French Development Agency Support to the private sector in health

1. French Development AgencySupport to the private sector in health Technical Department Health and Social Protection Division Marie-Odile WATY, head of division

2. AFD / General overview Main characteristics __________________________________________________________ • State-owned development bank • Complete set of instruments: • grants • concessionaryand subordinated loans (AFD); loans at market condition (Proparco) • guarantees (ARIZ : AFD and Proparco) • equities (Proparco) • For any kind of development stakeholder • central governments, • local authorities • state companies/banks • private companies/banks/funds Diversity of clients, instruments and intervention (project, sector-based approach, multi-countries or regional intervention, NGO support…)

3. AFD / General overviewFinancial commitments: 4 370 M$ in 2006

4. AFD Group AFD Group AFD PROPARCO CEFEB FFEM Affiliated Banks Studies & Training French Fund for Global Environment Public and private (non-profit) financing Private Sector (for profit) Financing In French Overseas Territories • Central player of France’s official development assistance (Triple A rated) • Active on the 5 Continents • Actions geared towards reaching the Millennium Development Goals (MDGs): • Economic growth • Poverty reduction • Promotion of Global Public Goods (e.g. : public health, environment)

5. AFD / General Overview60 countries of intervention

6. Private health sector : Context • Important role in the provision of care (not-for-profit as well as for-profit sector) • Better quality care and patients satisfaction • Better incentives in place for good management and staff retention

7. Private health sector : Challenges • Sector totally unregulated in terms of quantity and quality (the best coexisting with the worst) • Distrust between the public and private sectors • The for-profit sector is confined in large cities where high and middle income groups live, and usually targets more lucrative health care business (diagnostic facilities, etc.) • The not-for-profit private sector often has poor management capacity and difficulties to expand • In low income countries, the sector is largely fragmented, made of very small businesses

8. Private health sector : Challenges In low income countries, the sector has difficulties expanding due to : • low payment capacities from the general population and lack of risk pooling arrangements • high risk activities • difficulties in accessing funds In middle income and emerging countries, the sector has no difficulties accessing funds (credit availability) but difficulties to expand (lack of health insurance)

9. Private health sector : Development perspectives • A priority for AFD(not-for-profit and for-profit sectors) • Need to know, at country level, the situation of the sector and its needs and to better understand its willingness and capacity to expand its services to poorer segments of the population • program of sectoral studies (immediate launch in 5 African countries) • Part of the institutional dialogue with government authorities, especially ministries of health, and part of project preparation activities

10. Private health sector : Development perspectives Transversal activities : • Regulation, accreditation, quality assurance • Legal framework and tools, etc. • Public-private partnerships, contracting • Through grants and technical assistance

11. Private health sector : Development perspectives Not-for-profit sector or social business (top priority): • Expansion and development of existing facilities and services • Improvement of management capacities • Through soft loans, grants or guarantees depending on the context • Examples: Cameroun, Lebanon, Eye fund with the Deutsche Bank, etc.

12. Private health sector : Development perspectives • For profit: • Private sector Initiative for Africa was launched by President Sarkozy at Cape Town last February • Objective: to reduce barriers which limit access to capital and to strengthen local capabilities. • Impact: to support 1900 entities of different sizes (mainly small and medium) which should create 300 000 jobs and provide local investors with more than €8Bn of complementary funding • Tools: loans, guarantees and equity investments to leverage local resources : • implement a new fund of guarantee (ARIZ 2), • set up an investment fund for Africa with €250 M as initial allocation, • double AFD group activities dedicated to the private sector

13. Private health sector : Development perspectives • 1/ ARIZ (risk guarantee) key objectives • To share credit risk with commercial banks to support MSMEs and MFIs financing • To facilitate access to credit, in particular medium & long term loans, • ARIZ 2 (€250 M)enhances the existing ARIZ fund • larger panel of beneficiaries: give access to bigger player (maximum guaranteed amount increased to €2M from €750 K) as well as smaller ones (through portfolio guarantees to financial institutions) • broader risk participation (rise in the % guaranteed, from final loss to second loss indemnity, possible advance of 100% of the guarantee as the damage occurs…) • extended eligible guarantee on equity (from €300 K to €1M), increase duration from 7 to 10 years, open to capital-investment entities Expected to deal with 400 companies/year for €750 M operations

14. Private health sector : Development perspectives • 2/ Set up an investment fund for Africa • €250 M “fund of African-based funds” • dedicated to SMSEs, post-crisis countries, strategic sectors (health, social, food) • part of profits generated from the fund will be re-invested to strengthen capacities (management) and support intermediaries for companies services Expected to catalyse €1 Bn investment through 20 funds, 800 SMSEs,100 000 jobs

15. Private health sector : Development perspectives Firms : Development of social and environmental responsibilities • Support to projects developed by firms in developing countries • Creation of foundation to promote corporate social and environmental responsibilities

16. Thank you