After USAID: who will finance Africa’s healthcare future?

The future financing of Africa's healthcare systems is a pressing concern as governments face fiscal pressures and international funding becomes less certain. The USAID's withdrawal and reduced international funding have highlighted the need to mobilize more domestic capital into healthcare. At a recent HealthCap Africa roundtable, investors, development finance institutions, and regulators discussed the role of private capital in strengthening Africa's healthcare sector.

Private capital has the potential to build businesses that can become major contributors to the wider economy and create jobs, while healthcare has become a significant private-market asset class with over $320 billion raised for healthcare. However, Africa currently faces a significant healthcare investment gap, with low levels of private healthcare investment despite a high burden of disease.

India's experience demonstrates that sustained private investment can significantly improve healthcare outcomes, and Africa has a growing pool of domestic capital that could be directed towards healthcare. To achieve this, regulatory structures need to be created to allow pension funds and other domestic investors to participate in private markets, and better matching between businesses and investors is needed.

Private capital is already contributing to healthcare infrastructure in Nigeria, with a 250-bed multi-specialty tertiary hospital recently built with private capital. Development finance institutions are willing to share learnings to help pension funds spread investment risk, and the World Bank emphasizes the role of government policy in creating an enabling investment environment.

The roundtable suggests that private capital and domestic institutional investors will play an increasingly important role in financing Africa's healthcare systems as government budgets become under pressure and international funding becomes less certain.