Research Context
This study addresses critical financing gaps in last-mile distribution of public health commodities across Low- and Middle-Income Countries (LMICs), where payment delays and limited working capital create persistent stockouts and inequitable access to essential medicines.
The Challenge
Approximately one-third of the global population lacks regular access to essential medicines, with median availability in public sectors reaching only 40% compared to 78% in private sectors. Distribution costs can account for up to 50% of logistics expenses, yet chronic underfunding, delayed payments to suppliers, fragmented governance, and limited digitization severely constrain last- mile delivery performance across sub-Saharan Africa.
Research Objective
Develop a Supply Chain Finance (SCF) instrument design for public health commodity distribution that is financially viable, operationally feasible, and aligned with existing policy frameworks to improve last-mile delivery and incentivize sustainable public-private collaboration.
Methodology
Extensive literature review, case study analysis across Latin America, Asia, and Africa, and key informant interviews to evaluate SCF models. The study examines enabling factors and proposes a reverse factoring prototype tested across diverse African contexts including Senegal, Kenya, Ethiopia, and Ghana.
Key Findings
Limited SCF Application
Only Ghana and Cameroon have implemented formal SCF instruments in health sectors. Most African countries lack dedicated financing mechanisms for last-mile distribution, relying instead on fragmented donor funding and delayed public payments.
Critical Enablers Identified
Three key enablers determine SCF success: strong governance frameworks with clear institutional roles, digital infrastructure enabling verified delivery data and e-invoicing integration, and mature private sector capacity with established financial relationships.
Proposed Solution
A reverse factoring model leveraging public buyer creditworthiness, supported by Development Finance Institution (DFI)-backed first-loss guarantees and commercial bank participation. The model integrates with existing procurement systems through fintech platforms, enabling suppliers to access early payment at reduced costs.
Recommendations
The study recommends three strategic pillars for successful implementation: strengthening governance mechanisms through multi-stakeholder coalitions and independent oversight structures; integrating digitalization by embedding SCF platforms within existing Public Financial Management systems and promoting interoperability standards; and expanding dissemination and capacity- building through targeted awareness campaigns, practical training programs, and peer learning networks. These recommendations emphasize gradual localization of financial capacity with donor engagement serving as catalyst rather than permanent fixture.
Expected Impact
- Improved working capital management for buyers and suppliers
- Reduced payment delays and borrowing costs
- Enhanced medicine availability and supply chain resilience
- Strengthened public-private sector trust and collaboration Mobilization of private investment through blended finance
Target Audience
This research informs ministries of health and finance, donors, development partners, private sector logistics and financial institutions, Development Finance Institutions (DFIs), and global health policy platforms seeking to strengthen supply chain transparency, efficiency, and sustainable financing in LMICs health systems.
