[et_pb_section fb_built=”1″ admin_label=”!! PLEASE DO NOT EDIT !!!” _builder_version=”4.19.5″ _module_preset=”default” global_colors_info=”{}”][et_pb_row use_custom_gutter=”on” gutter_width=”1″ admin_label=”!!! PLEASE DO NOT EDIT !!!” _builder_version=”4.20.4″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.19.5″ _module_preset=”default” global_colors_info=”{}”][et_pb_text admin_label=”SUMMARY – Click on the WHEEL” _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”10px||20px||false|false” global_colors_info=”{}”]<\/p>\n
As development aid contracts sharply, a practical UHC-focused guide to designing blended finance fund for health-system investment: five steps to structure the capital stack, sequence the raise, match instruments to assets, and govern for independence.<\/b><\/p>\n
[\/et_pb_text][et_pb_text admin_label=”TEXT – BLOCK 1″ _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n
Aid is contracting fast, with Development Assistance Committee (DAC) funding down more than 23% in 2025<\/a>\u00a0and\u00a0health potentially down 40%-plus<\/a>\u00a0with Africa and health suffering the most.\u00a0Yet\u00a0the African continent is not capital-poor<\/a>:\u00a0it holds roughly $4.4 trillion in domestic capital, over $2 trillion of it institutional. What can turn (some of this) capital into investment for health? On which focus areas and with what type of guardrails?<\/p>\n [\/et_pb_text][et_pb_image src=”https:\/\/p4h.world\/app\/uploads\/2026\/07\/p4h_blog_health-investment-areas_2026.png” title_text=”p4h_blog_health-investment-areas_2026″ _builder_version=”4.21.0″ _module_preset=”default” custom_margin=”10px||10px||false|false” global_colors_info=”{}”][\/et_pb_image][et_pb_text admin_label=”Image CAPTION” _builder_version=”4.21.0″ _module_preset=”default” text_font_size=”13px” custom_margin=”||35px||false|false” custom_padding=”||||false|false” global_colors_info=”{}”]<\/p>\n Figure 1: Horses for courses: Different types of development finance for different contexts (reproduced from Multilateral Development Finance, OECD, 2026<\/a>).<\/em><\/p>\n [\/et_pb_text][et_pb_text admin_label=”TEXT – as partners… ” _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n As partners are scoping out so-called innovative financing instruments to fill the financing gap left by retreating donors and fiscally challenged governments, different modalities are being discussed (see Fig 1 for a Multilateral Development Bank (MDB) financing typology by type and purpose<\/em>), from debt to health swaps<\/a>, systematically explored under Brazil\u2019s G20 Presidency, to, more recently, ways of leveraging development banks\u2019 balance sheets to finance critical health system functions such as procuring essential commodities, as in the case of African Development Bank (AfDB)\u2019s Africa Medicines and Equipment Facility<\/a>, and the Africa Health Sovereignty Fund<\/a>, discussed during the recent World Health Summit (WHS) in Nairobi with United Nations Capital Development Fund (UNCDF) and Africa Centres for Disease Control and Prevention (CDC) amongst other partners.<\/p>\n [\/et_pb_text][et_pb_text admin_label=”TEXT – in an attempt 3″ _builder_version=”4.21.0″ _module_preset=”default” custom_margin=”||20px||false|false” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n In an attempt to more systematically explore the best (and worst) practices (from a Universal Health Coverage (UHC) perspective) in designing innovative financing tools, in this post we tackle issues specific to designing a blended fund <\/strong>(typical for public private financing) for health systems investment<\/strong>, along five key steps (see Fig 2)<\/em>.<\/p>\n [\/et_pb_text][et_pb_image src=”https:\/\/p4h.world\/app\/uploads\/2026\/07\/p4h_blended-finance-schematic_post_2026.png” title_text=”p4h_blended-finance-schematic_post_2026″ _builder_version=”4.21.0″ _module_preset=”default” custom_margin=”||20px||false|false” global_colors_info=”{}”][\/et_pb_image][et_pb_text admin_label=”Image CAPTION” _builder_version=”4.21.0″ _module_preset=”default” text_font_size=”13px” custom_margin=”||35px||false|false” custom_padding=”||||false|false” global_colors_info=”{}”]<\/p>\n Figure 2: Designing the capital stack for a health system infrastructure investment in 5 steps: right sequencing, right stacking, right instruments (used Claude, Opus 4.8 based on authors\u2019 own text).