Performance-based development funding using market mechanisms: A public-private partnership social financing model for medical equipment technology in developing countries

Abstract

This article analyzes the viability of utilizing a new performance-based development financing model related to funding medical equipment technology (MET) transfers to developing countries. In such an innovative model utilizing market-based incentives and public-private partnerships (PPPs or P3), social bond investors fund MET by receiving a social development bond' in exchange for a predetermined and agreed-upon amount of principal and interest to be paid only if the related MET project is deemed to satisfy certain predetermined, agreed-upon success metrics (as determined by a third party). Thus, the public sector only funds MET projects that are deemed successful based on the agreed success metric by all related stakeholders, with the MET transfer project being funded no matter what the circumstance. This performance-based model can complement existing funding models, which improves the transparency, coordination and efficacy of such MET development assistance projects in developing countries.