With legacy diseases and shortage of healthcare workers keeping African life expectancy far below the global average, impact investing can give the African healthcare sector a much needed shot in the arm.
African health needs care
When it comes to health, the African population definitely deserves greater care. Africa is the only region in the world where life expectancy is below 60 years of age, with South-East Asia and the Eastern Mediterranean region tied for second place at 68 years and the rest of the world (Americas, Europe and the Western Pacific) all enjoying a place under the sun with an average lifespan of 75+ years of age.
With the single most effective lever in life expectancy being child mortality, Africa, with a child mortality rate that is unduly high at 91 per 1,000 live births (almost 10% of children do not survive beyond 5 years), is grappling with an issue that literally haunts it from the cradle to the grave. Compare it to the next worse-off region, the Eastern Mediterranean, that comes a very distant second at half of Africa’s child mortality rate (55 per 1,000), and the sheer size of the problem begins to make itself felt.
All in all, the significant setback that HIV and Malaria gave to Africa is still being felt, with the continent having a 16 year gap to close to reach the current world average in life expectancy.
Let us take a look at the main determinants of Africa’s healthcare woes:
Legacy diseases running rampant
Till today, Sub-Saharan Africa continues to have the most serious HIV and AIDS epidemic in the world. In 2015, an estimated 25.5 million Africans were living with HIV, accounting for 70% of the global total. In the same year, there were an estimated 1.4 million new HIV infections and 800,000 AIDS-related deaths in Africa.
Coming to Malaria, the latest estimates by the WHO show that the disease caused 584,000 deaths, of which Africa accounted for an estimated 90%. Further, more than three quarters (78%) of malaria deaths occur in children under 5 years, adversely impacting infant mortality rates in Africa.
Severe shortage of healthcare workers
Africa’s shortage of healthcare workers is so severe that it is finally getting not only international attention but also active global intervention: Japan’s government is helping to train and retrain 100,000 health workers for Africa.
Nonetheless, staff shortages remain a chronic problem. Around half of Egypt’s annual output of newly trained doctors leaves the country in search of higher salaries, and Sierra Leone has been forced to send many of its professionals abroad for training, while importing doctors and nurses from Cuba and Nigeria to meet demand.
African Healthcare needs a shot in the arm
With diseases that are declining in the rest of the world keeping mortality rates among adults and children at a global high in Africa, coupled with a severe shortage of healthcare workers, there is no doubt that healthcare in the continent is in need of a significant shot in the arm.
Having said that, it is becoming increasingly clear that African healthcare needs cannot be fully met by the already over-strained public sector due to the disparity between existing resources, health infrastructure, the high rate of diseases and the growing demand for medical care.
In this context, the private market for healthcare in Africa is growing and is becoming the patients’ preferred choice because of greater accessibility, a higher perceived quality of services, continuous care and availability of drugs. The lower and middle income segments of the African population are currently turning to small and medium private healthcare operators where they pay out of pocket for a range of medical treatments.
Healthcare funding is the need of the hour
However, despite being the healthcare providers of choice for nearly half of the African population seeking medical care, lack of investment capital does not allow Africa’s small and medium private healthcare facilities to expand and improve their services.
Indeed, the International Finance Corporation (IFC) estimates that Sub Saharan Africa’s private healthcare system needs an investment between US$11 billion and US$ 20 billion over 2007-2016 to meet the needs of the population. The requirement is estimated at around 50% in health care provision with the remainder split across distribution and retail, pharmaceutical and medical product manufacturing, insurance, and medical education.
Impact Investing to solve healthcare woes
While healthcare funding can have a long gestation period because of the infrastructure intensive needs of private healthcare facilities, there is no doubt that the return on investment goes far beyond mere financial profits and transcends mere monetary considerations.
It is here that impact investing, with its focus on socio-economic development rather than pure profits alone, can make a real difference to Africa’s healthcare facilities. Impact investors, who consciously choose to invest in impactful sectors that uplift local livelihoods, are most suited to understanding the challenges and tackling the issues facing the healthcare sector in Africa.
At GroFin, with our vast experience across 25 healthcare deals totaling US$ 11 million worth of investments, we have helped sustain over 3,000 jobs and served more than 390,000 patients. We aim to grow our healthcare investments to 15% of our total portfolio in the medium term, and are always on the lookout for the next promising healthcare investment.
Taking care of Africa’s health may be a huge challenge, but with the right resources and the right intentions, we can make a real difference to the lives of children and adults alike.