news analysis advocacy
AfricaFocus Bookshop
New Gift CDs
China & Africa
tips on searching

Search AfricaFocus and 9 Partner Sites



Visit the AfricaFocus
Country Pages

Burkina Faso
Cape Verde
Central Afr. Rep.
Congo (Brazzaville)
Congo (Kinshasa)
Côte d'Ivoire
Equatorial Guinea
São Tomé
Sierra Leone
South Africa
South Sudan
Western Sahara

Get AfricaFocus Bulletin by e-mail! | on your newsreader!

Print this page

Africa: Financing Global Health

AfricaFocus Bulletin
Sep 28, 2009 (090928)
(Reposted from sources cited below)

Editor's Note

The G20 Summit meeting in Pittsburgh last week marked a significant expansion of international fora on global problems, with the official announcement that it was replacing the more restricted G8 as the primary venue for coordination of the world's major economic powers. The Summit's conclusions, focused on macroeconomic and financial issues, offered little for Africa, apart from generic expressions of support for development and protecting the most vulnerable. But the changing policy climate was also reflected in the parallel release of incremental proposals for new financing mechanisms for global needs that would be more consistent than promises of "aid" from rich countries.

This AfricaFocus Bulletin contains excerpts from newly released documents on two such ventures, both designed to provide additional finances for global health. These are the Currency Transaction Levy proposed by non-governmental organizations and beginning to win significant support from European governments, and an initiative from the international travel industry designed to facilitate small voluntary contributions whenever someone makes an international travel reservation.

Another AfricaFocus Bulletin released today, available on the web at, provides basic background information on the G20 as well as the full text of the Leaders' Statement from the Pittsburgh Summit.

More information on the proposed currency transaction levy is available at and

For previous AfricaFocus Bulletins see,
on economic issues:
on aid, poverty, and public investment:
on health:



New web-only AfricaFocus Bulletin

Shortly after sending out last week's AfricaFocus Bulletin on the Global Fund for Education, I received an e-mail from a reader alerting me to reports from the recent 6th Pan African Reading for All Conference, held in Dar es Salaam in August. The conference attracted over 500 delegates from 34 countries, and featured two keynote addresses by Kenyan author and activist Ngugi wa Thiong'o, in addition to sharing of research and experience in more than 200 sessions. You can find one of the speeches and the conference recommendations in a web-only AfricaFocus Bulletin released on September 22 (

AfricaFocus FYI

Just added. Link to thoughtful, well-documented critical article on the Gates Foundation and its Alliance for a Green Revolution in Africa (AGRA), in a recent issue of The Nation. Visit

++++++++++++++++++++++end editor's note+++++++++++++++++++++++

¥€$ to H£ALTH The Currency Transaction Levy

Funding the Health Millennium Development Goals

International HIV/AIDS Alliance and Stamp Out Poverty

[Excerpts: for full text of briefing, in pdf, including footnotes, see]

[For more information, please contact: /]


In this briefing, the International HIV/AIDS Alliance and Stamp Out Poverty make the case for the introduction of a Currency Transaction Levy (CTL), a proposal to harness some of the vast wealth of the foreign exchange market through a very small levy on currency transactions. Such a move would provide urgent, additional funding which would revitalize the Health Millennium Development Goals, reducing child mortality, improving maternal health and combating AIDS, TB and malaria, at a time when they are perilously off-track and in desperate need of further resources given the global financial crisis.


3. The global financial crisis a threat to achieving the health Millennium Development Goals

We are facing the worst economic crisis for decades. Even the most prosperous nations are struggling to cope with an economic downturn that is predicted to become significantly deeper and last longer than previous downturns.

Responsibility for the global financial crisis rests with the financial sector in the richest countries. However, it is the poorest and most vulnerable in the least-developed countries who are experiencing the impact most dramatically. The health MDGs are already perilously off track. ... A child born in a developing country is over 13 times more likely to die within their first five years than a child born in an industrial country. Gender also continues to fuel inequalities within health. For example, in sub-Saharan Africa almost 75% of HIV infections in 15 24 year-olds are among young women. The global financial crisis threatens to undermine the health MDGs still further, by reducing much needed aid flows.

4. Global health resource needs

There have been many cries of alarm and even outrage over inadequate global resources for health. Many caveats exist about the potential overlap in funding estimates and about inaccuracies in both resource needs calculations and in projections of future domestic and donor spending. Despite this ambiguity, it is clear that a significant financing gap exists to meet the health MDGs. According to the World Health Organization (WHO), an additional US$251 billion is needed between 2009 and 2015 to strengthen health systems in 49 low-income countries. By doing so, 23 million deaths would be averted between 2009 and 2015, including up to four million child deaths per year. ...

