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The Blended Finance Fund Shaping African Health Care

African Health CareThe Transform Health Fund announced at the U.S.-Africa Leaders Summit in December 2022 heralds a new age of private and public investment in African health care systems. A wide range of institutions has pledged either grant or private equity funding, including USAID, the U.S. International Development Finance Corporation (DFC), AfricInvest, private foundations, multinational corporations and the International Finance Corporation (IFC). The fund’s total commitments now amount to $50 million, capital which will go toward improving supply chains, health care delivery and the availability of digital tools to serve the unmet health care needs across sub-Saharan Africa.

The Financing Gap

Africa is home to 16% of the world’s population and bears 23% of the global disease burden, yet 1% of global health spending ends up in the continent, according to the Health Finance Coalition (HFC). Compared to their international counterparts, the Brookings Institute reports that Africans pay high out-of-pocket costs for health care — while also living in countries with some of the worst poverty rates in the world. Half of all Africans, according to DFC, currently lack access to modern medical facilities.

One challenge to building system resilience, exposed during the coronavirus pandemic, is the lack of African-made health care products: the continent imports more than 90% of pharmaceutical equipment and supplies to meet its health needs, according to Brookings. During the pandemic, Africa established local production firms and intra-governmental funds and partnerships, such as the African Medical Supplies Platform. Yet, there remain ample opportunities for improvements in disease prevention and treatment, pandemic preparedness and health commodity production throughout Africa. The IFC estimates that $25-$30 billion is necessary to ensure African health care systems can meet the continent’s rising demand.

Bridging Public and Private Financing

The Transform Health Fund is one example of an increasingly popular strategy of resilience-building in Africa’s health care system known as blended financing, or a capital stack approach. The primary feature of this model is public-private partnerships, where institutions, including government institutions like the DFC, nonprofit organizations and investment firms, leverage their resources to make an impact on a shared goal.

Virtues of the approach, according to agencies like Wilton Park, the International Monetary Fund (IMF) and IFC, lie in its distribution of risk among funders and its ability to achieve a balance between donor and commercial investments in the face of dramatic need. While donor institutions can help bolster emerging industries, health systems in capitalist, globalized economies require private sector buy-in to decrease dependency upon aid and strained state budgets.

Toward Universal Health Coverage

HFC and AfricInvest, key contributors to the Fund, state that the ultimate goal of the Transform Health Fund is to achieve Universal Health Coverage (UHC). The role of public-private partnerships in achieving this social impact is unique and complex. A Health and Human Rights Journal article warns of possible conflicts between the goals and priorities of private and public health care institutions, particularly as related to human rights-based conceptions of health care. Such conflicts are more likely to be avoided if collaborators can ensure African leadership of the initiative and both strong coordination, according to Wilton Park and effective regulation, according to Brookings, of Africa’s blossoming health care sector.

Given the widely documented link between health and poverty, stakeholders of the Fund hope that industries serving populations in need can also prove to be sustainable and profitable. With a target amount of $100 million, the Fund will primarily inject investments into eight countries in sub-Saharan Africa, including Kenya, Uganda, South Africa and Nigeria, according to the DFC report. However, with a diverse set of stakeholders and a strong focus on transformation, as its name suggests, the Transform Health Fund ushers a new future for the broader African health care landscape and, if successful, the well-being of all African people.

– Hannah Carrigan
Photo: Wikipedia Commons

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Providing Housing Solutions for the Philippines

housing solutions for the PhilippinesThe homeless population in the Philippines is a staggering 4.5 million, representing about 4% of the population. This number is expected to rise to 12 million by 2030 if no action takes place to address the issue. Manila, the capital of the Philippines, is where a significant portion of homeless Filipinos reside. For this reason, activists often center efforts around increasing housing solutions for the Filipinos in Manila. Hope in solving the housing crisis is rising as efforts begin introducing creative solutions to cater to the Philippines’ unique needs.

