Bill Gates is co-chair of the Bill & Melinda Gates Foundation, a philanthropic organisation focused on expanding opportunity to the world’s poor by collaborating with grantees and partners. The Foundation was born in 2000 out of the merger of the William H. Gates Foundation for global health and the Gates Learning Foundation for assisting minority students from low-income backgrounds access a university education. In 1975, Mr. Gates left Harvard University in his junior year to focus on Microsoft, the company he founded with his childhood friend Paul Allen. As chief software architect and chairman, Mr. Gates led the company to become a worldwide leader in business and personal software, services, and solutions. In July 2008, Mr. Gates transitioned into a new role as chairman of Microsoft and advisor on some key development projects.

In what has become a tradition Mr. Gates authors an annual letter in which he speaks candidly about his work at the Foundation and shares what they learned along with their partners and grantees. The letter is available on www.billsletter.com and you can follow the discussion using #billsletter on Twitter.

Edited excerpts from Mr. Gates' interview with Narayan Lakshman in New York earlier this week, on the occasion of his 2013 letter’s release:

On the letter

Since I’ve got a pretty broad readership this is a chance to share my views. I just tend to be more optimistic than a lot of observers nowadays. I’d say that’s really because I see the data and the innovation coming along. I think it’s valuable for people to see progress because otherwise they become cynical, whether it’s about the world in general or their aid budgets, or corruption.

So the big thing... is measurement, something that comes naturally to the private sector, because they have to have a theory about how their business works... Governments and philanthropy haven’t done as much measurement and the good news is that measurement is easier to do in a world of satellite photos, cell phones, cheap software and databases. Gathering information is going to be easier now... and so we can identify where something is going very well. For example polio eradication we can tell whether the vaccine team goes where they’re supposed to go. We can tell whether the map is missing a village or not. The benefit of that attitude is that we will get more value out of these programmes and [address] what is often been the Achilles Heel of these programmes, the delivery piece that just doesn’t [reach intended recipients].

India – aid recipient or donor?

You can be an aid recipient and donor at the same time. India does modest donor-things today. It is still a meaningful aid recipient in absolute but as percentage of the government’s overall budget I would say it is fairly modest. The impact of the aid is slightly more than what our figures would suggest though.

Speaking for ourselves, a lot of what we are able to do – and this comes back to the measurement [question] – is hire what we call strategy units in. We are able to hire analytical-type personnel, create the right tools and salary structures for them and connect them up with a government activity like vaccination coverage or spending or getting contraception out and make sure that the increased government investment is actually being used appropriately.

In India it is still about money but it is more about execution, whether it is in education, which is not a big area for us, or health, which is a big area. The quality of execution is a limiting factor. Kerala achieved great health results not so much by putting a lot more money in than in other places; or if you look at the improvements in Bihar in the last four years, they used some of their NRHM money but that really was about measurement and quality of execution.

So I think we and other donors still have a role to play for, I’d say, ten years or so. [The Republic of] Korea is the only country that has gone all the way from being huge [aid] recipient to [being a] huge donor.

Pinpointing challenges in India’s policy implementation

Some of them are basic: does grain for the poor get diverted corruptly? Do teachers show up [in classrooms]? Are health-worker jobs filled? Are they properly trained? Why don’t kids get vaccinated? We should be able to register them digitally and follow up digitally. In Bihar that is what we are starting to see. We did it in the pilot districts and then the government spread it out to the other districts.

Every year health in India gets better but we should be impatient that they haven’t adopted some of the new vaccines yet. Rotavirus, pneumococcal virus, that’s in the years ahead and could save so many Indian lives. The execution is uneven – 40 per cent of the world’s un-vaccinated kids are Indian and that’s not even accounting for the fact that they don’t have those vaccines in their programmes. I’m an optimist about this – the right partnerships, work, care and budget increases appear to be on their way. So every year the improvement can be pretty dramatic, particularly in the North because it is coming off of low levels.

The Giving Pledge

Up until this year the GP was entirely focused on people living in the U.S., since we had 92 people of great wealth, over $1 billion, who pledged to give the majority away during their lifetimes or through their wills. Just this year we are recruiting internationally and we will announce our group in February... So we are interested but it will be a long time before there are as many non-U.S. GP members as U.S. members, even though there are more international billionaires than U.S. billionaires. There are wonderful, giving people, such as Azim Premji in India, but it’s just less of a tradition.

Hopefully it is a growing tradition and everybody who joins encourages more people to join, to think about philanthropy, doing it younger, and get more engaged in it. It’s not a passive thing that you should do through your will. It should be an enjoyable thing that you do with the same skills that helped you make the money. That’s our view and we will see how it goes.

Millennium Development Goals

I’m a huge believer [in the view] that we should take the [current] goals and update them. We’re working on exactly [that]. There’s a meeting in Botswana in a couple of weeks and we will put forth some ideas. I was pretty clear that we would get child mortality down to six million and that the goal for 2013 should be three million. We can do it. With maternal mortality we should get another 50 per cent reduction. That’s not easy, but that’s do-able. With education goal we should put a quality metric in and not just [state], “Everyone is attending.” We should have some level of literacy that they have to attain, that’s a refinement. The sanitation goal – the way [progress] is measured is not good. We need to work on that.

