Business Opportunity: Reversing The Low Supply Of Medical Services In East Africa
There are 103 doctors per 1 million people in East Africa, and for someone interested in investing in the continent, that could spell opportunity, according to an investment banking and advisory firm.
David L. Ross is managing director of Statera Capital, an impact investment banking and transaction advisory firm founded in New York City and focused on Sub-Saharan Africa. The firm has offices in London, Johannesburg and Dar es Salaam.
East African doctors have been disincentivized to stay there due to late payments, bureaucratic challenges, poor working conditions and even hostility from the supervising agencies and governments, Ross said in a guest column for The Exchange. Lured by higher salaries abroad, these doctors contribute to the continent’s brain drain.
Ross has identified market opportunities and investment ideas that he said could help fill the gap where other medical services have been lacking in East Africa.
These include making use of telemedicine using tools like Skype that allow doctors in other locations to direct nurses and health workers on diagnosis and procedures.
Another investment opportunity is motorcycle ambulances, which can weave in and out of traffic easier than full-size ambulance trucks, Ross said.
And there’s also drug and blood delivery by drones — something a Silicon Valley startup is trying to scale up and make a reality in Rwanda.
Kenya had the most doctors in East Africa per capita with 200 per million in 2013 — the most recent year reported by the CIA World Factbook on physicians density. Uganda had 120 doctors per million in 2005. Rwanda had 60 doctors per million people in 2010, and Tanzania had 30 per million in 2012.
That’s significantly less than World Health Organization levels of healthcare sufficiency, Ross said.
Africa is short 90,000 doctors, 500,000 nurses, 300,000 community health workers and 500,000 hospital beds, according to a 2007 report by the International Financial Corporation (IFC), entitled “The Business of Health in Africa: Partnering with the Private Sector to Improve People’s Lives.”
In 2013, the investment gap was still there, Abax Services reported.
However Africans are willing to pay for quality and timely private health care despite their apparent low income levels rather than queue up in public facilities, the report said. The scope for investment in health is interesting for the private and public sectors.
There is also an interest for local manufacturers of drugs and medical accessories to capture a market previously dominated by imports.
Africa experiences 24 percent of the global burden of disease, but has only 2 percent of the global supply of doctors, and less than 1 percent of spending is on global health, according to the U.S. National Institutes of Health.
In Africa in 2009, Libya had the highest doctor density at 1,900 per million and Nigeria had 410 doctors per million. South Africa had 780 doctors per million in 2013 — 7.6 times the average doctor density of EAC countries.
By comparison, outside Africa, Monaco in 2012 had the highest number of doctors at 7,170 per million. Cuba had 6,720 per million doctors per million people in 2010. The U.S. had 2,45o physicians per million people in 2011.
The ratio of doctors to the population is getting worse in East Africa as the population grows, Ross said. East Africa has some of the fastest-growing countries in the world.
To counter this trend in public health, many doctors in the East African Community, especially Kenya, are being offered career paths that allow them to specialize. This makes for more stimulating work and entices them to stay, Ross said.
The East African Development Bank and the British Council offer fellowships in Kenya so doctors can specialize in particular medical fields. Many organizations offer scholarships for students headed abroad as long as they sign a contract promising to return to their home countries and work there.
Some expat doctors working in the U.S. and Europe still care about the situation at home and some have formed organizations to advance healthcare in their home countries, like Nigerian Physicians in the Americas among others, Ross said.
These are some market opportunities and investment ideas that could fill the gap where medical services are lacking in East Africa, according to Ross:
- Drug distribution: getting medicine to patients in rural areas of the EAC is difficult. The companies that can solve this problem will be rewarded financially.
Silicon Valley startup Zipline said earlier this year it would begin delivering blood and drugs by drone across Rwanda by July, The Verge reported.
In August, TechCabal reported that Zipline drones had arrived in Rwanda, and would start delivering blood and health supplies soon. Zipline partnered with the UPS Foundation, Gavi, and the Rwandan government.
- Motorcycle ambulances: many EAC cities lack enough ambulances. Traffic stops large trucks from attending to patients. Motorcycle emergency medical care can be provided in some cases through low-cost motorcycle ambulances that can weave through traffic faster than full-size medical trucks.
- Visiting doctors: doctors conducting a common specialized treatment can visit countries for short periods and conduct numerous surgeries in a matter of weeks. This is done in certain types of eye and mouth surgeries — mostly by charitable organizations. It could be expanded greatly with increased coordination of patients and treatments.
- Medical informatics: the limited nature of available medical information in the EAC combined with high accessibility to telecom networks could create investable opportunities for willing ventures.
- Telemedicine: doctors in other locales could provide part-time medical specialist services via teleconferencing systems such as Skype, directing other medical staff on procedures and evaluation of diagnostic outcomes.
- Private specialized clinics: investment in limited-function clinics limits the complexity of medical diagnosis and treatment of common ailments. This is largely untapped outside major EAC cities, Ross said, according to The Exchange.
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