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Africa: Financing Global Health
Sep 28, 2009 (090928)
(Reposted from sources cited below)
The G20 Summit meeting in Pittsburgh last week marked a significant
expansion of international fora on global problems, with the
official announcement that it was replacing the more restricted G8
as the primary venue for coordination of the world's major economic
powers. The Summit's conclusions, focused on macroeconomic and
financial issues, offered little for Africa, apart from generic
expressions of support for development and protecting the most
vulnerable. But the changing policy climate was also reflected in
the parallel release of incremental proposals for new financing
mechanisms for global needs that would be more consistent than
promises of "aid" from rich countries.
This AfricaFocus Bulletin contains excerpts from newly released
documents on two such ventures, both designed to provide additional
finances for global health. These are the Currency Transaction Levy
proposed by non-governmental organizations and beginning to win
significant support from European governments, and an initiative
from the international travel industry designed to facilitate small
voluntary contributions whenever someone makes an international
Another AfricaFocus Bulletin released today, available on the web
at http://www.africafocus.org/docs09/g20_0909.php, provides basic
background information on the G20 as well as the full text of the
Leaders' Statement from the Pittsburgh Summit.
More information on the proposed currency transaction levy is
available at http://www.stampoutpoverty.org and
For previous AfricaFocus Bulletins see,
on economic issues: http://www.africafocus.org/econexp.php
on aid, poverty, and public investment:
on health: http://www.africafocus.org/healthexp.php
New web-only AfricaFocus Bulletin
Shortly after sending out last week's AfricaFocus Bulletin on the
Global Fund for Education, I received an e-mail from a reader
alerting me to reports from the recent 6th Pan African Reading for
All Conference, held in Dar es Salaam in August. The conference
attracted over 500 delegates from 34 countries, and featured two
keynote addresses by Kenyan author and activist Ngugi wa Thiong'o,
in addition to sharing of research and experience in more than 200
sessions. You can find one of the speeches and the conference
recommendations in a web-only AfricaFocus Bulletin released on
September 22 (http://www.africafocus.org/docs09/rfa0909.php).
Just added. Link to thoughtful, well-documented critical article on
the Gates Foundation and its Alliance for a Green Revolution in
Africa (AGRA), in a recent issue of The Nation. Visit
++++++++++++++++++++++end editor's note+++++++++++++++++++++++
¥€$ to H£ALTH The Currency Transaction Levy
Funding the Health Millennium Development Goals
International HIV/AIDS Alliance and Stamp Out Poverty
[Excerpts: for full text of briefing, in pdf, including footnotes,
[For more information, please contact: email@example.com
http://www.aidsalliance.org / http://www.stampoutpoverty.org]
In this briefing, the International HIV/AIDS Alliance and Stamp Out
Poverty make the case for the introduction of a Currency
Transaction Levy (CTL), a proposal to harness some of the vast
wealth of the foreign exchange market through a very small levy on
currency transactions. Such a move would provide urgent,
additional funding which would revitalize the Health Millennium
Development Goals, reducing child mortality, improving maternal
health and combating AIDS, TB and malaria, at a time when they are
perilously off-track and in desperate need of further resources
given the global financial crisis.
3. The global financial crisis a threat to achieving the health
Millennium Development Goals
We are facing the worst economic crisis for decades. Even the most
prosperous nations are struggling to cope with an economic downturn
that is predicted to become significantly deeper and last longer
than previous downturns.
Responsibility for the global financial crisis rests with the
financial sector in the richest countries. However, it is the
poorest and most vulnerable in the least-developed countries who
are experiencing the impact most dramatically. The health MDGs are
already perilously off track. ... A child born in a developing
country is over 13 times more likely to die within their first five
years than a child born in an industrial country. Gender also
continues to fuel inequalities within health. For example, in
sub-Saharan Africa almost 75% of HIV infections in 15 24 year-olds
are among young women. The global financial crisis threatens to
undermine the health MDGs still further, by reducing much needed
4. Global health resource needs
There have been many cries of alarm and even outrage over
inadequate global resources for health. Many caveats exist about
the potential overlap in funding estimates and about inaccuracies
in both resource needs calculations and in projections of future
domestic and donor spending. Despite this ambiguity, it is clear
that a significant financing gap exists to meet the health MDGs.
According to the World Health Organization (WHO), an additional
US$251 billion is needed between 2009 and 2015 to strengthen health
systems in 49 low-income countries. By doing so, 23 million deaths
would be averted between 2009 and 2015, including up to four
million child deaths per year. ...
