This Article is From Sep 20, 2014

UN Entrepreneur Taps African Oil for Child Health

UN Entrepreneur Taps African Oil for Child Health
Geneva, Switzerland: Republic of Congo has become the first country to agree to divert part of its oil revenues towards childhood nutrition, a victory for "innovative financing" to help the world's poorest, the scheme's creator Philippe Douste-Blazy said in an interview.

The breakthrough may pave the way for similar financing schemes with other oil producers, first in Africa and then further afield, said Douste-Blazy, the UN under-secretary general for innovative finance for development.

"It's a first. Now we are going to begin with Gabon, Equatorial Guinea, Angola, Nigeria and with Cameroon," he said.

Douste-Blazy, who previously served as France's foreign minister and health minister, is the chairman of UNITAID, a body hosted by the World Health Organization that provides long-term funding for the treatment of HIV/AIDS, malaria and tuberculosis in developing nations.

Most of UNITAID's $300-million funding comes from a levy on air tickets, a scheme already implemented by more than a dozen countries. Douste-Blazy is confident that Japan will join the scheme this year or next and he is also courting India.

"The simple idea is to take a microscopic contribution of solidarity on economic activities that benefit most from globalisation: mass tourism by plane, mobile phones, Internet, financial transactions and extractive resources," he said.

Shaving off a small fee from the cost of a flight has enabled UNITAID to boost the fight to stop AIDS, malaria and tuberculosis, one of the "Millennium Development Goals" that the U.N. hopes to reach by next year.

"We have proved that it works. Now we have to change the scale," he said.

Aside from the humanitarian motivations, Douste-Blazy believes that the rich should share a portion of their wealth because the poorest people can see how the rich live, and their "humiliation" risks turning into anger and sparking conflict.

"There are more than 1.5 billion who live on less than $1.25 per day," he said. "With the phone there is a globalisation of knowledge. They are going to compare their lifestyle with ours."

His new target, and the beneficiary of the oil scheme, is chronic malnutrition - undernourishment in early childhood that causes stunted growth, can lower a child's IQ and is associated with a lifetime of increased health risks. He plans to create a UNITAID-style venture to manage the project, provisionally called UNITLIFE.

About 40 percent of African children suffer from stunted growth, according to the WHO's 2014 World Health Statistics, as well as almost 50 percent in India, Guatemala and Laos.

For the poorest countries, the economic cost is about 6 percent of their gross domestic product.

Eliminating the problem in the 36 worst affected countries, accounting for 90 percent of all children whose growth has been stunted, would cost about $10.8 billion a year, according to UNITLIFE estimates. But the return on that investment is huge: a $100 package of interventions up to the child's second birthday is expected to return $3,000 in economic impact and healthcare savings.

Republic of Congo President Denis Sassou Nguesso, one of the first to sign up for the air ticket levy, said in a letter to Douste-Blazy that he was committed to do more and he hoped others would follow, in Africa and elsewhere.

"This is the reason why the Republic of Congo desires to put in place an extractive industries solidarity contribution to the tune of 10 cents per barrel of oil managed by the Congolese state," said the letter, a copy of which was seen by Reuters.

"This innovative financing revenue will serve the fight against chronic malnutrition via a multilateral organisation hosted by the United Nations." Reuters was not immediately able to contact the Congolese government for comment.

If expanded to eight African countries, the 10 cent oil levy would generate $100-200 million per year, and a worldwide roll-out would generate at least $1.64 billion a year, according to Douste-Blazy. It could also be applied to gas or mining revenues.

The structure of UNITAID and the venture to tackle chronic malnutrition are corruption-proof, he said, because a board channels the funds and a U.N. agency - the WHO for diseases and UNICEF for the new venture - manages the spending.

"What's important to understand is that the money from UNITAID has never gone to a government or a minister or a head of state. The level of corruption is zero."

Other financing tools that Douste-Blazy hopes to tap for health causes include a financial transaction tax backed by 11 European countries and a fee from telecoms regulators in Africa, who already make money by verifying that mobile phone companies are charging the right amount for international calls.

Since the mechanism is already set up, Douste-Blazy hopes he will be able to skim off 0.5 cents per call for health spending, and is talking to four countries about doing so.

He also hopes to tap high-volume internet traffic.

"I've asked Google," he said. "One could perhaps ask for $0.50 per advert. We discussed it with them. I don't have the answer, but some interest from them."

© Thomson Reuters 2014