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COVID recovery offers opportunities to invest in Nigeria across the healthcare value chain



The health sector in Nigeria was in a crisis before COVID-19. The pandemic is revealing years of neglect and waste in Nigeria’s healthcare system.

Fragmentation on both the supply and demand side of the health system have made it difficult for appropriate private sector investments to drive efficiency, effectiveness and productivity in the space. More so, the lack of structure in health payments means that there is a huge proportion of out-of-pocket health expenditures which results in poor health-seeking behaviour and eventually ranking Nigeria low across all health indices.

As part of the recovery, innovative approaches to decision-making, investments and solutions are needed to ensure that Nigerians have access to quality and affordable care, while helping to build a robust healthcare system.

A local lens can help parse opportunities in primary, secondary and tertiary healthcare, as well as pharmaceuticals and health-tech.

A flurry of investments and projects since the COVID crisis began to demonstrate the opportunity. Last month, Nigerian telemedicine startup Helium Health raised $10 million to help healthcare professionals meet growing demand. Genomics research firm 54genes raised $15 million to ensure genetic data used in therapeutics development comes from people with African ancestry. 

More directly, medical supplies delivery company LifeBank partnered with the Nigeria Institute of Medical Research to launch drive-thru COVID testing sites. And the state of Lagos commissioned a 118 bed-space facility at Gbagada General hospital to help manage COVID cases. 

To combat the effects of the pandemic, the Central Bank of Nigeria has created two intervention funds: The N50 billion ($129 million) Targeted Credit Facility to support households and micro, small and medium enterprises and the N100 billion ($258 million) healthcare intervention fund for pharmaceutical companies, healthcare practitioners intending to expand or build capacity.

The jury is still out on how accessible and effective these funds will be to cushion the economic fallout of the pandemic and provide the necessary stimulus to the economy. So far, small businesses have had difficulties meeting the requirements to access the fund and there have been complaints regarding the capacity of the application platform to handle the volume of expected loan requests.  

Opportunities lens

Our mission in the health sector has not changed since the Covid-19 pandemic; the needs, proposed solutions and pre-pandemic opportunities still remain relevant. The only difference is the renewed drive to get all stakeholders involved at a critical time like this. 

The solutions are not complicated and can be implemented by targeting different aspects of the healthcare system.

Primary healthcare. The primary healthcare system is the first point of contact with the people – 80% of health visits are at the primary healthcare level. Primary healthcare facilities are usually responsible for providing essential services such as health and sex education, pregnancy care, and treatments of common diseases. 

A well-funded and functional primary healthcare system will lead to better health-seeking behaviour and reduce preventable deaths in women and children. Being the first line of defence, a robust primary healthcare system will significantly reduce the communicable diseases burden and also reduce the pressure on secondary and tertiary healthcare and enable specialization at those upper levels.

Innovative models of combining private sector expertise, infrastructure and capital with publicly owned primary healthcare centres and the fledgling mandatory health insurance schemes and the Basic Healthcare Provision Fund will be key to achieving this.

Secondary healthcare

  • Equipment financing: There is a huge deficiency of medical and diagnostic equipment in Nigeria. Availability of laboratory services and imaging tools boosts patient footfall and creates alternate sources of revenue to healthcare providers, thereby making their businesses more sustainable. Equipment to be financed will also be equipment that ensures that the costs of services are not prohibitive. Over the last few weeks, opportunities for local production of basic equipment have opened up and would be an ecosystem to look out for in the short to medium term.
  • Infrastructure and expansion financing: Healthcare providers require financing to improve infrastructure and clinical services which enables them to scale, provide better and more affordable, quality and specialist services. 
  • Stock/consumables finance: To help healthcare providers with finance for purchasing essential medical consumables and stock needed for provision of services.
  • Working capital finance: To bridge the financing gap with respect to operational activities of hospitals.
  • Digital medical records solutions and tele-medicine capabilities: Hospitals also require digital health technology such as digital health records, use of artificial intelligence and tele-health to improve the healthcare experience for both patients and healthcare professionals. More so the data gathering allows for more informed and smarter decision-making. Covid-19 has shown the importance of collecting and using data in managing health crises – examples of South Korea and New Zealand and how they have managed the crises are evidence of the importance of data. Telemedicine on the other hand, allows initial clerking and diagnostics without exposing both the professional or patient to harm especially for easy to treat ailments.

Tertiary Healthcare. Tertiary Hospitals in Nigeria provide the largest catchment area for patients due to the expertise of the doctors, availability of multi-specialty care, relative affordability compared to private sector hospitals, and are burdened with primary and secondary cases due to the reasons stated above. There is also a rising non-communicable disease burden and the requisite infrastructure to deal with this is not available. The Government in response to this has conceded to accepting PPP projects in Tertiary Hospitals across the country.

There are concessions for the renovation, equipping and management of specialist departments to private healthcare managers – the ultimate goal being a partnership where the private sector provides the financing to equip and renovate the centres, as well as the expertise to deliver medical services efficiently and manage such departments in a viable and sustainable manner, whilst the hospitals provide the facility, patients and staffing.

Another key reason that investments must be provided in this space is that increased specialization and competence in the Tertiary hospitals will lead to more efficient care which will result in reduced costs of treatment and reduce the barrier for accessing healthcare in the country. This has worked in India, and given the similarities in terms of population, poverty rates and resource-constraints, we must seek to emulate them and reverse the medical tourism.

Pharmaceuticals. Pharmaceutical products play an important role in healthcare. Along with well-trained and motivated health professionals, medicines are among the most effective ways to prevent, alleviate and cure diseases. Ensuring access to quality and affordable medicine is therefore important to counter increasing counterfeiting and salvage an inefficient sector.

Investments are required across the pharmaceutical value chain from research & development, to local production of raw materials, manufacturing and distribution capacity. This will ensure development of industrial capacity and self-sufficiency of the industry in the long run. 

Health-tech. While we continue to serve as one of the top destinations for tech investments in Africa, Nigerian health tech companies have not received as much attention as their fintech counterparts. Over 75 health tech start-ups have raised funding to date, but this has not impacted on Nigeria’s health indices and quality of healthcare so far.

There are several outfits providing affordable digital solutions – through telemedicine, tech-enabled clinics, electronic health records, medical research and healthcare related logistics services. These companies require financing to develop digital infrastructures for widespread adoption. 

The investment opportunities in healthcare are many, over the years, the solutions to financing have typically been replicas of foreign structures which have not always yielded successful results. What has become evident is that to solve problems quickly and scale solutions fast, there needs to be a better appreciation of the peculiarities of the market by wearing local lenses when designing for the market.


Ayotunde Aladejana is a senior health financing specialist at Sterling Bank.

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