An inspection of the African health sector reveals a mixed picture. There is much to be optimistic about, yet there are still significant challenges. Despite having 14% of the world’s population, the continent bears 25% of the global disease burden, with less than 1% of the world’s financial resources and only 3% of the world’s health workforce. Less than 30% of the population has access to basic healthcare.

Mr. Nishit Shah

Furthermore, COVID-19 has disrupted global supply chains, increased the burden on health workers and interrupted continuous care for non-communicable diseases (NCDs) and treatment of other illnesses like malaria, TB and HIV/AIDS. However, the pandemic has also spurred local manufacturing, increasing our awareness of the need to rely less on international supply chains. African economies are also growing steadily, with one in five of the world’s consumers predicted to be located in Africa by 2030 and household consumption predicted to reach $2.5 trillion by the same year. Both sides of this coin, the exciting growth as well as the serious challenges in the African health sector, represent significant investment opportunities.

UNECA estimates that health business opportunities in Africa will be worth as much as $259 billion by 2030. Additionally, the African Continental Free Trade Agreement (AfCFTA) represents an opportunity to prioritise health in all trade policies and programs and increase integration between African nations.
Investing in African health systems is an opportunity to accelerate economic development and growth, contribute to saving millions of lives and prevent life-long disabilities. Such investment will move countries closer to achieving objectives of national poverty reduction strategies and the Sustainable Development Goals (SDGs).

There Are Obstacles to Investment…
So why isn’t widespread investment in the African health sector already happening? What are the stumbling blocks for investors? One primary challenge is a lack of data, which means it is difficult to make policy and investment decisions that are data-driven. Even large institutions such as the World Health Organization (WHO) do not have complete healthcare data sets on Africa. Though some organisations are compiling significant amounts of data, this is often proprietary and doesn’t benefit the entire sector.
There is also a lack of understanding when it comes to the health sector. Health has historically been viewed as having higher risk and lower returns on investment, although this is not necessarily accurate. Lenders often have steep requirements for the organisations they are investing in, making the barrier to accessing financing very high and often completely out of reach. This puts early-stage businesses in a difficult position, as they are not yet big enough to receive venture capital funds, but also do not have the capacity to comply with the requirements of lenders.
In a sector that has historically relied on donor funds, health businesses seeking funding from investors often focus on impact and neglect emphasising their business case. However, investors cannot invest based only on the impact of an organisation. As much as they might support the outcomes of the initiative, they need to see the validity of the business case. There is a capacity gap when it comes to small businesses understanding what investors are looking for and learning to speak their language.
Finally, the investment sector is quite fragmented. Investors are trying to solve many different problems focusing on different issues but are often working in silos. As a result, there is duplication, resources are often wasted and opportunities missed.
…However, Opportunities for Investment Are Ripe
The investment challenge is significant but not insurmountable. There is a tremendous opportunity to leverage the private sector in ways that improve access and increase the financing and quality of healthcare goods and services throughout Africa.
Collaboration will be key in moving investment forward. Working together could benefit both individual investment companies as well as the sector in general. Strategic partnerships could allow for pooled procurement or collaboration on initiatives that have overlapping objectives. Additionally, co-investing opens up many opportunities, spreading out the risk whilst ensuring adequate levels of due diligence since both investing parties will want to ensure that the investment is sound.
Focusing locally can also reduce barriers to investment. Partners who are familiar with the local landscape can make a huge difference when it comes to whether an investment will succeed or fail. Seeking out investments from local companies rather than solely relying on international donors and investors is also key to the long-term strategy of growth and self-reliance.
There are also specific areas of investment within the health sector that show great promise. Manufacturing is a weak area in the African health sector but is also vital to its growth. The continent realised the disadvantages of depending solely on other countries when supply chains were disrupted during the pandemic and this only further strengthens the investment case for local manufacturing. Manufacturing in the health sector often focuses on pharmaceuticals, but there are many areas beyond pharma including various kinds of equipment and supplies. For example, personal protective equipment (PPE) is a vital output of medical supplies manufacturing. Manufacturing is also featured in many national plans, meaning there will be widespread support and encouragement of such investments from governments.
Human resources for health is an important area of investment. Training health workers is an essential aspect of growing healthcare. All other expansions in the sector will be meaningless if there is a lack of enough well-trained health workers to support them. Additionally, Africa’s young population gives us the chance to invest in preventative measures and nutrition is one of the most pivotal areas of preventative health. Malnutrition for children can result in life-long limitations of cognitive abilities and obesity is also an issue that leads to many other health problems.
Health technology also shows great potential for investment. This has been an important area of the health sector for many years, but its prominence has increased since the COVID-19 pandemic. The gap in data collection and availability also offers an opportunity. A central compilation of data that is publicly available, even accessible with a fee, could offer the chance to benchmark, plan and forecast. An information centre could potentially be managed by private sector health associations.
So, although there are barriers to investing in the African health sector, the potential advantages far outweigh the challenges. Investment can fill gaps, address challenges and capitalise on the momentum of growth and innovation on the continent.