Sub-Saharan Africa is disproportionately affected by poor health. The region accounts for 12 percent of the world’s population, yet it carries 26 percent of the global disease burden. Current health systems are inadequately equipped to address this imbalance, constituting just 3 percent of the world’s health workers and 1 percent of global health expenditure.
The role of the private sector
There is growing recognition that the private sector plays a critical role in meeting the health needs of individuals in sub-Saharan Africa, including those at the base of the pyramid. According to the International Finance Corporation report, The Business of Health in Africa, private sources financed about 60 percent of the $16.7 billion spent on health in 2005 in sub-Saharan Africa. Fifty percent of those expenditures were captured by private providers.
A portion of those providers include market-driven enterprises that leverage technology and innovative strategies to provide health services and products in a sustainable manner to populations that are underserved by the public health care infrastructure. These providers are already serving the poor and, if assisted properly, have the potential to make a real difference in addressing future health needs in the region.
Health venture financing: the “missing middle”
While there are multiple donor-funded mechanisms providing grants and support to nongovernmental organizations addressing health in Africa, there are few vehicles that support commercial health enterprises specifically aiming to serve the poor. Smaller, early stage entrepreneurial entities that do not qualify for commercial debt or private equity financing are often at a loss for financing opportunities to expand their businesses.
To address this gap in health venture financing, the SHOPS project launched the Health Enterprise Fund. The fund aims to spur innovation in health care in Africa among earlier stage enterprises intending to serve the base of the pyramid. Enterprises must also address critical health priorities in sub-Saharan Africa, including high rates of maternal and child mortality, unmet need for modern family planning methods, and lack of access to HIV/AIDS testing, care, and treatment services. It will support approaches that can deliver results and through funding and technical assistance will prepare enterprises to receive onward financing from other sources.
Who is eligible?
In the first round of applications, SHOPS looked for enterprises that have developed low-cost health care delivery approaches. In order to be eligible, these enterprises had to:
- Have a sustainable, revenue-generating business model
- Address critical health issues in the areas of family planning, reproductive health, maternal and child health, or HIV/AIDS
- Be based in Ethiopia or Kenya (or intending to expand operations to these countries)
- Provide goods or services that result in improved health outcomes among base of the pyramid population segments
What were the selection criteria?
For the first round of applications, the selection committee aimed to identify enterprises that have the potential to improve health outcomes through increased provision of, or access to health services. Successful applicants were those that demonstrated the potential for sustainability, scale, and replication. For selection criteria specific to Ethiopia, click here
How does it work?
The Health Enterprise Fund used a competitive grant process to identify grant recipients. Applicants that demonstrated the potential to create the biggest impact in the fund’s target areas were selected to receive both a grant and technical assistance.
Grants ranged from $100,000 to $200,000.