Maximising The Return On Healthcare Investment In Africa

Author:Mr Robert Breedon and Tom Gray
Profession:Gowling WLG

Africa is experiencing consistent economic growth. As McKinsey puts it, the "lions are on the move", resulting in increased urbanisation, social mobility and increased life expectancy.

50% of Africans will be living in cities by 2030, and by 2034, 1.1 billion Africans will be of working age, resulting in urgent demand for increased infrastructure (see, for example, our previous article on affordable housing in Africa), including improved healthcare provision.

Challenges and opportunities are plentiful in the African healthcare sector, a market the International Finance Corporation (IFC) estimates is currently worth $US35 billion. A vibrant and educated (and growing) middle class will demand better quality healthcare. Increased life expectancy and lifestyle changes will place an increased focus on non-communicable diseases such as diabetes and cardiovascular conditions.

Existing market constraints are being considered and, in some cases, addressed, whether through regulation (and deregulation) of the industry, increased private sector involvement in the development and operation of healthcare facilities, greater investment in pharmaceutical production and the supply chain, and on new technology and innovation.

So what are the key developments in the healthcare sector in Africa and what are the opportunities in this expanding new market?

Supporting the private sector

Various African governments are starting to work together across their regional trade bodies and organisations - such as the West African Private Healthcare Federation and the East African Healthcare Federation - to tackle the challenges faced by players in the African healthcare sector, whether that's through encouraging investment in facilities, or protecting trademarks and innovation.

Drafting law and regulation which attracts and sustains investor interest for healthcare projects is a priority for many governments. The Kenyan Government is focused on private sector involvement in healthcare provision, and has ensured the correct legal and regulatory framework is in place. While the country is currently grappling with how best to ring fence budgetary funds for healthcare provision by the County Governments, Kenya plans to tender for $US600 million worth of new contracts for facilities and equipment, including 300-bed hospitals, oxygen plants and IT systems.

Meanwhile, Nigeria has passed a law committing to a minimum spend of its annual federal Government revenues on...

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