Nigerian Health Industry

The Future of Africa’s Healthcare System

In recent years, Africa has significantly improved its healthcare system, but the trend can only be sustained through an effective partnership between the private and public sector operators.

The healthcare industry is in turmoil all over Africa, largely due to service delivery and resource challenges. This is even more so in Sub-Saharan Africa, where only a few countries can spend the $34 to $40 a year per person that the World Health Organization considers the minimum for basic health care.

Piqued by this crisis, in 2007, the WHO developed a framework that described the healthcare system in six core components. They include service delivery, healthcare workforce, healthcare information system, medicine and technologies, financing, and leadership/governance.

In all of these parameters, Africa is behind as most African countries cannot meet the basic requirements for a sound healthcare system.

As a result of the gap in the provision of quality and affordable healthcare services, the demand for overseas medical treatment has risen exponentially over the last couple of decades resulting in huge capital flight. A recent report shows that the continent loses over a billion dollars on medical tourism to other countries with more advanced medical systems.

Another major challenge undermining growth in the region’s health system is financial barriers to healthcare services. This results from high out-of-pocket expenditure rates, owing to ineffective national health insurance systems and poor service integration. Today, only a handful of African countries can boast of universal healthcare coverage for most of their residents. This has severely restricted access to quality healthcare in the region.

Recent growth in the healthcare industry

Interestingly, the above narratives do not tell the complete story about health care in Africa. Underneath the chaos is a system gradually taking shape and finding more relevance in the broader economy. Recent studies have shown that the industry has a much better future than its present, owing to an influx of capital inflow/investments and a rapid drive towards innovation. Both foreign and domestic investors are building world-class infrastructures in a race to cater for the medical needs of Africans, and the trend is expected to continue well into the future. It is estimated that at its present growth rate, the healthcare system in the region will hit $259 billion in 2030. This represents more than 150% growth from the 2016 level of $19billion.

Additionally, the health-tech segment, with an annual growth rate of 23%, is projected to reach $11 billion by 2025.

However, for this growth pattern to be sustainable, leaders and policymakers in the region must work to expand healthcare and provide coverage for the over 615 million Africans without access to health services.

Private Sector’s Role

The private sector has been instrumental to the healthcare sector’s growth, delivering about 50% of the region’s health products and services.

Though in some cases, private medical facilities are priced out of the reach of ordinary people. In other instances, they are the only option for healthcare in mainly rural areas and poor urban slums. A poor pregnant woman is likely to access healthcare in a private hospital or clinic just as in a public facility.

The private provider also fills an important medical need by offering unavailable products and services, such as advanced medical equipment and procedures and higher-quality services.

Aside from that, private sector investors like Lifestore, MedPlus, HealthPlus, Africa Emergency Services etc., are also at the forefront of investment in healthtech, which has improved healthcare delivery efficiency across Africa.

Helium Health, for instance, is a private company committed to the digitalisation of healthcare operations and patients record. Their work has allowed hospitals and clinics to become more efficient and render higher quality services.

Impact of Covid-19 pandemic on healthcare

Following the outbreak of the Covid-19 pandemic, the hollowness and weakness of the African healthcare industry were exposed. But while on the one hand, the virus wreaked havoc on the region, on the other hand, it provided an opportunity for the continent to transform its health infrastructure and have more control of the supply chain system. It induced a paradigm shift from large-scale reliance on donor and externally manufactured products to continental production systems, leveraging opportunities created by the African Continental Free Trade Agreement.

Experts believe that relying on African institutions to fight the pandemic has served the continent well as the region now has a more robust infrastructure and financial capability to combat its health challenges.

“The development of these innovative mechanisms means Africa can now go to the market to procure its health commodities, empowering Africa to move from importing over 90 per cent of its health needs to producing equipment and pharmaceuticals on the continent,” a recent Brooking report enthused.

Covid-19 was also a major catalyst for capital inflow. Aside from the temporary freezing of debt servicing obligations by developed nations as a gesture to boost liquidity, there has been a notable spike in private sector investment since 2020.

According to Abiola Ojo Osagie, senior partner at AfricInvest, while some sectors were traumatised during covid, others benefitted. “We had to rethink how we deploy

the capital because it was no longer ‘business as usual. Some sectors were badly affected, but others were benefiting. Consumer-driven industries were resilient and defensive. Even though consumer spending fell, some of those with big markets were still doing well.”

This may explain why several large-scale healthcare investments went ahead in 2020 while deals in other sectors were delayed or called off altogether.

Some of the sealed major health care deals included SPE Capital Partners’ stake in Saham’s Group Pharmaceutical in Morocco and Endeavour’s investment in health-tech platform Guidepost in South Africa.

Factors driving growth in healthcare

While Covid has indeed accelerated growth in Africa’s healthcare industry, several other factors have been responsible for the vibrancy of the segment even before Covid.

Migration: A major factor driving the growth is rural-urban migration. This is one of the biggest reasons why investment in healthcare has risen significantly across the continent.

Since 2000, a vast majority of Africans have moved to the cities. On average, the African urbanisation rate stood at 47% as of 2020. That means close to 500 million Africans now live in the cities.

As more and more people migrate to the big cities in search of good jobs and a better standard of living, it creates demands for more quality healthcare, and this demand inspires new investment in top-quality hospitals and medical facilities.

