Expanding access to healthcare in Africa.

Transform Health Fund

The Challenge

The African healthcare sector is currently grappling with significant financing shortfalls, hampering its ability to meet the needs of its population. Despite housing 16% of the global population and carrying 23% of the global disease burden, Africa only receives 1% of global health spending. Furthermore, an additional $240 billion of annual global spending is estimated to be required to achieve Sustainable Development Goal 3 (SDG 3) - ensuring healthy lives and promoting well-being for all at all ages.

Coupled with the financial gap is a lack of large-scale, socially oriented deals that align with commercial risk-adjusted return requirements. This dearth of investment opportunities is partly due to the financial instability of many health entrepreneurs in the region. Their unsustainable financial structures cut them off from scalable financing, making them unattractive to potential investors.

The African healthcare sector faces considerable hurdles, primarily resulting from a deficit in coordination among its concessional and commercial entities. This disjunction severely obstructs the integration of diverse forms of capital, consequently limiting the potential influence of investments in this crucial sector.

The Solution

Transform Health Fund (THF) presents an innovative solution to these challenges, leveraging private, return-seeking capital to achieve public health goals. Using a capital stack approach, it provides various forms of capital - debt and quasi-debt - to fund healthcare initiatives. With a current fund size of $50 million and a target size of $100 million by the end of 2023, THF aims to scale proven interventions from both the public and private sectors to improve access to Universal Health Coverage (UHC) in Africa.

THF partners with a dedicated team with finance and health expertise across Sub-Saharan Africa, Health Finance Coalition, to play an active role in the construction of deals. This hands-on approach helps to cultivate a pipeline of large-scale, social-oriented deals that meet commercial risk-adjusted return requirements.

To address the lack of coordination among existing players, THF is exploring ways to coordinate between private capital and donors to develop opportunities for co-investment. This approach helps to blend different forms of capital effectively, maximizing the impact of each investment.

For the issue of financial sustainability among health entrepreneurs, THF plans to use blended capital to provide adjusted returns. This structure helps to ensure downside risk while supporting a system of staggered investments, making these enterprises more appealing to investors and helping to secure the necessary financing to scale their operations.

Total Impact Capital’s Role

Total Impact Capital played a pivotal role in the structuring of Transform Health Fund (THF). Utilizing a deep knowledge of blended finance capital structures, Total Impact Capital was instrumental in helping THF craft a highly efficient framework designed to maximize the impact of each investment. Concurrently, Total Impact Capital also lent expertise to fundraising efforts, leveraging our experience and network to garner commitments from renowned entities such as Merck and prominent Development Finance Institutions (DFIs), such as the International Finance Corporation (IFC), US International Development Finance Corporation (DFC), Swedfund, and FSDAfrica.

Total Impact Capital also supported THF's deal construction. Our contributions included assisting the relevant team, the Health Finance Coalition, in organizing various stages of deals and liaising with a multitude of stakeholders, including government bodies and private sector entities. This support helped to catalyze THF's operational expansion and the development of a robust pipeline of investment opportunities.

To cap its contributions, Total Impact Capital successfully positioned AfricInvest as the manager of Transform Health Fund. As a leading private equity and impact investor, AfricInvest brings an extensive wealth of experience and knowledge to fund management, further amplifying THF's potential.

The Impact

  • Supply Chain Transformation

    THF understands that an inefficient supply chain stands as one of the most substantial obstacles to attaining quality, affordable healthcare in Africa. By strategically deploying private capital, THF plans to confront and address this challenge head-on, focusing on critical needs such as infrastructure, logistics, data, innovative financing models, and last-mile capacity enhancement.

  • Innovative Care Delivery Models

    THF is dedicated to harnessing solutions that extend quality care, cutting-edge technology, and innovative services to low-income patients who are most vulnerable. By investing in technology-enabled public-private collaborations for health service delivery and management, THF aims to achieve scalability, enhance efficiency, and ultimately drive significant improvements in health outcomes across Africa.

  • Scaling Proven Interventions

    THF is focused on a single investment goal: to amplify the reach of proven innovations, whether originating from public or private sectors, with the intent of bolstering access to healthcare and achieving Universal Health Coverage (UHC) across Africa. Through this targeted approach, THF aims to advance the delivery of healthcare to all, irrespective of socio-economic circumstances.

The Future

Transform Health Fund remains resolute in its commitment to broadening access to healthcare across Africa, leveraging its strategic investment portfolio to propagate health enterprises. Total Impact Capital, continuing its supportive role, is set to assist THF with its deal construction and upcoming second funding round of $50 million, an effort that will effectively double the fund's value to $100 million, thereby bolstering its capacity to effect transformative change in Africa's healthcare sector.