Positioning Health Enterprises for Investments and Access to New African Markets

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Thursday, September 16, 2021 / 09:40 AM / OpEd by Abiodun Awosusi / Header Image Credit: Justtechinfo

 

  

The ongoing coronavirus pandemic underscores the urgent need to invest in resilient health systems. While governments are deploying economic and public health measures to curtail the multidimensional impact of the pandemic, the successful implementation of the African continental free trade agreement (AfCFTA) has the potential to contribute to resilient recovery and transformation of African economies. Although the pandemic is expected to spur higher public spending on health, health enterprises in the private sector need to prepare for opportunities and challenges of a continental market with 1.3 billion people and combined gross domestic product of over $3 trillion dollars.


 

From Accra to Johannesburg, there is growing awareness of the potential benefits of the free trade pact. A World Bank analysis shows that successful implementation of the agreement especially with apt focus on facilitating trade could raise household incomes and lift millions out of poverty. According to the United Nations Economic Commission for Africa, better trading relations and volume among African countries is a crucial building block for Africa's economic development. The United Nations Conference on Trade and Development posits that AfCFTA can accelerate the growth of the "trade-industrialization nexus" with apt right rules of origin and productive capacities in place.

 

Although a free trade agreement could be viewed as a neoliberal tool to enrich a few, the uniqueness of AfCFTA lies in its catalytic potential to galvanize progress towards infrastructure investments, regulatory reforms and other building blocks required to create a continental market that truly benefits many Africans. The founding fathers of the African Union envisioned continental economic integration as a multigenerational journey with multiple milestones and strategic partnerships on the way to creating an African Economic Community. As Confucius once said,"the man who moves a mountain begins by carrying away small stones." There is therefore opportunity for adjustment and equity for nations, businesses and individuals during operationalization with health as one of the keystones for successful integration.  

 

Africa's healthcare market is currently worth about $150 billion, with projected increase to $259 billion by 2030. The market for pharmaceutical products is expected to grow significantly with several initiatives along the value chain. In view of these potential opportunities, health institutions need to be well-positioned as the trade pact shapes evolution of the private sector. The private sector refers to private health facilities, pharmacies, health product manufacturers, logistic companies, clinical research organizations, startups and ancillary health providers. In this analysis, I use a four-point framework to explore the dynamics.


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Preparation

There are ongoing negotiations on key elements of the free trade area. Phase I negotiations focus on rules of origin as well as tariff and non-tariff barriers. The second phase covers intellectual property, competition and investment while the third phase is for e-commerce. Although some observers argue that the non-completion of negotiations before the January 2021 start of trading under the AfCFTA could be counterproductive in the face of COVID-19, there is however significant commitment and momentum to complete the negotiation process and ensure more countries ratify the agreement and develop national implementation strategies.

 

In reality, a layer of complexity also exists in negotiations across regional economic communities (REC) and economic partnership agreements with non-African countries. AfCFTA is expected to build on the successful elements in current trade infrastructure and agreements to promote deeper cohesion. Prompt completion of ongoing negotiations among state parties is crucial as key stakeholders evaluate relevant provisions for the healthcare and pharmaceutical value chains particularly intellectual property rights and market access.  Health sector leaders should closely follow the negotiation process using available resources including the World Health Organization Trade and Health Tool.

 

Alignment

Health policy makers and business leaders can contribute to the development of national AfCFTA implementation strategies in a way that ensures the dynamic socio-economic and commercial determinants of health do not undermine access to high-quality health services for all. The pandemic has shown that trade plays a significant role in access to health technologies including personal protective equipment, tests, drugs and vaccines. Export restrictions in the global response to the pandemic delay access to medical tools in developing countries. Although the situation appears to be improving, there is growing concern about vaccine inequity and concomitant delay in economic recovery in Africa.

