Closing the Gap in Healthcare in Africa

Shifali Gupta

September 30, 2020

A brief look at the gap in healthcare

Sub-Saharan Africa bears over 24% of the global disease burden, but is home to only 3% of the global health workforce. On average, there are 3 physicians per 10,000 population compared to OECD countries that have 10x the number. In fact, according to WHO’s estimate, African nations would need to increase their health workforce by about 140% to achieve enough coverage for essential health interventions.

In addition to the sheer shortage of healthcare professionals, the workforce is concentrated in the major towns and cities, while rural areas can only boast of about 25% of a country’s doctors and nurses on average. Moreover, brain drain affects Sub-Saharan Africa disproportionately. In Nigeria, 63% of newly trained doctors end up practicing abroad.

More than 60% of the world’s HIV patients are found in Sub-Saharan Africa. Besides HIV, there are many other top causes of death that are very treatable in the rest of the world, including but not limited to lower respiratory diseases, diarrhoeal diseases, and malaria and tuberculosis¹.

The out-of-pocket cost for healthcare in Sub-Saharan Africa is a significant percentage of an average household’s annual budget, leading to the second highest cause of impoverishment. Financing of healthcare infrastructure is inadequate, with a major contribution coming from DFIs directed to public hospital systems, which are insufficient to cater to most of the population.

Tailwinds in improving healthcare

The need is clear. What’s promising is the tailwinds that we’re seeing to cater to these needs. There are 747 million mobile connections in sub-Saharan Africa, representing 75% of the population. This shows a growing trend in connectivity, and while it may be hard to physically reach rural areas, people are no longer completely disconnected.

Between 2005 and 2012, Africa added 70,000 new hospital beds, 16,000 doctors, and 60,000 nurses. This directly contributes to increasing demand for healthcare devices and services that are conducive to a low resource environment.

Private healthcare is growing rapidly, especially as incomes rise across many countries in the continent. Capital and operational expenditure is often self-financed because hospitals are generally of the opinion that the requirements to secure financing from financial institutions are stringent and interest rates are too high to guarantee return on investments. This is leading to innovation in reducing operating costs, especially through the use of technology.

Technological improvements in healthcare have accelerated across the world, especially in the time of COVID-19. Few of these have the potential to significantly reduce costs and increase access to healthcare in Africa. Leveraging data, artificial intelligence (AI) and machine learning (ML) models, and digitization of assets such as medical health records, along with e-commerce show great promise for the future of healthcare in Africa.²

As a result, there is ample opportunity for innovative startups to address these gaps. Pitchbook reports that over $50M was invested in 2019 across Africa in healthcare management services alone. Therefore, now is an opportune time for investors to look into this space that is by and large unsaturated.

Opportunities for investment in healthtech

There is a pressing need to improve healthcare across the African continent. The good news is that both investors and entrepreneurs are realizing this and have sprung into action. Funding is no longer limited to foreign aid, and entrepreneurs are leveraging technology along with their knowledge about the market to come up with innovative solutions. We analyzed the 6 sub-sectors listed below to identify opportunities where early-stage venture capital funding can drive growth and have an immediate impact. Here’s a snapshot of our findings (further details follow).

Tech-Enabled Services

This sector is seeking to improve hospital, pharmacy or lab infrastructure using technology. For purposes of this discussion, tech-enabled services are differentiated from “supply chain” by its focus on patients rather than B2B. Most healthcare infrastructure consists of primary or community-based health clinics and pharmacies/labs. Secondary and tertiary hospitals for specialty care are located in large metropolises only. Public hospitals are usually insufficient and private clinics and hospitals tend to be unaffordable for most of the population. As a result, pharmacies and diagnostic centers are crucial to deploying grassroots level of primary care (including vaccines) in most countries. Below is a screenshot of the healthcare system in Nigeria which is representative of many healthcare systems in Africa³.

Technological interventions are seen across primary healthcare, secondary/tertiary healthcare, public health (including vaccination, sanitation, and family planning), and health programs (including HIV/AIDS, TB, and malaria). Startups are seizing the opportunity to provide solutions to both the middle class and the masses. This includes reassessing the value chain of how individual patients interact with the healthcare system and features the introduction of innovations like digital record-keeping and e-commerce.