Donor and recipient countries must meet their existing financial commitments. However, this would still leave a US$100 billion funding gap in the US$251 billion target identified by the WHO ... innovative financing mechanisms are urgently required to raise critically needed resources for health. One of the most prominent ideas in this field is the Currency Transaction Levy (CTL), a proposal to harness some of the vast wealth of the foreign exchange market through a very small levy on currency transactions.

5. The foreign exchange market

The foreign exchange (FX) market is the largest in the world by volume. According to official 2007 figures, US$3.2 trillion of FX transactions occur every day. Over 2007 this equated to US$800 trillion. Unlike most other areas of the financial market, the FX market has continued to grow, even during the economic downturn. For example, in 2009 approximately US$4 trillion of FX transactions occur every day. This will equate to US$1,000 trillion over the course of the year more than 50 times greater than the total value of all goods and services traded throughout the world each year. The FX market is therefore a very robust income base.

6. The Currency Transaction Levy

The proposed CTL would subject all wholesale or interbank FX transactions of a particular currency globally to a levy of 0.005%. Countries can apply unilaterally a levy on transactions of their own. The tax can be captured wherever the trade takes place in the world. It does not require a global or regional consensus. Crucially, this levy would only apply to all transactions of particular currencies, not the transactions of all currencies in one particular country. Also this levy would not apply to the retail market used by people to change money when they go abroad, to buy goods or to invest. As a result, the levy would not affect the retail economy directly. In particular, the levy would have no impact on existing trading in goods and services; it would not increase the costs of buying goods and services; it would not change the risks of trading in particular currency-denominated assets; and it would have no effect on the functions performed by a currency (for example, as a medium of exchange, store of value or unit of account). The levy would not affect migrant remittances.

7. Financial transaction levies are commonplace

The FX market is an anomaly in that it remains untaxed. Levies on other types of financial transactions, such as taxes on share and bond trading or bank debits, have a long history. Most have operated successfully for many years and have raised substantial amounts of revenue with no apparent negative impact on the market. For example, in the UK a 0.5% stamp duty on share transactions generated approximately œ4 billion in one financial year and had little impact on the London Stock Exchange. As identified by the All Party Parliamentary Group for Debt, Aid & Trade, all of the G10 countries except Canada have levied financial transaction taxes (FTTs) at some time. Of these, the United States, UK, France, Belgium and Switzerland have existing FTT regimes. The other G10 members have recently dismantled their FTTs, including Japan in 1999, Italy in 1998, Sweden and Germany in 1991 and the Netherlands in 1990. This movement towards the removal or reduction of FTTs has been counterbalanced by recently imposed FTT regimes in India (2004), Peru (2003), Argentina and Colombia (2000), Ecuador (1999), Greece (1998), Finland (1997) and Brazil (1997). In fact, Greece doubled its FTT on share trading in 1999.


8. Collection

The last two decades have seen significant changes in the way FX transactions are settled nationally, using Real Time Gross Settlement systems (RTGS), and internationally, using the Continuous Linked Settlement (CLS) Bank. The FX market is now fully electronic and operates through an interconnected and interdependent global network of central banks and national payment systems that cooperate in the oversight of cross-border payment systems, such as the CLS Bank.

A CTL would therefore be feasible, efficient and inexpensive to implement. Indeed, according to Professor Rodney Schmidt, 'the technology and institutions now in place to support [the FX market] make it possible to identify and tax gross foreign exchange payments, whichever financial instrument is used to define the trade, wherever the parties to the trade are located, and wherever the ensuing payments are made.' Furthermore, the global standardisation of financial transactions messaging using SWIFT (Society for Worldwide Interbank Financial Telecommunications) would make the payment and collection of the levy automatic, no matter where the transaction occurred; be it on Wall Street or in the Cayman Islands. As a result, the levy would not impact negatively on one or more financial centres or cause more trading to be conducted offshore.

There is also little scope for avoidance. Since the attacks on the World Trade Centre on 11 September 2001, financial controls to combat money laundering and the financing of terrorism have tightened considerably. Evasion in this climate is very difficult, especially as all electronic transactions leave an electronic trail. Indeed, experts have commented that if a CTL were introduced at as low a rate as 0.005%, avoidance would be more costly than compliance.

