IFC taps Philips, Co-op Bank in Sh33b deal targeting healthcare sector
Thursday, April 15th, 2021
IFC, a member of the World Bank Group, has tapped health technology company Philips and Co-operative Bank of Kenya in a deal to help small businesses purchase essential medical equipment.
In a move meant to strengthen the response of these firms to Covid-19 challenges, the deal is the first under the IFC-led Africa Medical Equipment Facility, worth $300 million (Sh33 billion) in loans and leases.
The loans are expected to range from $5,000 (Sh500,000) to $2 million (Sh220 million) given to financial institutions for support of smaller healthcare providers in Cameroon, Côte d’Ivoire, Kenya, Rwanda, Senegal, Tanzania, and Uganda to help the firm’s lease or purchase equipment.
According to a statement by the lenders, this move was cushion smaller healthcare operators in Africa since they are perceived as risky borrowers, meaning they can’t afford medical equipment, renovations, or to recruit qualified personnel.
“Many smaller healthcare businesses in Africa don’t have the equipment they need to respond to Covid-19 and deliver other vital services,” said Makhtar Diop, IFC’s managing director.
“Unlocking access to finance can save lives now and will, in the long term, strengthen healthcare systems across the continent.”
The Global Financing Facility’s support in the form of this first loss guarantee enables IFC to extend risk-sharing facilities to the most challenging markets including conflict-affected countries.
Risk-sharing is an effective instrument to encourage financial institutions to lend to smaller businesses.
“This partnership with IFC and Philips will allow Co-operative Bank to extend credit to a wider range of investors in the health sector, who previously have found credit availability a challenge.
Health expenditure is one of the largest budget items in many households in Kenya,” said Gideon Muriuki, Group managing director and CEO, Co-operative Bank.
Apart from the cash, the firms will benefit from an advisory services programme for small businesses in the healthcare sector which is meant to strengthen their medical equipment procurement processes, financial management competencies and business planning.
In Kenya, the Global Financing Facility support will include technical assistance to improve the quality of care for small and medium-sized healthcare facilities that are serving low-income populations, including women and children.
The advisory programme will also help participating financial institutions to strengthen credit underwriting skills for the healthcare sector.