Big transitions, bold solutions, collective power, systematic change. These themes set the stage for the upcoming Impact Forum, a global impact investing event by the Global Impact Investing Network (GIIN). Within the African context, however, one must question if we have truly experienced the transformative power of impact investment, especially in crucial sectors like healthcare. 

For years, Africa has grappled with significant health challenges, underscoring deficiencies in its health ecosystem. While daunting, these challenges are surmountable. Enter impact investing: a powerful tool poised to bridge the continent’s healthcare funding gap.

While Sub-Saharan Africa houses 14% of the global population and shoulders nearly 20% of the world’s disease burden, it currently receives less than 2% of health-related investments. There’s a critical opportunity to increase this allocation. Africa’s rapidly growing population and its urgent need for robust health infrastructure underscore this urgency. Investors seeking both tangible impact and financial returns will find the African healthcare sector a promising avenue.

The Missing Factor

In Africa, the healthcare system, especially the pharmaceutical sector, leans heavily on imports, accounting for a staggering trade deficit of 12.6 billion euros according to the International Trade Centre. Beyond financial imbalances, the continent grapples with health infrastructural challenges. There’s a dire shortage of facilities, infrastructure, and skilled healthcare professionals. These gaps become even more pronounced in conflict regions like Sudan and the Democratic Republic of Congo.

In the past year, the Democratic Republic of Congo confronted measles and cholera outbreaks, all while grappling with internal violence. Compounding these challenges, the World Health Organization (WHO) has projected a healthcare funding requirement of $174 million for 2023. Yet, as of June 2023, only $23 million, a mere 13% of the total, has been secured. Parallelly, hundreds of thousands of Sudanese refugees face an escalated risk of disease outbreaks. This dire situation places tens of thousands in jeopardy, particularly within refugee settlements in Sudan and neighbouring countries, despite assistance from WHO.

African Governments, the World Health Organization, various Foundations, and Development Finance Institutions (DFIs) have undeniably elevated healthcare standards. Yet, there remains vast potential for impact investors to channel funds towards these societal and health challenges, working in tandem with the institutions mentioned. This opportunity aligns with a burgeoning trend: a 2022 GIIN survey revealed that 54% of the 308 impact investors sampled prioritize initiatives centred solely on creating meaningful impact.

Gradually but Certainly Far from Stagnancy

Recent years have witnessed a transformative shift in Africa’s healthcare perspective, transitioning from a peripheral concern to a central focus. This evolution is evident in the continent’s efforts towards the United Nations Sustainable Development Goals (SDGs) and the Africa Union Agenda 2063, which echo the commitment of African leaders to advance the health and well-being of their people. While the pace of these initiatives might seem slow, any movement away from stagnation is commendable.

According to WHO data from April 2023, notable strides have been made: Africa’s maternal mortality rate plummeted by 38% since 2000. Furthermore, healthy life expectancy in the region surged from 47.1 years in 2000 to 56.1 years in 2019. Over the same period, the service coverage index soared by 22 index points, from 24 to 46.

The vision ahead is underpinned by the Africa Health Strategy (AHS) 2016–2030. This strategic framework aims to further elevate health standards across the continent. Serving as a pivotal tool, the AHS 2016–2030 is poised to catalyze the transformation of the healthcare sector, ameliorating Africa’s disease burden by capitalizing on past lessons and leveraging present opportunities.

Why Invest in Africa’s Healthcare?

When faced with the question of why invest in Africa’s healthcare, a counter-query often arises: why not? Sub-Saharan Africa’s immense healthcare challenges necessitate fresh, innovative approaches. Recognizing the significant role the private sector plays in enhancing healthcare, African Governments, Development Agencies, and Multilateral Institutions have introduced incentives like tax holidays to draw in this segment. Consequently, impact investors now have the avenue to invest in healthcare via private equity and venture capital funds.

A pivotal attraction for impact investors is the African Continental Free Trade Area (AfCFTA). Championed by African leaders, this single market, spanning 54 countries, offers access to a 1.3 billion consumer base—a number projected to surge to 2.5 billion by 2050. This expansion presents robust incentives for both existing investors and newcomers. Furthermore, the International Trade Centre identifies the pharmaceutical value chain as one of AfCFTA’s four pilot strategic sectors, spotlighting opportunities for healthcare-focused impact investors.

For 2022, GIIN data highlights Sub-Saharan Africa and the US & Canada as the top regions receiving asset allocations. The presence of investment structures, including managers and foundations that cater to impact investors’ needs, underscores Africa’s appeal for healthcare impact investments.

The existing demand for healthcare, coupled with success stories like AfricInvest—a beacon of transformative impact with three decades under its belt—magnetizes other impact investors. The recent launch of the $50 million Transform Health Fund post the US-Africa Leaders Summit further illuminates the potential that awaits in Africa’s healthcare domain.

Conclusion

While initiatives like the Transform Health Fund mark notable progress in Africa’s healthcare sector, they are merely the beginning. Such efforts are pivotal in signalling to stakeholders and policymakers that the journey to sustainable healthcare in Africa demands collective action. This urgency is even more pronounced as the deadline for the Sustainable Development Goals (SDGs)—especially SDG Three, focusing on good health and well-being—approaches. Yet, numerous African nations continue to grapple with meeting these targets.

To truly address the health goals set out by SDG Three and Agenda 2063, impact investment in healthcare stands out as a viable strategy, offering investors both societal and financial returns. Encouragingly, recent data from GIIN indicates that as new societal and environmental challenges arise, investors are actively responding by channelling more assets into impact investing.