City firm pilots currency transaction levy

In May 2007, INTL Global Currencies, a City of London firm specialising in foreign exchange with developing countries, ran a week-long trial of a CTL. In the process, it raised œ4,000 for the charity, Widows and Orphans International. In his evidence to the All Party Parliamentary Group for Debt, Aid and Trade Inquiry, Philip Smith of INTL Global Currencies explained: 'It's not a huge amount but we felt it was illustrative of a week's turnover for us across all our countries. And we're not an enormous entity which would have raised a lot more.' He said it took a 'press of a button' to add the levy into its system. He said INTL had informed its clients about what was happening and said the feedback was very positive. Nobody had commented on any problems and he added that rolling the levy out on a larger basis would be very simple: ...

Ethical Currency launches a CTL

In August 2009, Ethical Currency became the first FX broker in the world to voluntarily levy 0.005% on all of its transactions. Ethical Currency's founder, Alastair Constance, recognised that 'as funding for international development becomes more scarce, we need to be creative about finding new and sustainable sources of income'. The money raised will be donated to the Global Fund to Fight AIDS, Tuberculosis and Malaria.

Alastair Constance believes a similar levy would be easy for traders to replicate as FX transactions are all electronic and that, over time, the tax would be barely noticed.

9. Market distortion

A CTL rate of 0.005% (half of one-hundredth of 1%) is too small to alter decision-making in the market and yet high enough to yield a substantial revenue stream (see below).

Indeed, Professor Joseph Stiglitz, who heads the UN President's taskforce on the financial crisis, has said: 'I cannot believe a sterling stamp duty at the rate of 0.005% would result in the diversion of financial transactions from the UK to other countries.'

Similarly, in work for the UN University in 2007, Professor Rodney Schmidt undertook the most detailed econometric modelling to date, confirming that at a rate of 0.005% the levy is too low to affect decisions to trade.


10. Incidence

Large international banks dominate the global FX market. In the first instance, the economic footprint of the CTL would therefore fall upon the large financial institutions that are members of the CLS Bank and the RTGS.


A CTL on a specific currency would also be dispersed widely throughout the global financial system. Given that banks will, as far as possible, pass on any costs to their wide range of clients, a CTL would not impact one institution or financial centre more than another. Importantly, a CTL rate of 0.005% would also have minimal impact upon any bank's clients. ...

11. Precedent

UNITAID, which is financed principally through aviation levies and has helped drive down drug prices and develop new treatments for HIV, TB and malaria, exemplifies the use of nationally collected tax revenue, pooled internationally and spent on a global public good. Importantly, it has not required universal participation to work. Countries that wish to participate work together to harness the income stream. A CTL would operate according to the same principle.

The Currency Transaction Levy is not the Tobin tax but a solidarity levy

It is important to clarify that the CTL is not the same as the Tobin tax. It differs fundamentally from the Tobin tax in that it is born of a different time, proposed at a different rate and designed for a different purpose.

James Tobin's original idea in the 1970s sought to alter motivation in the foreign exchange market, to impede daily currency trading and to discourage speculative activity. It proposed a rate of 1% 200 times the 0.005% rate set out here and the income was not designated for a specific purpose, such as development. The Tobin tax actively sought to alter the structure of the market. The CTL is entirely different. Its raison d'ˆtre is as a financing instrument for development. Its rate is designed specifically not to hamper normal market operations but to take a relatively small amount from the volume traded. ...

12. Projected revenue

Based on 2007 Bank of International Settlement figures, a CTL rate of 0.005% levied only on the US dollar would yield an annual revenue of US$28.38 billion. In comparison, it would yield US$12.29 billion annually if levied solely on the euro, US$5.59 billion annually if levied solely on the yen and US$4.98 billion annually if levied solely on the pound.

A CTL rate of 0.005% levied on all major currencies would yield an annual revenue of US$33.41 billion just US$5.03 billion more than a levy on the US dollar alone. This is because most foreign exchange transactions occur among the major currencies and most involve the US dollar. In comparison, a CTL rate of 0.005% on all the major currencies except the US dollar would annually yield a revenue of US$21.24 billion. A coordinated CTL on just the euro and pound together would annually yield US$16.52 billion.

13. Window of opportunity

The global financial crisis, and the role the financial sector has played in this, has led to a demand to re-examine the rules, regulations, boundaries and 'social usefulness' of the financial sector. In the past year governments have had to step in to bail out major banks in Europe and the United States. The effective nationalisation of major banks needed to keep the financial industry afloat means that governments have greater ability to introduce regulation to curb risk. Increased demand for a more equitable global financial system has led to calls for the implementation of the CTL. The Chair of the UK's Financial Services Authority, Lord Turner, has called for discussions on the CTL. G20 leaders, led by French President Nicolas Sarkozy and German Chancellor Angela Merkel, have expressed an interest in taking forward the implementation of a FTT and a CTL.

