
medical systems.

Ghosh believes that the next few years will see developments in
how charities are financed.

"I wouldn‘t be surprised if we came out of the crisis with more of
a mind for social-investment-oriented products," she said.
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