In Africa, Bridging the Financing Gap Between Banks, Clinics
Wednesday, March 23, 2022
Above: Ioan Cleaton-Jones—WDI Director, Healthcare Delivery, speaks to an audience participating in the African Medical Equipment Facility (AMEF) program in Côte d’Ivoire.
Medical conditions aren’t limited by borders, but that’s not the case for the equipment to diagnose and treat them. Clinics and medical centers in East and West Africa often struggle to secure funding to bring the large-scale technical tools necessary to serve their communities. Without the backing of a bank loan, expensive equipment, such as MRI and CT scanners, are frequently out of reach. A newly launched program from the International Finance Corporation (IFC), part of the World Bank Group, seeks to bridge this gap.
The Africa Medical Equipment Facility (AMEF), launched by IFC and supported by the government of Norway, is connecting lenders and medical professionals to improve the availability of medical equipment across the continent. It aims to provide security and support for both sides of the interaction, all to ultimately improve healthcare for those living in the region. The program is set on three pillars: financial risk-sharing for banks, training for lenders, and training for leaders of small- and medium-sized enterprises (SMEs) focused on healthcare.
The funding is meant to kickstart essential healthcare investments in the region, while the training for both groups was developed to ensure the process goes smoothly. It’s also where the William Davidson Institute (WDI) at the University of Michigan entered the scene. IFC engaged WDI to deliver AMEF training courses to both client financial institutions and healthcare focused SMEs in Cote d’Ivoire, as well as to provide follow-up coaching support to AMEF trainees.
Alleviating the Risk
With funds from the International Development Association’s Private Sector Window and the Global Financing Facility, IFC is bolstering lenders’ confidence — encouraging them to step into an investment opportunity that may otherwise feel uncertain or risky. In turn, medical clinics and related businesses can apply for loans from $5,000 to $2 million, and the program can support $300 million in financing across the region.
For these loans to be effective, the small healthcare businesses need to meet the lending requirements of the banks and the medical teams. The program seeks to help banks appropriately assess and manage risk and help healthcare organizations to better understand how to procure and finance the medical equipment they need. After both businesses and lenders enter into an agreement, the program provides consulting services to support the businesses through the first few transactions to help them purchase the equipment they need.
Providing a Foundation
The first training programs recently kicked off in Kenya and Côte d’Ivoire. IFC engaged WDI to deliver the training with NSIA Banque in Abidjan, Côte d’Ivoire. Ioan Cleaton-Jones, Director of Healthcare Delivery at WDI, led sessions with lenders and potential borrowers. For banks, he shared a clear methodology for how to evaluate medical equipment financing, covering common medical equipment, principal risks, loan forms, and a case study to apply the knowledge learned. The goal, Cleaton-Jones said, is to increase the bank’s comfort with financing medical equipment purchases, thereby increasing opportunities for financial institutions to finance smaller healthcare businesses.
“If the bank has a better idea how to evaluate risks, they are less afraid to do so, which will help to facilitate lending,” he said.
For healthcare SMEs, the training session introduced the AMEF program and gave an overview of future training sessions, which will cover how to evaluate equipment needs, develop technical specifications for that necessary equipment, solicit bids from potential suppliers and apply for bank financing. While the organizations might understand the ailments their communities are battling, an essential aspect of resolving them is identifying the exact specifications of the equipment needed for diagnosis and treatment. Do they need a 3T or a 1.5T machine when they place an order for an MRI? What equipment is missing from a clinic that could improve its response to COVID-19? Not only did the training cover the financing piece of this puzzle, but it also provided potential borrowers with the framework to make these types of critical determinations around their equipment choices.
Enthusiasm for Solutions
IFC’s goal is to expand the program across the region, into Cameroon, Senegal, Tanzania, Uganda, and Rwanda, and to additional countries after that. Interest and enthusiasm from both banks and SMEs bode well for its plans. In the training sessions that have already occurred, bankers and healthcare professionals shared excitement around the opportunity and sought clarity on the next steps, Cleaton-Jones said. Lenders asked technical questions about approving loan applications, looking for tools and checklists to standardize and distill the review procedures. Potential borrowers, on the other hand, were eagerly searching for loan-specific details. Already facing an immense push for updated and new equipment in their facilities, healthcare leaders asked about interest rates and grace periods. In just a few sessions, Cleaton-Jones saw the tremendous support the facility and training program will provide to participants.
AMEF’s objective is to improve the health sector’s resilience in Africa, and grow the collaboration between healthcare businesses and local banks—and it’s a perfect match for WDI’s support. “This fits really well with WDI’s mission,” said Cleaton-Jones. “It’s training businesspeople. It’s putting the skills for economic success in the hands of business decision-makers.”
At the William Davidson Institute at the University of Michigan, unlocking the power of business to provide lasting economic and social prosperity in low- and middle-income countries (LMICs) is in our DNA. We gather the data, develop new models, test concepts and collaborate with partners to find real solutions that lead to new opportunities. This is what we mean by Solving for Business—our calling since the Institute was first founded as an independent nonprofit educational organization in 1992. We believe societies that empower individuals with the tools and skills to excel in business, in turn generate both economic growth and social freedom—or the agency necessary for people to thrive.