Reaching remote patients in Africa: an investment opportunity

The World Bank estimates that 48 African countries will need at least 11.6 billion francs to immunize 70% of their population. Anadolu Agency

Donors and investors have disbursed considerable sums for the development of drugs and vaccines against Covid-19. But the delivery to the populations of the poorest regions is sorely lacking in funding. Some investors are trying to change the situation.

This content was published on July 15, 2021 – 11:01

Unlike other diseases, there is an effective vaccine against Covid-19. This is mainly thanks to the billions of dollars that have come to finance small biotechnology firms and large pharmaceutical groups. Yet, with only 1% of its population fully vaccinated, Africa faces an increase in coronavirus cases as the highly contagious Delta variant spreads.

The Covid-19 has highlighted the insufficient funding available for basic health systems, infrastructure and logistical efforts to ensure that vaccines and other drugs reach populations in developing countries.

“We have left vulnerable populations in Africa without vaccine protection in a context of already weak health systems,” World Health Organization (WHO) representative Mike Ryan recently told a press conference.

While COVAX, the global vaccine pooling mechanism, aims to provide enough commodities for 20% of the population in developing countries, it is only scratching the surface. The World Bank estimates that 48 countries in Africa will need at least 12.5 billion dollars (11.6 billion francs) to immunize 70% of their populations. Of which 3 billionExternal link for supply chain, cold storage and delivery. In a country like the Democratic Republic of Congo (DRC), the estimated cost is five times the government’s per capita health budget.

Globally, states spent 93 billion euros on the development of vaccines and treatments against Covid-19 between the start of the pandemic and January 2021, according to figures from the Kenup Foundation. Some 95%External link went to vaccine manufacturers.

“It is important to guarantee the supply of vaccines, but if there is a shortage of health personnel and infrastructure to administer these vaccines, you will not achieve your goal,” warns Maya Ziswiler, head of social finance. at the UBS Optimus Foundation.

“These obstacles to access to the vaccine can prove to be much more critical than the availability of the product itself,” assures the one who has long worked at the Geneva-based Global Fund to Fight AIDS, Tuberculosis and Malaria. .

The missing link

Maximilian Martin heads the philanthropy and innovative finance area at Lombard Odier. He believes that innovation and financial markets can help finance health systems. The concept is not new – the “first generation” of innovative financing mechanisms has registered several success-stories.

The Global Fund to Fight AIDS, Tuberculosis and Malaria, launched in 2002 to boost access to medicines against these three wounds, and the GAVI vaccine alliance are good examples. They both rely on pooling sources of finance to meet countries’ demand to secure purchases from manufacturers, resulting in lower prices. More than twenty years later, it is also the idea of ​​the COVAX market guarantee (AMC).

But so far, in terms of basic health care and the development of appropriate infrastructure, these mechanisms have struggled to go beyond the mere provision of vaccines to make other drugs available to the poorest.

There are “excellent philanthropic programs and mechanisms to stop polio and other diseases with free or paid drugs. But it is difficult to invest in basic healthcare services to fight against diseases, transmissible or not, ”Florian Kemmerich, partner of the impact investment company Bamboo Capital, based in Geneva, told SWI .

“All the efforts made to defeat the Covid pandemic are extraordinary. Unfortunately, this in no way eludes the systemic foundations of insufficient access to health care. ”

In 2017, the WHO quantified this situation. Half of the world’s population did not have access to essential health services. And 100 million people were pushed into extreme poverty, weighed down by their health costs. According to experts, the pandemic has only made this situation worse.

New generation ideas

So that’s one of the challenges today: how to attract investors despite the complexity of working with governments.

The Global Financing Facility (GFF) hosted by the World Bank works to reduce the risks associated with investments, in order to attract more money for basic care for women and children. Head of private sector mobilization at the GFF, Sneha Kanneganti recognizes that political and financial risks in some countries are likely to chill many investors.

“We just have to find the right structures offering these investors the incentives that suit them, so that the level of risk is manageable from their point of view,” she told SWI

This is also what some investors are attempting by renewing traditional financial tools.

A few years ago, the UBS Optimus Foundation granted a $ 400,000 “impact loan” to Hewatele, an East African start-up that produces oxygen. The sum was conditional on clear objectives in terms of impact: the supply of oxygen cylinders to new and remote clinics. With the Covid-19 crisis, the foundation has broadened its envelope to allow the firm to ramp up.

The foundation also brought to market the first-ever health development impact bond to reduce child and maternal mortality in an Indian region. If the objectives are met, the investors are reimbursed in full and pocket a return of 8%.

Likewise, Lombard Odier joined forces with the International Committee of the Red Cross, also based in Geneva, to develop an impact bond for the construction and operation of three physical rehabilitation centers in Africa. Private investors advance funds and are reimbursed by donors if social goals are met. As it stands, it has drained 22 million euros.

Bamboo Capital and the Stop TB Partnership have just launched the HEAL fund – a $ 75 million vehicle investing in the development and deployment of medical technologies. Its aim is not only to fight disease but also to modernize basic community care. Bamboo and the Stop TB Partnership are now looking for benchmark investors, such as donors, in order to stimulate private investors by reducing financial risk.

Attract the giants

Pharmaceutical companies seem to have a real interest in this type of development, especially as Africa is becoming an increasingly attractive market.

“Businesses should support healthcare systems as a precondition for stimulating demand and try innovative ways of delivering their products and services,” says Maya Ziswiler at UBS. Many pharma groups are already active in strengthening health systems, but more often through sympathetic philanthropic endeavors rather than through sustainable and scalable investments.

Florian Kemmerich, for his part, confides that Bamboo has entered into dialogue with several pharmaceutical companies but that it seems difficult for them to provide the 15 million francs in first loss capital necessary for the development of access to care programs.

Why not then financing instruments designed to encourage these firms to join the dance? Nothing far-fetched in this idea, according to Maximilian Martin, at Lombard Odier. As proof, green bonds are already in use to raise funds in debt markets, to help companies finance clean energy projects.

“From a financial perspective, it would be interesting to bring together the 50 world leaders in terms of expertise in care, the supply chain or know-how on the product and to think about how we could develop instruments that can encourage each of these firms to contribute more to the common good, ”argues Maximilian Martin.

“If you don’t have medicine, it is difficult for you to help the patient,” notes the banker. But conversely, the issue is not limited to the quantities of drugs that you can sell. ”

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