In this interview, Salma Kabbaj and Ada El Kohen, Co-founder of IMPACT Lab and Consultant at Southbridge A&I in Morocco, share more insights into the recently launched seven-million-dollar innovation programme principally funded by the Gates Foundation for the benefit of African companies operating in the digital health sector, a sector in dire need of substantial support in Africa.
In the wake of Coronavirus, what financial challenges do African healthcare distribution companies face?
In 2021, Southbridge and its partner Salient Advisory produced a report for the Gates Foundation on the difficulties of financing healthcare distribution businesses in Africa.
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First, because the total amount of available money is minimal and concentrated in terms of regions, industries, and recipients, there is restricted access to equity finance in Africa.
In 2021, only $4 billion was raised by African startups, compared to approximately $19.5 billion in Latin America and $42 billion in India.
In addition, the primary concentration of these funds is on Fintech (63 percent), energy, and agriculture.
Geographically, 85 percent of funding is allocated to Nigeria, Kenya, Egypt, and South Africa. Consequently, the health industry as a whole and enterprises situated outside of these geographic areas continue to be ignored.
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Private equity investors, who are primarily interested in regional operators, view investment opportunities as limited, and investment tickets are frequently insufficient to cover the considerable transaction costs. In this environment, it is not surprising that health product distribution startups have trouble raising capital. Only fifty-four percent of the 54 healthcare distribution startups that we analysed appear to have received any external funding.
Debt money is more accessible than equity, but it is still expensive and difficult to obtain. African firms, particularly distributors, continue to rely mostly on banks for financing. However, it appears that debt and access issues are primarily the product of structural constraints outside the health system.
In light of this, Southbridge A&I and its partners have just established a $7 million HealthTech in Africa programme, which is partially financed by theGates Foundation.
What is the plot of the entire story?
“Investing in Innovation” (i3) is a pan-African programme that intends to support 30 HealthTech-focused businesses in Africa over a two-year period by offering access to $7 million in financing and market opportunities. The sixty selected entrepreneurs will get a USD 50,000 grant in addition to support with market access and funding by linking them with key regional players.
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The Bill and Melinda Gates Foundation, the African Union Development Agency (AUDA NEPAD), the World Health Organization AFRO (WHO AFRO), and two major pharmaceutical companies, Merck (MSD) and AmerisourceBergen, are among the high-level collaborators in this endeavour.
During the project, a number of events will be organised across the continent to allow selected enterprises to meet with programme partners and other key stakeholders, such as industrial partners, investors, and government officials, and to explore potential collaborations.
One of the requirements of the programme is to promote African HealthTech enterprises, while simultaneously highlighting the leadership role of women in this field and encouraging female entrepreneurship in the world of medical innovation.
The programme relies on four local accelerators to identify, select, and support promising HealthTech startups: IMPACT Lab in Morocco for French-speaking Africa, Starupbootcamp AfriTech in South Africa for Southern Africa, Villgro Africa in Kenya for Africa East, and Co-creation Hub in Nigeria for West Africa.
IMPACT Lab is responsible for the implementation of this initiative throughout Francophone Africa. What is your level of participation in this regard ?
At IMPACT Lab, we are convinced that entrepreneurial innovation is one of the key levers for tackling the socioeconomic challenges of the African icontinent, and that the implementation of innovative models requires a regional collaborative strategy. In 2018, we launched innovation programmes in Morocco, Côte d’Ivoire, Senegal, and Benin under this framework, allowing us to assist approximately 250 enterprises in 17 African countries. The i3 initiative matches so perfectly with the objectives of IMPACT Lab and increases our African partner network.
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The purpose of IMPACT Lab under the i3 project will be to mobilise and select companies to participate in the programme, in addition to preparing startups for interactions with potential partners. This will aid them in defining their financial needs, speeding their traction, and meeting the standards for fundraising.
To do this, we will host workshops on cross-functional themes such as fundraising strategy, valuation, and pitch preparation. In addition, we will conduct diagnostics to determine each startup’s unique requirements, whether they pertain to its business strategy, legal and financial elements, organisational structure, or anything else, in order to deploy the specialists who can address them.
What do you believe about HealthTech in Africa?
In numerous African nations, a significant section of the population relies on private distribution systems to receive essential products and services. Nonetheless, severely fragmented private value chains frequently fail to provide consistent access to high-quality, low-cost services, medicines, equipment, and essentials. Startups and medium-sized distributors usually operate on a small scale in fragmented markets, unable to utilise technology, economies of scale, or breadth to effectively serve their customers.
The current issue for Africa’s HealthTech industry is to ensure the availability, accessibility, and quality of affordable health products and services. In this aspect, technology and innovation can be crucial.
What about the decision of a startup’s size and location?
The i3 project is available to all businesses with solutions to the challenges of African health product supply chains. For instance, we seek solutions that improve stakeholder engagement, provide access to health products in underserved areas, ensure product quality and traceability, and reduce waste.
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To be qualified, startups must be led by African founders and serve the African market, regardless of location. They must be operational, either in the start-up phase with at least one client or in the expansion phase. We also encourage organisations to contribute if they have supply chain optimization solutions for other industries and are interested in exploring the opportunities in the healthcare industry. Applications can be submitted until August 14 at https://innovationsinafrica.com.
i3 healthtech funding i3 healthtech funding i3 healthtech funding
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh