Healthcare in Africa Opportunities in the Sector - Knight Frank
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Opportunities in the Sector
Healthcare in
knightfrank.com/research
AfricaH E A LT H C A R E I N A F R I C A H E A LT H C A R E I N A F R I C A
FOREWORD INTRODUCTION
I am excited to introduce Knight Frank’s inaugural edition of the
Healthcare in Africa report.
As Africa continues to grow, improving the health of people living on the
The Covid-19 pandemic has presented the world with its greatest
continent remains the key to unlocking economic development and wealth
challenge yet, as a global healthcare and economic crisis. It has
challenged global health systems with infrastructure, mode of delivery
and financing being some of the many things which were directly
impacted in the immediate aftermath. However, as an optimist, I
believe the pandemic has also presented us with opportunities. It has
allowed each country to carefully examine the infrastructure gaps,
consider alternative mediums such as Telemedicine, a longstanding Whilst, Significant strides have been currently grapple with an annual
concept which is only now becoming mainstream, and this in turn has made in Africa’s healthcare provisions, financing deficit of $66bn for primary
The sizeable gap for healthcare
caught the attention of a broader pool of investors to take a closer look healthcare financing remains the healthcare. Significant disparities
infrastructure and increase in
and deploy funding towards healthcare. greatest hurdle towards quality and exist in terms of healthcare funding
urbanization, creates a demand for
accessible healthcare on the continent. by African Governments, with the
As a continent, Africa’s overall economic and demographic additional healthcare facilities. This can
According to the World Health majority continuing to fall below par
fundamentals present a strong case for investment in healthcare with be an opportunity for the private sector
Organisation, Africa shoulders 24% of the 2001 Abuja declaration which
the private sector playing a pivotal role. With increasing urbanisation to step in and invest in sub-country
of the global disease burden and yet sought up to 15% of GDP allocated to
and a rising middle class, the need for specialised care continues (level 4) hospitals with a typical size
only accounts for only 1% of the global healthcare spending. Opportunities
to be prevalent. Across the continent, the need for governments of 50-70 beds to be able to reach wider
financial resources for health. The spanning the entire human lifecycle
to facilitate investments in this sector cannot be overemphasized. catchment in the community level.
UN Economic Commission for Africa abound for both small and large market
Through retention of qualified human capital and revenues that would
further notes that although the private participants, such as private investors,
otherwise be spent on outbound medical tourism, a long term positive Dr Gireesh Kumar
sector accounts for 50% of healthcare institutional funds, real estate
impact in individual countries would be realised. Senior Manager,
expenditure, African Governments developers and healthcare operators, to
Healthcare Consultancy
Alongside real estate experts, the Knight Frank Healthcare team enter the sector.
includes medical doctors and corporate finance specialists who offer
a wider perspective on the market and can identify where and what
the opportunities are. We believe that the healthcare sector in Africa
will continue to be driven through consolidation, public private
partnership opportunities, international operator interest and the
introduction of highly specialised health services. Healthcare Spending (% of GDP)
Whether you are an investor, operator or owner, I am sure you will find
this edition extremely valuable and useful.
If my team or I can be of any help, do not hesitate to contact us. Ghana Ethiopia Nigeria Cote Kenya Botswana Rwanda South Africa
d'Ivoire
SHEHZAD JAMAL
Partner, Healthcare Consultancy
3.3% 3.5% 3.8% 4.4% 4.8% 6% 6.5% 8%H E A LT H C A R E I N A F R I C A H E A LT H C A R E I N A F R I C A
HEALTHCARE DEMAND DRIVERS
POPULATION DOUBLE RISING MIDDLE TECHNOLOGY:
GROWTH: DISEASE CLASS: Africa’s adoption of technology
has been lauded as a means for the
Africa’s population has continued
BURDEN: The African Development Bank continent to leapfrog its existing
estimates that Africa’s middle infrastructure deficit. Big data
to grow at an average rate of 2.5%
Historically, communicable diseases class will grow from 355 million analytics, telemedicine, and point
per annum and is expected to grow
have formed the bulk of Africa’s individuals to 1 billion individuals by of care imaging and diagnostics
to 2 billion people by 2050, up from
healthcare burden. However, 2050. By 2023 almost half of African currently constitute ways in which
1.3 billion people in 2019, making it
HEALTHCARE
changes in lifestyle and structural households will have an annual the healthcare sector can deploy
the fastest growing continent in the
adjustments have contributed to income exceeding $5,000, up from technology for quality and accessible
world. More so, Oxford Economics
estimates that individuals aged
the rise of non-communicable
diseases. Lifestyle diseases such as
41% in 2018, according to Oxford
Economics. Knight Frank’s Wealth
INFRASTRUCTURE healthcare. Historically, the use of
telemedicine was primarily seen to
over 65 years will grow by 43%
over the next ten years, as life URBANIZATION:
cancer, diabetes, and heart disease Report data further estimates that
(HOSPITAL BED meet the healthcare requirements of
now feature prominently in Africa’s individuals with an income of over remote areas due to lack of available
expectancy increases. Currently,
individuals aged under 30 years
epidemic profile. According to the US$20,000 are forecast to rise by
DENSITY): skilled labour. Among the major
At a 4.5% annual growth rate, Africa’s International Diabetes Federation 32% to 17 million individuals over hurdles to telemedicine has been
account for 60% of the population.
urban growth is estimated to be in Africa, an estimated 2.8 million the same period. This rise in middle the adoption of this technology by
These demographic shifts present Other than South Africa, all African
approximately 11 times that of Europe. individuals aged between 20-79 class numbers is expected to lead to insurance providers. However, with
a range of challenges in relation countries fall short of the global
By 2050, nearly 60% of Africa’s years were living with diabetes in a change in tastes and preferences COVID-19, this may end up more
to the provision of healthcare but average hospital bed-to-population
population is expected to be living in 2019, these are projected to grow and consequently lead to increased mainstream as insurance providers
will ultimately mean a substantial ratio of 2.7 beds per 1000 people and
urban areas. This has been attributed to 4.2 million by 2030. As demand demand for quality healthcare. We embrace the concept. In April 2020,
growth in demand for healthcare require significant investment in
to rural-urban migration and for specialist care rises, existing expect that this will also lead to as a measure towards ensuring
services. healthcare infrastructure. In terms
increased migrations across African healthcare facilities lack the increased demand in preventive care limited human interaction during
of additional beds for example,
cities. As a result of increasing urban capacity required. This has led to services, as individuals become more the COVID-19 pandemic, insurance
Nigeria requires an additional
pressures, African Governments have the rise in medical tourism across conscious of their general health and brokerage Minet Kenya and virtual
386,000 beds based on the global
developed satellite cities. This further the continent, as individuals seek wellbeing. medical clinic SASA doctor launched
average, while Kenya requires an
strains the under-served healthcare specialist care elsewhere. Nigerian a telemedicine solution for their
additional 70,000 beds as illustrated
infrastructure of the continent and authorities, for example, have clients across the country.
in the Bed to Population deficit
presents an urgency to plug this gap. estimated that the country loses up
chart.
to $1 billion in outbound medical
travel annually.H E A LT H C A R E I N A F R I C A H E A LT H C A R E I N A F R I C A
2019 Bed to Population Deficit
Additional Beds
required at current
Additional Beds
required at current
Real estate
Investment required
Real estate Investment required
based on world average INVESTING IN AFRICA’S
HEALTHCARE
country ratio world ratio based on current ratio
What Experts Have to Say ...
