How the Medical Credit Fund and PharmAccess are enhancing healthcare access and infrastructure in Sub-Saharan Africa — and what Europe can learn from Africa
Healthcare systems around the world are increasingly overstretched, fragmented, and facing growing disease burdens and rising costs. While established markets such as Europe grapple with demographic shifts and rising demand within mature but strained systems, Sub-Saharan Africa (SSA) is confronting the urgent need to build infrastructure and scale healthcare provision to serve a growing population.
These acute challenges are serving as a spur for innovation within the region, with technological and financial solutions emerging that can prove useful not only in Africa, but also the Global North.
Dutch development organisation PharmAccess has spent over two decades pioneering solutions to healthcare access in resource-restricted settings, developing approaches that are not only proving effective in enhancing healthcare infrastructure in Sub-Saharan and Eastern Africa (EA), but also increasingly relevant to European markets.
Through its Medical Credit Fund (MCF), which provides loans to healthcare businesses in Africa, and auditing and quality approach SafeCare, PharmAccess has created an integrated model of quality improvement and flexible financing to support healthcare innovation in countries including Ghana, Kenya, Nigeria, Uganda and Tanzania.
HBI spoke with Dorien Mulder, Investment Director of MCF, about how this approach could reshape healthcare development beyond Africa.
Improving care quality and scaling access
“At the Medical Credit Fund, we work most closely with SafeCare,” explains Mulder, highlighting how PharmAccess’ different instruments operate in concert. This integration reflects a fundamental insight — in resource-restricted settings, financial sustainability and quality improvement must develop hand in hand. SafeCare’s quality approach, along with the due diligence of the MCF, helps make the risks associated with health SMEs in Africa more transparent and the health sector financeable.
SafeCare, developed by PharmAccess in collaboration with its partners in Africa and the Joint Commission International (JCI), exemplifies this integrated approach. The reviewing criteria are focussed on iterative and scalable improvements to ensure that progress, and the funding that can underpin transformation, is sustainable and the commitment to care improvement is long-term.
“If you apply accreditation standards like the ones you have in the UK and the Netherlands to the average African clinic or hospital, it would miserably fail,” Mulder notes. “[SafeCare] was established to create a quality system to be used in what we call resource restricted settings… It’s not a pass or fail. It’s a system where you can climb the ladder. So you can start at level one and you can move to level five by implementing activities around quality improvement… It’s also about how you manage your facility — do you use standard operating procedures, things like that.”
The programme itself has evolved to become more accessible and to increase possible touch points with providers — for example, during the Covid-19 pandemic it instituted a digital review system, by way of an app, to ensure continuous engagement with facilities and persistent oversight.
Innovative financing and risk-assessment as an engine for development
MCF’s financing model is specifically designed around the needs of developing healthcare businesses and financial infrastructure, with the fund operating two distinct lending tracks: traditional term loans, and a pioneering digital lending programme.
Term loans, ranging from $100,000 to $5 million USD, support substantial investments in equipment, renovation, and working capital. However, MCF’s digital lending programme, with smaller loans that start at $1,000, is proving perhaps the programme’s most innovative and impactful financing mechanism.
One of the greatest challenges facing healthcare providers in SSA is the matter of accessing credit. For lenders it is the proper assessment, and offsetting, of risk. This is in part addressed through SafeCare, which provides MCF insights into the operations and sustainability of any healthcare organisation it is engaging with.
Leveraging Kenya’s M-PESA mobile money revolution, MCF has developed automated systems to assess creditworthiness through providers’ payment streams, automatically collecting repayments from patient payments.
“We have these digital small loans up to $300,000, which are un-collateralised,” Mulder highlights, and explains the disbursement and repayment mechanism: “People pay in a clinic with their phone using mobile money. We have a partnership with a sister organisation called CarePay in Kenya where we can look at these mobile money, these M-PESA streams, and [we can] say ‘okay you had £100 in payments last month’. Then we can determine ‘okay, we will allow you to borrow £100 to pay back in six months’.
“We disburse the loan and then we automatically collect the repayments on the loan from those payments of patients in the facility. Those payments, typically 30%, go to repaying the loan, while 70% goes to the facility… It’s also flexible because, if they had a bad day or it’s a weekend and they didn’t make that much money, then they repay less.”
The scale and impact of this digital lending approach is significant, with MCF’s non-collateralised loans helping them to meet the needs of a range of provider types, from small clinics seeking working capital or a piece of equipment, through to larger facilities that need to bridge the gap until health insurance claims are paid. To date, MCF has disbursed 11,000 loans with a total value of €180 million to over 2,000 healthcare companies.
Another critical innovation is MCF’s approach to currency risk. Unlike many international investors who provide foreign currency loans, MCF provides local currency loans:
“We run the currency risk,” Mulder explains, “which we manage by adjusting interest rates according to the market. We are normally a bit more expensive than the commercial banks, because we take more risk, but also because we fund ourselves in Euros and we have to take into account this currency risk.”
MCF is operated as a blended fund, combining catalytic capital from the Dutch government with loans from development finance institutions including FMO from the Netherlands, British International Investment (owned by the UK government), and Swedfund from Sweden, as well as Dutch healthcare manufacturer Philips.
Growing public and private provision
PharmAccess supports the development of both public and private healthcare provision, with the intention of developing wider healthcare infrastructure.
“The situation is they’re complementary — private and public — and both are needed,” Mulder explains. “The most important thing is that healthcare is accessible to all.”
This cooperative approach has particular relevance as health insurance mechanisms in Africa are also coming up. “For that to work, there needs to be public involvement because you need to force everybody to contribute [and] to be in a system and the public health insurance schemes are the only way to also include the lower income groups. But then you have to make sure that those people that have access to that insurance can use both services in the private and the public sector and then they keep complementing each other.”
In some instances the delineation between public and private provision is not clear-cut:
“There are a group of facilities that are somewhere in the middle, which are the faith-based facilities that in some countries do receive funding from the public sector — they also serve a large part of the population. For example, in Ghana where there’s the Christian Health Association. They have around 370 healthcare facilities across the country associated with them. They function as a public-private partnership [and] we would consider the facilities private and we would be able to lend to them. It’s also a partner of PharmAccess and the SafeCare quality programme, which they are implementing within this network.”
Lessons for other healthcare markets
For healthcare investors and providers, PharmAccess and MCF’s experience offers valuable insights into applying innovation under resource constraints.
Mulder believes that there is a benefit to building technologies ex nihilo, without the baggage of legacy systems and infrastructure: “What can [European healthcare providers and investors] learn from Africa? I think it’s the whole mobile money revolution. It’s sometimes easier to implement technology if there’s nothing there.”
Their digital payment integration, and utilisation of mobile applications for tracking business performance, cashflow, and repayments, demonstrates how technology can address both operational efficiency and financial performance when resources are constrained. “In Africa the money available for health is limited, so the pocket per person available to spend on healthcare is much smaller. So you have to be innovative to provide care and to reach people beyond those that are affluent, residing in capital cities,” notes Mulder.
MCF’s blended finance approach also offers lessons for healthcare investors approaching constrained markets — by combining catalytic capital with commercial investment, MCF and PharmAccess are demonstrating how to ignite and continuously develop sustainable healthcare markets, even in the face of straitened resources.
We would welcome your thoughts on this story. Email your views to Chris O'Donnell or call 0207 183 3779.
