THE BUSINESS OF HEALTH IN AFRICA
The Power of Two
Khama Rogo MD PhD
Lead Health Sector Specialist & Head,
Health in Africa Initiative,
World Bank Group
Contents
1.
Private Sector Participation in the Health Sector
2.
Constraints to Private Sector Participation
3.
Addressing the constraints- HiA’s work in Africa
4.
HiA’s Objectives, goals and work streams
5.
Coverage in Africa
6.
Concrete Results
7.
Strengthening Health Systems
8.
Opportunities in East Africa
9.
Recommendations from the HP report
10. Catalyzing openness prudence and growth
2
The private sector plays a dominant role in health
Public
Private
Health care expenditure by
financing agent
Percent
$16.7B
100%
Public
~40
Health care expenditure by provider ownership
Percent*
$16.7B
100%
Public
~50
For-profit
Out-ofpocket
~50
Other
private
Private
prepaid
Private
~5
~50
Social
enterprise
Nonprofit
Traditional
healer
~5
Financing
agent
Providers
~65
~15
~10
~10
Private sector
providers
When measured on a usage basis:
• Private sector providers likely comprise larger share of market due to
under-reporting of non-profit and informal segments
• Social enterprises, non-profit and informal segments comprise larger
share of private sector due to smaller user fees and under-reporting
3
The “Red Report” and Key Findings
Key Findings
 60% of health care in SSA is financed by private sources
 50% of health care in SSA is provided by private sector
 The private sector serves all segments of the population
 Government constraints means the private sector will
continue to play an important role in the medium term
 Investment demand is expected to be $25-30 billion over
the next ten years
 Most investments in the private sector will be in SMEs
 The role and potential of the private sector is not well
understood. It is ignored by governments and donors alike
Dec 2005 – August 2006
Formulate Partnership
IFC and the Bill & Melinda Gates
Foundation formulate
partnership
Dec 2007
Scoping Study & Strategy Development
The Business of Health In Africa Report
published and strategy presented to the
Board
IFC’s Strategy to the Board
 Use IFC’s core competencies; apply market principles
 Work with local businesses, financial intermediaries, and
policy makers plus the international community
 Comprises: i) Investment, including an equity vehicle;
increasing availability of long-term debt; and increased
focus on life sciences; ii) advisory services to complement
the Bank’s work with governments; iii) health worker
education; and (iv) risk pooling
 Aspiration of investingUS$1 billion over 5 years
Jan – Dec 2008
Initial Preparation Phase
Report dissemination, fundraising formation of
joint IFC-World Bank Team based in Nairobi,
Kenya and Washington DC
Jan 2009 Onwards
Implementation
Research & Analysis, Policy Advice, Debt & Equity
Financing
We are approximately three years into a five year program
4
Constraints to Private Sector Participation and HiA’s role in
addressing the issues
Increase Access to
Capital
Limited access to capital, including both debt and
equity, is a significant constraint to growth and a driver
of sector fragmentation
Improve Regulatory
Environment
The regulatory environment often impedes growth of
the private healthcare sector in many SSA nations
Promote Risk Pooling
Vehicles
Increase Revenue Flows
from Alternative
Sources
Alleviate the human
resources shortage
Risk pooling vehicles are superior financing mechanisms
to out-of-pocket payments and can help mobilize
revenue for providers, supporting the growth of a
formal, organized private sector
Though the private sector receives most of its revenue
from the general population, the public sector,
international donors, and employers are alternative
sources of funds
Short supply of skilled health workers and healthcare
managers has an adverse impact on the potential for
healthy, sustained private sector growth
5
The investment
strategy of the
WBG’s Health in
Africa Initiative
addresses the need
to increase capital
for private sector
entrepreneurs
The policy and
analysis strategy of
the WBG’s Health in
Africa Initiative
proposes advocacy
and technical
assistance
mechanisms to
address the other
major challenges
faced by the private
sector in SSA
Engagement scores across SADC
Country
P&D (10)
Inf. Ex. (8)
Reg. (13)
Fin. (6)
PPS (2)
Angola
6
4
5
3
2
Botswana
7
6
6
3
2
Congo, Dem. Rep.
2
2
5
1
1
Lesotho
4
3
6
2
2
Madagascar
6
5
8
3
2
Malawi
7
4
9
2
2
Mauritius
8
8
11
4
1
Mozambique
4
3
7
0
1
Namibia
6
5
11
3
2
Seychelles
5
8
12
1
1
South Africa
9
5
13
3
2
Swaziland
3
4
7
2
2
Tanzania
8
5
7
2
2
Zambia
7
4
9
3
2
Zimbabwe
6
4
10
1
2
6
HiA: Goals and Organization
Approach:
Three Workstreams
Mission
Local
govern’t
Catalyze sustained improvements in:
(a) access to quality health-related goods
and services in Africa; and
Local
s/holders
Donors
B. Advisory
Services to
governments
(b) financial protection against the
impoverishing effects of illness,
with an emphasis on the underserved.
