Tapping into Africa: When it comes to healthcare investment opportunities, is the continent a jewel in the crown?
By Jean-Claude Bastos de Morais:
The African healthcare industry is growing fast. The Africa Healthcare Summit, which assesses investments, developments and technology in African health, estimates that some USD30 billion in new investments and around one million healthcare provisions will be required in the next few years to meet the continent’s healthcare demand. Pharmaceutical spending in the region is expected to reach USD30 billion this year alone, with an annual growth rate of 10.6 per cent.
As African economies continue to diversify from their reliance on natural resources, the continent is seeing the emergence of new trends in healthcare provision. Much of these developments are being led by African innovators and entrepreneurs, who are leveraging technology to address healthcare challenges unique to Africa.
Without doubt, there is a huge investment boom that looms ahead in Africa’s healthcare sector. The question is what is in it for investors eyeing lucrative opportunities in the world’s most exciting frontier economy? Who will win and who will lose?
mHealth, hacking and technology for next generation African healthcare…
Despite demands from a burgeoning middle class for improved and more sophisticated healthcare services, Africa does not need to rapidly build state-of-the-art hospitals. What it needs instead is rapid access to treatment; skilled healthcare workers; and new models for healthcare training and education to reach the masses.
Underlying these needs is technology-led innovation, in particular mobile healthcare or mHealth. Here is where Africa’s most promising development hack, the mobile phone, comes into play. According to GSMA’s The Mobile Economy report, it is estimated that 386 million unique mobile subscribers were located in Sub-Saharan Africa at the end of 2015, up from 348 million in 2014. Mobile penetration rates in several Sub-Saharan countries have reached almost 80% due to cheaper access, and people are beginning to use their mobile phones in ways that the developed world has never really seen – from banking to farming and healthcare.
With a young, tech-savvy population, Africa is in the ideal position to hack its way through development challenges in healthcare by adopting mobile-led solutions for a vast range of medical services. From consultation to detection and treatment, mHealth is slowly changing the way healthcare provision is applied in Africa, even in rural parts of the region.
Some innovations designed to reduce maternal and child mortality rates, a common problem still in many parts of Africa, include Totohealth, which utilizes SMS and voice technology to detect fetal developmental abnormalities. WinSenga, an African startup that created the low-cost mobile phone-based antenatal diagnosis kit that captures fetal heartbeat sounds, and transmit the diagnoses to the mother via SMS is another. In the fight against malaria, one of Africa’s biggest killer diseases, the first smartphone-based diagnosis system, Matibabu, detects malaria-causing parasites without the need to draw blood for tests.
There is also tremendous scope to leverage mHealth solutions to upskill medical caregivers with targeted training and education, which will open up opportunities for thousands of Africans unable to access a medical degree in universities, thus rapidly accelerating healthcare provision across the continent.
Yet African innovators and entrepreneurs are unable to upscale and commercialize their healthcare solutions at the rate required, and this is largely because investors are still hesitant to back young startups in this space.
The fact is that Africa is an early stage market offering tremendous potential. With the global mHealth market expected to balloon to USD24 billion dollars by 2018, up from USD4.5 billion in 2013, Africa is rife with potentially high yields and first mover benefits for investors ready to increase their risk appetite in African healthcare.
Investing in ‘reverse innovation’ from African healthcare innovators...
With the continent being in need of improved healthcare solutions, the healthcare technology space, in particular mHealth, provides new opportunities for both entrepreneurs and investors alike. A Deloitte Open Mobile Survey forecasts Africa’s healthcare sector as a rising star with regards to new mobile growth channels. The utilization of mHealth technologies is now being interpreted as a way to offer exceptional and easily accessible care that costs less.
Many of Africa’s innovations, although initially developed to address local challenges, are turning out to be spring boards for innovation in the developed world. Reverse innovation, or trickle-up innovation, is witnessing healthcare-related solutions stemming from African, and other emerging countries, being leveraged by large multinational companies. GE Healthcare’s V-Scan, a mobile ultrasound device designed to be used in rural areas and the SMS for Life program by Novartis, which uses mobile text messaging to track and prevent essential malaria medicine stock outs at public health facilities are examples of how reverse innovations have strong potential.
Today, most of the developed world is faced with aging populations and are straining current financial resources to maintain delivery of high quality care. Healthcare solutions from emerging regions like Africa have the potential to positively impact healthcare financing in developed countries through quality innovations at decreased costs.
The slow demise of the North to South illusion…
The trouble is that most developed countries still maintain the ‘north to south’ illusion, which is the perception or belief that innovations can only come from the developed nations in the northern hemisphere as opposed to those in the south.
Thankfully though, particularly to the large multinational pharmaceuticals who are well familiar with competition and cost-cutting, developed nations are beginning to accept the inevitable fact that mature healthcare systems are over stretched. These governments will eventually have no choice but to battle change-resistant cultures to introduce solutions from less developed regions to reduce healthcare financial burdens.
The shift is happening albeit slowly but herein lies the opportunity. It does not have to be just the big pharmaceuticals who reap the benefits of reverse innovation. Private investors too should really start looking into this sector and capitalize on the innovative solutions coming out of Africa as many of these have feasibility and relevance worldwide. Importing innovations from the developing world can provide access to young markets and new profit avenues, while benefitting societies in need regardless of which end of the hemisphere.
Investors, be they governments, institutional investors, large multinationals or private investors all have the collectively responsibility to think along these lines. There are opportunities to work with local partners who understand how to navigate the African market and overcome challenges such as the lack of globally accepted policies, standardized metrics, information security, and lack of technological infrastructure. Since investments to support these fundamental structures usually need large amounts of capital, African governments are now increasingly open to partnerships with private companies, thus reducing their financial burden as well.
The Corporate Council on Africa’s Health Program also provides a platform for linking current and prospective members to growing investment opportunities in Africa’s health sector while addressing unmet public health needs.
I believe that the next ten years is going to give birth to a new, African healthcare model that uses mHealth at its core. It will be one that the world will not have seen before. Ultimately, meeting Africa’s healthcare demands can deliver strong financial returns, and potential investors must keep in mind that by being overly risk averse, they are missing out on lucrative investment opportunities in an exciting, fast-growing sector in Africa.
About The Author
Jean-Claude Bastos de Morais is an innovation influencer and entrepreneur with a deep interest in African socio-economic development.. In 2003, Mr. Bastos de Morais founded Quantum Global Group, an international group of companies focused on African development, particularly in the fields of corporate finance advisory, asset and private wealth management, real estate and investment consulting. Mr. Bastos de Morais is on the advisory board of the Official Monetary and Financial Institutions Forum (OMFIF) and the University of Cape Town, Graduate School of Business. He is also a member of the international Board of Foundation for Globethics.net, a leading global network that advocates ethical corporate and social practices.
He began his career as management consultant and holds a Master of Arts in Management from the University of Fribourg in Switzerland.