In Madagascar, the public health sector struggles to meet the population’s demand for health care. Every day, 10 women die from pregnancy- or birth-related complications, and 100 children die from preventable causes. The private health sector is critical to bridging the gap between public health services and the Malagasy people’s needs because it can provide complementary products and services with a broader geographic reach. However, private health providers often encounter obstacles in accessing the finance they need to improve and expand their services to better meet patients’ needs.
Mr. Lantoarimanga Eli Enfi Patric owns a drug shop in Mahanoro, Madagascar. Mahanoro is an isolated rural fishing community on the eastern coast, about 220 miles from the capital. Due to poor road conditions, residents of Mahanoro often find themselves more than eight hours away from the nearest health facility or pharmacy. Mr. Patric’s drug shop has served as an important resource for patients in need of medicine, but Mr. Patric often found that he was out of stock of the products his customers needed. Expanding his inventory, however, would require funds that Mr. Patric did not have, and he was unable to find a bank willing to lend to him.
The United States Agency for International Development (USAID)-funded Sustaining Health Outcomes through the Private Sector Plus (SHOPS Plus) project improves health outcomes by strengthening provision of private sector health information, products, and services; increasing effective public-private engagement to improve public health outcomes; improving the enabling environment for the private sector within the health system at the global, regional, and country levels; and surfacing, disseminating, and applying innovative, emerging, and tested private sector models. Banyan Global leads the access to finance and business strengthening component of the project.
In Madagascar, we are working with financial institutions to expand financing to the health sector, as well providing business training and coaching services to private health care businesses. Banyan Global works with two banks in Madagascar–AccèsBanque Madagascar and Baobab Banque Madagascar–to support their use of USAID’s Development Credit Authority (DCA) guarantees to make loans to private health providers. DCA guarantees are agreements between USAID and financial institutions that incentivize lending to underserved businesses by sharing risk. Even with the risk-reduction of a DCA guarantee, however, banks often prefer the ease of making a few big loans to larger clients, rather than working to make a greater number of small loans that are often requested by private health care businesses, such as Mr. Patric’s drug shop. In addition, banks are generally unfamiliar with the structure of the private health sector and the financial needs of providers. Private health providers are also often reluctant to request a loan because they know that banks may not be eager to work with them.
That’s where Investing in Excellence comes in. The Investing in Excellence program, created by Banyan Global, recognizes the ways in which private health providers are leveraging financial support to invest in and improve their health care practices. Banyan Global’s SHOPS Plus team offers business training and coaching to help private health providers establish savings and learn how to access loans from partner banks. Health providers then use these funds to invest in their practices. SHOPS Plus and its partner banks award an Investing in Excellence certificate to participating health care businesses that have made significant investments in expanding and improving health care. The Investing in Excellence program draws attention to the fact that these private health providers, and the banks that support them, are working to advance health care in Madagascar.
Mr. Patric was recently recognized by SHOPS Plus and Baobab Banque Madagascar for being the bank’s first recipient of a “Hasimbola” loan. Banyan Global worked with BaoBab to create the “Hasimbola” loan product, which was designed to meet the needs of private health providers. Mr. Patric used the loan to renovate his facility and expand his pharmaceutical inventory, thereby benefiting the community he serves by increasing the number and variety of products available to them.
“Thanks to the financing from Baobab, I was able to make investments to expand my stock and guarantee the availability of medicine, so that patients don’t have to go home empty-handed. My sales have increased, because new clients are being referred to me by doctors who are sure that I’ll have the prescribed medicines in stock.” – Mr. Patric
To date, 13 Investing in Excellence certificates have been awarded by SHOPS Plus and partner banks to private health providers in Madagascar. Banyan Global has now expanded the program to Senegal, where SHOPS Plus is partnering with Ecobank and other local financial institutions to provide Investing in Excellence certificates to Senegalese private health providers.
Through Investing in Excellence, Banyan Global has created an innovative way to incentivize banks to lend to small private health providers and to encourage private health providers to use their loans to strengthen their businesses in order to improve health outcomes in their countries.