Donor and recipient countries must meet their existing financial
commitments. However, this would still leave a US$100 billion
funding gap in the US$251 billion target identified by the WHO ...
innovative financing mechanisms are urgently required to raise
critically needed resources for health. One of the most prominent
ideas in this field is the Currency Transaction Levy (CTL), a
proposal to harness some of the vast wealth of the foreign exchange
market through a very small levy on currency transactions.
5. The foreign exchange market
The foreign exchange (FX) market is the largest in the world by
volume. According to official 2007 figures, US$3.2 trillion of FX
transactions occur every day. Over 2007 this equated to US$800
trillion. Unlike most other areas of the financial market, the FX
market has continued to grow, even during the economic downturn.
For example, in 2009 approximately US$4 trillion of FX transactions
occur every day. This will equate to US$1,000 trillion over the
course of the year more than 50 times greater than the total
value of all goods and services traded throughout the world each
year. The FX market is therefore a very robust income base.
6. The Currency Transaction Levy
The proposed CTL would subject all wholesale or interbank FX
transactions of a particular currency globally to a levy of 0.005%.
Countries can apply unilaterally a levy on transactions of their
own. The tax can be captured wherever the trade takes place in the
world. It does not require a global or regional consensus.
Crucially, this levy would only apply to all transactions of
particular currencies, not the transactions of all currencies in
one particular country. Also this levy would not apply to the
retail market used by people to change money when they go abroad,
to buy goods or to invest. As a result, the levy would not affect
the retail economy directly. In particular, the levy would have no
impact on existing trading in goods and services; it would not
increase the costs of buying goods and services; it would not
change the risks of trading in particular currency-denominated
assets; and it would have no effect on the functions performed by
a currency (for example, as a medium of exchange, store of value or
unit of account). The levy would not affect migrant remittances.
7. Financial transaction levies are commonplace
The FX market is an anomaly in that it remains untaxed. Levies on
other types of financial transactions, such as taxes on share and
bond trading or bank debits, have a long history. Most have
operated successfully for many years and have raised substantial
amounts of revenue with no apparent negative impact on the market.
For example, in the UK a 0.5% stamp duty on share transactions
generated approximately œ4 billion in one financial year and had
little impact on the London Stock Exchange. As identified by the
All Party Parliamentary Group for Debt, Aid & Trade, all of the G10
countries except Canada have levied financial transaction taxes
(FTTs) at some time. Of these, the United States, UK, France,
Belgium and Switzerland have existing FTT regimes. The other G10
members have recently dismantled their FTTs, including Japan in
1999, Italy in 1998, Sweden and Germany in 1991 and the Netherlands
in 1990. This movement towards the removal or reduction of FTTs has
been counterbalanced by recently imposed FTT regimes in India
(2004), Peru (2003), Argentina and Colombia (2000), Ecuador (1999),
Greece (1998), Finland (1997) and Brazil (1997). In fact, Greece
doubled its FTT on share trading in 1999.
The last two decades have seen significant changes in the way FX
transactions are settled nationally, using Real Time Gross
Settlement systems (RTGS), and internationally, using the
Continuous Linked Settlement (CLS) Bank. The FX market is now fully
electronic and operates through an interconnected and
interdependent global network of central banks and national payment
systems that cooperate in the oversight of cross-border payment
systems, such as the CLS Bank.
A CTL would therefore be feasible, efficient and inexpensive to
implement. Indeed, according to Professor Rodney Schmidt, 'the
technology and institutions now in place to support [the FX market]
make it possible to identify and tax gross foreign exchange
payments, whichever financial instrument is used to define the
trade, wherever the parties to the trade are located, and wherever
the ensuing payments are made.' Furthermore, the global
standardisation of financial transactions messaging using SWIFT
(Society for Worldwide Interbank Financial Telecommunications)
would make the payment and collection of the levy automatic, no
matter where the transaction occurred; be it on Wall Street or in
the Cayman Islands. As a result, the levy would not impact
negatively on one or more financial centres or cause more trading
to be conducted offshore.
