Medical Credit Fund (MCF), the only debt fund fully dedicated to the African health sector, on Thursday announced the completion of a EUR 32.5 million fundraise by its second fund (MCF II).

This financing round will expand the Fund’s presence and support to healthcare providers in sub-Saharan Africa, with a focus on primary healthcare services, including malaria prevention and treatment as well as maternal and childcare.

This round of financing also caters to expanding its fully digital loan product called ‘Cash Advance’, which grew exponentially in the past two years.

The funding round was anchored by the Dutch Ministry of Foreign Affairs, which provided the first equity injection of EUR 7.5 million in January this year, to cater to the demand for loans during the heights of the COVID-19 crisis.

Also participating in this funding round are CDC Group, EUR 10 million, FMO, EUR 7.5 million, SwedFund, EUR 5 million and Philips, EUR 2.5 million. In addition, MCF will benefit from a guarantee facility by the U.S. International Development Finance Corporation (DFC), which was initiated by the Health Finance Coalition (HFC) with support of the U.S. President's Malaria Initiative (PMI) and USAID’s Center for Innovation & Impact (CII).

Through blended finance, MCF uses catalytic capital from both public and private sources and is targeting to grow to EUR 80 million in the next few years.

MCF II qualifies under the 2X Challenge as its funding will enhance access to capital for gender-smart healthcare businesses and help to increase health services for female patients.

The 2X Challenge is a commitment by the development finance institutions (DFIs) of the G7 to mobilize capital to support businesses, provide women in emerging economies with access to leadership opportunities, quality employment, and products and services that enhance their economic participation and inclusion.

Medical Credit Fund will deploy the funding to advance its product offering and digital loans across sub–Saharan Africa. Mitigating the chronic underfunding of the sector means more patients can receive better healthcare and stimulate efficiencies; facilitating and stimulating loans, business support, and investments for private health care providers, and innovating value-based health care solutions and financing, using data to empower health care consumers, patients, doctors and financiers alike.

Since its establishment, Medical Credit Fund has provided over 6,500 loans to healthcare providers in Africa, worth over EUR 120 million, with a 96% repayment rate. It has reached 1,800 health small and medium-sized enterprises (SMEs) in Kenya, Ghana, Nigeria, Tanzania and Uganda.

Loans are combined with support for business and quality improvement using the PharmAccess – SafeCare standards and methodology, through which more than 80% of the clients are able to improve their services.

MCF will deploy the funding to further scale its impact across sub-Saharan Africa with a focus on advancing its digital loan products.

Only 5 years after introducing ‘Cash Advance’, 80% of MCF’s disbursements now go through digital loans. Cash Advance does not require collateral: the provider’s history of mobile money receipts serves as the basis for the loan. The digital revenues are used directly to pay back the loan.

The Country Director of MCF, Mr. Derrick Ewudzie-Odoom said, “For us in the Medical Credit Fund, the raising of this new fund means that the work we have been doing in improving quality healthcare financing is significantly changing and transforming the healthcare financing landscape in Ghana and the sub-region and making MCF an attractive partner for impact financing..”

“This requires that we do more to improve and impact more lives through the financing of medical quality improvement and strengthen the businesses of our partner healthcare providers,”

Mr. Derrick Ewudzie-Odoom noted that the MCF is poised to mobilize more risk capital and make them available to private (including faith-based) and quasi-public health providers in sub-Saharan Africa; all in the bid to increase access to quality healthcare delivery towards the achievement of Universal Health Coverage.

Medical Credit Fund and the COVID-19 pandemic in Ghana

Mr. Derrick Ewudzie-Odoom said The Medical Credit Fund (MCF) is well-positioned to assist hospitals in Ghana to combat the spread of the novel Coronavirus disease (COVID-19) which has become a global pandemic.

According to the Country Director of MCF, “The Fund is in prime position to offer access to finance and quality improvement programmes to help deal with the healthcare needs of Ghanaian citizens”

Mr. Ewudzie-Odoom said the MCF is capable of extending loan facilities ranging between €5,000 and €2.5 million equivalent in Ghana Cedis to private and quasi-public health facilities including pharmaceutical companies to expand their infrastructure, purchase medical supplies (medicines and consumables) and equipment for the management of diseases including COVID-19.

Medical Credit Fund impact on Ghana

Mr. Ewudzie-Odoom said the Medical Credit Fund does not only provide financing to hospitals and clinics but to other players in the health industry such as pharmaceutical manufacturers and wholesalers, pharmacies, laboratories, diagnostic centres, medical suppliers, and health training institutions.

Established in 2009 as part of the PharmAccess Group, the Medical Credit Fund is the only fund dedicated to financing small and medium-sized healthcare facilities in Africa.

In Ghana, MCF has disbursed over 860 loans worth $25 million to health SMEs across the length and breadth of the country. Since the beginning of 2021, MCF has for instance provided financing to some of the top pharmacy retail chains to expand their operations in Accra, Takoradi, Mankessim, Cape Coast, Kumasi, Bolgatanga and Koforidua in a bid to make available drugs for the treatment of malaria and other prevalent diseases.

MCF has also supported a fully Ghanaian-owned company that is about to manufacture medical gloves and condoms among other latex products in the western region of Ghana. An Accra-based private hospital that has expanded its operations to the Western Region, specifically in Elubo has also obtained financing from MCF.

In Wenchi in the Bono East Region, MCF is financing the construction of a whole new 100-bed hospital facility that will not only serve the people of Wenchi but also its surrounding towns and villages.

In the area of medical equipment, MCF has financed some local equipment vendors and also collaborated with major international equipment suppliers to retool hospitals.

The public health system across Africa, especially the private healthcare sector, faces many challenges which include capacity and quality of care. For small and medium enterprises (SMEs), it is even more challenging to access loans to invest and expand their healthcare facilities and services.

By reducing the perceived risks of investing in this sector, MCF provides liquidity to Health SMEs that find it difficult to secure formal bank loans. The funds are then invested in facilities, equipment, infrastructure, commodities, staff and systems that deliver enhanced care to all patients supported by the internationally accredited SafeCare programme.

He said the Medical Credit Fund in partnership with the NHIA and other institutions such as CHAG has a certain arrangement that allows the MCF to pre-finance the vetted claims of medical facilities. “This allows the facilities to run effectively while they wait for NHIA to reimburse such claims.” He added.

According to Mr. Ewudzie-Odoom, this NHIA claims pre-financing has saved many hospitals and clinics by providing them with regular access to financing.