The US$ 8 Billion Hole in Global Health: Why Private Capital Must Step Up Now [GUEST ESSAY]
Newsletter Edition #268 [The Files In-Depth]
Hi,
As the extent of the crisis in global health becomes clearer going beyond the immediate financing crunch, all kinds of measures are on the table. The range of implications of the lack of resources for health programmes over the medium to long term is yet to become fully evident. But what we reasonably know is that traditional donor countries will not step in significantly to fill the hole left by the withdrawal of the U.S. from the sector. Philanthropists are not likely to respond in equal measure.
In today’s edition, we get an indication of private capital’s appetite for global health.
We present a guest essay from a Switzerland-based global health investment advisory firm, Baraka Impact Finance, to give you a flavor on the types of conversations in the ecosystem, on the crisis we are collectively witnessing. This contribution argues that private capital can be a cornerstone for global health financing to address health inequities at scale, and a new social contract around finance.
Already, impact investing in global health exceeds $100 billion.
By one estimate, Switzerland accounts for over 10 per cent (nearly CHF 180 billion at the end of 2024) of the entire universe for sustainable investments. With Geneva as the capital of global health, there are questions on whether private investments into the staid world of global health policy-making, could to an extent, staunch the current bleeding in the field, albeit in return for efficiency and other metrics.
It has been our every effort to bring our readers diverse viewpoints. You will find today’s piece illuminating to understand how other actors are assessing the current crisis.
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I. GUEST ESSAY
The US$ 8 Billion Hole in Global Health: Why Private Capital Must Step Up Now
By James Bair
Bair is a Partner and Managing Director of Baraka Impact Finance LLC, a Swiss-registered advisory and intermediary facilitating private capital investment in the health sector of emerging and frontier markets. Contact: jbair@barakaimpact.com
The global health financing system is facing a crisis of historic proportions as traditional sources of Official Development Assistance (ODA) continue to erode.
The U.S., once the single largest bilateral donor to health programs in low- and middle-income countries (LMICs), has significantly reduced its contributions, with the Trump administration’s foreign aid freeze alone creating an $8.3 billion annual gap.
But this is not a uniquely American shift. European donors—including the UK, France, and the Netherlands—have also scaled back support, compounding the strain on already fragile health systems. Collectively, these funding contractions imperil millions of lives and risk unraveling decades of progress against HIV, tuberculosis, malaria, and other preventable diseases.
With longstanding models of global health assistance under threat, there is an urgent need to reimagine how the world finances health equity and resilience. While many are sounding the alarm, few are answering the question: What now?
Many are suggesting private capital must step into this vacuum, not as a stopgap, but as a cornerstone of a new and sustainable global health financing system. Already, in many LMICs, private actors provide the majority of healthcare services. Across Africa, roughly 65% of healthcare delivery is carried out by the private sector. Despite this, the potential of private capital to address these gaps remains largely untapped.
The challenge now is not whether to engage the private sector—it’s how to mobilize private capital in ways that tackle health inequities at scale.
Reimagining Capitalism for Impact
This shift requires more than just capital—it demands a reimagining of the financial system itself.
As Kusi Hornberger, Partner at Dalberg and author of Scaling Impact: Financing and Investment for a Better World, writes: “It’s not a question of whether we have enough capital. It’s a question of whether we have the moral imagination to rethink the way our system of capitalism can be extended.” Hornberger calls for a set of strategic paradigm shifts—from prioritizing impact-first investment over ESG-lite frameworks, to catalytic finance that pushes markets toward true inclusion, to results-based approaches that measure what matters. [ESG: Environmental, social, and governance]
This vision reinforces the need for tools that not only move money but move outcomes. Whether it’s deploying concessionary capital for health startups caught in the finance continuum’s “missing middle” or bundling more traditional financing instruments with technical assistance to mitigate risk, the future of health investment must be based on co-design processes that integrate the diverse needs of all stakeholders, with greater health equity as the guiding star.
Blended Finance 2.0: No longer a Buzzword, but a Blueprint
Blended finance is often misunderstood. It’s not a single model, but a toolkit of flexible financial structures that combine philanthropic, public, and commercial capital to reduce risk and crowd in private investment where it’s needed most.
Pairing institutional, venture and other return-seeking capital with non-dilutive or concessional funding can help make health innovations sustainable and investible. Every transaction requires collaboration, intentionality and deep alignment of incentives. There’s no shortcut—but there is a path forward.
As Hornberger writes, achieving this shift also requires an intentional revaluation of success: we must stop measuring activity and start measuring impact. We must think in terms of catalytic leverage—not just capital deployed—and empower local actors through capacity-building alongside capital.
The Shift in Investor Mindset Is Real
Private capital is not monolithic.
Mobilizing the sector requires collaboration with a broad spectrum of investors and other funders, ranging from foundations to sovereign funds, family offices, philanthropic organizations, and venture funds.
Across this spectrum there is an increasing demand for greater impact accountability, driven by environmental and social concerns, but also by a recognition that measurable and monitorable impact performance indicators can add business rigor that supports social and commercial objectives. This shift is happening in real time.
According to the Global Impact Investing Network, funds focused on social and environmental goals now manage over $1.5 trillion, having grown at an annual rate of 21% over the past five years.
The Financial Times reports firms like LeapFrog Investments, ResponsAbility, and ImpactAssets are seeing increased allocations from investors seeking to live their values, especially in light of the rollback of foreign development aid. Development Finance Institutions, such as the Investment Fund for Developing Countries - IFU (Denmark), Invest International (the Netherlands) and, Development Finance Corporation (in the U.S. - which seems to have been spared the government’s recent cuts) are stepping up with larger, more flexible mandates to mobilize capital using innovative financial mechanisms to leverage greater private sector and LMIC domestic resource participation.
The most recent GIIN State of the Market Survey (2024) estimates that global health sector impact investing now exceeds $100 billion. While this is impressive progress, the health finance gap remains vast – but not insurmountable.
What Needs to Happen Next
To turn the tide, we must:
● Expand de-risking tools like investment guarantees, technical assistance and co-investment partnerships that broaden the appeal and expand the health sector opportunities for investors.
● Strengthen local capital and innovation ecosystems to increase system resilience and lessen dependence on High Income Country funding sources.
● Enhance impact measurement usage and methodologies. Address current data analytics and market intelligence asymmetries. Provide investors and innovators with data and analytic tools that strengthen impact reporting, improve business rigor and ensure investor and innovator alignment.
● Advance blended finance literacy, and deploy blended finance expertise “into the field” to ensure these structures can be deployed efficiently, equitably, and at scale.
● Champion the six paradigm shifts —from patient capital to catalytic design—to center people, not just returns, in financial decision-making.
A Moment of Reckoning — and Reinvention
As has been noted, this is the most serious crisis to hit the international aid system in eight decades. But it is also a moment of reinvention. Governments may be retreating from global commitments, but the tools and capital to build a better system already exist. What’s needed now is coordination, courage, intention and a new social contract around finance.
The private sector can—and must—do more than fill gaps. It must build what comes next. The stakes could not be higher. And the time is now.
II. NEW BOOK FROM GENEVA HEALTH FILES
We are pleased to announce the launch of our new book:
Negotiating Equity: The Amendments to the International Health Regulations - A multilateral effort to strengthen the rules to govern international health emergencies
We will have a panel discussion during the World Health Assembly: Will the amended IHR deliver on equity goals?
Registration here. Limited spots only!
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