While implementing greater financial oversight and restrictions on the kinds of products that have caused the financial crisis, it is possible to review the one area of the financial industry that historically has remained exempt from taxation: foreign exchange transactions. As an additional source of revenue, a CTL would go a long way towards filling the funding gap faced by the Health MDGs and enabling developing countries to achieve these targets and, in turn, provide effective healthcare to those who need it most.

Global Travel & Tourism industry unite to do "MassiveGood"

Innovative travel-related fundraising initiative will help finance health care for the world's poor

[Excerpts: for full text and additional quotes see]

For more information contact:

Amadeus Corporate Communication, tel: +34 91 582 0160 e-mail :

Jienna Foster, Millennium Foundation, Mobile +41 (78) 933 18 84 E-mail:

Laura Russo / Claire Behar, Fleishman-Hillard
Phone: 212-453-2048 / 212-453-2122;
E-mail: /

Madrid, Sept. 23, 2009 Leading representatives of the Global Travel and Tourism Industry joined today, for the first time ever, to declare their support for a new ambitious global health initiative, MassiveGood. The project was created by the Millennium Foundation for Innovative Finance for Health, and will allow travellers to give a 'micro-contribution' every time they purchase travel services, which will go towards fighting HIV/AIDS, malaria and tuberculosis in developing countries. The initiative has the potential to raise up to $1 billion in additional funding for global health during its first four years of operation.

"We pledge, by supporting this initiative, to encourage our industry to help raise funds to treat the sick in the poorest of our world's countries," affirms the declaration signed by major travel industry representatives.

The announcement was made on the first day of the UN General Assembly, during a meeting of the Task Force for Innovative Finance for Health, spearheaded by UK Prime Minister Gordon Brown and World Bank President Robert Zoellick.

Jean-Claude Baumgarten, President and CEO of the World Travel & Tourism Council, representing the industry at the announcement, stated: "As the leaders of an industry that is central to the global economy, generating almost one out of every ten dollars spent in the world and employing 220 million workers, we recognize this responsibility."

Leading representatives of the global travel and tourism industry joined in signing a declaration of principles committing their support to the Millennium Foundation and the launch of MassiveGood. Signatories included the World Travel and Tourism Council; Amadeus, Sabre and Travelport, which represent the leading Global Distribution Systems (GDS), managing the world's airline reservation networks; leading online travel agent Opodo; American Express Business Travel and Carlson Wagonlit Travel, as travel management supporters; Voyageurs du Monde as a leisure travel agent supporter; Mondial Assistance as Call Center partner and the Global Business Coalition on HIV/Aids, Tuberculosis and Malaria..

The initiative, baptized today as MassiveGood, will seek to raise additional needed funding for the fight against HIV/AIDS, tuberculosis and malaria, through a WHO-hosted organization, UNITAID.

"The biggest crisis the world is facing is the glaring inequalities in access to health care between the rich and the poor," Dr. Philippe Douste-Blazy, Chairman of the Millennium Foundation, United Nations Under-Secretary and Special Advisor for Innovative Finance for Development, stated.

"The Millennium Foundation has been privileged to have such supportive and active partners in this endeavor, without which the project could never have had such overwhelming success," added Dr. Bernard Salom‚, the Foundation's Managing Director.

The technology solution for MassiveGood was developed by Amadeus, and can be integrated into all GDS systems and embedded in the regular booking system for airline tickets and other travel reservations. As a result, MassiveGood will make it easy for everyone who travels to make a small ($2) micro-contribution through a simple click each time they book their reservation, whether online or through an agent.

This is the first major fundraising initiative launched by the Millennium Foundation, whose mission is to mobilize new sources of innovative funding to achieve the three health-related Millennium Development Goals agreed to by the United Nations in 2000: to treat and fight life-threatening diseases, including HIV/AIDS, malaria and tuberculosis; to reduce childhood mortality; and to improve maternal health.


The travel and tourism industry's different sectors (air, hotel, car rental and train) together account for 9.4% of the world's GDP (about $5,800 billion) and 8% of global employment (220 million jobs worldwide).


AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

AfricaFocus Bulletin can be reached at Please write to this address to subscribe or unsubscribe to the bulletin, or to suggest material for inclusion. For more information about reposted material, please contact directly the original source mentioned. For a full archive and other resources, see

Read more on |Africa Health||Africa Economy & Development|

URL for this file: