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Medical Credit Fund Progress Report 2014


Preface Medical Credit Fund remains the first and only dedicated fund providing loans to small and medium sized healthcare facilities in Africa. It combines tailor-made loan products and a system for improving business and clinical quality, with the ultimate aim of improving healthcare services for low-income earners in Africa.

In remembrance of Prof. Dr. Joep Lange and Jacqueline van Tongeren On 17 July 2014 our colleagues from the Amsterdam Institute for Global Health and Development Joep Lange and Jacqueline van Tongeren lost their lives on board Malaysian Airlines flight MH17, en route to the International AIDS Conference in Melbourne. Joep was a world class scientist and a visionary leader, most known for his pioneering work in HIV/AIDS care, treatment and research. As founder and chairman of PharmAccess, Joep helped expand this mission with new ways of financing healthcare, improving quality of care and setting up rigorous impact evaluations. He was involved in the inception of the Medical Credit Fund and actively followed its progress. Joep and Jacqueline were, and continue to be, a driving force in leading all of us on the road towards an AIDS free generation and affordable access to quality healthcare. It is impossible to overestimate the contribution they have made.

The crucial role of the private health sector in complementing the public system to deliver essential healthcare in Africa is coming into focus. Although both the global impact investing community and local capital markets are increasingly aware that investing in healthcare pays, the investments needed to build a system of affordable and quality healthcare are still falling short. Against the backdrop of a changing financing landscape, Medical Credit Fund and our African partners are helping to close this gap. In the early years of our existence we struggled to find suitable partner banks and convince them to join our mission. It took almost a year to process the first few loan applications that were submitted in 2010. Now, banks regularly approach us to discuss potential collaboration, and their growing appetite is further evidenced by the fact that they are starting to take an increasingly large share of the risk. Last year, we formed new partnerships with Diamond Bank in Nigeria and Bank of Africa in Tanzania. Existing partnerships with banks like K-Rep Bank in Kenya have deepened, as they have pronounced health as one of their strategic pillars and taken the lead on recruiting clinics. By summer 2015, we disbursed more than 600 loans at a value of over USD 9 million to clinics in four African countries. Fresh opportunities on the horizon include building on partnerships with companies like Philips and exploring new avenues towards inclusive healthcare through mobile health (mHealth). Our innovative layered capital structure has enabled us to leverage large amounts of private capital, thereby increasing our developmental impact significantly. In 2014, we were honored to receive the OPIC Impact Award for Access to Finance and were selected as first runner-up in the SME Finance Innovation Award. We also were selected as one of the ImpactAssets 50. At the same time, we are perhaps most proud of how the program has resonated on the ground. The consistently high repayment rate (96.5% in 2014) has driven palpable change in a market where African banks are now even developing loan products of their own. Demand continues to grow as more and more clinics are embracing their potential to build their business and provide better healthcare for their patients. Thanks to the involved support of our investors and donors, the strong and important relationships with our African partners and the unwavering motivation of our colleagues, we are highly committed to continue in the spirit of Joep and Jacqueline, working towards a financially and clinically sound healthcare system in Africa. Monique Dolfing-Vogelenzang, Managing Director July 2015



Vision To enhance the provision of affordable quality healthcare services to low-income populations in sub-Saharan Africa.

Mission Increase access to capital for small and medium-sized healthcare providers in order to facilitate sustainable clinical quality improvement. 3


Access to capital Most African medical professionals in the private sector, especially those that serve low-income groups, have limited or no access to capital. With a loan, they can grow their business and improve the quality of healthcare services for their patients. The private healthcare sector serves over 50% of the population. Despite its crucial role in complementing the public system, the private sector faces many challenges. The vast majority of private healthcare providers in Africa are small and medium-sized enterprises (SMEs), ranging from smaller hospitals, diagnostic and health centers to dispensaries, maternity homes and nurse-driven clinics. One of the things they often have in common is the fact that they are not (yet) bankable.

Investment climate As many SME owners are medical professionals with little or no experience in business management, their facilities often lack a credit history, adequate bookkeeping and accounting systems, financial performance records and sufficient assets to meet collateral requirements. As a result, many are unable to secure formal bank loans. From a potential investor’s point of view, the fragmented and opaque private health sector can easily be deemed a high-risk bet. Without independent and transparent benchmarks or a quality assurance system, they cannot compare, assess and rate healthcare quality. Enforcement of loan contracts, such as retrieving equipment from a facility in a poor community, is difficult for social reasons. Also, revenue streams are unpredictable due to the high percentage of out-of-pocket payments from uninsured patients. To cover all these unknown risks banks tend to levy high surcharges and mark-ups, making cost of capital unaffordable for most healthcare providers.

This leaves the private health sector in a vicious circle of low trust, low demand, low willingness to prepay, few investments and low quality supply. Medical Credit Fund aims to help create a virtuous cycle by building trust and reducing risk. SMEs are trained on how to become bankable and a set of clinical standards are making quality improvement measurable. This makes investors more likely to seize the opportunities in the private health sector, leading to heightened investments in healthcare and empowering healthcare providers to grow their business and serve more patients.

A short history Medical Credit Fund is a not-for-profit foundation that aims to increase access to quality healthcare services for low-income people by facilitating loans and technical advisory services for healthcare SMEs. It was established as part of the PharmAccess Group in 2009 and has since set up operations in Tanzania, Kenya, Ghana and Nigeria. Just after disbursing our very first loan, we won the G20 SME Finance Challenge Award for our innovative financing model. In 2012, we closed our first round of investments. In early 2014, we received the inaugural OPIC Impact Award for Access to Finance.


Beth Bafford Director, Investments Calvert Foundation Calvert Foundation is a US-based non-profit financial intermediary that raises capital from private, retail investors in the US and invests in community and economic development around the world. Calvert Foundation has invested globally for nearly twenty years. Most of its past international investments were in microfinance institutions.

“Medical Credit Fund was one of Calvert Foundation’s first investments in a structured fund focused on financing the growth of SMEs. A few years later – thanks in part to a great experience with Medical Credit Fund – Calvert Foundation is actively investing in funds that are focused on growing SMEs across health, clean energy, fair trade, and agriculture. Within health, our investment in the Medical Credit Fund has allowed us to vastly expand our understanding of the needs of SMEs operating in the health sector in sub-Saharan Africa. Medical Credit Fund’s work touches each of the three main objectives in improving health outcomes: quality, access, and affordability. • Quality: Through SafeCare, Medical Credit Fund has demonstrated the value of transparent standards for quality of care.

Beth Cobert (White House), Monique Dolfing-Vogelenzang (Medical Credit Fund), Jennifer Pryce (Calvert Foundation) and Francis Kelly (Deutsche Bank Americas Foundation)

‘Our investment in the Medical Credit Fund has allowed us to vastly expand our understanding of the needs of SMEs operating in the health sector in sub-Saharan Africa.’ They have proven that consumers, payers, governments, and providers all have a shared interest in developing and adopting this common set of quality metrics. • Access: Medical Credit Fund understands the need for the expansion of existing health providers, whether it be into new geographies or new services, and provides flexible financing solutions for clinics to grow in line with their changing consumer demand. This increases access for underserved populations more efficiently and sustainably. • Affordability: Taken together, the technical assistance, SafeCare evaluation, and financing solutions provided by Medical Credit Fund allows clinics to run better businesses. These more efficient providers can deliver

more affordable services for the patients they serve. In addition to their holistic approach to growing and strengthening health providers, Medical Credit Fund has shown an incredible ability to adapt to the rapidly changing environment in which they operate, one of the qualities we look for in strong fund managers. When we invest in a new fund, there is no way to anticipate all of the challenges ahead, so this adaptive attitude has been critical to their success. We have been grateful for the opportunity to learn alongside the Medical Credit Fund team for the past few years and look forward to working with them for years to come.”



‘Joining the program has raised the bar of our perception of quality and has helped us to chart a course for attaining this standard.’ Dr. Olayinka Sobamowo, Medical Director, O&S Hospital, Lagos, Nigeria

‘Combining loans with capacity building through business and quality training is the perfect marriage. This program is really bringing change. One clinic and one community at a time.’ Monica Oguttu, Executive Director, KMET, Kenya



How we work As the first fund specialized in health SMEs in Africa, Medical Credit Fund prepares clinics for securing loans from local banks, builds capacity through business and quality training, and helps investors see the potential of this emerging asset class. Many healthcare providers are unable to qualify for traditional bank loans. As a result, they struggle to find the money to purchase modern equipment, expand their facilities or even pay for basic repairs. With our partners, we help clinics build a financial track record, grow their business acumen and improve the quality of their healthcare services. By combining financing with technical support, we build capacity, improve the business potential and the quality of healthcare services on offer, and make clinics bankable.



Over the course of 2014, the success of this approach and the growing interest in the private healthcare sector has allowed us to gradually enlarge the role of the banks. In addition to increased risk sharing, the banks are also starting to take on recruitment and initial screening of the clinics.

SafeCare assessment

quality improvement

Quality improvement and business planning The loans are linked to a technical advisory (TA) program focused on both clinical quality and business in order to ensure that the loans lead to better quality services for patients.


repayments and possibly a next loan

Access to loans Medical Credit Fund mitigates risks for banks in order to bridge the financing gap for firsttime borrowers in particular. The loans are offered in local currency and our contracts with the banks stipulate reasonable interest rates for the healthcare providers in the program. We employ a policy of incremental lending: by starting less experienced clinics off with smaller loans, we protect them from over-stretching their repayment capacity and help them to establish a positive repayment track record. The entry and small loans also ensure that clinics get their collateral documentation in order so that they can potentially meet the more stringent requirements for larger loans. Larger loans have additional requirements, such as a SafeCare entry assessment, a first quality assessment, a two-day business and a one-day quality training, the development of a quality upgrade plan as well as a business plan.

• The clinical quality side of the program is based on the SafeCare methodology, the only internationally accredited quality assessment system designed especially for resource-limited settings. SafeCare


more patients, receiving better health care

AHME 2014 was the second full active year of the African Health Markets for Equity (AHME) program. AHME is a five-year partnership led by Marie Stopes International and funded by the Bill & Melinda Gates Foundation and the UK’s Department for International Development (DFID). AHME aims to improve health outcomes by enhancing the quality of private healthcare for the poor in Ghana, Nigeria and Kenya. As part of this program, the healthcare providers in the partners’ franchise networks (Marie Stopes International, Population Services International and Society for Family Health) have access to loans as well as support in business and quality improvement.

health insurance program





< 5,000

6 months


5,000 – 10,000

< 12 months


6,000 – 50,000

< 36 months


50,000 – 350,000

12 – 60 months



Level 1

Level 2

Level 3

Level 4

Basic Assessment

Accreditation Level

Level 5

Advanced Assessment

Quality Sub-Saharan Africa has a shortage of institutions and standards that can ensure objective measurement and rating of the level of quality of basic healthcare facilities. As a result, quality levels are not transparent, benchmarking is not possible and patients face uncertainty with regard to the quality of services at different facilities. Building institutions and creating standards that help patients to make informed decisions about healthcare will address these issues. In addition, such systemic changes can stimulate providers to improve the quality of care, motivate performance-based financing mechanisms by (inter-)national donors and investors, and enable local and national healthcare authorities to monitor and regulate healthcare providers.

with patient safety and quality demands. The methodology consists of measurable steps towards quality improvement.

The SafeCare quality improvement program works with a set of unique and internationally recognized standards that are realistic for resource-limited settings while not compromising on quality levels. These standards focus on ‘bottom of the pyramid’ public and private healthcare facilities such as dispensaries and health centers, which often struggle

From the onset, financing quality improvement through the SafeCare program has been a key aspect of our technical advisory program. While full accreditation may remain a bridge too far for most clinics, SafeCare creates an improvement path that offers healthcare providers positive incentives to move steadily upwards in quality.

SafeCare methodology is being firmly embedded in the legislative framework of the countries we work in. Through strategic partnerships with the governments of Kenya, Tanzania, Nigeria and Ghana and government agencies such as the National Hospital Insurance Fund (NHIF) in Kenya and the National Social Security Fund (NSSF) and the National Health Insurance Fund (NHIF) in Tanzania, SafeCare is recognized as one of the external evaluation systems that sets standards and certifies quality of care. Interest in the program continues to grow.

introduces quality standards, innovative tools, instruments and training modules to assist clinics in achieving basic safety principles before continuing to improve their quality further. It is built around manageable steps of quality improvement and will lead to substantial compliance with safety and quality standards and accreditation. Quality advisors also help SMEs to identify their highest priorities for quality improvement. SafeCare creates transparency of quality levels and allows for benchmarking so that investors and stakeholders can compare healthcare facilities, evaluate progress according to fixed standards and measure investment results. • On the business side, the program provides business training, performs financial due diligences and facilitates the interaction between the clinics and the banks where necessary. Business advisors work with the health SMEs to compile annual statements, propose efficiencies in management and operations, scan the market for growth opportunities and, finally, support them in producing a convincing business plan for the bank. To this end, we developed a business training module, a

‘We used the loan to renovate the clinic and contract a gynecologist who comes every Saturday. The number of patients is increasing daily.’ Dr. Hassan Ahmad, owner Bonde La Mpunga Dispensary, Tanzania

web based business planning tool for clinics and a business assessment tool that enables central data gathering and analysis to score performance and support clinics with feedback on how to further improve their financial management. The TA program is delivered by PharmAccess in partnership with social franchise networks, local associations or umbrella organizations of private healthcare facilities. These partners select and enroll clinics: they are responsible for the business planning and quality training, they analyze the clinic’s general performance and financial situation, they identify its most urgent needs and improvement priorities, they calculate whether the clinic will be able to repay the loan within a given time frame, and finally, they assist in submitting a loan application to the bank. As such, the TA program significantly helps to reduce the investment risks and to build trust.







• BancABC • National Microfinance Bank (NMB) • Bank of Africa

• Association of Private Health Facilities in Tanzania (APHFTA) • Christian Social Services Commission (CSSC)

• Philips Health Systems, BD • Pfizer

• PharmAccess Group • IFC/Health in Africa Initiative


• KREP Bank • Chase Bank

• Kisumu Medical and Educational Trust (KMET) • Population Services International (PSI/Kenya) • Marie Stopes International, Kenya (MSK)


• uniBank • HFC Bank

• Marie Stopes International, Ghana (MSG)


• First City Monument Bank (FCMB) • Diamond Bank

• Society for Family Health (SFH) • Marie Stopes International, Nigeria (MSN)





Healthcare provider

Tornam Sapati

Dr. Stephen Yobo

Head of Credit Risk department uniBank

Medical officer Anthon Memorial Hospital

“If you look at the structure of the economy in Ghana, much of the funding comes from the government, with very little coming from the private sector. In rural areas especially, there are many SMEs and a growing need for quality health services. Since government cannot solve all these issues, public-private partnerships are an effective way to achieve more.

“We used our loan to purchase a portable Philips ultrasound scan machine. It’s a world of difference. Sometimes I compare it to the old machine and I laugh. Diagnosis comes much more easily now, the resolution is perfect. It recently helped us detect an extra-uterine pregnancy. And if we have any doubts about what we see, we can adjust a Doppler to the machine.

MCF helps us move beyond our catchment area to provide financing for quality improvement at rural as well as urban clinics. Its model fits our risk appetite in that, besides the risk-sharing agreement, it gives us insight into the technical operations as well as the finances of clinics.

Another benefit is that it has a big memory capacity and stores all the records of the patients. One day we had a power failure just as I was using the machine. I thought ‘Oh no, now I’ll lose all my data!’ But thanks to the battery life, the machine was still on. I could finish and save my work. Clients are also happy with it. We can manoeuvre the screen so that they can see clearly and ask questions to understand what they’re seeing. They can be much more involved this way.”

The MCF program is a very, very important intervention in Ghana. Our partnership is a win-win situation. It is not only a profit-making avenue for us, but a means of giving back to society and boosting the health sector at the same time.”

‘We used our loan to purchase a portable Philips ultrasound scan machine.’ Dr. Stephen Yobo Anthon Memorial Hospital Accra, Ghana




Spotlight on Siloam Hospital




7.6 million

Procedures in place Alice Bett, a lawyer by profession, founded Siloam Hospital with her husband Franklin, a former politician. She now runs it with Mr. Stanley and Mr. Nimrod. “When Franklin and I started, neither of us had a medical background,” Alice explains. “This program has

opened our eyes to areas where we could improve on our operations and services.” This ranges from the importance of hand washing to knowing not to store flammables with the other medicines in the pharmacy. “The hygiene has greatly improved. We have seen an enormous decline in infections and our patients spend less time in the hospital. Getting our standard operating procedures in place took time. We now have a quality improvement team, a clinical services team and a technical team, each with their own activities but all geared towards improving services for our patients. It was also an eye-opener to see how this measure which didn’t cost any money had such a positive effect on the hospital.” High staff turnover was a major challenge for Siloam. “Our nurses would often move on to other jobs within three to four months. Now, we invest in continuous medical education, we built staff houses on the premises and our staff really feels and functions like a team with a shared goal. Job


Sept 2011

Dec 2011

Oct 2012

May 2013

April 2014

June 2014

Siloam Hospital Ltd was established

Entry Loan Kshs 500,000 (USD 5,700), used for computer hardware and an X-ray processor.

SafeCare score 27% (Level 1)

SafeCare score 62%

Follow-up loan Kshs 4.2 million (USD 48,000), used for construction of new wards, staff houses, improving the theatre and improve maternity services.

SafeCare score 78% (Level 3)

Top-up loan - Kshs 20 million (USD 220,000) used for further construction of the surgical theater and laundry department, buying of equipment (patient monitors, autoclave, fetal doppler machine), buying of hospital beds, delivery beds, lockers, wash rooms.


# of HIV tests increased from 143 to 320 per month

On the verge of paying off their third loan and committed to further improve the quality of their healthcare services, Siloam Hospital is working hard to serve their community to their full potential. Siloam Hospital is a private, 78-bed hospital in the highlands of the Great Rift Valley in Kericho County, Kenya. People in the area are mainly employed in tea, flower or dairy farming. About 70% of patients seeking care at Siloam are low-income earners. About a third of Siloam’s patients are children. The hospital focuses on antenatal and maternal care and deliveries, other primary healthcare services and HIV/AIDS testing and treatment, dental care, family planning, ambulance and mortuary services. Up to 70 insurance companies are affiliated with Siloam. It is also fully recognized and accredited by the National Hospital Insurance Fund (NHIF).


60 # of patient visits increased from 1,600 to 2,630 per month

Revenues increased from Kshs 4.7 million to Kshs 7.6 million per month

satisfaction has become so high that our nurses choose to stay with us even though they might be able to earn more at a public facility.” To diversify the services available, Siloam also used their loan to construct a doctor’s plaza next to the main building, where they now have visiting consultants come in on average once a week. These include gynaecologists, paediatricians, ENT surgeons, orthopaedic surgeons, a dentist and an optician.


# of deliveries increased from 60 to 200 per month

that would be better business-wise, but that’s not what the heart of our director says.” When Siloam Hospital entered the program in 2011, they were assessed as a Level 1 facility in the SafeCare program. Since then, they have progressed to Level 3 and Siloam is determined to continue their improvement journey. Their current quality improvement plan has them projected to achieve Level 5 by the end of 2016. “Our entire staff is more focused than ever,” Alice explains. “We have seen what we can achieve and we don’t want to go back, we want to go higher.”

Challenges Although achieving NHIF accreditation was a milestone, the NHIF’s capitation model can be less advantageous compared to the fee for service model. Healthcare providers receive a fixed amount for every patient treated, regardless of whether they have had complex surgery or were diagnosed with a simple cold. In a hospital that offers as many services as Siloam, this often means they are not paid nearly enough to cover their expenses. Attracting more privately insured patients by constructing more private rooms, for example, is crucial to keep finances balanced, but as Alice says, “It’s important to not lose focus of why we started: to provide services for those who need it most.” Head nurse Beatrice adds “There are certainly other ways in which we could run this hospital



New approaches to healthcare financing With our partners, Medical Credit Fund also invests time and effort into developing new products to fulfill a need in the healthcare markets in the countries where we work. One such new product was launched in Ghana in June 2015. Nathaniel Otoo Deputy CEO National Health Insurance Authority Ghana (NHIA)

“The NHIA has had a strategic partnership with PharmAccess Group since 2008. One of our joint efforts was the completion of the design of Ghana’s health insurance accreditation system. Now, we are working with MCF and uniBank on an innovative new factoring product for healthcare providers. In our current system, when a clinic treats a patient the National Health Insurance Scheme (NHIS) has three months to pay out the claim. In practice, however, we see situations where it can take up to six months or more. This can create serious cash flow issues where clinics are unable to pay the salaries of the medical staff or to keep their pharmacy stocked. On top of that, in a situation of high inflation, money that lies

unpaid for a while loses its value. With MCF and uniBank, we will soon be able to offer healthcare providers the opportunity to discount the debts that the NHIS owes them to the bank. uniBank will first verify the claim with the NHIS, and then disburse the amount to the clinic. In due time, the NHIS will subsequently pay out to the bank. By reducing the turnaround time, healthcare providers can meet their financial obligations and minimize the depreciation of their money. This is the first product of its nature in the health insurance sector. As the NHIS spends about USD 250-300 million on health insurance claims per year, the impact of this new approach in healthcare financing can be very significant.”




Clinics and results

10 Number of banks





Total number of disbursed loans

Total disbursed loan amount in USD

Loan repayment performance

Current outstanding amount in USD





Top 3 diseases treated

HIV tests performed per month

1. Malaria 2. Hypertension 3. Skin infections

349 Kenya


Number of patient visits per month

Family planning visits per month

Immunizations per month


968 Total number of clinics in program

235 Ghana 217 Nigeria

876 Doctors

1,454 Nurses

2,218 = 5,229

681 Midwives

Supporting staff

Total number of health care staff at clinics


167 Tanzania



Number of local technical advisors

Quality assessment


Quality training


Business training



Quality improvement plan

Business plan finished


QUALITY INVESTMENTS SafeCare certificates Top 3 quality improvement areas


1. Renovations 2. Medical equipment 3. Accounts and other expenses

Total number of health facilities in the MCF program

Data until 31 December 2014

Top 3 priority areas 1. Infection control 2. Basic infrastructure and equipment 3. Staffing and skills

597 Total number of SafeCare assessments






6 45

I 282 entry level



Highlights 2014

Impact and leverage

New banking partnerships with Diamond Bank (Nigeria) and Bank of Africa (Tanzania)

Clinics in the program are successfully using loans to provide better quality services, build their business and serve more patients. Trust in the private healthcare sector continues to grow. Our program is specifically designed to provide access to capital for clinics that would otherwise rarely qualify for a traditional bank loan. As many of these clinics are first-time borrowers or financially less experienced clients, our loans carry a higher risk profile. Despite this higher risk, our loans portfolio generated an impressive 96.5% repayment rate in 2014. After successfully repaying their first loan and improving their business administration and clinical quality through the technical advisory program, about 60% of clinics apply for larger loans within our program. Others have become bankable to the extent that they can secure bank loans in the regular market.

OPIC Impact Award for Access to Finance

Catalytic role with banks The African healthcare financing landscape is slowly coming of age. Local capital markets are displaying an increasing interest in the private health sector, a segment long underserviced due to the high risk profiles associated with it. Whereas we initially struggled to find banks willing to partner with us, now we are often approached with requests for collaboration. Initially, banks often categorized the program as a corporate social responsibility product instead of as a viable business case. Now, they see the business potential of financing the health sector and are developing loan products of their own that are fully integrated in their regular targets and business policies.

50% 45%


36% 2.500

40% 35%




25% 1.500 1.000


18% 13%

15% 10%








Percentage of total risk exposure

Thousands (EUR)

Risk sharing local banks 3.500

In partnership with Philips Health Systems, we developed a loan product to bring innovative medical equipment within reach of private health SMEs.

In Ghana, the National Health Insurance Agency (NHIA) invited MCF to assist in designing an advance loan product with uniBank that bridges the delay in the pay-out of claims to private sector

health facilities and allows them to maintain healthy cash flows The Ogun State government in Nigeria invited AHME partners to contribute to a large demand-side finance initiative in the form of a public health insurance program with the private sector First runner-up in the SME Finance Innovation Award, initiated by DEG, FMO and Proparco Kenya carries about two-thirds of the cumulative disbursed loan volume. This can be attributed to high financial literacy levels among customers due

to deep penetration of the banking sector, but also to pro-active marketing by K-Rep Bank and Chase Bank, and successful recruitment by KMET and AHME partners Selected for ImpactAssets 50 for the second year in a row In Tanzania, PharmAccess and MCF embarked on the â&#x20AC;&#x2DC;Business of Qualityâ&#x20AC;&#x2122; program for smaller health facilities under the DFID-funded HDIF initiative, which also includes government cooperation to introduce qualityfocused accreditation on a larger scale

Risk sharing

Capacity building

Medical Credit Fund aims to increase the delivery of affordable quality healthcare services by reducing the investment risk. Besides taking on a more active role, our partner banks are also taking on more ownership. Risk sharing by the banks almost tripled from 13% in 2011 to 36% in 2014. As such, our program serves as a catalyst, creating an active and sustainable market where African banks will be able and willing to serve the financial needs of health SMEs. Other players in the health sector such as manufacturers and distributors of hospital equipment and supplies are also becoming more involved. In 2014 we embarked on a partnership with Philips Health Systems to help clinics acquire much needed medical equipment. With Pfizer, we have organized exchange programs across four countries. This has resulted in, for example, special loan products for pharmacies which help them to secure larger contracts with producers and distributors of medical drugs.

The 968 clinics in the program completed 432 business trainings and 376 quality trainings, covering a total of 1,769 health professionals. Also, by helping banks to train their staff and build internal resources, we contribute to long-term support for the healthcare sector.

Approved expert opinions / business plans 1.500

1,134 1.000



345 109

2014 0

Risk Portion Banks (EUR)

Risk Portion MCF (EUR)

Risk Portion by Banks in percentage








32% How clinics invested their loans Renovations Medical Stock / Inventory Accounts & other expenses Medical equipment


Fixed assets



8% 8% Healthcare quality improvement Clinics tend to use their loan primarily for improving infrastructure. Renovations include tiling, roof repairs and updating the laboratory, the consultation room or the reception area. About 20% of the clinics purchase new or additional equipment. Popular items include microscopes, hematology analyzers and delivery beds. The category â&#x20AC;&#x2DC;Accounts & other expensesâ&#x20AC;&#x2122; in the graph above refers to activities such as producing annual accounts, developing guidelines, protocols and standard operating procedures. Fixed assets concerns investments in, for example, generators, air conditioners and refrigerators.

To date, 483 facilities have completed a first SafeCare quality assessment, of which 114 also finished a follow-up assessment, usually two years later. Key areas where the facilities show improvement are infection control, waste management and the implementation of clinical guidelines. For example, where 59% initially scored non-compliant on antenatal care standards, only 9% scored non-compliant during the follow-up assessment. Non-compliance with standards on the use of PostExposure Prophylaxis for HIV reduced from 88% to 21%. Clinics also experience a strong improvement in their business, with 22% increase in patient visits over a six month period and a revenue increase of just over USD 5,000. 23






Healthcare providers in program





Approved Expert Opinions and Business Plans





Trained professionals





Loans disbursed (cumulative)





Value of loans disbursed in USD (cumulative)





SafeCare Entry Assessments





Patient visits per month







Chase Bank, Kenya

Diamond Bank, Nigeria

KREP Bank, Kenya

Eunice N. Kimeriah Chioma Kema Ogwo Calvince Odera Assistant General Manager SME Banking & Strategic Business Partnerships

MSME Assets Manager

Head of Special Products

For many years, the health sector in Kenya was underfunded. As a bank, we saw a largely untapped market as well as a chance to play a role in the social development of the country. Our collaboration with MCF has allowed us to test the waters and deepen our focus to the various sub-segments in the sector.

Partnering with MCF gave us a fresh perspective on lending to healthcare SMEs. Initially, we found the health sector to be quite a closed community. Clinics were risk averse when it came to lending, while bank analysts were not sufficiently equipped with the expertise to accurately evaluate how clinics run their business.

Until recently, healthcare was not seen as a bankable sector. When we started working with MCF in 2010, we focused on entry loans. For most clinics, this was their first loan ever. MCF helped us see that, with guidance, these clinics had the potential to grow.

Coming from our tradition of being a relationship bank, we tailor our approach to the needs of each sector to create long-term partnerships. We don’t just provide financial products, but aim to be a trusted advisor, adding value through capacity building in financial literacy in planning, book keeping and documentation.

Most clinics process about 70% of their transactions through their cash book, paying salaries and buying drugs from suppliers with cash. As a result, the bank cannot assess how creditworthy they are. MCF allows us to meet the clinics halfway by providing an in-depth analysis of the clinic’s business, enabling us to avail a loan we would otherwise not have disbursed using our generic loan appraisal system. So far, repayments are going well.

SafeCare is vital, as it not only benefits the patient but also ensures that the clinic is managed more professionally and that the business will be there for the long haul. This partnership has been a great learning experience as we transform from being bankers into a hybrid of financial healthcare advisors supporting the medical fraternity in their journey to grow their business.

Every year, billions of dollars are spent on medical tourism to other countries, mainly due to the lack of faith in local standards. This program helps us run a profitable portfolio while contributing to better healthcare in Nigeria at the same time.

This program is unlike any other. It’s not just a loan. The combination with SafeCare opens many avenues for clinics to improve their quality. It started out in our ‘Special Products’ department. A few years in, the business potential is clear. We have gained confidence in lending to the healthcare sector. The program is now integrated in our mainstream operations and everyone from management and board to branch staff is familiar with it. We have also rebranded the MCF loan with a local name, Tabibu, that people understand. It has become one of the bank’s strategic pillars in terms of growing our loans portfolio across the board. MCF taught us to speak a different language and we have gained invaluable experience in Kenya’s changing healthcare financing landscape.



Outlook 2015 and beyond Over the next few years, the Medical Credit Fund will focus on increasing local ownership, streamlining operations, diversifying loan products, scaling up in existing markets and expanding into new markets. Local ownership Medical Credit Fund will continue to assist partner banks in moving into the healthcare financing market through credit risk trainings, marketing and the introduction of new loan products. At the same time, the banks will play an increasingly important role in recruitment of clinics and the initial intake procedures. Loan numbers and volumes will be incorporated into the banks’ own target and incentive schemes. For clinics that are already bankable or nearly bankable, this will speed up the application process considerably. Clinics that are not at that level yet will still receive technical assistance to become bankable.

Streamlining operations By further aligning our client-facing operations we expect to achieve efficiencies in terms of time, scale and costs. Where clinics used to deal with both business and quality advisors, they will now be assigned a single relationship manager to whom they can address all their questions. We will also tailor our services to clinics at different capacity levels: beginner, intermediate and advanced.

Larger loans After a few years of operations, we have identified a demand for larger and more flexible loans. To this end, PharmAccess is working on the Africa Health Infrastructure Fund (AHIF) to complement and build on the Medical Credit Fund. AHIF will be a USD 60 million impact-oriented investment

fund providing debt with flexible terms to companies in the health sector. In response to a growing demand, AHIF will be able to process loan requests above Medical Credit Fund’s USD 350,000 ceiling.

New markets In 2015, Medical Credit Fund and PharmAccess are exploring possible operations in Uganda. With IFC/World Bank, Bank of Uganda and the Ugandan government, we are in discussions to provide loans and technical assistance for private clinics in remote areas of the country. This endorsement and strong support from the government to strengthen the private sector will be an important step to increase access to quality healthcare. Besides exploring new markets, we will continue to develop our programs in Kenya, Tanzania, Ghana and Nigeria. This includes investigating additional banking options to establish wider regional coverage and more diversified lending options, both upwards in the form of larger loans through AHIF and downwards to meet the demand for relatively small loans addressing the specific needs of social franchised clinics. The latter may be based on health facilities’ cash flow as channeled through a new mobile payment system linked to the PharmAccess mHealth program. Through such innovations, we aim to better accommodate the financing needs of healthcare providers across the board.



