Health Business Investment in Africa
On Thursday 25th March 2021, Africa Health Business convened a group of stakeholders from the African investment space, representing the African Development Bank (AfDB), MyDawa, GE Health, Metropolitan Hospital, and Chemonics International, to discuss investment in the health sector, including challenges faced, opportunities presented, and specific areas of potential. The following includes highlights of the discussion.
Now more than ever is the time to invest in Africa’s health sector. Although there are many challenges and barriers, and the COVID-19 pandemic has further widened the glaring gaps in the health sector, there is both the opportunity and responsibility to use these challenges as a chance to invest in building stronger health systems on the continent. There are several things to consider in encouraging further investment in the health sector in order to achieve universal health coverage (UHC).
In order for investment to take place, there needs to be an enabling environment. The private sector is always looking for the lowest amount of risk and the highest levels of stability. Governments often have gaps in funding capacity that need to be filled. Banks are wary of healthcare investments because of the perceived high risk and the technical health expertise often required. Therefore, the opportunity for innovative partnerships can help to mitigate risks and enhance the appetite of investors that would not necessarily invest in the health sector on their own. This could include co-investing, public-private partnerships, leasing rather than buying high-priced items, and arrangements between manufacturers and investors. The different stakeholders need to be open to creative new ways of investing and the possibility of working in partnership.
Before the pandemic, there was a strong focus on behavior change when it came to the adoption of new technologies. However, because the use of these solutions was forced upon both practitioners and patients during the lockdowns and social distancing that COVID-19 required, that behavior change has now taken place. The technology is already being used, adopted and integrated. Digital technology companies and investors looking to strengthen health systems should capitalise on this moment.
Health infrastructure is an area where governments are spending a disproportionately low percentage of their healthcare budgets. The private sector has an opportunity to fill this gap by investing in things like laboratories and testing facilities, as well as hospitals and clinics. Additionally, Africa currently manufactures less than 2% of the pharmaceuticals that it consumes. The pandemic revealed the fragility of international supply chains and increased the motivation to begin establishing local pharmaceutical production. The AfCFTA is providing a pathway for increased intra-African trade, which opens up opportunities for local pharmaceutical manufacturing to not only serve the needs of the country where they are based but potentially their entire region. Recent estimates show that the African health sector will be worth around $259 billion by 2030, with the potential to create over 16 million jobs across the continent. There are great opportunities in the health sector, we just need to create an enabling environment for private sector engagement and participation.
By Joelle Mumley, Associate Editor, AHB