Reports indicate that many foreign investors are seeking opportunities to partner with African pharmaceutical and medicine manufacturing companies on investment possibilities.

Favourable business climate: In a bid to attract investment, many African countries have been working toward creating a favourable environment for businesses to thrive. This has encouraged investment in domestic pharmaceutical and medicines manufacturing companies. The new environment has also inspired a spike in investment in retail pharmaceutical stores, which spawns several African countries. The likes of Lifestore, MedPlus, HealthPlus and other major retail brands have injected innovations and exciting supply chain dynamics that have transformed the segment.

Health consciousness: Over the years, as more Africans get educated and international exposure, there has been gravitation toward health consciousness as a lifestyle. This has increased demands for improved health services and encouraged investment into the sector. The post-Covid 19 era has also accelerated the emergence of a health and wellness-conscious consumer in Africa. And as Africans increasingly become conscious of their health, this has impacted how much they exercise and check their health with doctors.

Investment opportunities

For Africa to catch up with the rest of the world, it must accelerate Universal Health Coverage by growing its health insurance segment and investing in urgently needed medical infrastructure. This is important because there is a direct correlation between healthy living and economic growth.

Over 600 million Africans without access to proper medical assistance represent a massive investment opportunity for private and public sector operators.

According to the International Finance Corporation, the next decade will be critical for the region to bridge the market gap. And for that to happen, there must be considerable investment in the industry. The urgent needs include over half a million additional hospital beds, better production facilities and distribution/ retail systems for pharmaceuticals and medical supplies. And about 90,000 physicians, 500,000 nurses, and 300,000 community health workers.

The report also recommends that for these needs to be met, the enabling environment has to be created for effective collaboration between the private and public sector operators. The framework for partnership must include improvement in the regulatory oversight of private health care and outline ways that the private sector could be better engaged to improve its sustainability.

Nigeria’s healthcare sector is one of the most underfunded sectors in the country . It is a sector which, like its education counterpart, regularly goes through sessions of industrial action as workers press home their demands from the government of the day.

Adequate medical outfits, absence of modern equipment and poor remuneration of medical doctors are some of the issues bedevilling the sector.

According to the Minister of Education, Mallam Adamu Adamu, the doctor to patient ratio in Nigeria is at 1:6000, a far cry from the World Health Organisation recommended 1:600.

This is the scenario that prompted Olwasoga Oni to come up with his health tech startup company, MDaaS, in 2016. In an attempt to provide access to affordable healthcare, his startup uses an annual subscription based model along with a network of diagnostics centres present across five Nigerian cities at the moment to provide some much needed medical diagnostics.

Teaming up with three other colleagues at MIT, Genevieve Barnard Oni, and Joe McCord, they founded MDaaS Global in a bid to provide solutions and solve part of the myriad of challenges being faced by Nigerians, majority of whom are within the low- and middle-income bracket.

From MIT to MDaaS: How

Oluwasoga Oni Birthed The Tech Start Up Providing Diagnostics Services For The Underserved

Profile || By Wale Ameen

During the class, they were challenged to build a company that could serve a billion people.

Today, MDaaS Global builds and operates modern, convenient, and affordable diagnostic centres in underserved communities and offers services such as imaging, cardiac and lab services to identify health issues earlier and more accurately for effective treatment.

Starting off as an equipment leasing company, MDaas has transitioned into operating its own diagnostics centres. Through its capacity building programmes, MDaaS is also raising a bunch of skilled medical technicians to plug the hole of a lack of skilled technicians in the health sector.

The company has gone on to receive funding to expand its offerings. It has so far raised a total of $3.7 million from investors including Newtown Partners, CRI Foundation, FINCA Ventures, Techstars and Future Africa.

How he came up with the idea of MDaaS

Speaking on how he came by the idea of MDaaS, which by the way stands for Medical Delivery As A Service, the business idea, he says, had been percolating for a while. He reveals that he was surrounded by health care while growing up. His dad is a medical doctor in a small town, and he had witnessed the issues he faced accessing medical equipment.

The idea of starting up a company to provide a solution for that challenge was further solidified during one of his classes while pursuing a Master’s Degree in System Design and Management at MIT. It was during that class that he was introduced to Joe (McCord), one of his co-founders and there he thought about bringing him on board since he had spent a good portion of time working in Nigeria and, as such, understood the context of the business idea.

He recalls that he then met Genevieve (whom he is now married to and shares the task of running the startup with along with the two other guys on the team), also in the same class, while he drafted a long time buddy of his way back from college, Ope Ologun to make the fourth co-founder.

Work experience

Before launching MDaas, Oluwasoga had previously worked with a number of organisations, including Skye Bank, where he worked as a computer engineering intern, Zebra Technologies, where he worked as a firmware engineer; and EMC as a software engineer.

Challenges

When asked what challenges he and the team have faced in the course of establishing the startup, he says it’s the issue of hiring the right personnel for clinical roles such as doctors, radiographers, and lab scientists.

He said, “As an early-stage healthcare company in Nigeria, one challenge has been hiring for clinical roles, such as doctors, radiographers, and lab scientists, given the significant brain drain Nigeria experiences in those fields. In order to build a strong talent pipeline for our growing company, we have invested more heavily in our recruiting processes and developed our own training programs for young clinicians.”