Bamboo Houses

EarthTech, an innovative development agency focused on sustainability, recognizes the Philippines’ housing problem as a crisis. EarthTech has proposed an affordable, sustainable and efficient solution: modular homes made out of bamboo. Unlike other housing solutions for the Philippines, CUBO Modular, the designer of the homes, prefabricates them off-site. This means that the homes can be put together on-site in just four hours. The engineered bamboo lasts up to 50 years and absorbs carbon rather than produces it. This makes bamboo a durable and environmentally friendly material.

Solar Paneled Homes

The Philippines has one of the highest household electricity rates in Southeast Asia, often creating a financial burden for low-income houses. Imperial Homes Corporation (IFC) has been tackling this problem through the development of “energy-efficient communities” like Via Verde Homes.

Via Verde houses consume about 25% less water and roughly 40% less energy in contrast to standard housing. IFC also installed solar panels on the roofs of all Via Verde Homes. The solar panels substantially cut down families’ electricity bills, allowing them to afford other essential needs. The IFC continues to work on building low-income, solar-paneled homes in the Metro Manila area. The innovative company has received international attention, winning the ASEAN Business Award for Green Technology in 2017.

Resistant Housing

The Philippines Archipelago experiences an average of 22 typhoons a year. Normally, five to nine of those typhoons cause serious damage. Typhoon Sisang in 1987 demolished more than 200,000 homes, after which the Department of Social Welfare and Development initiated the Core Shelter Housing Project. The Project teaches the Filipino community how to construct their own weather-resistant homes. The Project has created more than 41,000 low-cost houses for people whose homes have been destroyed by annual typhoons. Each home costs about $300 to build. Construction of the homes focuses on resistance, and when finished, can withstand typhoons up to 180 kph. Furthermore, the shelters are built with locally available materials such as concrete and steel. This makes the shelters one of the most ideal housing solutions for the Philippines.

Long-Lasting and Inclusive Urban Development

The Philippines Housing and Urban Coordinating Council, a governmental organization, released a statement addressing the growing homeless population in Manila and other cities in the Philippines. The Council stressed the need for community input regarding housing solutions in the Philippines. Bringing the community into the conversation means leaders can better understand the root problems that affect a particular area.

The Council would focus on long-lasting urban development, meaning permanent housing solutions rather than more temporary and unstable shelters. The statement also addressed the need for increased water and job availability. The Council believes this would holistically solve the Philippines’ housing crisis.

Advocacy and Sustainability

Habitat for Humanity runs a Habitat Young Leaders Build movement that mobilizes youth to speak out in support of homeless communities, build houses and raise funds for housing solutions. Habitat Philippines is advocating the Presidential Proclamations to implement tenure policies for informal settlers who reside in illegal, unused housing, making them vulnerable to losing shelter.

This organization, along with the Department of Human Settlements and Urban Development, is in the process of implementing the New Urban Agenda into the development strategy of the Philippines. This Agenda is a document outlining standards and policies necessary for sustainable urban development. Thus, the implementation of the New Urban Agenda would provide the foundation for permanent housing solutions for the Philippines and other urban programs.

Moving Forward

In order to create permanent housing solutions for the Philippines, urban development that includes resources and programs to keep Filipinos out of homelessness and poverty is needed. Housing that is sustainable, resistant to natural disasters and affordable to purchase and maintain will ensure the basic right to shelter for many Filipinos.

– Sarah Eichstadt
Photo: Flickr

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Mali’s Shea Butter Production: The IFC Steps in to Ameliorate

Mali's Shea Butter
As the sun rises over the wild-growing shea trees in Mali, West Africa, women from surrounding villages frequently work at the base of the towering trees gathering up the precious shea fruit. Encased within the fruit’s delicious pulp is the invaluable shea nut. Once their containers are full, the Malian women walk several kilometers back to their villages with up to 50 kilos of fruit in teetering baskets upon their heads. There, the fruit heads storage until it is ready for processing. Mali’s shea butter production has the potential to uplift the country’s economy significantly.

Great Demand and Inadequate Supply

Mali is the second-largest producer of shea nuts. It supplies more than 20% of the world’s shea nuts, which primarily go toward making shea butter. Shea butter’s primary use is in food and cosmetic products. The shea butter industry has grown over 600% in the last 20 years and is still on the rise. West Africa exports more than 350,000 tons of shea butter annually. In short, demand is not an issue but due to inadequate processing technology, Mali’s full wealth potential of shea butter production has not undergone realization. With over 42% of the country’s population living in poverty, the untapped possibilities of a modernized, efficient shea butter production practice desperately needed unearthing. The International Finance Corporation (IFC) decided to do just that.

