The successful development of COVID-19 vaccines – with more vaccines expected as other pharmaceutical companies complete their medical trials – and the start of vaccination programs in some countries is a welcome sign after a year of economies and lives being battered by the pandemic.
But even as countries start to acquire and distribute the vaccine, the COVID-19 pandemic has exposed the weaknesses in Africa’s fragile healthcare systems, particularly on the availability and use of advanced medical equipment.
Spending on healthcare in sub-Saharan Africa is only 5 percent of GDP, or about half of the global average. There is a notable dearth in medical equipment across the region. According to the WHO’s 2017 Global Atlas of Medical Equipment, a survey of member states found that only 11 percent of respondent countries in Africa have at least one MRI machine per 1 million people and only 24 percent have at least one CT scanner. This compares to 62 percent in the Middle East and 89 percent in Europe for MRI machines and 85 percent in the Middle East and 97 percent in Europe for CT scanners.
For African healthcare providers, many of whom are small and medium-sized businesses, purchasing medical equipment can be a daunting task. Highly specialized knowledge of the market is needed to gain a clear grasp of what equipment to buy, where to get it, and how much to pay for it.
Healthcare providers often are cash-poor businesses who need help with financing given that a single piece of medical equipment can cost hundreds of thousands of dollars. However, banks in the region are often reluctant to offer loans due to a lack of expertise of their own—in their case on how to price and structure such financing.
At the same time, the pandemic has put additional financial pressures especially on small and medium-size businesses. There are the direct costs from the disease itself in terms of resources being stretched, and indirect costs related to the overall economic downturn and the drop in patients seeking out non-urgent medical care. Many of the smaller healthcare businesses that deliver essential services in countries across the region have struggled to survive during the crisis. This leaves health providers with little extra cash for purchasing medical devices.
Bridging this financing gap – and helping with the knowledge gap – is critical to help more healthcare providers access needed equipment. Getting this right requires linking partners across the supply chain from medical equipment manufacturers to financial institutions to the healthcare businesses. The IFC has stepped in, approving a $4 billion Global Health Platform for increasing availability of COVID-related medical supplies and services so the world’s poorest nations don’t get squeezed in the global scramble to buy supplies.
The platform offers financing to scale up manufacturing of everything from gloves to masks to hand-sanitizers and ventilators. Now, we are announcing the Africa Medical Equipment Facility as part of this platform, which will better enable banks in Africa to lend to healthcare small and medium enterprises who want to buy or lease medical equipment—such as lab equipment, oxygen compressors, and ventilators.
The facility brings together the key players in a most imaginative way. IFC will provide risk-sharing facilities to participating banks who will make medical equipment loans. In addition, IFC will also offer training for bank staff on how to underwrite such loans and support to small businesses to strengthen their financial management skills and procurement processes.
Healthcare businesses can apply for local currency loans and leases through the facility ranging from $5,000 and $2 million, with a total envelope of $300 million. Medical equipment manufacturing Philips is partnering with us on this facility and we invite others to join the program.
Crucial to IFC’s ability to provide such risk-sharing facilities is support from two blended finance facilities: the International Development Association’s Private Sector Window and the Global Financing Facility. This support enables IFC to offer more affordable pricing to participating African banks – which are then passed on to healthcare businesses and ultimately patients.
One African bank has already signed on: Co-operative Bank of Kenya. We want to expand the facility to other countries, including Cote d’Ivoire, Cameroon, Rwanda, Senegal, Tanzania, and Uganda and are inviting interested financial institutions to get in touch with IFC. This is a space where unlocking access to finance can save lives and, in the long term, strengthen healthcare systems across the continent.
Manuel Reyes-Retana is IFC Regional Industry Director for Financial Institutions Group in the Middle East and Africa. Mary-Jean Moyo is IFC Regional Industry Director for Manufacturing, Agribusiness, and Services in the Middle East and Africa.