Foreign investors eyeing Nigeria’s healthcare sector
The coronavirus pandemic has highlighted a significant gap in health spending in Africa’s largest economy, and international investors are keen to fill this gap.
In terms of health care, Nigeria lags behind its comparable African neighbors in terms of costs and access to health services.
For example, Nigeria’s government spending on health accounts for just 3.89% of its $ 495 billion gross domestic product (GDP), according to the latest available data from the World Bank, compared to 8.25% in South Africa and 5. 17% in Kenya.
Nigeria will need 386,000 extra beds and $ 82 billion in healthcare real estate investments to reach the global average of 2.7 hospital beds per 1,000 people, according to a recent report by real estate consultancy Knight Frank..
In addition, according to the UN, Nigeria’s 206 million population is expected to nearly double by 2050, making it the third most populous country in the world..
All of this, especially when combined with the coronavirus pandemic, has sparked interest in the medical sector from foreign investors..
Knight Frank’s survey of 140 global investors in June found that 80% are considering investing in health infrastructure in Africa in light of the coronavirus crisis. This interest was primarily focused on real estate properties for hospitals and hospitals, as well as operating companies collaborating with local experts..
As with much of the African continent, Nigeria has managed to maintain a relatively low incidence of coronavirus given its population size: 90,080 cases and 1,311 deaths have been reported as of Monday morning, according to data compiled by Johns Hopkins University..
Even before the pandemic, Africa’s medical assets began to generate wider interest. The International Finance Corporation, a member of the World Bank, in November 2019, in partnership with the Investment Fund for Healthcare in Africa II (IFHA-II), formed a Special Purpose Company (SPAC) with a budget of $ 115 million for healthcare enterprises in the east and south of the African continent.
European development finance institutions such as Swedfund, the Swedish development finance institution, have supported IFHA, along with organizations such as Pfizer and the Stichting Social Investor Foundation for Africa, whose sponsors include Aegon, Heineken, Shell and Unilever, among others..
Since the start of the pandemic, the Nigerian government has issued 100 billion naira ($ 254.6 million) in public health loans, from pharmaceutical companies and medical product manufacturers to service providers, which appears to have generated a lot of interest from private investors. The Bank of Industry, a Nigerian development finance institution, provides an additional 50 billion naira for this purpose.
«There are very good opportunities for the development of world-class healthcare facilities throughout Africa, but especially in Nigeria», – said Hafiz Giva (Hafeez Giwa), managing partner of HC Capital Properties, which invests in medical assets in Nigeria.
«Most of the public hospitals here were built over 40 years ago, and only a few have received any investment since then.», – Givea said in a report released Monday by consulting firm New Markets Media & Intelligence.
Tosin Ranseve (Tosin Runsewe), CEO of healthcare investment company AfyACare Nigeria, highlighted another opportunity: compulsory health insurance for federal employees will lower insurance costs, and the percentage of covered health care costs could rise to 20-30% by 2030.
Currently, about 72% of household health care costs are paid out of pocket, compared with the 35% sub-Saharan average, the Knight Frank report highlights, and only 5% of medical costs are covered by insurance..
«If we could reach the critical mass of 40-60 million Nigerians with medical coverage, the cost of this treatment could be covered by health insurance premiums of only about 20,000 naira ($ 50) per year, which is half the current average cost.», – said Ranseve.
«Private primary health care clinics have many opportunities for investors to provide services at an affordable cost».
Giva said HC Capital Properties is investing in Nigeria both because of «urgent need», and because of government initiatives that have made it easier to develop high quality assets that offer affordable service. He suggested that two types of investors are currently exploring these opportunities..
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«On the one hand, there are local institutional investors and local pension funds who, in the case of Nigeria, invest in naira and do not worry about currency risks», – said Gibea.
«On the other hand, there are investors and development-influencing institutions who are excited about the prospect of providing high-quality health care to low- and middle-income Nigerians.».
He expects the pandemic to lead to «constant change of mind», resulting in greater emphasis on quality home health care.
According to a recent PwC report, Nigeria is currently losing up to $ 1 billion a year to outbound health tourism among wealthier Nigerians due to inadequate domestic amenities..