Access to capital
The Medical Credit Fund is the first social financing fund that facilitates access to credit for the middle and lower segments of private healthcare providers in Africa. It was initiated by PharmAccess, Health Insurance Fund's implementing partner.
Private clinics provide about 50% of all healthcare services in Africa and are a staple of health care to low and middle-income Africans. Their private ownership status usually excludes them from contributions from donor or government resources. As many of these small and medium-sized enterprises do not qualify for traditional bank loans either, they often struggle to maintain their facilities or to improve the quality of their services.
Up until recently, local banks considered the private healthcare sector to be rather risky due to lack of performance benchmarks and the poor quality of business concepts applied. And for entrepreneurial investors such as angel investors, venture capital or other investment vehicles, the business volume of most private facilities was too low to consider involvement. At the same time both African governments and leading international stakeholders such as the World Bank and the IFC were voicing the importance of the private healthcare sector as a necessary complementary distribution channel for medical services. Therefore, there was a growing need to facilitate access to credit for especially the middle and lower segments of private healthcare providers.
Medical Credit Fund
The Medical Credit Fund was the very first fund dedicated to meeting that demand and bridging this financing gap.
After winning the G20 SME Finance Challenge Award for its innovative financing model, the Medical Credit Fund closed its first round of investments in 2012. Participating investors are the Overseas Private Investment Corporation (OPIC), Bill & Melinda Gates Foundation, Soros Economic Development Fund, Calvert Foundation, Deutsche Bank Americas Foundation and Dutch private investors. In 2014, the Medical Credit Fund received an OPIC Impact Award for Access to Finance for its groundbreaking work.
The Medical Credit Fund program is operational in Kenya, Tanzania, Ghana and Nigeria. It employs a two-pronged approach: Through business and quality training, clinics learn how to develop their business potential and how to improve the quality of their healthcare services. At the same time, access to capital allows them to purchase modern equipment, hire expert staff, make basic repairs or expand their facilities.
By helping clinics establish a track record of borrowing and repaying their loans, Medical Credit Fund also prepares these clinics to independently qualify for larger bank loans. With an average repayment rate of about 97%, the Medical Credit Fund portfolios are ranked among the highest performing portfolios of its partner banks.
Medical Credit Fund’s banking partners are K-REP Bank, Chase Bank Kenya, BancABC, National Microfinance Bank Tanzania, Bank of Africa Tanzania, UniBank Ghana, HFC Bank, FCMB and Diamond Bank. Its technical services partners are KMET, PSK, APHFTA, Hygeia Foundation, Marie Stopes International and Society for Family Health.