Nigeria 386K US$ 870 M US$ 82 Bn
4K
While the need and demand for establishment of the Healthcare REITs. • Defensible Nature: As an asset
healthcare facilities in Africa remain class, healthcare is less cyclical
compelling, they do not complete the Investment Criteria in nature and offers stable yields
Egypt 134K US$ 428 M US$ 23 Bn investment rationale for potential regardless of potential economic
3K
healthcare investors. The IFC noted In terms of investment criteria, all of downturns.
that while in 2005 Africa focused those interviewed would prefer picking
healthcare funds raised only US$0.1 established hospitals with strong • Triple net lease provision:
South Africa US$ 394 M
2K million, by 2015 this amount had brand equity and history, or new build Healthcare assets generally
increased twenty thousand-fold to top with an established operator. However attract longer term leases of a
$2 billion, ushering in a new dawn of due to the lack of an adequate pool of duration of twenty or more years
access to private equity capital. investible grade assets in healthcare, compared to other commercial
Kenya 70K US$ 156M US$ 6 Bn
2K greenfield projects can be considered, real estate sectors ensuring a
We therefore sought to understand provided a reputed healthcare operator steady cash flow for landlords.
the healthcare investment landscape is signing the lease. This makes it an attractive option
in the continent by analysing the for institutional capital.
Uganda 101K US$ 81M US$ 11 Bn
0.7K prospects of the formation of a Established and old assets
healthcare REITs or healthcare real • Sustainable demand: There is a
estate funds in different markets strong demographic fundamental
Source: Africa Horizons, 2019 across the continent. For this exercise, towards investing in healthcare
we sought the opinion of investment to meet existing and forecasted
managers, REITs managers, and demand, hence ensuring
Demographic Impact on healthcare services required New Build
healthcare travel consultants continuous income flow.
2019
in different countries. Below we
2035
summarize the responses received on Healthcare real estate
healthcare as an investible asset class. investment operation
Age 0-19 models:
Green Field
Mother & Age 20-39
1,000,000
Child Care Healthcare REITS as a viable A majority of healthcare facilities
Developing of
900,000
diseases having long investment option in Africa: across the continent are state-owned.
800,000 lasting effect on life However, investments in healthcare
753M result of a persons At the moment, healthcare REITs real estate currently occur through the
700,000
lifestyle choice Age 40-59
600,000 do not exist in the continent since following methods;
Population
500,000 565M
Sharp Increase Age 60 the development of REITs is still in Healthcare investments
484M
in lifestyle related and above its nascent stages. All individuals attraction: • Public Private Partnerships
400,000 diseases
Increasing long interviewed believed that healthcare • Owner-Operated investments
300,000
306M
term care REITS could be a viable investment Individuals interviewed cited the • Joint Ventures
200,000 242M needs option as these are low risk, long term following reasons why healthcare
100,000 140M 88M investments. However, regulatory REITS would be a viable option to
0 50M constraints in countries such as investors:
Age groups Nigeria pose a challenge towards
Source: UNH E A LT H C A R E I N A F R I C A H E A LT H C A R E I N A F R I C A
Healthcare synergies in Number of employees required for 100 bed general hospital
Masterplan developments:
Investing in healthcare presents an 255 150 135 60 HEALTHCARE FOCUS ON NIGERIA
opportunity for new master planned
developments (urban developments)
to benefit from the synergies a
healthcare component has to offer.
Nurses Allied Health Doctors Adminstrative
The adjacent exhibit helps put this Professionals Staff
into perspective:
Healthcare Legislation & Policies Healthcare outcomes 2005 2018
Employment at the hospital in the Life expectancy at birth, total (years) 48 54
1 National Health Act
development results in demand
for residential assets as healthcare 2 The Economic Recovery $ Growth Plan 2017-2020 Mortality rate, infant (per 1,000 live births) 95 76
professionals prefer to stay closer to
