The Healthcare sector in Africa
The Covid 19 pandemic has exposed gaps in the health sector that urgently need to be addressed in many African countries. Africa's macroeconomic and demographic fundamentals suggest a case for investment in health, with the public and private sectors playing a central role.
The market size of Africa's health sector was estimated at approximately €29.08 billion in 2016 and is expected to grow to approximately €46.34 billion by 2024, at a compound annual growth rate of 6%. Africa's population continues to grow rapidly. It has grown by 2.5% annually over the past 20 years and is expected to reach 2.4 billion by 2050. Africa also bears 25% of the global burden of disease and is served by only 2% of the world's health workforce. As the population grows, the need for quality and accessible health services will increase to achieve universal health coverage where all people have access to the health services they need.
The medical devices market in Africa was valued at approximately €4.07 billion in 2017 and is expected to grow to approximately €5.9 billion by 2023. Growth in the African healthcare sector is driven by the establishment of hospitals/clinics, in-country manufacturing, increasing microinsurance options, improving care, more POC solutions for healthcare, and an increasing focus on home diagnostics. Pharmaceuticals, medical services, medical devices and reagents and disposables account for the largest shares of Africa's healthcare industry.
The health sector of Africa's most populous country, Nigeria, ranks ahead of Egypt and Morocco but behind South Africa, Tunisia, Kenya and Algeria. Critics have accused the Nigerian president of not doing enough for the health sector in Nigeria, but praised industry players for making adequate use of available resources.
The Healthcare sector in South Africa
The South African health sector is one of the most dynamic industries in the world. The public health sector serves about 80% of the population and is responsible for about 48% of health expenditure, while the private sector serves about 20% of the population and is responsible for about 50% of health expenditure. South Africa has the highest standard of health care in Africa. There are over 200 private hospitals across the country, providing services equivalent to those in Europe, Asia and America.
South Africa currently operates a two-tier health system, namely the public sector and the smaller, fast-growing private sector, and is considered Africa's leader in the provision of medical tourism services. From 2006 to 2010, more than 2.5 million medical tourists were recorded visiting South Africa. In 2012, approximately 350,000 tourists from across Africa travelled to South Africa for medical treatment.
Private health care: Returns on investment are very good, especially in the private sector. In the last 10 years, private hospitals have increased their prices almost twice as much as consumer inflation. The three large groups (Netcare, Life Healthcare and Mediclinic) are particularly profitable. Together they command about 80 percent of the private hospital market in South Africa.
Public health care: Public healthcare in South Africa is currently funded through government expenditure in the form of taxes and expenditure by those who use the services. There are plans to introduce National Health Insurance (NHI) to provide more free services to all and improve the quality of public health care.
In 2019, spending in the South African healthcare sector amounted to more than €23.3 billion. According to Export.gov, South Africa is one of the largest markets for medical devices in the Middle East & Africa (MEA) region. The country's healthcare market is still expected to grow at a compound annual growth rate of 4.7%, reaching a value of €30.76 billion by 2022. Fitch Solutions expects a similar growth rate over the next decade to reach a value of €39.18 billion by 2027.
Medical devices: A large sector of the South African healthcare market is the medical devices market. In 2018, the market volume of medical devices already increased to more than €1.15 billion. South Africa's pharmaceutical industry remains the largest in Africa and was worth around €2.84 billion in 2018. Growth sectors include, in particular, universal healthcare and NHI, vertical integration of larger healthcare providers, medical equipment and devices, radiological equipment, surgical technology and dental equipment.
The Healthcare sector in Kenya
Kenya has the best health coverage in East Africa. The country has made good progress in expanding access to primary health care services, free maternity services, the abolition of user fees for primary public health care facilities and health insurance subsidies for the elderly and severely disabled. Kenya has established itself as an East African business hub and important pharmaceutical market, and as such already hosts many multinational companies, mostly through local agents or distributors.
The country has also made considerable progress in combating long-standing problems such as the high child and maternal mortality rates. However, the fact that a significant proportion of the population lives in rural areas continues to pose challenges to access and quality of care.
The Kenyan health market is almost entirely dependent on imports of medical devices, pharmaceuticals (at least 70-80%), dental products, laboratory equipment, health IT, clinical chemistry and diagnostics.
Medical devices: According to Fitch Solutions, the Kenyan medical device market will see double-digit growth in local currency terms until 2022, with slightly weaker growth in euro terms due to the devaluation of the Kenyan shilling. Nonetheless, the market will continue to rely heavily on imports as domestic manufacturers focus on basic consumables. In 2019, the medical devices market size was approximately €124.3 million.
