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Matching micro-finance with medical needs - lessons from Dar es Salaam

At next week's Positive Impact Summit in London, we will be discussing a range of case studies that demonstrate Positive Impact - the intentional creation of enduring economic and social value. Ahead of the Summit, we explore one particular example of Positive Impact in practice. Through the Human Development Innovation Fund, micro finance loans in Tanzania are helping more and more female business owners deliver affordable and accessible health services in their communities.

For rural women with few employment opportunities, owning a retail pharmacy provides a chance to supplement family income.

Medical needs and microfinance in Tanzania
In Tanzania, like any other country, reliable and sustainable medical supplies are vital to the health of the population. Private sector retail pharmacies are a major source of health care and medicine, particularly in rural and remote parts of the country. For rural women with few employment opportunities, owning a retail pharmacy provides a chance to supplement family income, while at the same time taking a leadership role in the community.

These pharmacies are known as Accredited Drug Dispending Outlets (ADDOs). According to the 2013 Tanzania Private Health Sector Assessment report, 60% of the population use ADDOs as their first port of call for health services. Despite the huge demand in this sector, ADDO shop owners continually experience financial difficulty stocking their shops with the right quality and quantity of recommended medicines. Inevitably this leads to missing stock, low quality supplies, and increased prices for customers.

In short, an inability to access finance is negatively affecting the ability of ADDO shops owner to support 60% of the population with vital medicine.

Opening an ADDO is easier said than done
Living in Tanzania’s capital city, Dar es Salaam, Agnes Nyasebo dreamt of opening an ADDO. Agnes is a widow, and a nurse and mid-wife at a local health facility. She saw the huge need for an ADDO in her area, with no one selling essential medicine to the community. As well as filling this life-saving gap in the community, an ADDO gave Agnes the opportunity to make more money to support her family.

Agnes began selling medicines from her house in small quantities. Due to a lack of start-up capital, she was unable to expand her business. Despite approaching various banks, none were willing to give her a loan as she was unable to provide collateral insurance. In the mind of the financial sector, ADDOs are not viable investment opportunities.

Investing in health – the power of a loan
Under a partnership between Palladium’s Human Development Innovation Fund (HDIF) and umbrella organisation The Association of Private Health Facilities in Tanzania (APHTA), funding and support is provided to AFYA Micro Finance Company Limited (AMIF). This partnership aims to transform ADDO ownership for local women like Agnes. AMIF is the link between aspiring ADDO entrepreneurs like Agnes and the finance they desperately need to establish their businesses. They target the lower end of the market and focus on four key regions: Dar es Salaam, Iringa, Mbeya and Rukwa. AMIF loans are used variously as start-up funding for new ADDOs, investment to increase existing capital, and to fund renovation or the expansion of premises. AMIF also provides group loans for ADDOs unable to take on individual investments. These innovative products are offered with no collateral requirement, but use the ADDO group itself as the loan guarantee. HDIF’s support for AMIF is ultimately about demonstrating that retail pharmacies are a viable investment proposition for the financial sector. Furthermore, they offer the opportunity for the private sector to play an active role the health of Tanzanians.

The opportunity was not lost on Agnes. She applied for a micro-finance loan in September 2015 to renovate part of her house into a fully-fledged ADDO shop and increase working capital in order to improve the breadth and depth of her stock. She has since successfully applied for a second loan to expand her business further.

Before accessing micro-finance, Agnes was making average sales of TZS 15,000 with 3 clients per day. With her first loan, she increased daily sales to TZS 80,000 with 15 clients per day. Her second loan has nearly doubled her revenue again, to TZS 150,000 in daily sales with over 40 clients being served daily. Agnes also recently employed a drug dispenser, and has been able to reduce the prices of some of her medicines as a resulting of being able to negotiate better bulk prices with suppliers.

Across AMIF’s portfolio, the lessons are clear: health care is a viable investment opportunity for financial institutions; the demand and need for quality medical supplies is so great that a network of regulated ADDOs has the potential to bring a vibrant market to remote areas of Tanzania; by investing in the health care market we invest in the health of Tanzania.

Buying and selling – the drivers of community development
At its heart, the HDIF and APHTA partnership demonstrates what we already know: that sustainable community development requires a market that matches supply to demand and recognises the needs of the population. The example of ADDOs is a good one.

With micro-finance the key to unlocking this market, ADDO owners are able to strengthen their businesses, increase their income, expand the type of services and medicines they offer, and serve more customers. For customers, health care services have been brought closer to their communities, and are more accessible and affordable.

At Palladium, we work at the intersection between market growth and social impact. We call this dual purpose Positive Impact.


Palladium’s HDIF program aims to identify and support innovations that have the potential to create social impact in education, health and, water, sanitation and hygiene (WASH) across Tanzania. With a focus on market driven solutions, HDIF catalyses the development, testing and scaling of innovative models of service delivery, information and communication technologies for development (ICT4D), and product solutions in health, education and WASH.

To learn more about our economic growth capabilities, visit our page here.