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Making the Case for Investing in Health Enterprises

A webinar sponsored by the US Agency for International Development’s (USAID) Abt Associates-led SHOPS Plus project on investing in social enterprises affirmed these key insights:

Social enterprises provide critical health services to their communities, and they care about quality.

  • More social enterprises could thrive if they had opportunities to receive grant capital along with technical assistance in the early stages of their businesses.
  • This assistance could prepare them for further investment by private investors.
  • The success of a social enterprise also depends heavily on a strong market ecosystem of policies, institutions, and public and private capital flows.

Abt hosted the event, which featured donors, healthcare entrepreneurs, and investors.

Elaine Menotti, health science specialist and deputy division chief at USAID, opened the discussion by giving an overview of a challenge fund for health enterprises led by the predecessor project to SHOPS Plus. The HANSHEP Health Enterprise Fund, which ran from 2013 to 2015, gave financing and technical assistance to 16 early-stage businesses in sub-Saharan Africa.

The Abt project team studied three of the businesses to learn how they increased access to family planning products and services after the Health Enterprise Fund ended and to better understand the long-term benefits of USAID’s investment. A new report from SHOPS Plus documents the findings.

Sam Gwer of Afya Research Africa shared his thoughts from the perspective of a former grantee. Colm Fay of the Clean Cooking Alliance and former manager of the Health Enterprise Fund offered insights from his role working on the fund and leading the design of the study. Wilfred Njagi of VillgroAfrica provided his viewpoint as an investor specializing in start-ups, while Shigeru Handa of Asia Africa Investment and Consulting gave his perspective as a private investor. April Warren, senior private sector advisor on SHOPS Plus at Abt, moderated the panel.

The panelists agreed that the time it takes for these businesses to achieve scale will likely extend past the typical five-year project cycle. By investing in continued monitoring beyond grant periods, USAID and its partners can support social enterprises more effectively and better measure the impact of their investments on service delivery and the broader health systems in which they operate.

Panelist stressed the importance of collaboration among financing actors that are supporting social enterprises to maximize impact. While they may work at different points along an enterprise’s maturity trajectory, closer alignment of their efforts could improve overall success ratios.

“Just looking at this panel,” remarked Njagi, “we have the full stock of capital represented here, so we have donors here, we have incubator/accelerators, and downstream investors. If we could do this at the beginning of the program, . . . then I think, we increase our chances of success.”

Handa echoed this statement, saying, “It’s important for the different players in the social enterprise community to know each other and jointly support startups.”

Watch a recording of the webinar.

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