Medical Credit Fund (MCF), the only debt fund fully dedicated to the African health sector, today announced the completion of a EUR 32.5 million fundraise of its second fund (MCF II).
The funding round was led by the Dutch Ministry of Foreign Affairs, which gave the initial equity infusion of EUR 7.5 million in January this year to meet credit demand during the COVID-19 issue. CDC Group, with EUR 10 million, FMO, with EUR 7.5 million, Swedfund, with EUR 5 million, and Philips, with EUR 2.5 million, are also part of this fundraising round.
This round of funding will help the Fund increase its presence and support for healthcare professionals in Sub-Saharan Africa, with an emphasis on primary healthcare services including malaria prevention and treatment, as well as maternal and child health and care. The funding will also be used to extend its wholly digital lending product, known as ‘Cash Advance,’ which has seen rapid growth over the last two years.
What you should know about MCF
Medical Credit Fund has granted over 6,500 loans totalling over EUR 120 million to African healthcare providers since its inception, with a 96 percent payback record. In Kenya, Ghana, Nigeria, Tanzania, and Uganda, it has reached 1,800 health small and medium-sized companies (SMEs).
Loans are combined with business and quality development support through the PharmAccess – SafeCare standards and methodology, which has helped 80 percent of businesses enhance their services.
MCF will use the funds to expand its footprint across Sub-Saharan Africa, with a particular focus on developing digital lending products. Only five years after starting ‘Cash Advance,’ MCF currently uses digital loans for 80 percent of its disbursements.
Cash Advances do not require security because the loan is secured by the provider’s history of mobile money receipts. The digital income is utilized to repay the debt in full. Kenyan customers praise the numerous repayment options as well as the quickness and simplicity of the transaction, which is completed entirely using their cell phone.
MCF will also benefit from a guarantee facility provided by the United States International Development Finance Corporation (DFC), which was established by the Health Finance Coalition (HFC) with the support of the United States President’s Malaria Initiative (PMI) and USAID’s Center for Innovation & Impact (CII). MCF, which leverages catalytic funding from both public and private sources, aims to grow to EUR 80 million in the next few years through blended finance.
What they are saying
Arjan Poels, Managing Director of MCF commented on today’s news: “I am very grateful for the support we received from our investors, especially the Dutch Ministry of Foreign Affairs. The funds will help to bridge the financing gap for small and medium-sized health businesses, allowing entrepreneurs to finance construction work, purchase equipment, and prevent medicine stock-outs. Mitigating the chronic underfunding of the sector means more patients can receive better healthcare.
“In Nigeria over the years, the Medical Credit Fund have provided over 930 loans worth over $11 million to health SMEs across the country with portfolio repayment rate currently greater than 90% so with this new fund and digital direction, health SMEs will not only have access to less cumbersome financing, but loans backed with technical support in areas of investment advisory & quality improvement geared towards improving their healthcare businesses.”
Clarisa De Franco, Managing Director & Head of Private Equity Funds, CDC Group, said: “Affordable, reliable and quality health care has never been more crucial than it is today. Which is why CDC is thrilled to be deepening its partnership with MCF, an impact-led fund manager with a track record of supporting the primary healthcare sector in Africa. Our commitment to MCF II will enable the Fund to increase its flexible finance offers to an estimate of over 2,500 healthcare SMEs, bolstering their ability to meet the increased demand for quality healthcare and to serve approximately 10 million patients by 2030. Strengthening Africa’s healthcare system is an immediate priority that demands dedicated healthcare financing to help close the funding gap in the market. CDC’s commitment alongside partner investors will serve the dual purpose of boosting the growth of Africa’s healthcare sector and it will act as a positive signal to the market, attracting even greater investments to scale inclusive quality healthcare for millions of people across Africa.”
Marnix Monsfort, Director Financial Institutions at FMO added: “We’re pleased to have contributed to this oneof-a-kind Fund targeting healthcare SMEs through our Building Prospects and MASSIF funds in the form of a
subordinated debt facility. As the Fund is aimed at reducing inequalities in several of our core markets, with a strong gender focus, we believe the Fund is uniquely positioned to play a leading role in the healthcare space and are proud to have been one of the investors for the launch of the second Fund.”
Audrey Obara, Head of Healthcare at Swedfund, said: ‘’Small and medium-sized private health facilities are crucial to increasing access to healthcare in Sub-Saharan Africa, especially for women and children. MCF has a responsible lending approach that strengthens health SMEs to provide better quality healthcare and operate financially viable enterprises. Therefore, the investment in MCF II is well aligned with Swedfund’s goal to support sustainable businesses that improve access and quality of health care for underserved patients across the sector value chain. We are also pleased that the fund has a strong digitalization focus and qualifies as a 2X investment.’’
Jan-Willem Scheijgrond, Head of Government and Public Affairs at Philips said: “As part of our commitment to improve the lives of 2.5 billion people per year by 2030 through innovation, Philips has the ambition to expand access to care for 400 million people in underserved communities. We have experienced first-hand that access to finance is a main bottleneck for healthcare providers in Africa to expand their services and invest in areas such as advanced medical imaging technologies. The Medical Credit Fund has proven that it can solve this financial bottleneck, and that is why we are cementing our long-term partnership with our investment in the fund.”