their work. In addition, the footfall of 3 National Policy on PPPs for Health
caregivers, patients and hospital staff TOTAL 600 Fertility rate, total (births per woman)
5.4 5.9
also spur demand for the retail and
F&B facilities in the area. This creates
longevity to the masterplan and Urban Population Healthcare Financing Health Insurance Distribution
directly impacts the socio-economic 3%
fabric by having a multiplier effect on 98.6 m 24% National Health Insurance
creating employment. in 2018 Scheme
4%
69% 3% Community Based Health
Insurance Schemes
54.3 m Estimated
in 2005 Beneficiaries as % of State supported
Out of Pocket Development Partners
Health Insurance
HEALTH CARE INVESTMENT
Expenditure the population
Private Insurance
Government Private Insurance Schemes
ACTIVITY AT A GLANCE
Mortality Proportion Medical Tourism
Outbound
Over the past five years we have witnessed key healthcare investment spend:
63% 4% US$
initiatives across Africa. These have included: 1 Bn
Germany
Communicable Cancer
Public Private Consolidation Financing US
Partnership (PPP) Initiatives: Initiatives:
1% 8%
initiatives: Dubai
Nigeria India
Government of Kenya launched a The emergence of market In November 2019 the IFC and
Diabetes Injuries
PPP initiative for Kenyatta National consolidators such as Evercare Investments Fund for Health in
Referral Hospital in October 2019 Fund consolidation of healthcare Africa launched a $115M health
11% 2%
for the development of a 300-bed providers such as Avenue Hospital care holding company to acquire
private facility. and Nairobi Women’s Hospital in and integrate targeted health care
Kenya. service businesses in East and Hospital Bed Density Healthcare Facilities Distribution
100%
Southern Africa. Cardiovascular Chronic Current Ratio (0.5) World Ratio (2.7)
80%
Respiratory
12% 60%
386k 646k 40%
4k 81k 20%
0%
2019 2035 2019 2035 Private Public Unknown Faith based
Other NCDsH E A LT H C A R E I N A F R I C A H E A LT H C A R E I N A F R I C A
HEALTHCARE FOCUS ON KENYA
C O N TA C T U S
Botswana
Curtis Matobolo, Managing Director
curtis.matobolo@bw.knightfrank.com
Healthcare Legislation & Policies Healthcare outcomes 2005 2018
Kenya
Life expectancy at birth, total (years) 54 66 Ben Woodhams, Managing Director
1 Kenya Health Act (2017) ben.woodhams@ke.knightfrank.com
Mortality rate, infant (per 1,000 live births) 50 31
2 Investment Promotion Act 2004 Malawi
James Lewis, MRICS Shehzad Jamal Don Whayo, Managing Director
Fertility rate, total (births per woman) Managing Director, Middle East and Africa Partner, Healthcare & Education don.whayo@mw.knightfrank.com
4.8 3.5
+971 50 2265 368 +971 56 4101 298
Nigeria
james.lewis@knightfrank.com shehzad.jamal@me.knightfrank.com
Frank Okosun, Senior Partner
Urban Population Hospital Bed Density Healthcare Facilities Distribution frank.okosun@ng.knightfrank.com
13.9 m Current Ratio (1.4) World Ratio (2.7)
100%
South Africa
in 2019 80% Susan Turner, Director
susan.turner@za.knightfrank.com
60%
7.9 m 70k 129k Tanzania
40%
in 2005 2k 32k
Ahaad Meskiri, Managing Director
20%
ahaad.meskiri@tz.knightfrank.com
2019 2035 0% Dr. Gireesh Kumar Tilda Mwai
2019 2035
Level 1 Level 2 Level 3 Level 4 Level 5 Uganda
Senior Manager, Healthcare Researcher for Africa
Judy Rugasira Kyanda, Managing Director
+971 56 4845 490 +971 54 3224 749
judy.rugasira@ug.knightfrank.com
gireesh.kumar@me.knightfrank.com tilda.mwai@me.knightfrank.com
Mortality Proportion Medical Tourism
Outbound Zambia
spend:
US$ Tim Ware, Managing Director
63% 10%
100 M tim.ware@zm.knightfrank.com
Zimbabwe
UK
Amos Mazarire, Senior Partner
Communicable Cancer
amos.mazarire@zw.knightfrank.com
US
1% 10% Consulting
India
Ian Lawrence
Kenya
Charles Macharia, MISK, RV Ruairi Moriarty ian.lawrence@knightfrank.com
Senior Research Analyst, Kenya Occupier Services & Commercial Agency, Nigeria
Diabetes Injuries
South Africa +254 721 386 019 +32 4728 62518
charles.macharia@ke.knightfrank.com ruairi.moriarty@knightfrank-emc.com
8% 1%
Healthcare Financing
Cardiovascular Chronic
Knight Frank Research Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range
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only and not to be relied upon in any way. Although high standards have been used in the preparation
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