Healthcare outcomes in sub-Saharan Africa remain the worst in the world. Even though its population is around 11% of the world's
total, it bears a quarter of the global disease burden; less than 1% of the global health expenditure is spent here, and it
has just 3% of the world's health professionals.
Infectious and parasitic diseases form the bulk (42.4%) of the disease burden in Africa, but this is rapidly being compounded
by the sharp rise of NCDs, particularly diabetes, chronic respiratory diseases, cancers and cardiovascular diseases.
A major problem is the sorry state of the majority of Africa's public health systems. Billions of aid spent on improving Africa's
health systems has yielded poor results. Health systems are grossly understaffed, have crumbling and decaying infrastructure
and are short on medical supplies. In addition, being built, equipped and trained to handle mainly parasitic and infectious
diseases, Africa's health systems are ill-prepared for this extra epidemic of NCDs.
Mark Swai, former hospital director of the Kilimanjaro Christian Medical Centre, talking to Pharm Exec in 2013, said "the beds of our new HIV/AIDS were filled with HIV patients whose diseases were not under control. Since the
introduction of affordable anti-retroviral drugs that decreased the disease burden, those beds are now filled with diabetes
Due to these chronic problems, most Africans flock to the private sector, not through choice but because in most cases, it
remains the only option.
But the private sector is also bedevilled with its own serious issues; poor managerial competency and regulatory oversight
mean that prices for essential drugs cost hundreds more than the trade costs, services are poor, staff are badly trained with
questionable ethics, the sector is plagued with excessive fragmentation, and medicines are either poor quality, expired or
Opportunities for growth
The problems listed above, though posing huge issues, point to a low-hanging-fruit market that is ripe for innovative disruption
and presents huge opportunities.
Faster economic growth signals that the healthcare market is sure to grow; the International Finance Corporation estimates
that the pharmaceutical market will expand to $35 billion by 2016, and $40 billion in 2020, surpassing the UK. Spending on
healthcare has increased by a compound annual growth rate of 9.6% since 2000. This demand for better healthcare presents several
different bankable opportunities (see Figure 2).
Figure 2: Breakdown of private health investment opportunities in sub-Saharan Africa, 2007-2016 %, $ million (11,300-20,300)
The IFC estimates that $25-30 billion in new investments will be needed to meet the demand for medical care between now and
2016, of which up to 40% is expected to come from the private sector; Robertson, writing in The Fastest Billion, expects a real increase of 72% in health expenditure through 2020.
Investing in healthcare also makes financial sense; in stark contrast to the 9.6% CAGR in the African healthcare sector from
2000, the healthcare, drug retailing, and pharmaceutical market growth were all in the six-worst performing sectors in the
Financial Times Share Exchange (FTSE) 350 in 2012 (see Table 1).
Table 1: FTSE sector performances, the six worst performers in 2012
However, private investment into the healthcare sector in Africa has been strikingly low:
» EY's African Attractiveness survey revealed that, of the $587 billion of FDI that Africa attracted in 2011, only 1% went
to healthcare projects.
» In one of McKinsey's often-quoted studies on Africa, "Lions on the Move (2010)," healthcare is not in the top 12 sectors
for attracting investment.
» According to an EY study, of private equity in Africa, healthcare accounted for only 5% of exits by sector; even though
70% of FDI was in the services sector, healthcare did not even make the top ten.
» In the three best-selling books, Africa Rising (2008), Africa, the Ultimate Frontier Market (2012), and The Fastest Billion (2012), healthcare does not feature in the listings of the sectors most attractive for investment.