1. Approach to calculating high-level 2016-2020 resource estimation for UNFPA Supplies
Approximate cost,
Cost bucket
Calculation
Contraceptives for 46 target countries
Cost of commodities for maintaining existing users and adding incremental users, based on original FP2020 model
% of commodities that are donor-funded, based on original FP2020 model assumptions
% funded by UNFPA, based on average of split of donor spend on commodities1
% co-financed by country versus UNFPA based on country categorization2
~$717M
‘System inefficiency’ factor including wastage and leakage rates (Assumes 25%)
The budget estimation reflects preliminary country categorization criteria and associated co-financing assumptions – as they are finalized, the budget calculation will need to be updated
Other commodities for 46 target countries
Based on 2015 split of spend on contraceptives vs. other commodities (incl. life-saving medicines, HIV medicines), which was 93% to 7%
Total commodities for ‘other’ recipients
Based on 2015 split of total commodity spend on 46 target countries vs. other recipients (incl. non-target countries, MSI central warehouse, humanitarian situations), which was 94% to 6%
UNFPA procurement fee (%)
~$14M
Based on procurement fee caps starting 2016 onwards; assumes minimum of ~$170M spent on commodities annually, resulting in ~2.2% blended procurement fee
Capacity development for 46 target countries
~$321M
Assumes commodity/capacity development split based on preliminary country categorization (80%/20% for long-term engagement, 70%/30% for transitioning, and 30%/70% for sustainable) HR
~$47M
Based on 2015 total spend on HR, deducting spend on select PSB positions; assumes ~3% annual inflation rate
Overhead (%)
~$77M
Based on consistent fee, which includes key management positions
Total
~$1.2B
1 10% was added to UNFPA split of donor spend, to account for year-over-year variability among key donors
2 Starting in 2017, UNFPA will gradually co-finance the following split of commodities spend by 2020: 90% for long-term engagement, 80% for transitioning, and 30% for sustainable
SOURCE: GPRHCS Annual report 2014, Track20, GPRHCS monitoring framework for

2. McKinsey conducted a high-level analysis as well as extensive research to better understand ‘system inefficiency’ costs associated with commodities
‘High-level’ analysis
Additional data points
Assumption used
Source
McKinsey found that, on average, donors provide ~15% more commodities to countries than what is required by users of that country
Their high-level analysis:
For a set of 14 donor-dependent countries1, they calculated the total contraceptives provided by method by all major donors2 from
They then translated contraceptives provided into potential users based on CYP conversions (for male condom CYP conversion, we incorporated an assumption that 30% of male condom users are truly using male condoms for birth control purposes)
In each country, for each year from , they compared the total potential users supported by donors to the total actual users in that country (not including sterilized users)
They then took the average from across the 14 countries to arrive at a 1.15x difference between potential users supported by donors as compared to total actual users in country
Wastage
4% for pills, 2% for implants
2011 USAID DELIVER companion guide for countries to develop commodity plans
5% for implants, oral contraceptives, injectables, and IUCDs, 10% for male condoms, 12% for female condoms
Swaziland contraceptive supply planning report
5% across commodities
Bangladesh contraceptive supply planning report
10% for all vaccines
Standard UNICEF assumption
Buffer stocks
Buffer stocks from 2-10 months based on facility type
Swaziland contraceptive supply planning report
~15-25% of prior year’s demand
USAID global contraceptive procurement’s average buffer stock of cataloged contraceptives
A number of additional costs contribute to ‘system inefficiencies’ such as leakages, humanitarian situations, and natural disasters
1 Analysis conducted for DRC, Ethipia, Kenya, Burundi, Chad, Nigeria, Malawi, Zambia, Congo, Guinea, Senegal, Benin, Chad, Cote d'Ivoire
2 UNFPA, DFID, The Global Fund, IPPF, KFW, MSI, PSI, USAID
Source: Track20, Original FP2020 model, USAID Deliver, Swaziland and Bangladesh contraceptive reports, McKinsey Team analysis