Global Health Financing at a Turning Point: Diversifying Beyond Traditional Aid

The financial foundations of global health are under strain as major donor countries reduce foreign aid, exposing structural weaknesses long hidden by consistent public funding. A more resilient system is needed, one that combines grants, concessional loans, and private capital to ensure continued progress.

The Reliance on Traditional Aid

For decades, global health financing has heavily relied on official development assistance (ODA) grants. As of 2023, these grants accounted for 75-95% of health-related aid flowing into developing economies WHO, creating a significant dependence on the budgets of a limited number of donor countries.

This model has yielded substantial gains. Between 2011 and 2019, mortality rates among children under five in low-income countries fell by 19%, from 1,837 deaths per 100,000 children to 1,485. ODA-funded institutions too played a crucial role in collective responses to global crises, including the COVID-19 pandemic.

A Shift in Funding and Emerging Challenges

Though, this dependence on a small group of provider countries presents a structural vulnerability. Changes in their political and fiscal priorities have ripple effects across the entire global health system. In 2024, total ODA fell by more than $15 billion, and funding is projected to decline by another 9-17% in 2025, potentially jeopardizing $40-55 billion in development assistance.

Bilateral ODA for health is shrinking even faster, with a projected decline of 19-33% between 2023 and 2025, falling below pre-pandemic levels. Of the 34 members of the OECD’s Development Assistance Committee (DAC), 22 cut their aid budgets in 2024.

These cuts are forcing agencies to adjust. The Joint United Nations Programme on HIV/AIDS (UNAIDS) anticipates halving its staff and reducing operations from 75 countries to 36 due to reduced US funding, while the World Health Organization (WHO) has proposed a 14% cut to its core budget for 2026-27.

The impact will be most acutely felt in the world’s least developed countries. Bilateral ODA to these countries is estimated to have fallen by 13-25% in 2025, following a 3% decline in 2024. In Sub-Saharan Africa, the projected cuts are even steeper, ranging from 16-28%, potentially resulting in a loss of around one-quarter of total ODA in a single year.

The Rise of New Actors and Funding Models

The decline in ODA reflects a broader structural shift. Between 2011 and 2024, health-related development assistance decreased by roughly 24% as a share of global GDP, despite a temporary surge during the pandemic. The rationale for health aid has also evolved, moving away from solidarity and human development towards economic interests, national security, and pandemic preparedness.

Meanwhile, the development finance landscape is becoming more crowded and complex. BRICS+ nations (China, Russia, and India, among others) and emerging regional powers are collectively providing over $100 billion in development funding since 2022. Approximately 80% of this funding comes from China, primarily through loans and non-grant instruments France Global Health Strategy.

The 11 BRICS+ countries, representing 27% of global GDP, are expected to surpass the G7 by 2050, increasing their influence over the volume and direction of development finance. These newer providers often prioritize bilateral, project-based approaches, loans over grants, and infrastructure investments.

The Role of Private and Impact Investors

Private and impact investors are also playing a growing role, particularly in Africa and Asia. Health-care-focused private equity and impact funds are providing patient capital and innovative financing structures, creating opportunities for investments that deliver both financial returns and measurable health benefits.

However, not all health projects are suitable for this type of capital. An analysis of Côte d’Ivoire and Uganda’s health-security action plans indicates that only 25-30% of budgeted projects combine direct, measurable health impact with predictable cash flows and clear revenue models. These typically involve infrastructure investments, such as oncology centers, that can generate service revenues and establish countries as regional hubs.

Towards a More Resilient Financing Model

To unlock the potential of diverse funding sources, health outcomes must be made “legible” to investors. While public donors focus on traditional indicators like lives saved, private and impact investors often seek quantitative frameworks that link investments to the Sustainable Development Goals (SDGs) and portfolio-level performance. The SDG Blue rating system is one example of such a model.

A reset in global health financing is crucial. National and global portfolios should be categorized into distinct project types, each matched with the most appropriate financing form based on its risk profile. Government grants and concessional loans should continue to support low-income countries, vulnerable populations, and essential public goods, while infrastructure and service-based initiatives with clear revenue models can attract private and impact capital. Blended finance arrangements can bridge these gaps, aligning public, philanthropic, and private resources.

Successfully achieving this reset requires effective structuring of financing, risk-based project sorting, and engagement with investors. By recognizing the potential for mutually reinforcing impact and financial returns, the world can build a more resilient and diversified financing model that protects and expands upon hard-won gains, even amidst budgetary constraints.