Increasing investments in healthcare
Mrs. Kenny Kentimu Okojie founder and pharmacist at D-Hub Pharmacy in Lagos, Nigeria received a MCF loan to expand her pharmacy into a health shop. In that way was able to gain additional revenue during the difficult COVID-19 period.
Medical Credit Fund (MCF) is PharmAccess' impact fund specifically targeting and supporting small- and medium-sized healthcare facilities. We are bridging the currently existing finance gap, making it possible for health facilities and other involved parties to invest in the quality care they want to provide. Read more about the Medical Credit Fund in this chapter:
2021 Impact
The start of a transformation – raising funds for MCF-II
While investing in healthcare continues to be perceived as a high risk in the finance industry, we can safely say that MCF has been a success story. By disbursing loans with a 96% repayment rate, we demonstrated that investing in healthcare in sub-Saharan Africa is a viable and effective investment.
Although 2021 was less turbulent than the first year of the pandemic, it was still a challenging year for the healthcare facilities we work with. 2021 was also the year where we focused on strategizing and preparing for the launch of MCF-II, to further grow our impact.
One of the main achievements of 2021 was successfully raising funds for MCF-II's launch. This new fund will operate alongside MCF-I, as the former will be phased out over the coming years. An injection of €7.5 million equity in MCF-II from the Dutch Ministry of Foreign Affairs in January 2021 helped address the challenges of the pandemic in our clients' health facilities. It also provided a valuable anchor for raising a further €32.5 million later in the year. In many ways, MCF-II will continue to build on the successes of the initial fund. Like MCF-I, MCF-II is a blended finance model, working together with public and private social investors. From MCF-I we learned that working with banks to disburse loans is challenging, as it is difficult for commercial banks to ease their eligibility requirements. We have thus stopped doing this, as it impedes access to capital for small- and medium-size healthcare facilities. At the same time, we have structured MCF-II to operate in a more cost-effective manner, laying the foundation to reach our goal of becoming financially sustainable by 2027.
Accelerating impact throughout the pandemic
MCF was well on course, digitalizing its loan offer, when the COVID-19 pandemic emerged. The pandemic brought great uncertainties to African health facilities and placed them under increased pressure. For many, it was a time of fluctuating patient visits and revenue, and at the same time with increased expenditure on personal protective equipment (PPE). Also, during these challenging times, there was no financial support from the public or private sectors. Medical Credit Fund wanted to avoid facilities having to close their doors because of COVID-19 at all costs. The closure of private health businesses would have resulted in many more people being unable to access care, especially in rural or hard-to-reach areas.
With our loan products, we reached a great variety of facilities during the pandemic – from primary care facilities in rural areas and full-service hospitals in capital cities to pharmacies and producers of PPE and other essential health products.
The role of Cash Advance and other digital loans
Cash Advance is a working capital loan with flexible payment terms, currently available in Kenya. With a fast turnaround and none of the traditional collateral requirements, this digital loan played an important role in supporting healthcare facilities during the pandemic, enabling them to fund running costs as their revenues fluctuated and costs increased. The repayment rate of Cash Advance is currently at 98%.
Scaling up to 6,500 loans to support health providers
MCF and the digital loan portfolio also helped to scale success, disbursing a larger number of loans. Digital loans allowed MCF to better serve smaller facilities with lower revenues, as the loans could be in small amounts and with flexible repayment plans. In total, up to the end of 2021, we disbursed 6,500 loans to 1,800 facilities.
Reaching low-income groups Lastly, MCF has had a social impact in reaching low-income groups, as well as more remote areas, largely due to the easy accessibility of digital loans. In fact, 55% of the patients served by the facilities we support are from low or very low-income groups.
Scaling up in the future
As we look forward to 2022, we are keen to forge ahead to increase our impact with MCF-II. Our objectives going forward include:
Continuing to scale up our digital services, especially for female entrepreneurs As the results of 2021 demonstrated the real effectiveness of digital loans, MCF-II will prioritize digital lending. This is to ensure that healthcare facilities continue to receive the funding they need, especially female entrepreneurs based in more remote areas.
Combining access to capital with technical assistance
Our goal is to improve the access of patients to quality care, so we are keen to help health facilities not only with access to capital but also by providing business support, meaning we engage with healthcare providers in a non-financial capacity. Examples of technical assistance include healthcare master's degrees, and healthcare architecture and design courses that we provide.
In the coming years, we will continue to introduce MCF clients to SafeCare, PharmAccess’ stepwise improvement program around care quality. SafeCare creates a quality benchmark for MCF clients and helps them to make smarter investment decisions, supporting steps in quality improvement. We have found that enhancing the quality of a provider’s healthcare services builds trust among its patients, which consequently puts them in a better position to pay back their loans.
Giving healthcare facilities currently participating in the SafeCare program access to financial resources supports them to make faster improvements in the services they offer to their communities.
