health and wealth

Africa: Despite coronavirus, healthcare investment continues to grow

By Rob Withagen

Posted on June 7, 2021 10:20

Investment in Africa’s healthcare sector is crucial as private provision accounts for approximately half of healthcare goods and services delivered. The private sector often fills gaps left by public services, according to research by the IFC.

Recent years have seen a step change in investment in the sector. Asoko’s database of deal activity in Africa records over 100 deals in the sector since 2015, covering both goods and services. Data from Africa Venture Capital Association, meanwhile, shows the sector taking a rising share of overall deal value on the continent, from 4% in 2018 to 12% in 2019 and 24% in the first half of 2020, the largest slice of the private equity (PE) pie in that period. The next decade is expected to see continued growth in healthcare investment as rising demand creates strong returns.

Even before the pandemic, healthcare has been attractive to Africa’s PE investors because of its favourable rates of returns and exit opportunities. Given Africa’s 1.3 billion-strong population and rising middle-class consumer base, consumer-focused sectors more widely are key areas of investment.

According to the IFC, consumer-focused industries offer the highest internal rate of return, with health coming in fourth at 9.6% behind telecoms, IT and consumer staples.

The effect of Covid-19

Covid-19 has further focused attention on these industries, which have been most resilient in the wake of the crisis. Talking to Asoko earlier this year, Abiola Ojo Osagie, senior partner at AfricInvest, one of the continent’s most active PE firms, explained the shift in focus necessitated by the pandemic: “We had to rethink how we deploy the capital because it was no longer ‘business as usual’. Some sectors were badly affected, but others were benefiting. Consumer-driven industries were resilient and defensive. Even though consumer spending fell, some of those with big markets were still doing well.”

This may go some way to explaining why several large-scale healthcare investments went ahead in 2020 while deals in other sectors were delayed or called off altogether.

Notable deals included SPE Capital Partners’s stake in Saham Group’s pharmaceutical business in Morocco, Rand Merchant Investment and Endeavour’s investment in health-tech platform Guidepost in South Africa, and AfricInvest’s exit of Morocco’s Polymedic to NBK Capital Partners and Foursan Capital Partners. Mediterrania Capital, Zoscales Partners and Oasis Capital also inked health deals in 2020 spanning North, East and West Africa.

North Africa has been a particular hotspot for healthcare deals, both in the pharmaceutical space where the sub-region’s more developed industrial base offers more opportunities, and in the services segment where large middle and upper class consumer segments provide a ready market for care provision. In sub-Saharan Africa, healthcare deals have been relatively widespread, including notable investment in Central Africa, and concentrations in the major markets, in line with overall investment trends.

Exit potential in the healthcare sector is also reasonably strong, especially given the illiquidity in African markets. Asoko recorded eight exits in the sector since 2015. North Africa dominated this activity, with three-quarters of exits in the sub-region, including the initial public offering of Unimed in Tunisia in 2016.

Bottom line

Expanding access to quality healthcare services and increasing domestic pharmaceutical manufacturing capacity will continue to dominate Africa’s healthcare sector development agenda, and investment can be expected to follow in support of these objectives.

Traditional bricks and mortar investment is needed on both fronts, but a growing niche of innovative, tech-enabled services will play an increasingly important role in the way healthcare is provided in Africa and thus attract a growing share of investment. Roughly 10% of deals Asoko recorded in the 2015-2021 Q1 period were health-tech deals, and we expect such innovations to continue to secure backing from the investment community as these businesses mature and expand.

Rob Withagen is co-founder and CEO of Asoko Insight, Africa’s leading corporate data and engagement platform, providing global investors, multinationals and development institutions the most effective route to discover, shortlist and engage their target universe of African companies. Learn more at

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