Commercial banks are rethinking traditional lending models as Africa’s pharmaceutical industry gathers momentum, with Stanbic Bank Ghana positioning itself at the forefront of efforts to structure flexible, long-term financing for biomanufacturing.
Speaking at the West Africa Biomanufacturing and Market Access Forum, Hakeem Shaibu, Senior Vice President for Telecoms, Media & Technology and Diversified Industries at Stanbic Bank Ghana, said the capital-intensive and high-risk nature of pharmaceutical manufacturing requires a blend of debt, equity and development finance partnerships rather than orthodox short-term lending.
Mr. Shaibu was contributing to a panel discussion themed “Making Biomanufacturing Bankable – What Investors Need from Governments and Manufacturers and Vice Versa.”
He explained that Stanbic Bank increasingly leverages access to debt capital markets, equity investors and concessional funding sources to structure transactions aligned with the long gestation periods typical of pharmaceutical investments.
“The nature of this business requires patient capital. You cannot finance it with short-term funds that put pressure on operations,” he said.
He identified partnerships with development finance institutions (DFIs) such as the International Finance Corporation (IFC) and the Development Bank Ghana (DBG) as critical in de-risking transactions, reducing pricing pressures and extending tenors to match project timelines.
According to Mr. Shaibu, commercial banks operate under a delicate balance—mobilising deposits at a cost while deploying capital in a way that preserves returns and manages risk exposure. As a result, revenue certainty remains a major determinant in financing decisions.
“When we give you a loan, the fundamental question is how secure we are in terms of collection,” he noted.
To address these constraints, he said Stanbic Bank had increasingly gone beyond conventional lending in supporting pharmaceutical companies across Africa, including in Ghana.
While the bank has an appetite for greenfield investments, Mr. Shaibu indicated that such projects typically require robust risk mitigants, including guarantees, co-investors and DFI participation.
One of the most critical risk-reduction tools, he said, is technology transfer partnerships. These arrangements, often involving established global manufacturers, help improve operational efficiency, reduce production losses and reassure financiers that manufacturing processes are proven and bankable.
“Where you have established global partners, their guarantees can effectively serve as credible collateral,” he explained.
Mr. Shaibu also pointed to structural challenges within the pharmaceutical sector, particularly the risks associated with limited product portfolios. Companies focused on a single product—such as vaccines—often depend heavily on government procurement, resulting in cyclical demand and heightened credit risk.
“If your business model relies on one off-taker, it affects how we price that risk,” he said, adding that diversified production lines with recurring revenue streams tend to attract more favourable financing terms.
Beyond bank-led solutions, Mr. Shaibu called on governments to play a more active role in de-risking pharmaceutical investments. He noted that tools such as advance market commitments, clearer procurement policies and predictable off-take arrangements would significantly improve project bankability.
“When we are modelling these transactions, we need visibility on where the income will come from,” he stressed.
He observed that easing lending rates have begun to improve conditions for long-term investments.
However, he maintained that sustained collaboration between commercial banks, DFIs, governments and industry players will be essential to unlocking the full potential of Africa’s pharmaceutical and biomanufacturing sector.
Source: businesspostonline