173,125 701,806

Financial overview


The Medical Credit Fund program continued to grow in 2014. The number of clinics expanded from 516 to 968, the number of disbursed loans increased from 442 to 617, and the disbursed loan volume grew from USD 4.1 to USD 7.5 million. Over 2014, we achieved a strong result on our loan portfolio of EUR 197,350. This was largely driven by a strong positive FX result on the loan portfolio and local cash positions which has not been fully offset by the negative FX result on the USD borrowings. The weakening of the Euro has been the main factor behind this FX result. We achieved a yield of close to 15% on the average outstanding funded portion and close to 10% on the outstanding credit risk exposure. This result is partly skewed by the positive FX result.

Expenses Total costs of the Medical Credit Fund program over 2014 were just over EUR 2.5 million, excluding loan and financing costs. These expenses are part of the grant income. Fund management costs, which relate to management of the loan portfolio as well as general program management, were consistent with last year at EUR 393,465. Technical advisory costs, meaning all activities

that are geared towards quality and business improvement at the clinics, were down to EUR 1.5 million from EUR 1.8 million over 2013. This is partly the result of increased efficiencies in the TA program.

• IFC (G-20 SME Finance Challenge)

Tanzania Kenya Ghana Nigeria

Hybrid fund Our hybrid investment fund has a unique ‘layered capital’ structure that blends debt financing for the loan program with grants for technical advisory services and first loss. In the event that clinics are unable to pay back their loans, the first loss grants absorb this setback, thereby lowering the risk for the debt investors. This layered capital structure has enabled us to leverage large amounts of private capital with public funds, thereby increasing our developmental impact significantly. Medical Credit Fund has attracted USD 29 million, of which USD 10.6 million are loans.


• Bill & Melinda Gates Foundation

Disbursed loans value (USD)

• Overseas Private Investment


‘The business training we received when we applied for an MCF entry loan taught us how to manage our books and build a financial management system. As a result, we were able to secure a next loan from a local bank that wouldn’t take us on before.’ Ann Maina, St. Patrick Healthcare Centre, Nairobi, Kenya


2014 (EUR)

Interest income


Income related to guarantee contracts


Management fees to partner banks amortized


Additions to provisions


Corporation (OPIC)

• Deutsche Bank Americas Foundation

• Calvert Foundation

• FMO on behalf of the Dutch Ministry

• Soros Economic Development Fund

FX result on loans & local cash balances


• Health Insurance Fund/PharmAccess

Result before financing costs


Financing costs


Result after financing costs


of Foreign Affairs • Stichting AmsterdamDiner Foundation / AIDS Fonds

• USAID • African Health Markets for Equity (AHME)



Team and Board TEAM/MANAGEMENT Amsterdam Monique Dolfing-Vogelenzang, Managing Director Bart Schaap, Director Finance Herman Abels, Director Operations Tom Bouma, Senior Financial Analyst Hanneke Peeters, Operations Manager SafeCare Joost Zijlmans, Senior Finance Manager Nada Coici, Portfolio Analyst Kenya Marceline Obuya, Program Director East Africa Evelyn Gitonga, Senior Business Analyst Georgine Mbeki, Deputy Operations Manager SafeCare Ivy Syovata, Business Advisor Tanzania Ewout Irrgang, Technical Director Rose Sweya, Business Analyst / Process Manager

Nigeria Uzodinma Osisiogu, Program Manager Nigeria Olusegun Sanya, Lead Business Analyst Abiodun Oyenuga, Lead Quality Assurance Advisor Ghana Maxwell Akwasi Antwi, Country Director Ghana Bismark Hedagbui, Lead Business Advisor Hansen Yaw Asare, Business Advisor Gabriel Fiadorme, Senior Quality Advisor Charles Tetteh Attram, Business Advisor Phylicia Adjei, Process Manager Joseph Asumang Peasah, Quality Advisor Bonifacia Agyei, Lead Quality Advisor Mary Asantewaa, Quality Advisor Leslie Kornah, Business Advisor

SUPERVISORY BOARD Onno Schellekens, Chairman | Managing Director PharmAccess Group Ben Christiaanse, Vice-Chairman | Retired CEO National Microfinance Bank Tanzania Ton Coenen, Executive Director Aids Fonds & SOAAIDS Nederland Frank Eijken, Owner and Manager of Eijken Management & Consultancy Klaus Vink, Resigned as Vice-Chairman in October 2014 | Solicitor, tax lawyer and senior partner at Vink & Partners Ruud Hopstaken, Joined in January 2015 | Board member of a.o. NICTIZ, GGNet and AMC Ventures CO-FOUNDER Hans van Veggel


