Supporting small regional health clinics in Africa: Medical Credit Fund

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Site Sub-Saharan Africa
Sector Healthcare

Challenge Africa carries a disproportionate share of the global burden of many diseases from HIV/AIDS to high blood pressure. Public funding for healthcare is grossly insufficient and many of the small private clinics that serve much of the population are struggling to meet demand and to finance badly-needed upgrades and expansions.

Solution A $5.4 million OPIC loan to the Medical Credit Fund (MCF) is supporting lending to clinics that are often too large to qualify for microfinance lending but lack the financial track record to obtain bank loans.

Impact Several clinics like the one pictured in Tanzania, have been able to use loans from the Medical Credit Fund to support upgrades, expansions and purchase new equipment, while also building a loan-repayment track record that will help them qualify for future bank loans. At the end of 2012, the fund had a total repayment rate of 98.3 percent.

In Sub-Saharan Africa, access to healthcare is limited, the quality of care is often poor, and the need is great. The continent carries a disproportionate share of the global burden of many diseases from HIV/AIDS to high blood pressure, and this disease load is exacerbated by widespread poverty, food insecurity and poor sanitation.

In this challenging environment, where public funding for healthcare is grossly insufficient, many lower-and middle income individuals and families lacking health insurance turn to small private healthcare providers, where they pay out of pocket for treatment skin infections, diarrhea, malaria as well as maternal and antenatal care and chronic disease. While these clinics are increasingly the health care providers of choice for a large part of the population, they struggle to meet demand. After years of neglect, many clinics are not providing what constitutes even a basic level of care and their lack of basic financial recordkeeping makes it difficult for them to obtain loans to support upgrades and expansions.

In 2012, OPIC provided a $5.4 million loan to the Medical Credit Fund (MCF), a nonprofit health investment fund that is working to provide support to these clinics that are often too large to qualify for microfinance lending, but lack the financial track record to obtain bank lending. MCF provides loans as small as $3,000 to small and mid-sized health clinics in Tanzania, Ghana, Kenya and Nigeria to support investments in updated equipment and general maintenance so they can gradually improve the care they provide, serve more patients and eventually qualify for traditional bank loans. The fund lends through an incremental process in which first-time borrowers start with a small loan of about $5,000 and graduate to larger loans based on performance and need. MCF is also supported by the Calvert Foundation. The Soros Economic Development Fund, the International Finance Corp., the Bill and Melinda Gates Foundation and other foundations.

Medical Credit Fund also introduced a set of standards to rate the clinics as the initial step in providing a process for them to improve the quality of care they provide. It also provides a technical assistance program around business skills to provide training on the job, to make sure they have audited financial statements.

Clinics have used loan money to invest in water tanks so they will have access to clean water, or in equipment like an ultrasound machine or a blood analyzer. They also invest in basic infrastructure like fixing the roof, retiling the floors, or adding screens, or air conditioning or refrigerators which make the building more hygienic or more comfortable and help them to improve the management of patient flow, so that they can ultimately treat more patients.

One clinic in Kenya used a $3,000 loan to repaint the facility, introduce a new waste disposal system and buy a sterilization machine for its operating room. It has found that by improving the facility it attracted new patients and the additional business covered the cost of the loan.

As of the end of 2012, Medical Credit Fund had a total repayment rate of 98.3 percent. Many of the clinics it supported have graduated from the first to a second, larger loan. The second repayment period is usually 24 to 30 months. The average size of the first loan is $5,000. The average size of the second loan is $25,000.

“We are helping these clinics build a financial track record showing they have borrowed money and repaid it, and that helps individual clinics,” explains Medical Credit Fund Managing Director Monique Dolfing-Vogelenzang. “But we hope to reach a tipping point where this market of small clinics, which are providing so much of the health care in Africa, becomes interesting for banks.”

This project was profiled in 2013