1. UNICEF SD VII Overview August 2015 Vaccine Independence Initiative 1

2. procuremen t initiates advance payment received CE acceptance CE issuance Request for CE Funds arrive Procurement initiates CE acceptance + waiver of advance payment + cash guarantee CE issuanceRequest for CE Pre-Financing in UNICEF Procurement Services VII provides a streamlined mechanism for these steps 2

3. 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 3

4. 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 4

5. 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… 5

6. 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 requirementSD 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) 6

7. 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 LoGSD registers MoU and LoG; VII Ceiling is active 7

8. 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 8

9. 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 9

10. Default Process CO demonstrates reasonable steps to recover funds No payment  CO makes recommendation for collection of funds specifying either: repayment 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. 10

11. 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. 11

12. 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 12

13. 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 13

14. 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 14

15. Why expand and extend VII? 15 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

16. Why expand and extend VII? 16 Total annual pre-financing needs expected to reach $225 million+ by 2020 across all essential commodities Build on a mechanism that is having positive impact