African markets lack consistent access to the essential diagnostics and therapeutics healthcare workers and patients need to address the region’s growing disease burdens. Specifically, the availability and supply of essential medicines and products is an ongoing challenge and has a disproportionate impact on vulnerable populations. 

To scale manufacturing locally, African manufacturers must receive support to better understand the realities of the markets in which they operate, strengthen business planning, and understand the connection between market structures, competition, and regulatory requirements with their revenues. Without such “investment-readiness” support, manufacturers will be unprepared and unsuccessful in accessing catalytic growth financing from DFIs and other impact investors.

If manufacturers are not able to easily access concessional scaling capital to drive growth, we risk losing hard-won manufacturing capacity, resulting in weakened access to lifesaving products for those most vulnerable to negative health outcomes. However, access to tailored investment readiness support is not widely available to existing or potential manufacturers.

HFC’s Unique Approach

To create a sustainable and robust medical manufacturing ecosystem across Africa, technical assistance must be expanded.  Traditional approaches, focused on regulatory, quality and manufacturing must be expanded to include “investment readiness work” to ensure companies are commercially and financially viable.

Through our efforts to develop investment-ready, scalable, and high impact deals, HFC has observed the following challenges, influencing our approach:

• Support offered to African healthcare companies often is not tailored to address the challenges unique to the sector.
• Transactions are complex and lengthy, leading investors to shy away from smaller investments, creating a gap between investment needs and availability.
• Collaboration between different investor classes, such as grant makers and impact investors, is underemphasized, leading to mismatched risk-return opportunities for investors and missed opportunities.

Access to diverse financing options enables small and medium enterprises (SMEs) to maintain operational stability, pursue research & development, and scale production capabilities in response to market demand. Financial flexibility is essential to balance supply with evolving healthcare needs especially when addressing sudden public health crises. Well-capitalized firms are better positioned to navigate market volatility and sustain their competitive edge, ultimately contributing to a more stable and efficient market equilibrium.

We recognize that a cohort-based learning approach is not sufficient to address specific company challenges. HFC therefore tailors support offerings to growth-stage companies. This unique structure not only ensures that a wider pool of companies benefit from our support, but also facilitates peer learning, capacity building, and investor engagements.

HFC focuses on the business and financial sustainability of a company, not just a product. While we recognize the importance of technical assistance for product development, quality, manufacturing and market dynamics, we also prioritize the long-term financial viability of a business. We look to capacitate management with the financial and strategic tools to access and grow new product lines, to optimize growth at the lowest financial cost, and to produce enough profit to reinvest in the business for sustainability.

HFC is focused on accessing concessional growth capital through blended finance structures. HFC looks to optimize the deployment of grant capital into blended finance structures. By using grant capital to directly or indirectly de-risk transactions, we make it easier for companies to access capital. Here, HFC partners like AfricInvest and the Transform Health Fund could be critical sources of investment for African manufacturers. Further, we educate management on how best to approach and access market shaping tools and how to leverage those tools to de-risk investments.

HFC holds an innovative position understanding and bridging the difference in perspectives between investors and management teams. Given its focus on mobilizing finance, HFC has deep relationships with US DFC, IFC, and others who are developing new ways to make financing available for surge production and delivery of key commodities. The focus on providing investment capital to commercial entities that advance health system resilience is a significant opportunity for the African local manufacturing sector. HFC can play an innovative and unique role in positioning manufacturers to capture that investment capital.

HFC’s Target Impact

As local manufacturers access sustainable sources of financing, we anticipate improved access to, availability, and supply of essential medicines and products and in turn improved health outcomes. As product availability scales, so too does product access. More product distribution points throughout the public and private markets at all levels of the health system contribute to an increase in the number of people taking said products. Finally, patient adoption and adherence also increases when products are designed for the markets where they are sold (in consultation with community representatives).

In addition to mobilizing new investment, the growth of these local manufacturers will produce new jobs and impact thousands of indirect beneficiaries. These investments will benefit the community and local economy, enhancing the overall quality of life and income potential of those in the surrounding community. The economic impact from this project results from growing, sustainable manufacturers that can offer new jobs and drive spending in a given economy. Key drivers of this economic impact include 1) increased consumer, government and donor spending on locally manufactured products leading to manufacturing growth and more distribution opportunities, 2) improved long-term viability of companies leading to job creation, and 3) companies’ ability to continue growing their financial profitability.

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