The IFC Lends a Hand

The IFC is loaning approximately $3 million to Mali Shi, a shea nut processing plant located just outside Mali’s capital city of Bamako. The goal is to build a new, more modern plant with updated technology to boost efficiency and promote a better product. The IFC has also committed itself to offering training in business and finance as well as management skills to the shea nut suppliers in Mali. The shea supply chain in Mali mostly consists of women. Therefore, the bolstering of the shea butter industry in this region will allow these women to pay for their children’s schooling, invest in a family business and access transportation.

Prioritizing the Valuable Resource

The shea butter industry is not slowing down any time soon and women in low-income countries are on the frontlines. As the shea fad continues, more and more companies that use shea butter in their products are working to keep their focus on the hard-working women supplying the shea nuts. As companies bring in profits, many are fighting to ensure the suppliers of the valuable shea nuts are reaping the benefits of the backbreaking work.

Ghanaian American Rahama Wright is one of them. Rahama’s company, Shea Yeleen, has a business model that benefits the suppliers in the West African countries producing the shea butter. Shea Yeleen offers shea producers five times the typical income. Instead of an average of $2 per day for the labor-intensive work, many suppliers are now receiving $10 per day from Rahama’s company. Additionally, many of the women who belong to the cooperatives Shea Yeleen supports receive health insurance, training and access to savings groups. Shea Yeleen ensures its suppliers receive compensation by processing payments through the cooperatives and requiring signed payment receipts from cooperative members.

The Future Looks Bright

In a nutshell, as demand for Mali’s shea butter continues to rise, investment in shea entrepreneurs is vital. The efforts to modernize shea processing in Mali offer a bridge between a life of poverty and one of financial stability. For more than 120,000 individual shea nut suppliers to Mali Shi (95% of which are women) the ability to process shea butter with a higher level of efficiency means a brighter future. This empowerment not only benefits the farmers directly affected but also provides an opportunity for serious economic growth for the country.

– Rachel Proctor
Photo: Flickr

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Small-Scale Leasing in Africa

leasing in africa
Ishmael Mantey, like many entrepreneurs in Sub-Saharan Africa, had trouble starting his business. “Formerly I was a private driver,” he said. “Life was not easy for me because I am married with two kids and providing for them is very, very difficult.”

Today, Ishmael is his own boss and runs a taxi service. He and thousands in a similar position have a new resource to help them achieve their goals. Small-scale leasing in Africa is turning a growing number of small businesses from plans into reality.

The leasing system is fairly commonplace in America, especially in the world of automobiles. Leasing is the practice of buying goods like taxis or sewing machines for a set amount of time. Similar to renting, a lease gives temporary ownership to the buyer. Unlike renting, the minimum term for leasing is fairly long term. A lease contract of two years is not uncommon.

The goal of leasing is to allow the borrower, the lessee, to generate as much revenue from the leased object as possible before returning it to the bank or leasing company, the lessor. Purchasing something like a car or a sewing machine requires the entrepreneur to pay full price. Often, small-scale businesses cannot afford the equipment they need at that price. With leasing, lessees must only pay for part of the value of the investment. In effect, they only pay for the value they “use up.”

There are a few companies in developing African countries that have made a big splash with their leasing programs. Notable among them is the Africa Leasing Facility. Started in 2008, the Africa Leasing Facility program has helped more than 14,000 small-scale business owners with training and support.

When an entrepreneur comes to a leasing company they usually have a plan. The company works with them to find the exact piece of equipment they need and then they work out a deal. The finance company buys the equipment and then lends it to the entrepreneur. Both the lessee and lessor sign a contract stating the length of the lease, and how much the lessee is to pay to the lessor. Then, a mutually acceptable payment plan is decided.

The international development community has every reason to be excited about leasing. As Riadh Naouar, program manager or IFC’s Africa Leasing Facility puts it, “Leasing effectively addresses the problem of lack of access to finance…It is an innovative financial solution for the procurement of equipment and machinery that allows small and medium-sized companies to grow and prosper.”

