The Transform Health Fund aims to provide a template for blended finance in the health sector in Africa. After the fund closes, we speak to Martin Edlund from the Health Finance Coalition, one of the founding organizations, about the progress made so far.
Sub-Saharan Africa is home to 14% of the world’s population and 20% of the global disease burden, yet only 1.6% of impact investments are made in this sector annually. Media Lens King on iStock
The Transform Health Fund (THF), a mixed-finance initiative aimed at injecting capital into Africa’s underinvested health sector, has received investment from development finance institutions (DFIs) to achieve its goals. It closed earlier this month with $111 million (102 million euros), more than the previous year. , multilateral development banks, impact investors, corporations and foundations.
Three investments have already been made, demonstrating that with the right structures in place, it is possible to benefit from different types of health investments that benefit the world’s poorest people. , regulators hope the investment will serve as a model for other companies to emulate.
“We designed the Transform Health Fund as a large-scale demonstration project that would capture the attention of investors and other fund managers in a way that would replicate our model and explore ways to invest in mixed fund structures. “We look forward to receiving the funding that will contribute to health care for the most vulnerable people,” Martin Edlund, executive director of the Health Finance Coalition (HFC), which is behind the foundation, told Impact.・Told investors.
Martin Edlund, Health Finance Union
The fund was launched in response to the 2022 coronavirus pandemic and is managed by investment platform AfricInvest in collaboration with HFC. They are required to consider a wide range of potential areas, including care delivery, supply chains and digital technologies, through debt and mezzanine investments.
“This is a pretty broad mandate, but if you want to capture businesses that are investable and have real impact, you also need a broader perspective,” Edlund said.
So far, the fund has already committed $20 million in loans to three companies. Africa Healthcare Network is the largest dialysis chain across sub-Saharan Africa. Lapaire Glasses offers affordable eye care products and services with a network of stores in six countries in West and East Africa. Finally, Insta Products produces ready-to-use therapeutic foods for millions of malnourished children and mothers across sub-Saharan Africa, which are purchased and distributed by international NGOs. .
Mr Edlund said these companies were chosen because they have a significant impact on the poorest communities. Lack of available dialysis leads to very high mortality rates, such as when kidney function is compromised by severe malaria. Difficulties in obtaining glasses can also affect a child’s ability to learn as well as work and earn an income.
DFI contributes to capital expansion
The growing interest in supporting the sector is evidenced by the wide range of investor groups that helped the fund exceed its $100 million target.
These include Dutch multinational Philips, the International Finance Corporation, Swedfund, the US International Development Finance Corporation, France’s DFI Proparco, pharmaceutical company Merck, the British government-backed FSD Africa Investments, and the Canadian government-backed FSD Africa Investments. They include Grand Challenges Canada, US investor Impact Assets and global companies. Health Investment Corporation, family office Ceniarth, UBS Optimus Foundation, Skoll Foundation, Chemonics International, Anesvad Foundation, Netri Foundation, and the United States Agency for International Development (USAID).
Some of these investors are participating in HFC, which facilitates the use of public and philanthropic funds to encourage private sector capital investment to impact health care. HFC is sponsored by the nonprofit Malaria No More, of which Edlund is CEO. The coalition was originally convened by Ray Chambers, a private equity investor turned philanthropist. He is the co-founder of Malaria No More and the World Health Organization’s Ambassador for Global Strategy and Health Financing.
african medical care
Africa’s health sector is in urgent need of investment. According to THF, sub-Saharan Africa is home to 14% of the world’s population and 20% of the global disease burden, yet only 1.6% of annual impact investments are targeted in this sector.
“There’s been a lot of enthusiasm among DFIs to help invest in health care in the wake of the coronavirus pandemic, but I think everyone is frustrated that it’s so difficult to invest in health care.” said Edlund. “If you actually double-click on these existing investments, they’re usually only invested in tertiary care. Big hospitals for the richest, middle class, urban people. Healthcare innovation, access, quality, “It’s hard to invest beyond the urban audience where affordability can have the biggest impact,” he said.
HFC’s past efforts to finance health care in Africa suggest that the perceived risk surrounding this area is not always justified. Mr Edlund noted that loan default rates were relatively low under the Open Doors Africa Private Health Initiative. The initiative provides guarantees for front-line clinics and pharmacies to receive loans during the coronavirus pandemic that would otherwise be out of reach.
“This is a great example of capital that doesn’t need to be spent to achieve outcomes. You just need to reduce the risk for someone else in the system,” he said.
Opportunities to make the biggest impact
THF encourages investment teams operating under AfricInvest to pursue opportunities to make the greatest impact possible under its structure, which is based on metrics related to the number of lives saved or improved. It is supported by an impact framework based on a point system derived in part from .
“At the end of the day, there will be a heated debate about whether something has enough impact to go before the investment committee,” Edlund said.
While AfricInvest will manage the fund, HFC will provide technical assistance and consulting support to entrepreneurs eligible to invest from THF.
HFC helps companies refine their financing strategies, business models, and expansion plans to reach rural and peri-urban areas to reach vulnerable communities, while ensuring they are considered investable by private investors. Enhance your bottom line.
“We are pushing each other to the limits of what we can invest to achieve impact. Both our team and the AfricInvest team are working hard to understand what is needed in terms of revenue and business planning; We have established a more common view of what works in terms of effectiveness,” Edlund said.
He expects the fund to make further investments “several times a year.” “We want to get the money out there as quickly as possible because there is a real need, but we need to do it rigorously,” he said.
Latest articles
Posted in category:
event,
impact on the ecosystem;
investment,
social impact
Posted in category:
event,
impact on the ecosystem;
investment,
social impact
Posted in category:
bonds,
climate and environment,
impact ecosystem
Posted in category:
bonds,
climate and environment,
impact ecosystem