I think it is clear that you can take the eight [goals] and come up with a great next set. The question is what should be added and should we wait for some consensus on everything that should be added. I’m a believer that we should at least get these eight in place. They have a certain clarity because they focus on the poorest. Many other issues don’t easily work through the United Nations consensus process. The action items are more telling rich countries what to do. If China and the U.S. can’t agree bilaterally on climate issues, then is it easier to get 193 countries to agree?

But we need climate goals. When we can get them, how we can get them, what form they are done in – I’m not an expert on that. But I know that we should keep these MDGs intact and only add a limited number. Everybody sees the MDGs were successful so every sin of mankind that people care about, somebody is writing an MDG and hoping to get, for example, wheelchairs for everybody, no smoking, and human rights. But I do think there was a benefit to the ones that we picked so I hope we don’t add too many more.

Foundation priorities in health

On our health programmes, we are reasonably analytical in terms of dollars per disability-adjusted life that you have saved. Polio in the present year is not a bargain because you have 250 cases and spending has been $1 billion per year for the last six years. We could get done early and spend less but that is what we are raising. The reason why that pays off is that if you stop spending then polio will spread back. The only reason you have 250 cases is that you are spending $1 billion a year. If you drop down to $500 million or $200 million then you will have some hundreds of thousands of polio cases. In other words you have wasted your money. You will also have disillusionment that will cost global health a lot. If you succeed, you will never have to vaccinate again, and places like South America are still doing yearly campaigns. They do a good job and they have to continue.

But in the future that won’t be necessary, so those health resources go elsewhere. So we save all of that for all time and we are using all this money to actually build functional health system. It is not just polio vertically. This is a bit of a change. In Nigeria, you have to get routine immunisation, so the $6 billion is part of that. In Pakistan and Afghanistan you have to get routine immunisation, and that is the base. That is why this polio money will help the President of Nigeria save a million lives, just in his country alone. It’s kind of mind-blowing but it’s very do-able – those are the figures. Even though it looks like it doesn’t pencil up, it does. We can send you a report on that.

Yes, [the focus also remains with diseases such as malaria]. We spend a million a year on that. It happens that we spend a bit more on polio than anything else, then vaccine delivery, HIV and malaria. The difference is not gigantic and we have never reduced the amount we spend on those diseases. None of [these diseases] has decreased enough for us to cut back [on our spending]. Our funding of the vaccine, drug or delivery [has not reduced].

Remember, we do more upstream research funding than most people. Most governments fund downstream delivery, which is great. We partner with that and put money into global funding. But where we are fairly unique is funding the creation of a new vaccine. Actually the U.S. government is big in that area but other than the U.S. government there is no one that is really big in funding upstream more, other than us.

Measuring education quality

Embarrassingly the countries that are best at measuring future performance [through education] are developing countries in Asia – or they were developing. Singapore, ROK, Hong Kong and China – they measure their teachers better than here. And they get much better results for much less money. There are countries worse than the U.S., such as South Africa, Mexico and Brazil is certainly not much better. In terms of equity and future economic performance – if you don’t run a good teacher personnel system, you’re not serious. Yet often, politically, the status quo is highly defended by the teachers’ unions. Mexico was sort of extreme. The government wasn’t allowed to know how many teachers there were. They just had to write the cheque. Nieto is trying to change that, but talk about a bad system! This was a bad system captured by the guild in the most ultimate way. The U.S. has some of that but nothing like Mexico. Getting change where you measure and you make sure that people are performing – that makes people really nervous. Even good teachers get a little nervous as you bring this in. We have personnel system reform and we have technology.

Religious views affecting vaccination programmes

I am afraid of unrest and instability. I’m no Boko Haram expert. But it doesn’t mean we are not going to do our best to eradicate polio and partner with our government to try to save those million lives. By persevering we honour the people in Pakistan who died. The benefits of getting rid of these things are so clear. For Nigeria to take those resources and put all of them into routine immunisation is just incredible.

If Nigerians are the last [to still have polio] then there will be these huge quarantine regulations put on anybody going in and out of the country. They have talked about that already. But because we still have Pakistan and Afghanistan [Nigeria isn’t quarantined yet]. In those countries the [polio] cases are a third of 2012 despite the violence and craziness. The majority of the cases were in northern Nigeria last year. We’re getting good help though. Some of the states are more engaged than the others.

We’re going to persevere in this. The world has spent so much money on polio eradication. To have any country be the reason for the entire world to give up – that would be a stunning tragedy. We are going to get down to two countries or one country, somewhere.

It is not clear which is the hardest for us [in terms of obstacles to vaccination]. So far the violence directed at vaccinators is the worst in Pakistan. The rumours about the vaccine not being good for you were the worst in Nigeria and we still suffer from it even though that was in 2003. There are parts in the north where we get 20 per cent refusals. Religious leaders come in and talk to the families and change their minds most of the time, but it just makes it that much harder.