A recent analysis by ODI found that a small share of development finance investment is explicitly directed toward the health sector. However new health sector initiatives from the US Development Finance Corporation (DFC) and the UK’s CDC following the onset of the Covid-19 crisis indicate that this may be changing. In response to the crisis, development finance institutions (DFIs) have supported clients that have traditionally been outside the health sector to refocus their operations in support of the global crisis response.

Our research also highlights DFI risk taking and innovative approaches in the health sector; examples which demonstrate the ability of DFIs to mobilise much needed investment into health. The use of pooled investment vehicles, volume guarantees, first loss guarantees and development impact bonds (DIBs), exemplify how DFI investment can act as a catalyst for market development in different areas of health supply chains.

We explore how DFI investment could support and complement public sector investment in the health sectors; both in the short-term and with a view to building long-term resilience. We also discuss which innovative financing approaches could best suit different-sized DFIs and how these entities could partner to maximise their approach.