Queen Máxima visits a Kenyan female healthcare entrepreneur and Medical Credit Fund client. Watch the highlights.
The Medical Credit Fund (MCF) is dedicated to supporting healthcare providers with access to finance, with special attention to women entrepreneurs. To date, the MCF has disbursed close to 10,000 loans worth €180 million to 2,083 clients.
In 2023, we doubled down on our efforts to support healthcare providers during the global economic downturn, increasing the number of loans issued to a record 1,514. These loans help providers, especially the smallest providers that serve lower income groups, manage their working capital or purchase medical equipment in a challenging environment.
We believe access to finance is key to improving the quality of healthcare and people’s trust in providers, and we share lessons learned and advise partners on access to financing to broaden the impact of our work.
Supporting healthcare SMEs
The private sector contributes significantly to healthcare provision in sub-Saharan Africa, but health facilities struggle to provide quality care that meets the community's needs. This is because private healthcare businesses are often micro, small, and medium enterprises (MSMEs), which face severe challenges in access to capital.
Most of these healthcare facilities cannot meet banks' eligibility requirements, and for banks and other financial institutions, the health sector is not very attractive. And many health entrepreneurs operating small businesses are women, who have traditionally been unable to access loans due to a lack of collateral.
With access to financing, underserved healthcare providers can purchase medical equipment, improve quality, and prevent medicine stock-outs. As the quality of their services improves, the number of customers and visits increases, thereby increasing their revenues while improving health.
Part of PharmAccess, the Medical Credit Fund (MCF) is dedicated to financing small and medium-sized healthcare businesses in Africa. The MCF aims to help healthcare facilities access finance to invest in their businesses, and ultimately expand access to quality healthcare. So far, MCF has disbursed close to 10,000 loans worth over €180 million to more than 2,000 clients.
MCF continues to be recognized for improving access to financing in the health sector. In 2023, for the ninth year, the MCF was listed as one of the ImpactAssets 50, which selects fund managers that demonstrate a wide range of impact investing activities across geographies, sectors, and asset classes.
Empowering women through finance
Sub-Saharan Africa is the only region in the world where more women than men become entrepreneurs, but women often struggle to succeed in business because they cannot access financing. In healthcare, this potentially impacts women more broadly: women health entrepreneurs are often those who provide maternal healthcare.
At the MCF, we believe this can and should change. The MCF empowers women by giving women health entrepreneurs access to finance and by supporting the companies that provide healthcare to women. We are working to close the gender gap by offering innovative products that enable women to access loans. In 2023, 29% of MCF loans were issued to women entrepreneurs. While many lenders reduced the number of loans they were issuing in 2023, we continued to support women throughout the economic downturn, disbursing 445 loans to women.
Our blended finance model MCF-II works with public and private social investors, focusing on direct lending through digital loans. Traditional loans require collateral, which prevents many women entrepreneurs from accessing finance. With our
digital loans, the provider’s history of mobile money receipts serves as the basis for the loan, and the digital revenues are used directly to pay it back. This enables women to access the finance they need to improve quality and build trust.
In 2023 we conducted research to improve our reach to the women entrepreneurs who most need these digital loans. The study revealed that digital loans can indeed contribute to closing the gender gap.
However, it also revealed barriers, showing that many women health entrepreneurs are not yet aware of the digital loans offered by the MCF, they have limited networks and access to information, and they are unable to meet collateral and asset requirements of traditional financial institutions. To address this, we will further focus on creating awareness and trial of the MCF digital loans. We started out by organizing an event focused on bringing women entrepreneurs in health together.
+ In this policy brief, some of the MCF's female clients elaborate on gender-specific barriers to lending.
Unlocking the potential of digital loans
Healthcare facilities faced major financial challenges in 2023, with the cost of medicines and fuel rising to unprecedented levels and income through insurers and patients falling. Kenya saw a large currency devaluation in 2023, Nigeria is experiencing ongoing economic problems, and while the situation in Ghana is a little more stable after the massive devaluation in 2022, inflation is still above 20%.
This situation affected our expansion in 2023 but also gave us even more reason to support entrepreneurs. We offer loans for equipment, construction and renovation, and working capital; in 2023, we issued more working capital loans, enabling companies to provide continuity of care to patients. A large proportion of these are digital loans, which are available in Kenya (branded as MCF Cash Advance) and, as of 2023, in Ghana. We are preparing to launch in Tanzania.
During these difficult times, we doubled down on our support: with an injection of €5 million from the Dutch Ministry of Foreign Affairs, we continued to lend when nobody else would, resulting in 25% more loans issued in 2023 compared to 2022.
We are grateful to the commitment of our partners, including the Dutch Ministry of Foreign Affairs, FMO, British International Investment, Swedfund, Philips, and the U.S. International Development Finance Corporation, which enables us to support healthcare providers and drive the virtuous cycle of trust.
We believe it is possible to realize the full potential of digital financing for healthcare, provided governments instate favorable policies and regulations. We will continue to advocate for this and provide the evidence they need to make transformational changes.
MCF Digital Loans launch in Ghana
Enhancing the value of quality and technical training
Health financing is inextricably linked to quality of care, and we believe by supporting the business of quality, we can help businesses thrive while offering better care to more people. When a healthcare SME wants to take out an MCF loan, the MCF and PharmAccess work in partnership to offer them technical assistance (TA) aimed at reducing risks and enhancing business and quality performance. We support borrowers to improve quality through SafeCare. We also build local capacity through curricula in health management and subject-specific training, organized by local partners.
In 2023, the MCF had close to 500 active customers. Most of these are digital loan recipients who took part in an onboarding process that included self-assessments developed by SafeCare, as well as support calls and webinars on quality improvement.
The support we offer is based on our clients’ needs: we listen to them and adjust our offer accordingly. With the support of investors, including FMO and Swedfund, we have embarked on research to understand how we can provide TA that gets clients to engage.
Over time, our focus has moved towards smaller clinics that need support in the form of working capital. Improving quality is an important goal, and while these clinics could benefit from SafeCare, it can be challenging for providers to set in motion. We are currently developing a modular approach, which makes it easier for clients to start their improvement journeys.
In addition, we are involved in USAID-funded programs in Zambia and Rwanda, which include activities to support quality and business improvement for health SMEs.