<\/em><\/p>\n [\/et_pb_text][ba_gradient_heading title=”Step 1: Define the structure (\u201ccapital stack\u201d) and the type of instruments (equity, senior secured debt or senior debt etc) that the financing raised by the fund will be deployed in, based on potential sources and intended uses of funds” html_tag=”h3″ primary_color=”#455A64″ secondary_color=”#455A64″ admin_label=”HEADING (50-60 characters) Define the structure” _builder_version=”4.21.0″ _module_preset=”default” title_font=”||||||||” title_font_size=”24px” title_line_height=”1em” custom_padding=”||10px||false|false” global_colors_info=”{}”][\/ba_gradient_heading][et_pb_text admin_label=”TEXT – BLOCK 4 ” _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n Do<\/strong> set your guardrails first, ideally by studying why earlier attempts failed. The financial structure should follow lessons from past failed attempts, not precede them (or repeat them) and be based on solid market intelligence.<\/p>\n [\/et_pb_text][et_pb_text admin_label=”TEXT – BLOCK 5″ _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n Do<\/strong> keep the terminology coherent. Since one of the primary audiences is the private sector banks and investors who typically invest in structured products with multiple risk tranches of this nature, make sure the terminology is consistent with what they would routinely see.<\/p>\n [\/et_pb_text][et_pb_text admin_label=”TEXT – BLOCK 6″ _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n Don’t<\/strong> overstretch. A modest fund with investments intended to be spread across major health system priority areas such as manufacturing, logistics, digital health, infrastructure, finance and more ends up with tickets too small to matter. Pick the few sub-streams where you can move the needle and where private capital may make sense: for a sovereign fund this is probably typically local manufacturing and the supply chains infrastructure.<\/p>\n [\/et_pb_text][et_pb_text admin_label=”TEXT – heading – Raise money” _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n [\/et_pb_text][et_pb_text admin_label=”TEXT – BLOCK 7″ _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n Do<\/strong> match financing source to the right function. Donors and foundations belong in first-loss and equity, without earmarks or conditionalities; development banks<\/a> are the natural home for mezzanine tranches; private senior capital is raisable with the right coupon but only on terms it recognises (concentration limits, eligibility guardrails, clean reporting) with the understanding that expectations of open-ended flexibility on potential investments by the fund may drive lenders away.<\/p>\n [\/et_pb_text][et_pb_text admin_label=”TEXT – BLOCK 8″ _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n Don’t<\/strong> assume more partners is better. Every extra equity or mezzanine provider condition their money with their own internal policies, compounding the cost.<\/p>\n [\/et_pb_text][et_pb_text admin_label=”TEXT – BLOCK 9 Don’t try” _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n Don\u2019t<\/strong> try to close all tranches at the same time. Depending on the sources of private financing, the degree of de-risking built into the structure and the private lenders risk appetite, consider raising the private capital in stages. For example, start with low leverage i.e, raise a modest amount of private capital, and invest that money along with the mezzanine and equity tranches in typical investments by the fund. Look to increase leverage (raise more private capital, filling up the remaining senior tranche) once the fund has built a track record and has an asset base that private lenders can examine and evaluate. Once these structures gain market acceptance, it will be possible to start more aggressively upfront.<\/p>\n [\/et_pb_text][ba_gradient_heading title=”Step 3: Fit instrument to asset” html_tag=”h3″ primary_color=”#455A64″ secondary_color=”#455A64″ admin_label=”HEADING (50-60 characters) Fit instrument to asset” _builder_version=”4.21.0″ _module_preset=”default” title_font=”||||||||” title_font_size=”24px” title_line_height=”1em” custom_padding=”||10px||false|false” global_colors_info=”{}”][\/ba_gradient_heading][et_pb_text admin_label=”TEXT – BLOCK 10″ _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n Do<\/strong> match finance to purpose \u2014 long-term, return-seeking capital suits assets that generate system-wide value over time, not fragmented needs<\/a>. Lending senior short-term debt into a pre-revenue plant is a cash-flow mismatch which will undermine the success chances of the deal.