NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

The global impact investment market is estimated to be worth US $1.16 trillion, but less than 2% of these investments are channeled to Africa’s health markets. This should not be the case, as the continent offers uniquely valuable opportunities for health businesses, due to overlapping trends involving both the supply of, and demand for, quality healthcare.

On the demand side, Africa’s demographic trends are likely to drive a growing need for health products and services in the coming decades. The United Nations Children’s Fund estimates that four out of every 10 children globally will be born in Africa by 2050, and these deliveries — and the subsequent care needed by both mothers and children — will take place in public and private health facilities across the continent. Africa’s demographic data shows that the continent already has the largest population of young people in the world, and new insights from McKinsey & Company project that almost 800 million people will enter the African workforce within the next three decades. These workers and emerging consumers will need products and services to maintain their health, prevent and treat diseases, and raise their productivity to meet local and global demands. Additionally, Africa faces a double disease burden, dealing with still-prevalent infectious diseases along with a rising incidence of non-communicable diseases (NCDs). These diseases are contributing to significant productivity losses across the continent, making the need for universal access to high-quality healthcare even more urgent.

Meanwhile, on the supply side, Africa is currently underequipped to fully provide the healthcare products and services its growing population will require. To take one prominent example, its annual demand for vaccines is projected to reach 2.7 billion doses by 2040, but there is limited manufacturing capacity on the continent to meet these needs. It also has a low health worker-to-patient ratio — a gap amplified by the mass exodus of health workers to developed countries.

As a physician and management researcher with experience in several African countries, I understand the value of timely investments to protect people’s health and wellbeing. I believe this is a pivotal moment to invest in Africa — and impact investors are well-positioned to do so. The growing impact investment space offers useful means to direct ample capital toward addressing the region’s health challenges, while maintaining effective engagement with the public sector. Current gaps should inspire impact investors to see these challenges as opportunities for a sustainable transformation of health systems and markets across the continent. Below, I’ll explore some of the ways investors and other stakeholders can contribute to this transformation.

Manufacturing Health Products

The COVID-19 pandemic exposed the over-dependence of African countries on other regions for access to vital medical supplies and health products. African leaders recognized this challenge and responded with the launch of the Partnerships for African Vaccine Manufacturing — which aim to expand the production of vaccines on the continent over the next two decades — as well as the African Pharmaceutical Technology Foundation, the Africa Vaccine Acquisition Trust and the African Medicines Agency. This vision requires national, regional and global reforms to support the sustainable production of vaccines on the continent. Governments must devote more resources to research and development within their limited fiscal spaces, while creating enabling environments for business development and cross-sectoral partnerships that support the local manufacturing of vaccines and other health products.

Impact investors interested in health markets and life sciences can play a crucial role in advancing this vision — and their efforts will not only contribute to equitable access to vaccines, essential medicines, diagnostics and other health products on the continent, but will also facilitate effective responses to disease outbreaks, NCDs and mental health challenges. To that end, investors can support new biotech firms, contract manufacturing organizations, laboratories and product development partnerships to address the unmet diagnostic, therapeutic and vaccine needs of African countries. Despite the region’s “institutional complexity,” investors that enter the continent early to build the infrastructure and relationships for a robust value chain are more likely to reap attractive returns with significant impact.

Developing Africa’s Health Workforce

Expanding access to high-quality healthcare in Africa will require more health workers. Evidence suggests that the continent is in dire need of an array of community-based, generalist and specialist health workers to raise the health worker-to-patient ratio. Additionally, multiple initiatives to expand the local production of vaccines, medicines and other products are contributing to the growing need for new investments in workforce development for the emerging biopharmaceutical industry. Leaders in the public, private and social sectors can learn from the exemplary expansion of the biotech and pharmaceutical industries in China and India to create specialized educational institutes and industrial clusters that accelerate talent development for Africa’s emerging healthcare value chain. The production of more health and biopharma experts can also reduce the negative effects of workers’ migration to the West.

A number of major players are working to address this challenge. The Mastercard Foundation and Institut Pasteur de Dakar recently signed a new partnership to develop talents for vaccine production in Africa. The biomanufacturing services and technology provider Unizima has also announced an inter-university partnership for vaccine manufacturing. And the International Vaccine Institute has training opportunities which welcome African students and professionals. African colleges and universities are also responding to this need, with Nigeria’s University of Medical Sciences and Rwanda’s University of Global Health Equity providing useful models of focused medical education. These efforts demonstrate faith in Africa and should nudge impact investors to work with other stakeholders on talent development and expansion of the continent’s health workforce. An increase in the enrolment and graduation of students from accredited public and private institutions can expand the number and capabilities of workers across the value chain to address national, continental and global healthcare challenges.

Investing in Health Service and Product Delivery

Investment in Africa’s health markets is an investment in the future prosperity of the world. Although it is unclear how emerging technologies like artificial intelligence and robotics will reshape the global workforce landscape — and what their potential impact will be in Africa — there are ample reasons to prioritize investments in supply chain infrastructure on the continent, and to boost access to finance for health-related small and medium-sized enterprises (SMEs). That’s the focus of the Medical Credit Fund, part of the PharmAccess Group — a leader in providing credit to health businesses through partnerships with context-specific financial institutions. Founded in 2009, the fund provides loans to general practice facilities, specialist centers and distributors of health products. Its technical assistance program enhances the capacity of health enterprise owners and managers to identify market opportunities, develop business and quality improvement plans, and become better positioned to access operational and growth capital. With over a decade of experience in supporting SMEs, the Medical Credit Fund offers useful lessons to established and emerging capital providers working with health enterprises.

A variety of funding platforms are also emerging to serve the growing needs of African healthcare firms. One such fund is HeliumCredit — part of Helium Health. Launched in 2020, it has already provided credit to hundreds of healthcare facilities in Nigeria, with plans to reach a wider base soon. Another one is Transform Health Fund, a new platform backed by global health and development financiers, which recently closed its first round: It targets service delivery and supply chains. Additionally, the World Health Organization and development finance institutions launched the Health Impact Investment Platform in June 2023, with a focus on providing financing for primary health care. As these platforms design and refine their investment theses and portfolios, stakeholders must pay attention to the potential risks and benefits of the blended financing mechanisms they often employ.

Although public financing remains crucial for national efforts to achieve universal health coverage, these new platforms and recent trends in investment flows highlight the role that private enterprises and investors can play in Africa’s efforts to reimagine its healthcare value chain. Synergistic investments in the sustainable production of health products, workforce development and healthcare delivery represent viable pathways for impact investors to contribute to equitable access to medical products and services across the continent.

Abiodun Awosusi is a General Management PhD student at the Ivey Business School — Western University.

Photo courtesy of IMF Photo/James Oatway.