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REGIONS MIDDLE EAST & AFRICA


ClosingAfrica’s healthcaregap A


AFRICAN COUNTRIES AIM TO ATTRACT INVESTMENT IN HEALTHCARE, INCLUDING PUBLIC-PRIVATE PARTNERSHIPS, WRITES JASON MITCHELL


frica shoulders 24% of the global disease burden but only accounts for 1% of the


global financial resources for health- care, according to the World Health Organisation. Now the Covid-19 cri- sis has concentrated the minds of east Africa’s middle classes on the need for improved healthcare, creat- ing huge opportunities for investors in the sector. In 2017, total healthcare spending


in Kenya amounted to only 4.8% of gross domes- tic product (GDP) compared to 17.7% in the US, while the Organisation for Economic Co-operation and Development average is 8.8%, according to theWorld Bank. In Ethiopia the fig- ure was 3.5%; inRwandait was 6.5%. Only South Africa – at 8% – came close to the OECD average. Kenya requires 70,000 additional beds to


bring it up to the worldwide average of 2.7 beds per 1000 people, which would entail $6bn investment in healthcare real estate assets, according to Knight Frank, an international real estate company. It requires an additional 2000 beds and an investment of $156m just to keep up with its 2019 country bed ratio. Meanwhile, Uganda requires 101,000 extra


beds to take it up to the global average, necessi- tating an investment of $11bn. It needs an addi- tional 700 beds and an investment of $81m to maintain its 2019 country bed ratio.


Time to build “Covid-19 has highlighted the healthcare infra- structure gapacross Africaandtheimportance of investinginthesectortoimproveaccess toquality care,” says Mary-JeanMoyo, director for manufac- turing, agribusiness and services for the Middle East and Africa at the International Finance Corporation (IFC), part of theWorld Bank group. “Thepandemic is playing a pivotal role in driving thepublicandprivate sectortoinvestinandbuild more health-related infrastructure. “There are important investment opportuni-


ties across traditional health services such as expanding hospital and clinic networks includ- ing specialties such as oncology and cardiology. There is also a growingneedformorediagnostics services,suchasimagingandlaboratoryfacilities to advance medical research.” The IFC is the biggest single investor in the


private healthcare sector in Africa and, as of July 2020, has invested around $500m in the indus- try, including funds mobilised from other finan- ciers and investment in intermediaries such as


72


private equity funds, debt investment vehicles and commercial banks. In February 2020, the IFC expanded its


TechEmerge Health initiative from India and Brazil to east Africa. The programme matches tech companies from around the world with leading organisations in emerging markets to drive the adoption of new technologies and spur innovation in healthcare service delivery. More than 20 private healthcare providers in Kenya, Ethiopia andUganda have signed up.


Funding tech pilots Selected innovators receive funding and guid- ance from the TechEmerge team to pilot their tech solutions in the east African market, with the ultimate goal of wider commercial deploy- ment of the technologies. “Leveraging innova- tive technology to improve both access to and quality of healthcare has interesting potential,” says MsMoyo. In November 2019, private equity fund


Investment Funds for Health in Africa (IFHA)-II (which is backed by European development finance organisations such as Swedfund) together with the IFC set up a $115mholding company to acquire and integrate targeted healthcare service businesses in east and southern Africa. Its investment platform, Hospital Holdings Investment, plans to grow services in east and southern Africa from one hospital and 35 clinics to five hospitals and 52 clinics within five years, and to serve up to 1.8 million patients a year. Population and GDP growth in several east


Africanmarkets – aswell as governmentsupport initiatives – have sparked health-related invest- ment. East Africa enjoyed some of the world’s fastest-growing economies in 2019, with Ethiopia expanding 8.9% and Rwanda 10%, according to the International Monetary Fund. This strong economic performance is


expanding the region’smiddle class. TheWorld Bank declared Kenya a lower middle income country in 2014, while Tanzania assumed that status in July 2020. The African Development Bank forecasts that the continent’s middle class will expand from355 million (34% of the popu- lation) in 2010 to 1.1 billion (42%) in 2060.


Investment options Knight Frank believes foreign investors will put theirmoney into hospital-related real estate and in hospital operating companies. Assistance from local companies that understand the local business landscape is vital, it adds.


www.fDiIntelligence.com August/September 2020


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