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Challenging Operating Environment (COE) Policy

The Global Fund has a country-classification mechanism to ensure that operational policies and processes reflect contextual needs for countries. These categories are updated every allocation period based on the allocation amount, the disease burden, and strategic impact of the country. Countries are classified as:

  • Focused Portfolios are generally smaller portfolios, with a lower disease burden, and a lower mission risk.
  • Core Portfolios are generally larger portfolios, with a higher disease burden, and a higher mission risk.
  • High Impact Portfolios are generally very large portfolios with mission critical disease burdens.

See the introduction of the GF’s Operational Policy Manual (2024) for the portfolio categorization.

The Global Fund also use two cross-cutting classifications to further differentiate portfolios:

  • Challenging Operating Environments (COEs) are countries or regions with complex natural or manmade crises and instability with an impact on the risk of death, disease, and breakdown of livelihoods.
  • Transitioning components are those that are approaching transition from receiving funding from the Global Fund.

To be able to operate in contexts of various degrees of complexity, in addition to the Risk Management Policy, the Global Fund has developed some specific risk management tools.

The Global Fund recognizes the need to apply a tailored approach for COEs focusing on providing a set of flexibilities when implementing Global Fund grants and this is articulated in the COE Policy (2017).

Challenging Operating Environments are countries or regions characterised by weak governance, poor access to health services, and man-made or natural crises. The policy classifies COEs based on countries with the highest External Risk Index (ERI) level in the Global Fund portfolio and allows for ad hoc classification to enable rapid responses to emergency situations. Once a country (or part of it) is categorised as a COE, the Global Fund can tailor the flexibilities that would apply. The flexibilities may relate to the following:

  • Access to funding: The Global Fund can allow the extension of existing grants, non-Country Coordinating Mechanism (CCM) applications, and extended allocation where a COE country is no longer eligible for funding.
  • Implementing entities: While the CCM nomination of the Principal Recipient (PR) is preferred, in COE countries the Global Fund may assume the responsibility for selecting the PR.
  • Grant implementation: Where relevant and possible, goals, targets, activities, and budgets can be adjusted, and implementation arrangements changed to reach target populations.
  • Procurement and supply chain: Where existing in-country supply chain systems are dysfunctional, disrupted or at risk of disruption, third-party providers may be selected for part or all the supply chain management functions. In emergency situations, PRs with strong procurement and supply chain capacity may be selected.
  • Monitoring and evaluation: The Global Fund recognizes the risks associated with data collection and data quality in COEs due to weak health data systems. It addresses these risks by 1) insisting on strengthening of Health Management Information Systems (HMIS) and using different types of data (surveys, evaluations, quantitative and qualitative sources) and 2) when necessary, having a performance framework with focus on output measures rather than outcome and impact.
  • Financial management: The flexibilities on key financial processes include, among others: ease of reprogramming process with a high-level budget based on past grant assumptions, reliance on implementers’ own assurance mechanism where deemed strong, outsourcing of accounting and/or fiduciary function, and extension of audit and reporting due dates.

The Challenging Operating Environment Operational Policy Note regulates the implementation of the COE policy. The level of verification and scope of the Local Fund Agent’s assurance services may be tailored in line with the nature of the crisis and associated risks. This tailoring is conducted by the Global Fund’s Country Teams.

UNDP is often nominated as PR in COE countries. As UNDP-implemented Global Fund projects adhere to UNDP’s regulations, rules, policies, and procedures. Most flexibilities would be negotiated during grant-making and the Country Office is advised to request support of the UNDP Global Fund Partnership and Health Systems Team and the Regional Bureau, as early as possible, during the funding submission and the grant making process.

Additional guidance to support this area of work are also available through resources listed below:

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