Africa Health Care Market Insight

Health care in Sub-Saharan Africa remains the worst in the world, with few countries able to spend the $34 to $40 a year per person that the World Health Organization considers the minimum for basic health care. And despite widespread poverty, an astonishing 50 percent of the region’s health expenditure is financed by out-of-pocket payments from individuals.

Donor attention has yielded remarkable efforts to fight HIV/AIDS, tuberculosis, and malaria. But most of the region lacks the infrastructure to deliver health care and faces a severe shortage of trained medical personnel. As Africa’s economies improve, the demand for good quality health care will only increase further.

Based on the research in a new report, IFC estimates that over the next decade, $25-$30 billion in new investment will be needed to meet Africa’s health care demand.

The Private Sector’s Role

The private sector already delivers about half of Africa’s health products and services. It calls for a close partnership between the public and private sectors, including improvements to regulatory oversight of private health care, and outlines ways that the private sector could be better engaged to improve its sustainability.

Rather than serving only the rich, in Africa today the private sector is sometimes the only option for health care in many rural areas and poor urban slums. A poor woman in the region is as likely to take her sick child to a private hospital or clinic as to a public facility.

Private providers, including for-profit and not-for-profit enterprises, also fill an important medical need by offering products and services that are not otherwise available, such as advanced medical equipment and procedures and higher-quality services.

Opportunities for Investment

There is demand for investment over the next decade, including:

Over half a million additional hospital beds

Better production facilities and distribution / retail systems for pharmaceuticals and medical supplies

About 90,000 physicians, 500,000 nurses, and 300,000 community health workers

About half of the investments are expected to be made by for-profit entities, with the rest spread between social enterprises and nongovernmental organizations. Most opportunities will be in the small and medium enterprise sector.

Meeting the demand can deliver strong financial returns and has an enormous potential for development impact, by expanding access to health services for the poorest people and reducing the financial burden on governments.

Looking Ahead

The private sector will continue to play a key role in improving the health of Africa’s people, and health expenditure will continue to grow rapidly. Donors, governments, and the investment community each have a role in developing a responsible, sustainable, and vibrant private health care sector in the region.