Healthcare Supply Chain

Healthcare supply chain focuses on the process of procurement of medical devices and pharmaceuticals by healthcare providers to then supply to end customers. As mentioned earlier, the supply chain in Africa is outdated and inefficient leading to significantly higher out-of-pocket costs. Most devices and pharmaceuticals are imported and then distributed through two major channels — NGOs (who tend to have their own supply chains to ensure transparency), and fragmented private wholesalers who mark up products significantly (2–380%) to make up for low volume⁴. Even when donated/subsidized, the cost of basic pharmaceuticals like malaria or HIV medication is quite high and fails to reach the population that needs it most. Startups have found innovative solutions to not only help transport life-saving drugs, but also address the mismanagement and counterfeiting problems in the private sector. The idea is to simplify supply chains, improve accountability, and reduce costs (especially since 20%-40% of the cost of healthcare lies in the supply chain⁵).


This sector seeks to use technology to reduce the cost of insurance and thereby, result in deeper penetration to prevent bankruptcy events due to medical expenses. Given that penetration of insurance in most African nations is less than 3%, the overall burden of healthcare falls on individuals and families with no recourse. Despite the push by many governments to administer a national health insurance scheme, the adoption has been low due to high and increasing premiums along with limited coverage⁶.


Telemedicine is defined as the delivery of healthcare and sharing of medical knowledge over a distance using telecommunication means. The aim of telemedicine is to provide expert-based healthcare to understaffed remote areas and to provide advanced emergency care through modern telecommunication and information technology. With a greater penetration of mobile technology, the means to reach the masses for basic health services has been significantly improved over voice, SMS, video, chat, and social media.

Medical Technology

Medical technology includes R&D and manufacturing of technological equipment used for healthcare services as well as research in genetics and pharmaceuticals. Historically, medical equipment and pharmaceuticals have been donated to large public hospitals by DFIs and large medical device/pharma companies but failed to promulgate better healthcare. Medical equipment found its way to the equipment graveyard due to a lack of proper electricity infrastructure along with inadequate skilled personnel⁸. As a result of the infrastructure and human resources constraints at the primary care level, there is demand for point of care diagnostic equipment (especially for maternal and child health services) that are not electricity dependent, can be used by semi-skilled staff and are more cost effective than existing technology.

Health-Related E-Learning

This sector aims to improve the knowledge pertaining to better health, wellness, and living among the masses, largely using telecommunication. Business models are catering to both educating the masses, while also helping lower skilled healthcare workers to be able to provide primary care. This is especially true in the case of expecting mothers and pediatrics (including vaccinations). While e-learning can go hand-in-hand with telemedicine, we have separated them here to focus on startups primarily focused on the healthcare education, content, and training aspects.

Key takeaways

Having looked at the investment upsides and considerations, along with saturation and competition levels, we believe that tech-enabled services and healthcare supply chain have the highest potential for scale in the near-term and therefore, highest attractiveness for venture capital firms like VestedWorld. Telemedicine and insure-tech are poised to be extremely impactful, but face high barriers due to a low adoption base. While we see growth opportunities in the longer term as the population becomes more tech-savvy, these sectors are not yet mature enough for a healthy exit in 5–8 years. Medical devices and e-learning are less attractive from a venture standpoint due to high capital and regulatory requirements and limited business cases respectively.

Above all, we believe that for a healthtech startup to be truly valuable, they need to maximize the value they provide their customers, whether patients or hospitals. This can include playing across multiple sectors, and providing a more holistic solution to patients, especially in D2C business models. Patients are unwilling to pay a higher price for a single service, but combined together, the unit economics become more attractive. For instance, telemedicine by itself is not as attractive to consumers as mentioned above, but combined with insure-tech or tech-enabled services, can significantly increase a company’s value proposition. One example is TMCG, an innovative company that is providing teleconsultation to patients, and at the same time has set up a tech-enabled pharmacy and lab along with pick-up and delivery services. This kind of vertical integration allows for them to charge a higher amount than pure teleconsultation companies while providing value-added services that are stickier for customers. Wellahealth is another startup that is combining tech-enabled health testing (starting with malaria) with health insurance plans to allow for regular check-ups. This is an interesting business model that allows customers to take preventative action through regular testing and regular payments instead of spending 10x at the time of treatment.

On the other hand, B2B solutions can do well by being hyper-focused and addressing key deficiencies in the system. The largest market for B2B sales is the public sector and NGOs. These sectors, however, can have long sale cycles. At the same time, the public sector across the continent is fragmented. In order to address both of these factors, companies should be focusing on one or two key pain points for delivering their solution. For instance, Field Intelligence (similar to portfolio company DrugStoc) is a developer of a pharmaceutical supply-chain platform intended to make healthcare increasingly efficient, affordable, and effective. The company’s technologies and services help digitize, strengthen, and sustain the supply chains that enable this access, thereby helping public and private providers change how healthcare gets delivered.

In conclusion, we believe that healthtech is ripe for innovation and disruption and venture capital investors have an opportunity to drive both financial and social returns. We would love to hear your thoughts in the comments below!



Read next

Back to all posts