NIGERIA Invest in 2012-13 - Newsdesk Media

With improved national health as a
key plank in reform, opportunities
are opening up for private-sector
involvement. Peter Guest talks
to two investors confident about
the future of healthcare in Nigeria
As Nigeria’s professional class
expands in step with the
country’s economic growth, the
demand for a higher standard
of healthcare could create
significant opportunities for investors. A 2008
McKinsey study for the International Finance
Corporation found that, despite the
widespread perception that healthcare across
the continent is delivered by the international
public sector, the reality is that for-profit
businesses are already responsible for
providing 50 per cent of healthcare services.
Across the region, the total healthcare
market is expected to rise to $35 billion by
2016, the study predicted. With sub-Saharan
Africa’s second largest economy and largest
population, Nigeria is poised to see a
significant proportion of that growth.
The rise of a large middle class in the
country, driven by Nigeria’s economic growth
and the presence of large corporate entities
– both domestic and international – has
created investment opportunities in consumer
goods, telecoms and financial services.
Those sectors have seen much wealth
created, and investors have achieved
significant returns as companies are
expanding across the entire continent.
However, the healthcare sector remains
fragmented and dominated by small,
independently owned operators.
This situation leaves the sector ripe for
investment, analysts said, with the
increasingly wealthy middle class demanding
a higher quality of care. More businesses are
now offering health insurance as part of their
employment packages, which is creating a
ready-made market for investors.
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Peter Botha, chief executive of African
Medical Investments (AMI), took over the
company last summer and is looking to
expand the business out of its core
markets in Southern and East Africa by taking
a stake in a private hospital in Lagos.
AMI currently runs hospitals in Tanzania,
Mozambique and Zimbabwe, and is on the
verge of a deal in Angola. Botha believes that
the model – providing access to high-quality
service for a narrow range of common
problems – can be transplanted to Nigeria.
“There are private hospitals in Lagos.
They are all doing well. What we have found is
that they are all doctor-owned, and the
doctors have reached the limits in terms of
capitalising on the growth,” Botha said. “I
think there’s an opportunity to go in, get a
good brand in a good location, invest capital
and then to refurbish and put in equipment.”
The key to making Botha’s model
work is an active health insurance industry.
Botha himself ran two health insurance
businesses in Nigeria’s commercial capital.
While still in its early stages, the market is
strong enough and growing fast enough to
warrant an investment, he says.
“It’s early stages, but it’s growing. If you
take the relativity of the size of the population
and its economy, it’s quite a big insurance
market. Over the past few years that insurance
market has grown dramatically, and it will
support a private hospital.”
Rather than seeking to develop
capability to handle the most complex cases
– such as cardiovascular illnesses – AMI’s
model works by focusing on treating the
most common requirements of company
employees and their families. These include
obstetrics and gynaecology, paediatric
medicine, trauma care and basic surgery.
“In general, people who are working for
a local company in a place like Lagos are
demanding private hospital care for delivering
their babies, looking after their children,
treating their trauma and their casualties and
their accidents first,” Botha says.
INvEST IN NIGERIA 2012-13