With global focus on entrepreneurship growing, small-scale leasing looks set up to be a big hit.

– Marina Middleton

Sources: Alios Finance Groupe, International Finance Corporation, The World Bank
Photo: Twitter

Dalberg Firm Helps Develop the World

Dalberg
Firms like Dalberg are needed more than ever in an increasingly complex world where sociocultural beliefs influence the effectiveness of public health interventions, where psychology interplays with sustainability measures, where the business of globalization meets the small farmer, and where economic and social development needs a well-thought out strategy in order to be innovative and successful.

Dalberg is a global development advisory firm where capital, research and strategy work cohesively to develop innovative solutions . Dalberg capital designs financial tools for high growth development projects. By developing these financial capabilities locally, Dalberg is able to incorporate their understanding of the local environment into their development strategies. Dalberg addresses specific needs of the communities.

Functioning like a think tank, the Dalberg Research team identifies critical issues related to global development, social impact and investing. The team offers analytical insight that can shape further solution design, investments and policy. They offer insight on topics like the internet gender gap and the need for a change in African economics in order to generate employment for the youth in the region.

In one of their contributions, a collaboration with the IFC, the research team identified the factors that contribute to the inefficiencies of aid organizations and proposed solutions to fill the gaps. The report highlighted some successful examples like the ICICI rural banking system in India and suggested an information sharing system at all levels of the supply chain that would increase transparency and accountability. The plan  also discussed the need to engage in more public-private partnerships to scale up the efforts of the private sector and to know about and adopt measures that have been successful elsewhere. This is just one example of the kind of work that Dalberg Research produces.

Dalberg also works with international aid organizations and governments to determine paths for growth and successful strategies to fill the development gap. For instance, in Senegal, the youth population is large and the school drop-out rate is high. The International Youth Foundation and USAID in Senegal wanted to strengthen their existing programs by understanding the youth perspective. Dalberg stepped in to perform the assessment and guided a discussion on potential solutions to this problem based on their findings.

In Pakistan where literacy and school enrollment is low, Dalberg worked with a development finance institution to identify schools that provide quality education, understand their business models, and regulatory factors that influence their success. With this kind of assessment, they were able to contribute to the design of financing models and investment options to foster the growth of the education sector.

The approach of organizations like Dalberg allow for the identification and scale up of successful solutions and enhanced cooperation between the private sector and aid agencies. An in-depth understanding of the contextual landscape of developmental issues assists in developing a more refined financing system and a friendlier political climate. Such organizations are finding an important place in the integrated methods that play a role in the fight for global equality.

– Mithila Rajagopal

Sources: CNBC Africa, Dalberg 1, Dalberg 2, U.S. News

Photo: Dalberg

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IFC Invests in Fluidic Energy Climate-Smart Batteries

IFC
Energy is tantamount to the development of poor nations. Several sectors rely on energy — from lighting schools and hospitals, powering farms, manufacturing facilities, maintaining water sanitation plants to keeping emerging businesses afloat. Mobile telecommunications has become a fundamental part of successful business — especially, the business of global development.

IFC, the private sector arm of the World Bank Group, plans to invest $7 million to the clean energy company, Fluidic Energy, which is a company for the research and development of new climate-smart batteries that power cellular phone networks in developing countries. The rechargeable energy sources are promised to be a solution that is both cost-effective and power-efficient. As the technology will reduce costs of powering mobile networks in rural areas, the battery is also a cleaner alternative to diesel generators and lead-acid batteries. In result, it is less damaging to the environment for it leaves a smaller carbon footprint.

The technology is currently used in Indonesia and other South East Asian countries. The hope is that the technology will branch out into the rest of Asia and South America. Fluidic Energy, the Arizona-based company, is a fine example of private businesses working in tandem with The World Bank Group for the common goal of global development.

Providing sustainable energy to telecommunications is a development that is promised to open new frontiers in other sectors where sustainable energy can be a progressive alternative.

– Malika Gumpangkum

Sources: IFCPressRoom, thegef
Photo: Panos