CALEB OPON

SOCIAL VALUE PARTNERS LTD (SVP)

NOVEMBER, 2013

INNOVATIVE FINANCIAL SUPPORT FOR

COMPREHENSIVE PUBLIC HEALTH &

EDUCATION SERVICE PROVISION A DISCUSSION NOTE for SAFARICOM LTD

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PUBLIC EDUCATION AND HEALTH SYSTEMS

What is the Challenge in the Health Sector?

The Health Care sector in Kenya is unable to deliver: Drugs into the hands of patients at affordable prices Machines (for diagnostics as well as treatment) into the hands of doctors and nurses

at the right prices A large majority of patients are unable to pay market prices as currently defined by

the high end hospitals. Machines and drugs have been too expensive to meet the needs of the majority Hospitals are far and few between Doctors, nurses and technicians are expensive to train and hard to sufficiently

remunerate within the public sector or indeed the country There is not enough funding flowing into the sector generally

What is the Challenge in the Education Sector?

Huge funding but still falls short of the resources required by all public sector education institutions.

Access to pre-primary and post-primary education is limited Facilities; the low transition rates to secondary schools and other tertiary institutions

are as a result of lack of adequate places. Inequalities due to cost, proximity and availability of appropriate physical amenities

such as school laboratories and adequate instructional material. Income disparities as high earners take their children to lesser affordable but more

competitive private schools with better academic performance. Outline of a Solution:

For both sectors, alternative sources of funding are required without recourse to the Exchequer or asking households to pay.

This funding solution can be provided by the private sector (specifically Safaricom and strategic sector supply-side partners under a PPP framework.

Using Safaricom’s 20million subscribers, the Mpesa/Mshwari products can raise savings targeted to the provision of quality health and education services

The amount of savings required would be pegged to the 2012/13 health education budget (as the base year) which was KES 318billion.

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Each Safaricom subscriber would therefore be required to save on average KES 16,000 with very limited withdrawals

This amount would then be invested by Commercial Bank of Africa in Kenya’s Treasury Bill/Bond market currently estimated at KES 2.1 trillion at an average 5% to 8% per annum

Yields from the investment transferred to the Safaricom Foundation to disburse for sector development. These yields can be used in two ways

1. Improve the two sectors as and when the yields are generated 2. Or used to procure a loan for the sectors development at once

Benefits

Safaricom:- expansion of subscriber base, revenues and related services in Kenya and other markets in sub-Saharan Africa through Vodafone mobile money .

Commercial Bank of Africa:- additional fee income and expansion of loan book Public health and education institutions:- provision of additional funding for sector

development without recourse to the Exchequer or asking households to pay. Supply-side partners; multinational firms like GE:- a new market for firms engaged

in the supply of medicines and medical and education equipment at market prices. All households, students and patients:- will access high quality health and education

services free of charge making huge savings Health and education staff:- increased salaries and better working conditions. Public health education institutions:- Infrastructural upgrades with the requisite

tools and equipment found in private sector institutions Donors, foundations, federated givers:- all donations converted to deposits/loans. GoK:- will solely be responsible for paying only recurrent expenditure. This will

allow GoK to recruit more teaching and health staff or increase their salaries. SVP:- entitled to a fee as concept copyright holders and explore licensing

possibilities in other markets.