There is also little scope for avoidance. Since the attacks on the
World Trade Centre on 11 September 2001, financial controls to
combat money laundering and the financing of terrorism have
tightened considerably. Evasion in this climate is very difficult,
especially as all electronic transactions leave an electronic
trail. Indeed, experts have commented that if a CTL were introduced
at as low a rate as 0.005%, avoidance would be more costly than
City firm pilots currency transaction levy
In May 2007, INTL Global Currencies, a City of London firm
specialising in foreign exchange with developing countries, ran a
week-long trial of a CTL. In the process, it raised œ4,000 for the
charity, Widows and Orphans International. In his evidence to the
All Party Parliamentary Group for Debt, Aid and Trade Inquiry,
Philip Smith of INTL Global Currencies explained: 'It's not a huge
amount but we felt it was illustrative of a week's turnover for us
across all our countries. And we're not an enormous entity which
would have raised a lot more.' He said it took a 'press of a
button' to add the levy into its system. He said INTL had informed
its clients about what was happening and said the feedback was very
positive. Nobody had commented on any problems and he added that
rolling the levy out on a larger basis would be very simple: ...
Ethical Currency launches a CTL
In August 2009, Ethical Currency became the first FX broker in the
world to voluntarily levy 0.005% on all of its transactions.
Ethical Currency's founder, Alastair Constance, recognised that 'as
funding for international development becomes more scarce, we need
to be creative about finding new and sustainable sources of
income'. The money raised will be donated to the Global Fund to
Fight AIDS, Tuberculosis and Malaria.
Alastair Constance believes a similar levy would be easy for
traders to replicate as FX transactions are all electronic and
that, over time, the tax would be barely noticed.
9. Market distortion
A CTL rate of 0.005% (half of one-hundredth of 1%) is too small to
alter decision-making in the market and yet high enough to yield a
substantial revenue stream (see below).
Indeed, Professor Joseph Stiglitz, who heads the UN President's
taskforce on the financial crisis, has said: 'I cannot believe a
sterling stamp duty at the rate of 0.005% would result in the
diversion of financial transactions from the UK to other
Similarly, in work for the UN University in 2007, Professor Rodney
Schmidt undertook the most detailed econometric modelling to date,
confirming that at a rate of 0.005% the levy is too low to affect
decisions to trade.
Large international banks dominate the global FX market. In the
first instance, the economic footprint of the CTL would therefore
fall upon the large financial institutions that are members of the
CLS Bank and the RTGS.
A CTL on a specific currency would also be dispersed widely
throughout the global financial system. Given that banks will, as
far as possible, pass on any costs to their wide range of clients,
a CTL would not impact one institution or financial centre more
than another. Importantly, a CTL rate of 0.005% would also have
minimal impact upon any bank's clients. ...
UNITAID, which is financed principally through aviation levies and
has helped drive down drug prices and develop new treatments for
HIV, TB and malaria, exemplifies the use of nationally collected
tax revenue, pooled internationally and spent on a global public
good. Importantly, it has not required universal participation to
work. Countries that wish to participate work together to harness
the income stream. A CTL would operate according to the same
The Currency Transaction Levy is not the Tobin tax but a solidarity
It is important to clarify that the CTL is not the same as the
Tobin tax. It differs fundamentally from the Tobin tax in that it
is born of a different time, proposed at a different rate and
designed for a different purpose.
James Tobin's original idea in the 1970s sought to alter motivation
in the foreign exchange market, to impede daily currency trading
and to discourage speculative activity. It proposed a rate of 1%
200 times the 0.005% rate set out here and the income was not
designated for a specific purpose, such as development. The Tobin
tax actively sought to alter the structure of the market. The CTL
is entirely different. Its raison d'ˆtre is as a financing
instrument for development. Its rate is designed specifically not
to hamper normal market operations but to take a relatively small
amount from the volume traded. ...
12. Projected revenue
Based on 2007 Bank of International Settlement figures, a CTL rate
of 0.005% levied only on the US dollar would yield an annual
revenue of US$28.38 billion. In comparison, it would yield US$12.29
billion annually if levied solely on the euro, US$5.59 billion
annually if levied solely on the yen and US$4.98 billion annually
if levied solely on the pound.
A CTL rate of 0.005% levied on all major currencies would yield an
annual revenue of US$33.41 billion just US$5.03 billion more than
a levy on the US dollar alone. This is because most foreign
exchange transactions occur among the major currencies and most
involve the US dollar. In comparison, a CTL rate of 0.005% on all
the major currencies except the US dollar would annually yield a
revenue of US$21.24 billion. A coordinated CTL on just the euro and
pound together would annually yield US$16.52 billion.
13. Window of opportunity
The global financial crisis, and the role the financial sector has
played in this, has led to a demand to re-examine the rules,
regulations, boundaries and 'social usefulness' of the financial
sector. In the past year governments have had to step in to bail
out major banks in Europe and the United States. The effective
nationalisation of major banks needed to keep the financial
industry afloat means that governments have greater ability to
introduce regulation to curb risk. Increased demand for a more
equitable global financial system has led to calls for the
implementation of the CTL. The Chair of the UK's Financial Services
Authority, Lord Turner, has called for discussions on the CTL. G20
leaders, led by French President Nicolas Sarkozy and German
Chancellor Angela Merkel, have expressed an interest in taking
forward the implementation of a FTT and a CTL.
