Innovative Health Product Financing and Business Strengthening in Tanzania
July 7, 2021 | By Ignacio Estevez, Principal Associate and
Access-to-Finance Director at Banyan Global
photo credit: ugurhan
Expanding the availability of health commodities in rural
and other hard-to-reach areas is key to improving family planning and other
health outcomes. Drug shops are often the main source of health commodities for
people living in hard-to-reach areas across sub-Saharan Africa. These
privately-owned pharmaceutical outlets sell nonprescription drugs and fill an
important gap in service provision for the communities they serve.
For Tanzania’s rural and urban poor, Accredited Drug
Dispensing Outlets (ADDOs) are often the first entry point to the health
system. Underserved populations depend heavily on ADDOs for access to essential
health commodities and services, but quality and financial sustainability vary
widely. Many ADDOs struggle to accumulate sufficient working capital,
particularly rural facilities that are challenged to replenish inventory during
the rainy season.
Strengthening the quality and financial sustainability of
ADDOs is an important strategy to increase and sustain their contributions to
the provision of priority public health commodities and services, ultimately
expanding access for Tanzania’s underserved populations.
Banyan Global, working as a subcontractor to Abt Associates under the United States Agency for International Development (USAID)-funded Sustaining Health Outcomes through the Private Sector (SHOPS) Plus project, conducted a business needs assessment and developed an ADDO strengthening strategy, which includes tailored business training and coaching and the introduction of digital inventory management and financial record-keeping systems. To measure the effectiveness of business training and coaching, Banyan Global developed a business practices score tool based on research conducted by the World Bank (David McKenzie and Christopher Woodruff, Business Practices in Small Firms in Developing Countries. The World Bank, 2015). Overall, the ADDOs that participated in Banyan Global’s training saw a 32 percent average improvement in key business practices, such as outreach, stock management, and record keeping.
To complement this business strengthening intervention, Banyan Global structured an innovative financing mechanism in partnership with a microfinance bank, a commodity supplier, and the local ADDO association to finance ADDOs seeking to purchase commodities. This innovative financing approach was tested in one region. Loan funds were used to purchase family planning and malaria products, among other inputs. To date, all initial loans have been repaid. The microfinance bank is currently scaling up lending to ADDOs within the pilot region with plans for replication in two additional regions later this year, followed by expansion nationally.
Banyan Global recognizes that improved health outcomes can only be achieved when all levels of the supply chain are engaged. By improving the ability of businesses at the end of the health supply chain to service rural customers, we ensure that important and often life-saving health commodities make it the last mile.