News
October 26, 2020
A recent report by McKinsey quotes Ngozi Okonjo-Iwaeala, former Financial Minister of Nigeria and one of the African Union’s COVID-19 Special Envoys, as saying, “[t]his crisis has shown that globalization may have led [Africa] to over- rely on global supply chains. There will be a big re-think worldwide – not just because of politics, but also because of countries’ ability to meet their basic needs.” Africa’s “re-think” – precipitated by health supply and infrastructure vulnerabilities made worse during COVID – has led to the consensus conclusion among African leaders that health innovation and production capabilities are essential for the continent’s health security going forward. These conclusions (and related growth) are expected to improve the private investment climate in the HealthTech sector.
COVID-19, among other trends, has:
With these trends, all highlighted/accelerated by the pandemic, we predict transformation of Africa’s HealthTech/MedTech sector in coming years, with particular emphasis on digital innovations.
This report is intended to guide strategy discussions, and for that reason is directional but not comprehensive. Also, our predictions come with an important qualification: because the COVID crisis is not over, the full effect of the pandemic on investing, innovation, and broad economic recovery,FN1 are still playing out. We nonetheless believe, as discussed in detail in this report, that sectors such as e- Health are expected to come out of the pandemic stronger due to increased usage and need.
This report is intended primarily for: (1) internal strategic consideration of potential future investments in Fund I; and (2) initial discussions on optimal structure and focus for Fund II. As such, for the most part we have not provided footnote citations for most of the discussion, although we have a central reference list of reports and articles, and that list is available on request. Many of the points we make, have been taken verbatim from those reports and articles.
In preparing this report, we had the benefit of a prior internal review and report regarding the African MedTech/e-Health landscape prepared in Q4 2019. A mere one year ago when we were preparing the Africa Backgrounder, we felt that most innovations were not “ready for prime time,” and that too many of the innovations were broadly infrastructural vs. “medical use.” On the former, COVID, as this report details, has created an opening for transformative change on the continent. On the latter, following our discussions around DocsApp, we have come to the conclusion that digital health infrastructure technologies, while not conventional “MedTech,” are nonetheless important e-health “facilitating technologies,” that would meet our “MedTech” definition in Fund legal documents. For this reason, we have embarked on another review of Africa’s emerging e-Health sector, the contents of which are described in this report.
Please email c.haynes@teamfundhealth.org to request access to the full report.
FN1 There will be a marked economic slowdown through this year and into 2021. The worst global recession since World War II and the effects of large-scale shutdowns of all non-essential businesses worldwide, cutting off international and regional supply chains and halting all non-essential travel, have rippled across Africa, and set the groundwork for the threat of the first African recession in 25 years. The International Monetary Fund is forecasting a 3.2% contraction in SSA’s GDP; a 1.6% contraction in the continent’s GDP; and these outlooks may worsen when revised later in the year. In addition, the pandemic has put 20MM or more jobs at risk across the continent, which will reduce people’s ability to spend on healthcare. New forms of civil unrest (e.g., in Nigeria) is another trend to watch, as is the rising level and severity of poverty from the pandemic.
In the context of lower oil prices, commodity-exporting countries such as Nigeria and Angola will be more severely impacted from a fiscal perspective. However, ultimately the rate of Africa’s economic recovery will depend on each country’s response.
Although a V-shaped recovery is not expected, being later into lockdown and early out of it, could mean African countries will begin to recover sooner. Cautious optimism has also been boosted by China, a key supplier, which might make reopening smoother, and ease pressures on supply chains.