Insights: Transitional Funding: A Set Up for Failure or Success?

Alyssa GovindanArticle

By: Alyssa Govindan, GBCHealth

The WHO recently reported that Brazil, Russia, India, China and South Africa, affectionately known as the BRICS, are losing a combined $46 billion to premature cancer deaths every year. Director of the International Agency for Cancer Research, Dr. Christopher Wild, spoke about the new report published in Cancer Epidemiology: “Focusing on tobacco control, vaccination programs and cancer screening, combined with access to adequate cancer treatment, would yield significant health and economic gains for the BRICS countries.”

This got us thinking. Taken individually, would these countries, even if politically-motivated, be in a position to implement these reforms? If so, would other health outcomes suffer as a result? Clearly, South Africa and India do not boast the same infrastructure as China. And finally, if these G20 countries are unable to adjust their budgets to confront serious health burdens, what does that mean for lower-middle-income countries (LMICs) that are growing rapidly?

Transitional Funding – What it is and why it’s popular

Development assistance levels for health are constantly moving targets. The 2000’s experienced a surge of donor funding from private organizations like the Bill & Melinda Gates Foundation and the establishment of PEPFAR, Gavi (the Vaccine Alliance) and The Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund). However, over the last decade that growth has begun to taper off.

The intention of development assistance for health has always been to develop systems that can be owned, funded and operated locally. Nevertheless, it is the transition from donor-funded programming to national ownership that is proving particularly difficult in LMICs.

This trend illustrates that decisions are really about operating from a mindset of scarcityACTION report

Transitional funding refers to the process of decreasing donor funds over time to encourage and support a country’s ability to finance and sustain its own health programs. With an increasing focus on impact, sustainability, value for money and growing pressures to combat climate change, population growth and urbanization; many organizations are beginning to eliminate or dramatically reduce funding to LMICs that are experiencing rapid economic growth. Donors are increasingly reallocating their funds towards the lowest income countries and emergency response instead.

While each donor organization has its own framework for determining which countries are eligible or ineligible for funding, three major health financers, Gavi, the Global Fund, and the World Bank, share similar approaches. These three groups comprise a large portion of foreign health assistance and many countries are dependent on their mechanisms to maintain essential health services.


The following is a brief overview of how these organizations determine eligibility for support:

Gavi allows countries to apply for vaccine support if their gross national income (GNI) per capita is below or equal to $1,580, averaging across three years. In 2013, Gavi agreed to support countries through an additional accelerated transition phase which allows a grace period of one year in which Gavi will financially back national immunization programs.

Many of these transitions are happening rapidly. The 72 countries eligible for GAVI phase II funding from 2007 to 2010 achieved 50% higher GDP per capita by 2014. As a result, 21 of these countries have already graduated or are moving toward graduation, with more to follow.

Last year, The Global Fund updated its strategy for distinguishing eligible countries from ineligible countries for the period 2017-2022. Countries are categorized into low income (LI), low-middle income (LMI), upper-middle income (UMI) and high income based on their income classification as determined by the World Bank. Also, each country’s disease burden indicators for HIV, tuberculosis (TB) and malaria are evaluated. Based on a combination of income classification and disease burden, countries are categorized as ineligible, eligible, or eligible for a specific disease. The Global Fund sets its transition threshold at $3,946 GNI per capita, at which point a country becomes eligible for a transition grant over the next three years.

The Global Fund emphasizes the importance of transition planning beginning at least 10 years before the projected end of Global Fund financing in order to properly address challenges and bottlenecks such as procurement of critical commodities. As a tool, the Global Fund also produces transition projections so that countries moving up in income classification can plan for a change in funding levels.

World Bank/ Dominic Chavez

The World Bank has two institutions, the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD). IDA aims to reduce poverty and improve living conditions in the world’s poorest countries through interest-free loans and grants. When countries grow economically, they graduate from IDA into IBRD, which lends money at concessional rates. IDA uses GNI per capita of $1,165 as a threshold. During the transition period, a country is eligible to access both IDA and IBRD funds with different size envelopes available depending on perceived risk. Some countries have “graduated” from IDA only to become eligible again after the GNI slipped below threshold in subsequent years.

Concerns surrounding transitional funding

Since many donor sources share similar eligibility criteria (i.e. World Bank income designations), it is easy for a country to lose funds from multiple organizations in the same year, otherwise known as simultaneous transition. This process presents major risks to transitioning countries, especially those who are not able to fully support their own health systems. One report found that 36 countries are expected to transition from two or more health financing mechanisms in the next decade. These countries are caught in a sort-of ‘catch 22’ – major health gains ironically may be threatened by economic growth.

The method by which donor agencies categorize a country’s eligibility does not always reflect that country’s ability or willingness to pay. While the goal is for countries to fill that funding gap with their own resources, the reality is that these programs sometimes get cut, leaving communities without access to essential services.

Determining transition readiness through GNI alone is a very narrow lens. Most LMICs are not able to sustain the costs of providing health services to citizens despite their rising GNI. For essential programs such as vaccine coverage and maternal and newborn health services, this shift could be catastrophic. Even in countries that still have access to external funding like Nigeria and Papua New Guinea, low vaccine coverage and low performing programs persist. According to Action, a global health policy partnership: “They and other countries like them will be deeply challenged to translate rapid economic growth into the government funding and programming that would be necessary to maintain recent health gains, let alone fill the significant remaining gaps”.

Some suggestions for a smoother transition

This push-pull between the efforts to ‘leave no one behind’ and for governments to sustainably self-finance health systems is a complex and developing concern. Devex recently published an article on steps to a responsible transition. Among these are:

  1. Mutual transitions: Advancing country ownership through agreements between the donor and recipient country could allow for aligned priorities, leading to a more engaged society and additional private sector investments to ensure sustainability.
  2. Determining readiness through development progress: Evaluating a variety of factors to determine transition readiness rather than solely GNI, can help countries prior to transition ensure that health programs are able to reach people in the long run.
  3. Prioritize transparency and accountability: Making data and results public allows for strong feedback loops for other countries to learn from and encourages improvements to planning.


Transitional funding is a complex and layered process. While the end goal is for governments to finance sustainable, self-sufficient health systems, health outcomes may regress if donors pull all funding – even if they do so gradually. This should not diminish the importance of transitional funding, but rather encourage donors to evaluate their methods of determining eligibility and better coordinate across their mutual portfolios.

To learn more about countries in transition see:

  • Journal of Global Health. “Transitioning financial responsibility for health programs from external donors to developing countries”
  • Modernizing Foreign Assistance Network. “Principles for Strategic Transitions”
  • Center for Global Development. “The Bad News Is Good News? The Problems of Graduating from Foreign Health Aid”
  • “Progress in Peril?”
Alyssa GovindanInsights: Transitional Funding: A Set Up for Failure or Success?