Analyzing the Small Islands Developing States Pooled Procurement Program: Assessing Financial Viability and Resource Mobilization
The WHO AFRO SIDS Pooled Procurement Program is anchored by strong political, and organizational will with its genesis signalled by the Seychelles Declaration of September 2017. At that Declaration, the Ministers of Health of five Small Island Developing States (SIDS) in the WHO Africa Region committed to the implementation of a pooled procurement program for medicines. On 29 September 2020, Ministers of Health of the following seven small island African states signed a formal agreement to jointly procure medicines and agreed to take advantage of economies of scale and collective bargaining: Cabo Verde, Comoros, Guinea-Bissau, Madagascar, Mauritius, Sao Tome & Principe, and Seychelles.
Despite the existence of the legal framework and political will, several operational questions remain unanswered. Such questions relate to affordability, financial projections, cash flow requirements, costs of operation and sustainability of income through surcharges, financial and economic benefits to member states. hera was contracted to help answer some of these questions.
The overarching aim of the analysis work was to estimate the break-even point for the SIDS procurement model adopted, with the objective of knowing the following:
Assess income versus expenses in the form of break-even analysis of the SIDS Pooled Procurement (PP) model (using various surcharge scenarios - 3-6% range).
Conduct a savings analysis with scenarios of price reductions (10-25% price reduction) anticipated.
Using the analytic work above, contribute to the business plan finalisation as a tool for resource mobilisation.
hera adopted an inductive and predictive approach, providing opportunities for co-creation through document review, Key Informant Interviews (KIIs) and virtual meetings with WHO and different sets of stakeholders. A three-phase approach was adopted and consisted of an inception phase, Predictive model development and data collection and lastly analysis and reporting phase.
hera estimated the costs of SIDS secretariat, and potential sources of income and conducted a financial analysis in the form of income and expenditure comparisons and cash flow projections. In addition, 5-year projections on savings were also estimated by assuming a reduction in prices through price harmonisation and economies of scale. Lastly, hera analysed the critical factors for SIDS pooled procurement mechanisms and share some expert opinions from experience across the globe.