Sector overview: The healthcare sector in sub-Saharan Africa, despite increasing consumer demand has not been a major beneficiary of positive investment trends compared to sectors such as telecommunications, financial services, oil, minerals, mining and infrastructure .
Yet, remarkable opportunities lie beneath the challenges facing provision of healthcare in the region. Despite the challenging statistics, the sector has experienced notable expansion in the recent past as governments, faced with rising demand for more and better services embrace private partnerships as a means of meeting health service delivery goals.
Consumer demand for healthcare services will fuel still greater demand for quality healthcare – and a greater need for capital investment in health care businesses to meet those demands.
A 2007 report by the International Finance Corporation (IFC) estimated the market for healthcare will more than double by 2016, going up to $35 billion and the private sector is poised to provide up to 60% of this to meet the demand in sub-Saharan Africa.
The following are some of the investment opportunities existing in sub-Saharan Africa's health care sector.
1. Health services provision
Description: This is the largest private healthcare segment in sub-Saharan Africa and holds significant potential for financial returns. Opportunities can be found in inpatient and outpatient care, preventative care and diagnostic services. High end clinics that target growing middle and upper-income groups are especially profitable and provide high quality care that attracts patients as well as experienced
staff. High volume, low cost hospitals usually located in high density areas targeting low income earners also offer high returns.
2. Distribution and retail
Estimated cost of investment: $2.8 billion
Duration: Over the next ten years
Description: Development of distibution infrastructure (warehouses, trucks and supply chain management information systems). The retail sector, though significantly smaller, is the most profitable segment within healthcare in sub-Saharan Africa, with net margins of up to 50%. Hospitals and clinics heavily depend on their pharmacies to subsidize their businesses.
3. Life sciences
Estimated cost of investment: $1.6-2.9 billion
Duration: Over the next ten years
Opportunities:
• Generics manufacturing: Involves formulation of generic medicines, both prescription and over the counter.
• Medical supplies manufacturing: Manufacturing of supplies such as long-lasting mosquito nets, medical gauzes, and medical furniture.
• South African life sciences innovation: Financing the development and commercialization of entrepreneurship innovation in South Africa’s life sciences sector
• Commercialization of infectious disease innovation: Financing phase 3 and production of products for infectious diseases developed all around the world.
4. Risk pooling
Estimated cost of investment: $1.4-2.5 billion
Duration: Over the next ten years
Description: Risk pooling is still in its nascent stages in sub-Saharan Africa and is a powerful force for encouraging the development of higher quality, better organised private sector providers.
5. Medical education
Estimated cost of investment: $1.1 -$1.9 billion over the next
decade
Description: Unavailability of skilled human resources is a significant barrier to the growth of health care provision in the region. The role of the private sector in the provision of medical education has been hampered by challenges including government regulations which traditionally restrict the private investors in this sector, as well as the huge capital required to establish medical schools. However, evidence from developing countries such as Egypt and India indicate that private medical and nursing schools can be profitable.
Countries like Ghana, Senegal, Tanzania and Uganda have more open policies regarding the role of the private sector in the provision of medical education. Opportunities include establishment of private hospitals which can achieve local accreditation as training institutions for nurses, midwives and laboratory technicians; and large multidiscipline universities.
6. Other opportunities include:
• Building public-private partnerships to manage state facilities
• Adjusting products to meet unmet demand, particularly among the poor
• Pursuing strategic growth expansion to unmet demand countries
• Creating new models for mobile, remote and home based healthcare
• Creating new opportunities around rapid penetration of mobile phone technology in the
region.
