December 19, 2007 — A new IFC report, "The Business of Health in Africa: Partnering with the Private Sector to Improve People’s Lives," estimates that over the next decade, up to $30 billion in new investment will be needed to meet Africa’s health care demand. "This is a chance to increase access to health care for millions of Africans," said Executive Vice President and CEO Lars Thunell. "If we can get all the critical players – governments, donors, investors, and providers – to leverage the private health sector and integrate it effectively with public systems, we can also greatly improve the quality of care."
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.
The Role of the Private Sector
The IFC report finds that 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
The report finds considerable 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.
How IFC Will Help |
To help Africa address its health care challenges, IFC will work with local businesspeople, financial intermediaries, policymakers, donors, and other stakeholders in the international community. IFC and partners are planning to mobilize up to $1 billion of investment and advisory services support over the next five years. IFC’s strategy includes:
- Creating an equity investment vehicle for health care entrepreneurs and businesses.
- Partnering with local financial institutions to improve access to long-term debt for health care organizations.
- Providing advisory services to build the capacity of local financial intermediaries and health care companies
- Expanding the activities of IFC’s life sciences team in the region.
- Helping expand education of health care workers.
- Encouraging development of health insurance companies.
- Improving the business environment by working with governments to reform private health care regulation and expand public-private partnerships.
- Supporting country assessments and a biannual report on the health care investment climate.
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"The report from IFC is the most comprehensive analysis to date of the private health sector in Sub-Saharan Africa," noted Prof. Eyitayo Lambo, a leading international health economist and former Minister of Health for Nigeria, who served on the project’s steering committee. "IFC's new strategy reflects important first steps to act on the report’s findings. It suggests new ways for health care organizations to access capital and world-class advisory services while working to strengthen the business climate. I am optimistic that it will create an environment for change, offer practical solutions, and facilitate sustainable investment."
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.
The report was prepared with input from a wide range of local and international stakeholders. Going forward, IFC will continue to engage with these groups. Stakeholder forums in Cameroon, Kenya, Nigeria, Senegal, and South Africa and civil society meetings in Europe are planned for the first quarter of 2008.
Guy Ellena, IFC Director, Health and Education, concluded, "IFC is committed to supporting private health care in Sub-Saharan Africa to improve people’s health and reduce poverty, and joining forces with our partners will help us understand what works and what doesn’t. I am also very happy to note that the African Development Bank was one of the first development finance institutions that supported the initiative and agreed to collaborate with us in establishing the equity vehicle."
To see the full report, click
here.
Contact:
Ludi Joseph
Communications Officer
Health and Education Department, IFC
E-mail: ljoseph@ifc.org
Phone: 202-473-7700
Website: www.ifc.org/che 
Health in Africa