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IFC and Gates Foundation Propose New Commercial Approach to Private Health Care in Africa


In Washington, D.C.:
Ludi Joseph

Phone: (202) 473 7700

E-mail:
ljoseph@ifc.org


Washington, D.C., September 11, 2006—The International Finance Corporation, the private sector arm of the World Bank Group, and the Bill and Melinda Gates Foundation have announced a $2.6 million research initiative—including a $1.8 million grant from the Gates Foundation and $800,000 from IFC—to develop an effective strategy for investing in private sector health care in Sub-Saharan Africa. The proposed research seeks to improve health care delivery in Africa through aid, investment, and technical assistance to private hospitals, clinics, and other health care providers.

On average, more families in Africa now seek health care from private sector providers than from public sector providers. However, private health care services have received far less attention than the public sector from development and aid institutions. In fact, 60 percent of health expenditure in Sub-Saharan Africa is privately funded, and the current size of the region’s private health market (excluding South Africa) is $18.6 billion, while the total health market (including public expenditure) is $31.3 billion. (Figures come from World Bank reports and are based on GDP per capita, purchasing power parity.)


Given its already significant size and current role in Africa’s health care market, the private sector clearly needs to be a key focus of efforts to improve health care in Africa. The proposed research will help identify trends in private investment in the sector as well as financial instruments and business models that may help improve health care delivery. It will also determine how socially responsible entrepreneurs and investors can profitably invest in health to improve services to the poor.


Lars Thunell, IFC’s Executive Vice President, said, “Efficient provision and financing of health services are critical to national well-being and economic growth. In Africa, the private sector plays an increasingly important role in delivering health services. It is vital that this role be recognized and allowed to flourish. Through this initiative with the Gates Foundation, IFC expects to raise understanding of the value of the private sector in the health care market and help put in place measures that will permit it to grow.”


“Private health care has the potential to play an important role in improving health in Africa,” said Joe Cerrell, Director of Global Health Advocacy at the Bill and Melinda Gates Foundation, “Through this initiative, the International Finance Corporation can help identify new ways to assist African families and communities that are unable to access public sector health services.”


Africa's health care system continues to face major challenges. Almost half of the world's deaths of children under five occur in Sub-Saharan Africa, and the region has the highest maternal mortality rate in the world. In addition, HIV/AIDS, tuberculosis, and malaria continue to take a heavy toll. Years of development assistance to African governments have not achieved sufficient positive health results. In fact, a recent World Bank report noted that “progress in health outcomes in Africa overall is not making the gains needed to achieve economic growth and reduce poverty.”


Guy Ellena, IFC’s Director for Health and Education, noted, “IFC is committed to supporting private health care in Sub-Saharan Africa. Joining forces with the Gates Foundation will help us understand what works and under what conditions.”


About IFC

The International Finance Corporation, the private sector arm of the World Bank Group, is the largest multilateral provider of financing for private enterprise in developing countries. IFC finances private sector investments, mobilizes capital in international financial markets, facilitates trade, helps clients improve social and environmental sustainability, and provides technical assistance and advice to businesses and governments. From its founding in 1956 through FY06, IFC has committed more than $56 billion of its own funds for private sector investments in the developing world and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. With the support of funding from donors, it has also provided more than $1 billion in technical assistance and advisory services. For more information, visit
www.ifc.org.

IFC's Health and Education Department (
http://www.ifc.org/che) provides project financing for capital expenditures on hospitals, health clinics, schools, universities, colleges, and curriculum and ICT-assisted education services. IFC supports institutions that introduce innovations, demonstrate best practices, or are directly aligned with public sector objectives. Technical assistance is also a critical component of IFC’s work. Through its experience in private health and education, IFC has established itself as a center for networking and information dissemination among private institutions and investors worldwide. Since 2001, the department has committed 43 projects in 22 countries. The size of its committed portfolio as of June 30, 2006, was $313 million.