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UNICEF SDVII OverviewAugust 2015

Vaccine Independence Initiative

2

procurement

initiates

advance payment received

CE acceptanc

e

CE issuance

Request for CE

Funds arrive

Procurement

initiates

CE acceptance + waiver of

advance payment + cash

guarantee

CE issuance

Request for CE

Pre-Financing in UNICEF Procurement Services

VII provides a streamlined mechanism for these steps

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What is VII?

• Vaccine Independence Initiative launched by UNICEF in 1991.

• A financial mechanism to ensure a systematic, sustainable vaccine supply for countries which can afford to finance their own vaccine needs but may require certain support services.

• Flexible credit terms which enable the country to pay after the vaccine is received

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What is VII? (2)

• A Guarantee Fund acts as the financial buffer between the procurement of vaccine by SD and the payment by the Government.

• The country’s ceiling allocation sets the maximum amount which may be owed to UNICEF at any point in time.

• Transactions are performed through ‘Procurement Services’ channel

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VII Uses

Countries historically have used VII for:• Traditional vaccines • Newly introduced and underutilized vaccines• Syringes, needles and cold chain equipment

But – we just received approval from UNICEF Executive Board to expand scope and size of support…

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VII Transaction Steps

Country Office / MoH submit quarterly requests detailing commodity need and requesting utilization of ceiling

SD confirms that sufficient ceiling exists to cover requirement

SD provides Cost Estimate (CE) and confirms to CO availability of ceiling

Upon acceptance of CE by Gov’t, Gov’t specifically indicates request to draw from VII ceiling. SD places Purchase Order with Supplier. Commodities are delivered

Following delivery, ~30 days afterwards UNICEF provides Statement of Accounts. Payment required 30 days later (i.e., 60 days total after delivery)

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Establishing VII Agreements

MoH, via CO, submits VII Plan to UNICEF SD/Comptroller

UNICEF Comptroller and SD review application and approve/decline

SD (PSC) provide CO with VII and LoG templates and assists with negotiations; CO leads negotiations with Gov’t

CO and Gov’t sign VII MoU; MoF issues LoG

SD registers MoU and LoG; VII Ceiling is active

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VII Plan – Key Components to Include

Background and Justification• Connects how joining VII program will lead to greater self-sufficiency• Identifies key issues to be solved, including those that will be solved by VII and those that require other intervention

Objectives • Describes MoH/MoF short-term and long-term objectives

Plan of Action & Intersectoral Cooperation

• Describes how various Ministerial entities will be involved in planning and decision making surrounding VII• Should communicate how sufficient budget allocations and timely budgetary disbursements will be ensured• Denotes pathway for “graduation”

Forecast • Forecast of commodities to be covered by VII should be estimated for a 2-year period• Annual needs should be broken into quarterly estimates and ideally on monthly basis for next calendar year

Budget and Budgeting Process

• Describes total budget plus all associated expenses• Describes budgeting processes, what is required and how Gov’t will look to streamline

Proposed Schedule • Combines budget release process and request for placement of purchase orders

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VII Ceiling

• UNICEF Comptroller, Supply Division establish a ceiling based upon the annual forecasted purchases and current capacity of underlying capital fund

• SD monitors the VII ceiling limits and outstanding balances by subscribing countries

• CO must also track fund activity

• UNICEF Comptroller and SD can review and adjust, as appropriate

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Default Process

CO demonstrates reasonable steps to recover funds

No payment CO makes recommendation for collection of funds specifying either:• r

epayment plan worked out with and signed by Government; or

• recommendation of default.

SD makes recommendation to Comptroller to debit (or not)

If default, Guarantee Fund to cover the default. Comptroller/Finance instructs reduction of the Guarantee Fund.

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Default Consequences

In a case of default on agreed-upon terms,

• Country would jeopardize its participation in VII.

• Supply through VII may stop until payment is made.

• DFAM will debit the default amount from Guarantee Fund and the Country ceiling will be immediately blocked, if not already the case.

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VII MoU (Key Components)

• Preamble

• Scope of the Agreement• General description, including aim for self-sufficiency in vaccine

financing

• Forecast, Cost Estimate and Payment Terms• Details on Ordering• Defines Ceiling• Identifies payment terms: Presentation of Statement of Accounts (+30

days)

• Other: Terms of Delivery, Dispute Settlement, Expiration, Insurance

• Annexes: • VII Plan, UNICEF GT&C, Technical Requirements, Consignee List, Bank

Details, Letter of Guarantee

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VII Letter of Guarantee

• 2 paragraph statement with following components:

• There are sufficient funds which have been budgeted and will be made available for that year’s forecasted vaccine purchases

• Promise-to-pay any amount owed under the ceiling

• Must be signed by Ministry of Finance

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February 2015 UNICEF Executive Board

• Approved a 5-year extension, 2016-2020

• Amended original VII approval to:• Allow the capital base (revolving fund) to increase from $10M to $100M,

subject to availability of specific-purpose contributions• Expand applicability to other supplies (while still prioritising immunisation) • Expand applicability to support special contracting arrangements to reduce

prices or secure supply

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Why expand and extend VII?

The financing needs for Immunisation has increased & will continue to do so:• Current annual pre-financing requests > $60m • Growing number of countries requesting to access VII • The number of vaccines used by countries has expanded and new vaccines are more

expensive • 22 countries taking over full new vaccine costs from GAVI in the next 5 years

Financing needs for other essential supplies is increasing• ~$40m of requests are for other essential supplies-- LLINs (bednets), RUTF, medicines, WASH

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Why expand and extend VII?

Total annual pre-financing needs expected to reach $225 million+ by 2020 across all essential commoditiesBuild on a mechanism that is having positive impact

Assume $30m Nigeria - specific revolver in place0

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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Pre-

Fina

ncin

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s in

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Anticipated Pre-Financing Requests to UNICEF - Increasing Self-Funding of Commodities

Baseline Current Annual Requests Anticipated Increases