The International Finance Corporation (IFC) has partnered with tech company Philips and the Co-operative Bank of Kenya to help small businesses in the health sector in Africa to purchase essential medical equipment and strengthen their capacity to respond to the COVID-19 pandemic.
These are the first partnerships concluded under the Mechanism for Access to Medical Equipment in Africa (or AMEF for Africa Medical Equipment Facility ). The latter aims to provide risk-sharing mechanisms to facilitate the access of small businesses to loans and leases for a total maximum amount of USD 300 million.
Through this mechanism, IFC will partner with medical equipment manufacturers and local financial institutions to support healthcare providers in Cameroon, Côte d’Ivoire, Kenya, Uganda, Rwanda, Senegal, and Tanzania.
Loans to small businesses in the health sector – which serve more than half of Africa’s population, especially low-income patients – are expected to range between USD 5,000 and USD 2 million.
Currently, most of these small caregivers cannot obtain bank loans due to the high credit risk associated with them. Consequently, they lack the means to purchase medical equipment, modernize their facilities or recruit qualified personnel.
“Many small businesses in the health sector in Africa do not have the equipment they need to respond to the COVID-19 pandemic and provide other essential services to the population. Unlocking access to finance can save lives now. In the longer term, this will help strengthen health systems across the continent,” explains Makhtar Diop, Managing Director of IFC. “
According to Winfried Janse, the person in charge of health at Philips Africa, lack of access to quality and affordable healthcare is one of the most critical issues of our time.
“Many institutions on the continent would like to invest in new medical technologies, but it is difficult for them to obtain the necessary funding. This partnership we will enable healthcare establishments to provide quality care to a large number of patients,” Mr. Janse said.
Risk sharing is an effective instrument to encourage financial institutions to extend loans to small businesses. With the support of IDA-PSW and GFF, in the form of a first-risk guarantee, IFC is able to offer risk-sharing mechanisms in the most difficult markets, including countries affected by conflicts.
“This partnership with IFC and Philips will allow the Co-operative Bank to extend credit to a greater number of investors in the health sector, who have so far faced great difficulties in obtaining loans. Health expenditure is one of the most important items in the budget of many households in Kenya. Any assistance aimed at fostering the growth of the sector and benefiting our people is therefore welcome, ”said Gideon Muriuki, Chairman and CEO of the Co-operative Bank of Kenya.
AMEF also includes a technical assistance program that aims to help small businesses in the health sector improve their medical equipment procurement processes, financial management skills and business planning. This program will also help participating financial institutions to strengthen their skills in underwriting credit for the health sector.