<\/p>\n [\/et_pb_text][et_pb_text admin_label=”TEXT – BLOCK 11 – Do solve” _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||1em||false|false” global_colors_info=”{}”]Do<\/strong> solve the demand side first. Manufacturing only becomes bankable behind predictable, pooled procurement. This is the gap the AfDB\u2013Gates Africa Medicines and Equipment Facility<\/a> targets, with affordability incentives tied to procurement performance. Plug into procurement reform where possible (same applies to regulatory reform and a functional African Medicines Agency (AMA)), coupled with short term trade financing to support pooled procurement at a regional level.[\/et_pb_text][ba_gradient_heading title=”Step 4: Govern for independence” html_tag=”h3″ primary_color=”#455A64″ secondary_color=”#455A64″ admin_label=”HEADING (50-60 characters) Step 4: Govern for independence” _builder_version=”4.21.0″ _module_preset=”default” title_font=”||||||||” title_font_size=”24px” title_line_height=”1em” custom_padding=”||10px||false|false” global_colors_info=”{}”][\/ba_gradient_heading][et_pb_text admin_label=”TEXT – BLOCK 12″ _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n Do<\/strong> confront the capture question: how do you stop a politically anchored fund from being steered by individual state or other institutional interests? A convener that is itself politically aligned rarely makes a credible referee.<\/p>\n [\/et_pb_text][et_pb_text admin_label=”TEXT – BLOCK 13″ _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n Don’t<\/strong> paper over the mandate-versus-fiduciary tension. A political target and a manager’s duty to investors can pull opposite ways. Decide in advance which yields and write it down.<\/p>\n [\/et_pb_text][ba_gradient_heading title=”Step 5. Manage risk proactively and plug into global health architecture” html_tag=”h3″ primary_color=”#455A64″ secondary_color=”#455A64″ admin_label=”HEADING (50-60 characters) Step 5. Manage risk proactively and plug into global health architecture” _builder_version=”4.21.0″ _module_preset=”default” title_font=”||||||||” title_font_size=”24px” title_line_height=”1em” custom_padding=”||10px||false|false” global_colors_info=”{}”][\/ba_gradient_heading][et_pb_text admin_label=”TEXT – BLOCK 14″ _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n Do<\/strong> source the right fund manager. Underwriting credit risk for start-up manufacturing in developing country settings is genuinely hard. Consider borrowing a development bank’s underwriting capacity, or standing up a small, dedicated team, inside a willing bilateral.<\/p>\n [\/et_pb_text][et_pb_text admin_label=”TEXT – BLOCK 15″ _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n Don’t<\/strong> treat de-risking<\/a> as an afterthought. Partial guarantees, first-loss facilities and transparent governance are prerequisites and make all the difference between a fund that closes and a concept note that circulates for years.<\/p>\n [\/et_pb_text][ba_gradient_heading title=”An important caveat” html_tag=”h3″ primary_color=”#455A64″ secondary_color=”#455A64″ admin_label=”HEADING (50-60 characters) An important caveat” _builder_version=”4.21.0″ _module_preset=”default” title_font=”||||||||” title_font_size=”24px” title_line_height=”1em” custom_padding=”||10px||false|false” global_colors_info=”{}”][\/ba_gradient_heading][et_pb_text admin_label=”TEXT – BLOCK 15″ _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n Whilst the ability to crowd in private financing using concessional funds is of critical importance, especially at times of declining consessionality rates<\/a>, there are caveats<\/a> given to the track record of blended financing when it comes to its scale, targeting and additionality. Such concerns have triggered calls for enhanced transparency<\/a> and closer alignment of blended financing with the principles and values of equitable UHC, precisely because such modalities use public monies (whether via Multilateral Development Banks (MDBs) or Development Finance Institutions (DFIs)) to subsidise private investment<\/a> (also known as \u201cderisking\u201d).