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Health sector bleeds as World Bank leads private investors in ‘takeover’

International lender World Bank and foreign investors must be smiling all the way to the bank as the private sector gradually takes over Kenya’s health sector from the government, with the poor citizens being pushed out of the formal healthcare system.

Here is how it works out. Armed with “deep” pockets and steady inflow of billions of shillings from international financiers such as the World Bank, Bill and Melinda Gates Foundation, Norwegian and Swedish governments, private health providers have taken over the bulk of government-trained health workers, leaving public facilities to grapple with a skeleton staff.

In what may be seen as a systematic plot to strangle the public health facilities, 73 per cent—equivalent to 55,028 of all health workers in the country—now work in private hospitals that arguably serve only those with steady incomes, while government facilities are left with just 27 per cent or 20,352 workers.

And as public health facilities continue to fail Kenya’s sick, against the backdrop of under-funding and a bungled devolution of the function, the hawk-eyed private sector has pumped billions of shillings into healthcare provision.

The government has the highest number of health facilities at 4,189 against 3,784 operated by the private sector. This means that a person with no or limited income in poor urban and rural settlements has a 73 per cent chances of not getting the attention of a qualified health worker.

On the other hand, a financially stable person has 73 per cent chance of getting quality medical attention from a qualified health worker. What is shocking is that the chronic understaffing of government-owned healthcare facilities could be part of a deliberate policy to cut down on health spending.

The policy has its roots in Structural Adjustment Programmes (SAPs) forced on the government in the 1990s by the World Bank and International Monetary Fund (IMF) as a condition for financial support.

At the onset, the SAPs in health sector took the form of introduction of user fees in public hospitals which in Kenya were labelled Cost-Sharing Programme and that were shortly followed by a reduction of funding to healthcare as a government expenditure.

World Health Organisation (WHO) is on record criticising SAPs because they deny healthcare services to the poor, but most African governments, including Kenya, have lacked the political will to wiggle out of the programmes.

“Studies have shown that SAPs policies have slowed down improvement in, or worsened, the health status of people in countries implementing them.

Results reported include worse nutritional status of children, increased cases of infectious diseases, and higher infant and maternal mortality rates,” WHO said in a note on the SAPs. In Kenya’s case, the World Bank has been curiously aggressive in its pursuit of cuts to healthcare expenditure and privatisation of the sector.

And the bank does not leave it at just pushing for the privatisation of the sector; it is also now among the biggest investors in Kenya’s private hospitals and pharmacies, earning billions of shillings in dividends from profits earned in the sector. Investment flows clearly indicate that healthcare has earned its place as one of the biggest gold mines in the country.

By 2010, Kenya’s private healthcare market was estimated to be valued at Sh20.7 billion according to a report published by International Finance Corporation (IFC). In the report titled Private Health Sector Assessment in Kenya, the IFC—a member of the World Bank Group—aggressively pushes the case for privatisation of the health sector and justifies the government cuts in public health spending.

Curiously, on the same year that the report was released, IFC through its agencies in Kenya started scouting for private health facilities that it could invest in.

And with good measure of success! In slightly more than five years, the World Bank through IFC, its private sector, has pumped billions of shillings into Kenya’s private hospitals through Abraaj Group, a private equity fund formerly known as Aureos East Africa Fund.

The funds invested by Abraaj Group are part of two funds that the IFC pooled from international investors worth Sh20 billion for investment in Africa hospitals and pharmacies.

The money is spread in two funds namely; Investment Funds for health in Africa and Africa Health Fund which are invested through private equity funds that demonstrate ability to pool more funds.

Abraaj, which runs Africa Health Fund and which is currently the biggest single investor in Kenya, has already put Sh20 billion into Kenya’s healthcare. Nairobi Women’s Hospital received investment worth Sh600 million while AAR Group was given Sh340 million to improve and expand its 28 clinics.

In between, other foreign investors have taken the IFC cue, and are investing heavily in the country. They include Fanisi Capital headed by Kenyan techprenuer and which draws the bulk of its financing from Norwegian government-owned Norfund.

In 2013, Fanisi acquired Haltons Pharmacy chain at Sh255 million to boosts its expansion drive across the country. Catalyst Fund, another foreign-owned private equity fund acquired Mimosa Pharmacy chain at Sh500 million.

American-owned Acumen Fund acquired Miliki Afya, a chain of medical clinics for undisclosed amounts while TBL Mirror Fund acquired majority stake in Meridian Hospital giving it the financial muscle to expand to 24 clinics across the country and three hospitals.

This is as public hospitals struggle with inadequate funding, infrastructure, drugs and staff, factors that have crippled the health sector, creating a fertile ground for persistent strikes by health workers. But question abound? Who will save Kenya’s health sector?

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