 

AfCFTA offers an opportunity to reverse the overdependence on imports and fast-track regional production of health technologies hinged on strategic partnerships. Its prospect is even brighter with the recent partnership of African and Caribbean countries on vaccine access. Cuba's example shows that national production of health products especially vaccines during a global crisis is possible. Therefore, health sector leaders can use informed commentaries, timely intelligence reports, research insights and plausible avenues such as regional and multilateral meetings, the Ministers Forum, the African Business Council, the African Business Coalition for Health (ABC Health), African Healthcare Federation and similar platforms to drive health in all strategies, policies and agreements.



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Investments

Public financing is vital to increase access to healthcare in Africa. Besides, the pandemic has sparked interest and innovative financing in Africa's health markets. While governments need to spend more on public health, the private sector is also positioned to attract partnerships and investments that facilitate progress towards health for all. Although some analysts believe that free trade agreements are antithetical to values of public health and health equity, this perception may mislead policy makers to dismiss the opportunity of leveraging impact investments for regional manufacturing of health and pharmaceutical products within a continental market. While regulation of the private sector is increasingly important, it remains crucial for improving access to health technologies and services.

 

The combined effect of a growing middle class, change in disease burden, mobile and internet penetration can stimulate new health investments. The outlook of a unified African market and imminent emergence of a continental regulatory agency are major market-shaping developments. The continent is expected to reach 614 unique million mobile subscribers with nearly half a billion mobile internet users by 2025.  Africa dominates the money mobile market with nearly half of global mobile money accounts. In 2020, the health-tech sector secured the third largest investments in Africa. Besides, the United States, China, European Union, France, and Germany as well as regional and global development finance institutions are investing in Africa-based manufacturing of health commodities and technology transfer in line with the AU-Africa CDC Partnerships for African Vaccine Manufacturing. Covid-19 and AfCFTA could position the health industry for a fourth wave of technology development and new investments after e-commerce, fintech and logistics as governments ensure efficient use of scarce public resources.

 

Consolidation

There is growing evidence that value-based, integrated health care systems can be key enablers of better health service delivery in Africa. Consolidation across service providers with shared values and interests is a viable strategy to harness economies of scale and scope for emergence of hospital groups, pharmacy chains, diagnostic and research consortia. Within a complex, highly regulated health ecosystem, it is counterproductive for health enterprises to work in silos. This consolidation will benefit from health insurance expansion and provider-payment reforms through tax-financed schemes and private insurance programs. And with Africa's changing disease burden, access to safe and effective tools to prevent, rapidly detect and treat diseases become increasingly important.

 

Efficiency gains from primary care investments and consolidated health groups can contribute to better access to affordable, high-quality health services and medical products at all levels of care. In addition, strengthening the role of institutions like ABC Health, research consortia and private health sector associations (e.g. Federation of African Pharmaceutical Manufacturers Associations and Africa Healthcare Federation) creates a coherent voice for the sector. It also facilitates peer accountability and better engagement for public private partnerships and creative health access initiatives.

 

The goal is to improve access to affordable high-quality healthcare for Africans without risk of financial ruin. Adequate preparation, strategic alignments for productive investments and consolidation can help health institutions succeed in an increasingly complex multipolar world with diverse actors and interests. The use of this 4-item framework is likely to take place within the context of multiple global risks such as global governance reforms, conflicts, climate change, as well as major energy and digital transitions. Effectively navigating these risks and taking the right steps to harness evolving opportunities can help move countries closer to health for all.  

 

 

About the Author

'Biodun Awosusi is a health economist at Health Systems and Development Enterprise. He is a TEDMED2020 Research Scholar and MIT Technology Review Global Panel Member. Previously, he was health financing advisor at Clinton Health Access Initiative; research consultant on the Bill and Melinda Gates Foundation-funded Learning for Action across Health Systems at Oxford Policy Management; advocacy manager at ACF International; and technical officer on the USAID-funded Program to Build Leadership and Accountability in Nigeria's Health System. He was the Nigeria Coordinator of the multi-country Rockefeller Foundation-funded Health for All Campaign for Universal Health Coverage in 2014. 'Biodun holds master's degrees in International Health (University of Oxford) and International Management (University of Liverpool) with a bachelor's degree in medicine and surgery from Obafemi Awolowo University. 

 

 

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