42706 - Africa Medical Equipment Facility

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Summary of Investment Information

Project Number

42706

Company Name

Africa Medical Equipment Facility

Date SPI Disclosed

May 5, 2020

Country

Africa Region

Region

Africa

Projected Board Date

Nov 5, 2020

Environmental Category

FI-2 - Limited

Status

Pending Signing

Last Updated Date

Aug 10, 2021

Department

Regional Industry - FIG Africa

Industry

Financial Markets

Previous Events

Approved : Nov 19, 2020

Sector

Commercial Banking - SME Finance

Additional Project Attributes

Blended Finance

Project Description

The Africa Medical Equipment Facility (“AMEF” or the “Program”) is an up to US$150 million unfunded Risk Sharing Facility (“RSF”) established by IFC in partnership with local participating financial institutions (“PFIs”) and original equipment manufacturers (“OEMs”) to support small and medium-sized healthcare providers (“Healthcare SMEs”) access up to US$300 million in loans and leases with tenor of up to 7 years and finance the acquisition of much needed medical equipment in Cameroon, Côte d’Ivoire, Kenya, Rwanda, Senegal, Tanzania and Uganda (the “Countries”).

The Program is expected to receive support from the IDA Private Sector Window (PSW) Blended Finance Facility (BFF) and the Global Financing Facility (GFF) in the form of up to US$18 million and up to US$6 million First Loss Guarantee (“Blended Concessional Finance Co-Investment”) respectively to facilitate the deployment of the Program’s first phase of US$100 million unfunded RSF to generate up to US$200 million of loans and leases in eligible countries. This support is expected to enable the Program to rapidly roll out and reach the healthcare sector in the Countries where access to medical equipment has historically been a challenge and in turn led to poor healthcare delivery and health outcomes. Without the Blended Concessional Finance Co-Investment, IFC will not be able to provide guarantees to the PFIs at a price that allows the PFIs in turn to provide access to finance to the health SMEs at a viable cost.

Under the Program, IFC will seek to work with as many PFIs and OEMs as possible that will meet IFC’s due diligence and investment criteria and are interested to participate in the Program with its defined terms and conditions. Any local financial institutions operating in one or several of the Countries and any OEMs with presence either directly or through a duly authorized distributor in one or several of the Countries are encouraged to contact IFC to explore partnership under the Program. IFC is also actively organizing outreaching activities to contact many potential market participants to explain the Program’s terms and conditions.

Associated Advisory Engagement

The Program will include an Advisory Service (AS) component to (i) support HSMEs strengthen medical equipment procurement processes, financial competencies, and raise awareness on patient safety, infection control, equipment maintenance; and (ii) support PFIs strengthen sector specific credit underwriting skills.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	165.0
Loan	0.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Guarantee	Loans to SME Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Stakeholders impact - Change in Healthcare SMEs' access to finance and benefits for patients: IFC anticipates that the Program will enable PFIs to sustainably increase their healthcare SME loan portfolio and risk profile and hence, contribute to increasing access to longer-term finance (up to 7-years tenor), which are financially underserved in these markets. The financing will be used to acquire medical equipment which is expected to improve the effectiveness of the healthcare provided and so contribute to a strengthening of human capital. The development impact is expected to be further strengthened with the IFC Advisory Services provided to selected HSMEs and PFIs and the inclusion of maintenance and servicing of medical equipment by the OEMs. Contribution to Market Creation - Competitiveness: The Program will encourage competition among OEMs which could result in equipment prices falling for the benefit of the HSMEs. Through a demonstration channel, PFIs' expansion of their healthcare SME loan portfolios will demonstrate to the wider market in the Program's Countries that HSMEs form an attractive market segment. The Program is expected to increase the market's competitiveness as other FIs in the Countries increase their lending to this market segment. There is also potential for the Program to lead to more loans and leasing by OEMs and equipment distributors. The Program is also expected to support the promulgation of technologies in healthcare in Africa.

IFC's intervention is expected to have both financial and non-financial additionality: (i) Innovative financing instrument to PFIs: Through the Program, IFC will bring unique support to the healthcare sector through the provision of an appropriate long-term industry dedicated risk mitigating tool typically not offered by commercial sources of finance. The Program will help better addressing healthcare SMEs lending risks through risk sharing schemes and partnerships with OEMs. (ii) Knowledge, innovation and capacity building: By providing advisory services to the PFIs to strengthen their understanding of the healthcare sector and underwriting standards, processing and risk management and to the healthcare SMEs to strengthen their financial management capacities.

E&S Category Rationale / Risks and Mitigation

This project has been categorized as a FI-2 project in accordance with IFC’s Policy on Environmental and Social Sustainability. This program is a risk-sharing program between IFC and participating banks in Cote D’Ivoire, Senegal, Cameroon, Kenya, Tanzania, Rwanda and Uganda to support financing privately-owned health SMEs. The E&S risks and impacts associated with the activities of SMEs are typically limited and can be addressed through mitigation measures. The overall portfolio risk is considered medium. For this project, the participating banks will be required to screen the eligible loans against the IFC Exclusion List and the applicable environmental and social laws in Cote D’Ivoire, Senegal, Cameroon, Kenya, Tanzania, Rwanda and Uganda. Given the use of proceeds, this project is not expected to support higher-risk transactions that may include: (a) involuntary resettlement; (b) potential adverse impacts on Indigenous Peoples; (c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage; or (d) significant occupational health and safety risks. In addition, transactions involving coal mining, coal-related activities and upstream oil and gas activities will be excluded from the project portfolio.

The main E&S risks and impacts relate to the ability of each participating bank to identify and manage the potential environmental and social risks associated with the activities of the health SMEs – manufacturing of medical equipment – and the labor and working standards of the participating banks.

Summary of Client Environmental and Social Management System (ESMS)

For this project, each participating bank will be required to develop and implement an Environmental and Social Management Systems (ESMS) that covers the applicable E&S requirements and appoint suitably qualified E&S officers to ensure that the E&S risks and impacts associated with its lending activities for this project are systematically assessed as part of the credit approval and monitoring process. In addition, the participating banks will be required to comply with the labor standards defined in IFC Performance Standard 2.

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