While implementing greater financial oversight and restrictions on
the kinds of products that have caused the financial crisis, it is
possible to review the one area of the financial industry that
historically has remained exempt from taxation: foreign exchange
transactions. As an additional source of revenue, a CTL would go a
long way towards filling the funding gap faced by the Health MDGs
and enabling developing countries to achieve these targets and, in
turn, provide effective healthcare to those who need it most.
Global Travel & Tourism industry unite to do "MassiveGood"
Innovative travel-related fundraising initiative will help finance
health care for the world's poor
[Excerpts: for full text and additional quotes see
For more information contact:
Amadeus Corporate Communication, tel: +34 91 582 0160
e-mail : firstname.lastname@example.org
Jienna Foster, Millennium Foundation, Mobile +41 (78) 933 18 84
Laura Russo / Claire Behar, Fleishman-Hillard
Phone: 212-453-2048 / 212-453-2122;
E-mail: email@example.com / firstname.lastname@example.org
Madrid, Sept. 23, 2009 Leading representatives of the Global
Travel and Tourism Industry joined today, for the first time ever,
to declare their support for a new ambitious global health
initiative, MassiveGood. The project was created by the Millennium
Foundation for Innovative Finance for Health, and will allow
travellers to give a 'micro-contribution' every time they purchase
travel services, which will go towards fighting HIV/AIDS, malaria
and tuberculosis in developing countries. The initiative has the
potential to raise up to $1 billion in additional funding for
global health during its first four years of operation.
"We pledge, by supporting this initiative, to encourage our
industry to help raise funds to treat the sick in the poorest of
our world's countries," affirms the declaration signed by major
travel industry representatives.
The announcement was made on the first day of the UN General
Assembly, during a meeting of the Task Force for Innovative Finance
for Health, spearheaded by UK Prime Minister Gordon Brown and World
Bank President Robert Zoellick.
Jean-Claude Baumgarten, President and CEO of the World Travel &
Tourism Council, representing the industry at the announcement,
stated: "As the leaders of an industry that is central to the
global economy, generating almost one out of every ten dollars
spent in the world and employing 220 million workers, we recognize
Leading representatives of the global travel and tourism industry
joined in signing a declaration of principles committing their
support to the Millennium Foundation and the launch of MassiveGood.
Signatories included the World Travel and Tourism Council; Amadeus,
Sabre and Travelport, which represent the leading Global
Distribution Systems (GDS), managing the world's airline
reservation networks; leading online travel agent Opodo; American
Express Business Travel and Carlson Wagonlit Travel, as travel
management supporters; Voyageurs du Monde as a leisure travel agent
supporter; Mondial Assistance as Call Center partner and the Global
Business Coalition on HIV/Aids, Tuberculosis and Malaria..
The initiative, baptized today as MassiveGood, will seek to raise
additional needed funding for the fight against HIV/AIDS,
tuberculosis and malaria, through a WHO-hosted organization,
"The biggest crisis the world is facing is the glaring inequalities
in access to health care between the rich and the poor," Dr.
Philippe Douste-Blazy, Chairman of the Millennium Foundation,
United Nations Under-Secretary and Special Advisor for Innovative
Finance for Development, stated.
"The Millennium Foundation has been privileged to have such
supportive and active partners in this endeavor, without which the
project could never have had such overwhelming success," added Dr.
Bernard Salom‚, the Foundation's Managing Director.
The technology solution for MassiveGood was developed by Amadeus,
and can be integrated into all GDS systems and embedded in the
regular booking system for airline tickets and other travel
reservations. As a result, MassiveGood will make it easy for
everyone who travels to make a small ($2) micro-contribution
through a simple click each time they book their reservation,
whether online or through an agent.
This is the first major fundraising initiative launched by the
Millennium Foundation, whose mission is to mobilize new sources of
innovative funding to achieve the three health-related Millennium
Development Goals agreed to by the United Nations in 2000: to treat
and fight life-threatening diseases, including HIV/AIDS, malaria
and tuberculosis; to reduce childhood mortality; and to improve
The travel and tourism industry's different sectors (air, hotel,
car rental and train) together account for 9.4% of the world's GDP
(about $5,800 billion) and 8% of global employment (220 million
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