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    Private sector at the bedside of health

    07/04/2017

    Access to healthcare – and to high-quality care – is a challenge for a large section of the population in Sub-Saharan Africa. It is often small private structures which meet needs in rural areas and for the poorest. The Medical Credit Fund foundation works alongside them and demonstrates that in the health sector, it is possible to effectively combine a social purpose with entrepreneurial projects.

    Sub-Saharan Africa has 16% of the world’s population, but only accounts for 2% of global health expenditure. Yet over the years, population growth, the rise in chronic diseases, but also socioeconomic progress, have created an increasingly pressing demand for healthcare. But the African subcontinent suffers from a clear lack of investment.

    In this extremely tense context, some 50% of total healthcare delivery is already provided by the private sector, which plays a key role at all levels, from healthcare provision to retail trade. It even has a predominant place in certain countries, such as Uganda or Ghana, with over 60% of total healthcare provision. “Contrary to common belief, the private sector is sometimes the only healthcare provider in rural areas and deprived urban areas”, explains Aurore Lambert, health project manager at AFD. “It is a far cry from provision just for rich people!”.
     

    These structures are often small or medium-sized, yet they face two major problems which are intrinsically linked: the poor quality of healthcare and the difficulty of gaining access to financing to allow investments to address this. In reality, the banking sector generally considers that their activities are risky.
     

     

    Some 600 health centers financed

    Medical Credit Fund (MCF) is a foundation whose purpose is precisely to facilitate financing for these structures, while helping to improve their quality standards. The foundation is based in the Netherlands and is, for the time being, the only one of its kind. Since it was set up 5 years ago, MCF has financed 586 health centers, mainly in Kenya and Ghana, but also in Nigeria and Tanzania.

    The average loan amount stands at EUR 20,000 and loans are mainly used to renovate buildings or purchase equipment. For example, a few months ago, South B Hospital, a small hospital structure with 45 beds located in a popular neighborhood of Nairobi, benefited from a loan to finance the creation of intensive care, nephrology and hemodialysis units. The hospital teams will follow a healthcare quality improvement program throughout the duration of the loan.

     

    Photo Dorte Hopmans © Diorte

     

    MCF is a not-for-profit foundation, but it is also a private actor: MCF does not allocate grants, but aims to grow in order to achieve financial equilibrium. Equilibrium ensures that the project is autonomous and gains in strength. “It is a social business”, explains Selvan Pajaniradja, who develops this sector of operations at AFD, “The aim is indeed to build high-quality health service provision for all at an affordable price. MCF consequently works for development, but at the same time generates the revenue which is essential for the sustainability of the project!”.

     

    French-speaking Africa for tomorrow?

    The originality of MCF can be seen in its inclusive and partnership-based method. The foundation works with local financial institutions, providing them with its knowledge of the health sector and assisting them in the appraisal and follow-up of files. “The aim is to work with local partners and help them develop their range of loans for the sector”, adds Aurore Lambert, “It involves showing that financing health services in Africa can be a profitable activity.” 

    As the MCF project fits in with its core objectives for health and social business, in December 2016, AFD decided to take part in a funding round, via a EUR 3m concessional loan and EUR 1m grant from its social business facility. It has thereby joined up with the International Finance Corporation (IFC) and Calvert Foundation . AFD’s long-term objective is to help MCF establish itself in French-speaking Africa, in particular in Côte d’Ivoire, Cameroon and Senegal, where there are also considerable needs. “Given its expertise in the health and financial sectors in a number of countries”, points out Arjan Poels, Chief Executive Officer of MCF, “AFD is a key partner in supporting our project to improve the financing capacity of health structures and, more generally, healthcare quality in Africa.”
     



     
     
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