Goals



US$1b mobilized
8 countries deeply engaged – 20
reforms
Bank
experts
A. Research,
Analysis, and
Dissemination
C. Access to
Debt/Equity
Financing
External
experts
Advocate for the positive role of the
private sector
Banks
Research
partners
7
Funds
Other
investors
Overview of the HiA Initiative: Coverage (as at Nov 2012)
Key
In-depth policy work +
all investment activities
Policy work only
All investment activities
Investment through
AHF/IFHA only
8
Policy Workstream
Public-Private Dialogue
• Support public and private sectors in engaging in
dialogue
• Establish formal platforms for continued dialogue
Policy & Regul. Reform
Insurance & Investment
• Simplify registration and
licensing
• Improve quality
standards and
inspections of private
providers
• More investment capital
• Increase insurance coverage;
enhance quality through
accreditation
• Facilitate contracting
between public and private
sectors
Expected Impact
•
•
•
•
•
Increased in Private investment
Private sector savings/pass on to consumers
% firms compliant with patient safety standards
# of people with access to new/improved health services
# of people effectively covered by health insurance
9
Policy Work – In-depth country work
Mali
 Country assessment and
engagement completed
 Reform agenda: PPD
Committee/PS Alliance;
Management of PHC; API adapting generic private sector
investment facilities to health;
licensing
South Sudan
 Six new health laws
prioritized
 3 PPP projects under
consideration
 HR training by
private institutions
started
 3 new private
hospitals targeted
Nigeria
 NHIS reform/health
financing reform project on
course
 Regulatory and PPP
priorities identified
 AHME project
Kenya
 Country assessment and
engagement completed
 New Health Bill passed
 NHIF audit/New NHIF Bill in
Parliament
 Joint inspection
tools/Revision of regulatory
laws
 AHME project
Burkina Faso
 Country assessment and
engagement completed
 Reform agenda: review of all
legal and regulatory texts;
enforcement of regulations;
PPPs in reproductive health,
public health programs and
training.
Ghana
 Country assessment and
engagement completed
 New PHS policy adopted
 3 PPP transactions signed
 3 new laws passed
 AHME project
Congo (Brazzaville)
Country assessment and
engagement completed
 3 Presidential decrees
 Parliamentary endorsement
10
Uganda
 Country assessment completed
(with USAID)
 New PPH policy passed
 Regulatory bodies and Acts
reforms underway
 PPP transactions on course
 Financial instrument for health
SMEs by USAID
Results: Analytical Work
 Title: “The Business of Health in Africa: Partnering with the Private Sector to Improve People’s Lives”
 Purpose: To demonstrate the importance of the private sector in delivering healthcare to Africans
 Target audience: The international donor and NGO community, African governments, the private sector
both in Africa and outside, and other stakeholders
 Publication date: December, 2007
 Title: “Healthy Partnerships: How Governments Can Engage the Private Sector to Improve Health in Africa”
 Purpose: To demonstrate to governments the ways in which the private sector can be engaged in health
and to show how they are performing in doing this compared to their peers
 Target audience: Primarily national governments in Africa
 Publication date: June, 2011
 Title: “Private Health Sector Assessments” (country specific reports)
 Purpose: To document the role that the private sector is playing in particular

countries and a reform agenda. These reports were developed within a framework of
engagement with policy makers, the private sector, donors and other stakeholders
Publication dates: Various, beginning with Kenya in 2010
 Title: Health Policy Toolkit, an online website
 Purpose: To provide health policy practitioners access to information about policies and
practices that can enhance the contribution of the private sector to health goals
 Target audience: Primarily, policy makers in Africa
 Publication date: June , 2011
11
Result: Investment
IFC Direct Investment (total $107.4m)
• Hygiea (Nigeria/$2.2m) - Hospital & HMO
• Life Healthcare(South Africa/100.0m) - Hospital
• Nakasero Hospital (Uganda/$3.0m) - Hospital
• IMG (Uganda/$2.2m) - Hospital & HMO
Fund Investments - Investment Fund for Health in Africa (IFHA) – (total Eur 13.6m)
• Hygeia (Nigeria/Eur 2.0m) – Hospital and HMO
• Pyramid Pharma (Tanzania/Eur 1.4m)- Pharmaceutical distributor
• Strategis Insurance (Tanzania/Eur 0.6m) - Health insurer
• Hello Doctor (South Africa/Eur 0.6m) – Telemedicine provider
• AAR (East Africa/Eur 7.0m) – HMO
• Sourcelink (Eur 2.0m) - Singaporean diversified medical holdings company seeking to expand its operations in the
manufacture of medical disposables (gloves, masks etc.) into Africa
Fund investments - Equity Vehicle for Health in Africa (EVHA) – (total $15.52)
• Nairobi Women’s Hospital (Kenya/$2.67m) – Hospital