According to Fitch Solutions, healthcare spending amounted to approximately €3.3bn in 2017, with per capita healthcare spending reaching approximately €66.3 in 2017, of which approximately 61% came from the private sector.
In 2017, total health expenditure accounted for about 4.8% of Kenya's GDP.
The Healthcare sector in Nigeria
According to a report by Fitch Solutions, healthcare spending in Nigeria is expected to reach €1.49 billion by 2021, growing at an average annual rate of 8.35%. It is estimated that healthcare spending will account for 2.94% of the country's GDP by 2021.
Research shows that there are several investment opportunities in the Nigerian health sector, including the country's large and growing population, economic recovery and policy incentives that should create long-term opportunities, increasing demand for specialised services, and the government's willingness to plan and collaborate with private providers.
Medical devices: Nigeria is largely dependent on imports for medical devices. 99% of the country's medical devices and equipment are imported from abroad. Local production is very low and consists mainly of syringes. In 2018, total sales of medical devices were approximately €109.66 million, up 10.8% from total sales of €74.63 million in 2017. Growth in this segment is expected to continue at an average of 9%, with the market reaching €167.36 million by 2023.
In response to the Covid 19 pandemic, the Nigerian government is planning to build 14 medical centres and upgrade their intensive care units through its national oil company, the National Petroleum Corporation (NNPC), in the country's six geopolitical zones. As the government lacks the necessary funds for this project, the private sector is becoming an indispensable player to improve Nigeria's health care. Both the federal and state governments are using the public-private partnership (PPP) model to attract private sector participation in their health projects.
Most Nigerian hospitals still store patient records manually using traditional paper methods. This indicates a good market opportunity for simple and affordable electronic medical records (EMR). Medical training and education services offer another business opportunity. Prospects also arise in hospital administration, management and consulting.
In addition, the pandemic has uncovered opportunities for e-health services as more people use telemedicine platforms for medical consultations with doctors to avoid hospital visits. The government, which paid little attention to telemedicine before the pandemic, has begun to adopt the technology as part of its public health intervention programmes.
The Healthcare sector in Ethiopia
Under the second Growth and Transformation Plan (GTP II) and the Health System Transformation Plan (HSTP), the Ethiopian Ministry of Health (MOH) is implementing reforms in various areas of the health system.
To improve management, the government has increasingly decentralised the management of the public health system to the regional health authority levels. The MOH has also continued to reform agencies such as the Ethiopian Food and Drug Administration (EFDA) and the Ethiopian Pharmaceutical Supply Agency (EPSA).
The main objectives of the Health System Transformation Plan are:
- Reduce infant and neonatal mortality rates.
- Reduce HIV infection rates and achieve zero new infections in children.
- Reduction in tuberculosis deaths and incidence.
- Reduce the incidence and mortality rate of malaria cases.
The healthcare market size in Ethiopia was around €82.34 million in 2019 and is expected to grow to around €108.85 million by 2021. This would mean an average annual growth of about 15%.
The main sub-sectors of the Ethiopian health market are:
- Equipment and services for new hospitals and health centres.
- Construction of modern hospitals, blood banks, drug storage and health facilities
- Pharmaceuticals and supplies
- IT support
- Cold storage facilities
- Knowledge and competence transfer
Opportunities for European companies
The African health markets offer diverse opportunities for European companies. Technology providers in particular have good opportunities to enter the markets.
The South African healthcare market, for instance, offers European companies opportunities in the areas of artificial intelligence, Internet of Medical Things (IoMT), software as medical device (SaMD), assistive technology and robotics, integration of data and data analytics, data protection, compliance and security, innovative medical devices, appliances and technologies, and pharmaceuticals.
In the Kenyan healthcare sector, there are opportunities for European companies to export medical devices, pharmaceuticals, dental products, laboratory equipment, healthcare IT, clinical chemistry and diagnostics.
The Nigerian healthcare sector is also heavily dependent on imports of medical equipment. This results in good opportunities for European companies to export equipment, medical technologies and devices to the market.
In the case of Ethiopia, the government is interested in improving the quality of the health system by acquiring services, equipment, supplies, information management systems and knowledge and skills transfer. This provides opportunities for European companies to provide equipment and consumables, hospital furniture, emergency departments, medicines, vaccinations and other services.
Conclusion
The healthcare industry is still in need of development in many countries in sub-Saharan Africa. Many sectors are dependent on imports and need help from private investment. European companies can benefit from this by exporting medical devices and equipment to African markets, among others, and contribute to the growth of the markets while profiting from it. With 20 years of experience in African market entry, Enterprise Africa is proud to present our specialised B2B E Commerce platform. Please follow this link for a short intro video: Enterprise Africa Introduction Video
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