<\/p>\n [\/et_pb_text][et_pb_text admin_label=”TEXT – BLOCK 16 – Quote” _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”||10px||false|false” global_colors_info=”{}”]<\/p>\n In fact, no country has made any serious progress towards UHC with private financing alone: private (as well as donor) monies can only complement and catalyse (at best; at worst they can distract, fragment, de-equalise and crowd out) domestic public funding for health.<\/p>\n<\/blockquote>\n [\/et_pb_text][et_pb_text admin_label=”TEXT – BLOCK 17″ _builder_version=”4.21.0″ _module_preset=”default” custom_margin=”||30px||false|false” custom_padding=”||1em||false|false” global_colors_info=”{}”]<\/p>\n As the financing for health ecosystem is changing fast, World Health Organization (WHO), under our renewed mandate[2]<\/a><\/sup> in this space, will, working with our partners, intensify our efforts to offer countries health financing intelligence, practical tools and guidance and norms on all types of financing for UHC, because the quality of funding oftentimes is as, if not more, important that its quantity and \u201cfilling financing gaps\u201d can do more harm than good.<\/p>\n [\/et_pb_text][et_pb_text admin_label=”TEXT – BLOCK 10 – Glossary” _builder_version=”4.21.0″ _module_preset=”default” text_font_size=”15px” custom_margin=”||40px||false|false” custom_padding=”20px|25px|20px|25px|false|false” custom_css_main_element=”background:#DCE5EA;” global_colors_info=”{}”]Check our Glossary<\/a> for definitions of the technical terms, abbreviations and acronyms mentioned in this blog post.<\/strong>[\/et_pb_text][et_pb_text admin_label=”TEXT – BLOCK 9 – Footnotes” _builder_version=”4.21.0″ _module_preset=”default” text_font_size=”13px” custom_margin=”20px||||false|false” custom_padding=”||||false|false” global_colors_info=”{}”]<\/p>\n [1]<\/span> Sequencing the raise: <\/strong>Under the proposal, while the entire senior tranche may not come in upfront, all parties to the transaction will agree on the expected total size of the senior tranche\/fund. Establishing a track does not require all the funds to be invested and will take say\u00a0 6 months on a 5 year structure. This period could be reduced further by underwriting the credits before the fund is launched thereby protecting the leveraged returns for the mezzanine and equity tranches. Also, once in a deal like this is agreed, it will be highly unusual for senior lenders\u00a0 not to take up the remaining tranche albeit with some adjustments to the underwriting standards.<\/span><\/p>\n [2]<\/span> See the Economics of Health for All Resolution<\/a> (2024) and Strategy<\/a> (2026) and the Strengthening Health Financing Globally Resolution<\/a> (2025).<\/span><\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":" As development aid contracts sharply, a practical UHC-focused guide to designing blended finance fund for health-system investment: five steps to structure the capital stack, sequence the raise, match instruments to assets, and govern for independence.Aid is contracting fast, with Development Assistance Committee (DAC) funding down more than 23% in 2025\u00a0and\u00a0health potentially down 40%-plus\u00a0with Africa and…<\/p>\n","protected":false},"author":641,"featured_media":987794296,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":""},"categories":[172],"tags":[3048,3024,130,133],"acf":[],"_links":{"self":[{"href":"https:\/\/p4h.world\/en\/wp-json\/wp\/v2\/posts\/987794215"}],"collection":[{"href":"https:\/\/p4h.world\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/p4h.world\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/p4h.world\/en\/wp-json\/wp\/v2\/users\/641"}],"replies":[{"embeddable":true,"href":"https:\/\/p4h.world\/en\/wp-json\/wp\/v2\/comments?post=987794215"}],"version-history":[{"count":43,"href":"https:\/\/p4h.world\/en\/wp-json\/wp\/v2\/posts\/987794215\/revisions"}],"predecessor-version":[{"id":987794327,"href":"https:\/\/p4h.world\/en\/wp-json\/wp\/v2\/posts\/987794215\/revisions\/987794327"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/p4h.world\/en\/wp-json\/wp\/v2\/media\/987794296"}],"wp:attachment":[{"href":"https:\/\/p4h.world\/en\/wp-json\/wp\/v2\/media?parent=987794215"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/p4h.world\/en\/wp-json\/wp\/v2\/categories?post=987794215"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/p4h.world\/en\/wp-json\/wp\/v2\/tags?post=987794215"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Step 2: Raise money in sequence [1]<\/a><\/sup> and mind conditionalities<\/h3>\n
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