• C&J Medicare (Ghana/$1.0m) – Hospital/Specialist clinic
• Revital (Kenya/$2.75m) – An early stage manufacturing company (Conventional Single use syringes and Auto-Disable
syringes)
• Avenue Group (Kenya/$2.5m)–Hospital & Managed Healthcare plan provider
• Biasa Clinic (Togo/ $1.6m)– Clinic (inpatients & outpatients)
• Bridge (Nigeria/$5.0) - specialized fertility treatment and medical laboratory services
Pipeline
• IFHA’s active pipeline consists of transactions totaling Eur 22.0m
• EVHA’s active pipeline consists of 37 transactions totaling $138.5m
12
Our Private Sector work in Africa contributes to the strengthening of countries’
health system – some examples:
Health Systems Pillars
Governance
Human
Resources
• 6 countries: •Uganda,
Ghana, Kenya:
• PPD
platform –
• Analysis –
strengthenin
g PP Units in
MOH;
Private
Sector
Federations
•
Mainstreami
ng PS
activities in
national
health
strategies
Role of
private
sector in
training of
health
workers
•
Regulation
and
accreditation
of nursing
schools
Pharmaceutica
ls
• South
Service Provision
•
Sudan:
•
PPP for
managing
the
pharmaceut
ical supply
chain
•
•
Ghana, Kenya,
B Faso, Uganda:
Establishment of
service standards
and quality based
inspections regimens
Access to credit to
private entities for
expansion of quality
services to
underserved
populations (eg:
Nairobi Women’s
Hospital -$2.5m)
Information
Systems
• All
Health Financing
•
countries:
•
•
eRegistration
and
digitalizatio
n of data by
health
regulatory
bodies
•
•
Nigeria, Ghana,
Kenya:
Social health
insurance –
effiecient national
health insurance
agencies/ universal
coverage
PPP transactions –
policy/transaction
pipelines
Access to
credit/Equity
financing
Opportunities in East Africa
OPENNESS
 Expanding the definition: Non state actors
 Dispelling the myths
 Supporting effective public private dialogue
 Policy and regulatory reforms
 Consumer voices
PRUDENCE
 Public private partnership transactions
 Health financing/Health insurance
 Access to credit
 Information – HMIS – use of ICT
GROWTH
 Access to basic and tertiary care (reduce external referrals/invest locally!)
 Use of new technologies
 HRH training
 Production of quality pharmaceuticals/goods
 Employment creation
15
Recommendations
Government
• Government must lead
• Quick wins
 Establish effective
dialogue
 Know who is doing what
• Start now
 Review policies and
practices
 Focus on
implementation
 Expand insurance
 Support quality
enhancements
Private Health Sector
Donors, Third Parties
• Organize;
then, seek dialogue
•Support
engagement and
take active role
• Encourage members to
 Formalize
 Join provider
networks
 Build capacity in
clinical practice and
in business
management
16
•Include private
sector in country
support programs
•Align programs
with priorities
coming out of
national dialogue
Catalyzing Openness Prudence and Growth: Health in Africa Initiative
• Brief History
•Launched by the World Bank Group in
2009 with support from the Bill and
Melinda Gates Foundation to address the
policy and market failures that
constrained achievement of the full
private sector potential to
address Africa's health care needs.
•HIA is supporting the governments of
Kenya, Ghana, Burkina Faso, Uganda,
Nigeria, South Sudan and the Republic of
Congo
•
IFC Direct Investment - (total
$104.4m)
• PE Fund



•HiA Goals
Improve the regulatory
environment for the private
sector
Implement reforms leading to
expanding coverage of risk
pooling mechanisms
Unlock private investments in
health through PPPs and
innovative financing
mechanisms.
•HiA Mission
•Catalyze sustained improvements in:
• Access to quality health-related goods
and services in Africa; and
•financial
protection
against
the
impoverishing effects of illness, with an
emphasis on the underserved.
Investments - Investment Fund for Health in Africa (IFHA) - (total Eur 13.6m)
•IFC
•Investment
• IFC Direct Investment - (total $104.4m)
•Portfolio
• PE Fund investments - Equity Vehicle for Health in Africa (EVHA) – (total $18.5)
• HiA Highlights
• Analysis
• Policy
• Advisory
• Investment
Shifting the debate in Africa and the donor community and brought much-needed attention to the role and
potential of the private sector,
Mobilized around $350m through two equity investment funds, four IFC direct investments, two output-based aid
project, and various donor-supported trust funds;
Published six private health sector country assessments, one major pan-African benchmarking report ("Healthy
Partnerships") and developed a web based toolkit for PP sector engagement;
Established PPP platforms to support sustainable dialogue, including PPP units in ministries of health and private
health sector federations in six African countries
Initiated multiple priority reforms in policy, regulatory and health financing in eight countries (Burkina Faso,
Ghana, Kenya, Mali, Nigeria, Uganda, South Sudan, and the Republic of Congo).
•17
THANK YOU
18