Introducing the PharmAccess Group The PharmAccess Group is dedicated to making health markets work for people in Africa. When Prof. Joep Lange (1954-2014) founded PharmAccess in 2001, the objective was to turn groundbreaking scientific research on triple-combination drug therapy into action by bringing HIV/AIDS treatment to the people who needed it most. PharmAccess joined forces with private companies like Heineken to set up workplace programs for their employees and dependents. These schemes proved that treatment in Africa was feasible and that the delay in delivering it was a political choice. This helped lay the foundation for large-scale international action: today, more than 10 million people living with AIDS have access to life-saving drugs. PharmAccess continues to be widely recognized as a pioneer in increasing access to improved healthcare. Building on our work on the front lines of HIV/AIDS treatment,our focus has broadened to making healthcare systems more effective and more inclusive. Reversing the vicious cycle that stifles progress requires innovations that explore new directions, challenge the status quo and provide real world solutions. PharmAccess builds trust on both the supply and the demand side of the healthcare market and leverages donor contributions to reduce risks and increase investments in health. We address market inefficiencies through an integrated approach: improving quality of care through clinical and business standards, introducing mHealth applications, providing access to loans for healthcare providers, facilitating access to health insurance and other health financing options, and conducting impact research for evidence-based innovation. On a solid base of local and international public-private partnerships, and with the support of many international development stakeholders including the Netherlands Ministry of Foreign Affairs, we help improve healthcare delivery and affordability for patients and increase market transparency for investors. PharmAccess employs a multidisciplinary team of almost 200 professionals. While our headquarters are in Amsterdam, we are firmly rooted in Africa with over 60% of our staff based in Kenya, Tanzania, Ghana, Nigeria and Namibia.

Our partners Public donors and investors African Development Bank, Asian Development Bank, Department for International Development (DfID), Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), Dutch Ministry of Foreign Affairs, Entrepreneurial Development Bank (FMO), German Development Bank (KfW), International Finance Corporation (IFC), International Labour Organization (ILO), Life Sciences & Health for Development (LS&H4D), Netherlands Organization for Scientific Research (NWO), Overseas Private Investment Corporation (OPIC), Rijksdienst voor Ondernemend Nederland (RVO), Saving Lives at Birth (USAID, Bill & Melinda Gates Foundation, UKaid, NORAD, Grand Challenges Canada), United States Agency for International Development (USAID) Strategic partners Government and parastatal organizations Ghana: National Health Insurance Authority (NHIA), National Health Insurance Scheme (NHIS) Kenya: Ministry of Health, National Hospital Insurance Fund (NHIF) Nigeria: Cross River State, Kwara State Government, Lagos State Government, National Primary Health Care Development Agency (NPHCDA), Ogun State Government Tanzania: Ministry of Health and Social Welfare, National Health Insurance Fund (NHIF), National Social Security Fund (NSSF) Uganda: Government of Uganda Multilateral organizations and agencies African Health Markets for Equity (AHME), Agence Française de Développement (AFD), Belgian Development Agency (BTC), Global Fund to Fight AIDS, Tuberculosis and Malaria, Global Partnership for Effective Development Cooperation, International Federation of Health Plans (iFHP), The International Society for Quality in Health Care (ISQua), Joint Learning Network, World Bank Group, World Economic Forum Foundations and associations Aids Fonds, Amref Health Africa, Association of Private Health Facilities in Tanzania (APHTA), Christian Social Services Commission (CSSC),

Private investors and donors Achmea Foundation, Algemene Pensioen Groep (APG), Bill & Melinda Gates Foundation, Calvert Foundation, Centers for Disease Control and Prevention (CDC) Foundation, Clinton Foundation, Deutsche Bank Americas Foundation, Dutch Postcode Lottery, ELMA Philanthropies, Goldman Sachs, M-PESA Foundation, Pfizer, President’s Emergency Plan For AIDS Relief (PEPFAR), Rockefeller Foundation, Safaricom Foundation, Soros Economic Development Fund, Stichting AmsterdamDiner Foundation

East Africa Healthcare Federation, Kisumu Medical and Education Trust (K-MET), Nigerian Healthcare Federation, Stop AIDS Now! Research institutions African Population and Health Research Centre (APHRC), Lagos University Teaching Hospital, Strathmore Business School (SBS), University of Ilorin Teaching Hospital Multinational corporations Achmea, Aegon, Heineken, KPMG, OLAM Group, Pfizer, Philips, Safaricom, Shell, SNS Reaal, Unilever, Vodafone Social franchise networks Marie Stopes International, Population Services International (PSI), Society for Family Health (SFH) Partner banks BancABC (Tanzania), Bank of Africa Tanzania, Chase Bank (Kenya), Diamond Bank (Nigeria), First City Monument Bank (Nigeria), HFC Bank (Ghana), K-Rep Bank (Kenya), National Microfinance Bank (Tanzania), uniBank (Ghana) Insurance companies and administrators AAR, Africa Medilink Ltd, Hygeia Health accreditation organizations Council for Health Services Accreditation for Southern Africa (COHSASA), Joint Commission International (JCI)

The Netherlands Trinity Building C Pietersbergweg 17 1105 BM Amsterdam +31 (0)20 566 7158 Kenya New Rehema House, 3rd Floor Rhapta Road, Westlands Nairobi +254 (0)20 444 2120 Tanzania Skyways Building 2nd Floor Ohio/Sokoine Drive Plot No. 149/32 Dar es Salaam +255 (0)222 124 888 Nigeria 10A Ademola Close off Remi Fani Kayode Street GRA Ikeja, Lagos +234 (0)134 22 800 Ghana 29 La Tebu Crescent P. O. Box CT 10245 East Cantonments, Accra +233 (0)302 73 5261/2 Namibia 1-3 Fouche Street Windhoek West Windhoek + 264 (0)61 419000 follow us on Twitter @PharmAccessOrg photography by Karijn Kakebeeke, Manyara Kinoti

graphic design by Saiid & Smale

Medical Credit Fund - Progress Report 2014  
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