The European Bank for Reconstruction and Development (EBRD) is supporting the development of high-quality hospitals in Egypt and Morocco, teaming up with other international financial institutions (IFIs) to deliver funding under an Islamic finance structure, known as a Commodity Murabaha, that the Bank is using for the first time.
A financing facility worth a total of $125m will be used for investments by the Al Batterjia Medical SAE group to develop one greenfield general hospital in Alexandria, in Egypt, and another in Zenata, Casablanca, in Morocco.
The International Finance Corporation (IFC) led the structuring of the Commodity Murabaha financing, which comprises $20m from the EBRD, $25m from the OPEC Fund for International Development, $18.75m from the Finnish Fund for Industrial Cooperation, and $61.25m from the IFC itself and the IFC Managed Co-Lending Portfolio Programme (MCPP).
The project aims to improve the quality of hospital services in both Egypt and Morocco beyond the current standards. The facilities will benefit from internationally recognised certification, which is a rarity in these two countries.
Egypt and Morocco, like other economies in the Southern and Eastern Mediterranean (SEMED) region, suffer from a low -quality healthcare, against a backdrop of fast-growing populations.
In addition to raising the quality of available healthcare, the developers are also committed to delivering high standards of efficiency in the use of energy, water, and construction materials.
This is the first time the EBRD has used a Commodity Murabaha, which is just one of many financial products that are compliant with Islamic law.
A Murabaha transaction is a multilateral sale arrangement whereby the financier – equivalent to the lender –purchases existing commodities from a supplier and immediately resells them to its client – equivalent to the borrower – on terms that provide for deferred payment.
The deferred payment is calculated as the original purchase price of the commodity plus a premium to include the financier’s profit margin.
The EBRD started operating in the SEMED region in 2012 and to date has invested more than €11bn in 255 projects in Egypt, Jordan, Lebanon, Morocco, and Tunisia.
Additionally, IFC said that the financing will help Humania develop a network of multispecialty hospitals and healthcare assets in Egypt and Morocco.
The first phase of its investment programme includes three hospitals and a medical tower with nearly 600 inpatient beds and 240 outpatient clinics. The company’s growth is considered key in both countries, where there are shortages of doctors and hospital beds.
According to the IFC, Egypt’s healthcare sector needs $60bn in investments by 2050 to meet rising demand for medical services, while Morocco is also facing a need to improve healthcare delivery, especially for women and young children.
Sobhi Batterjee, Chairperson of Humania said that healthcare and development are inextricably linked. He added,”Our partnership with IFC will allow us to provide world-class healthcare to more patients in Egypt and Morocco, and thus play a role in improving the healthcare systems and well-being of the communities in these countries.”