This archive report was first published on 5 August 2020.
On August 5, 2020, the COVID-19 pandemic continued to accelerate in Africa, with over 900,000 cases reported by the Africa Centres for Diseases Control and Prevention (Africa CDC). At least 18,000 people had died of the virus across the continent's 54 countries, with 540,000 recovering.
The health crisis exposed gaps in health services in the continent, a scenario that requires urgent attention. This reminds us of the Abuja Declaration, signed by African leaders in 2001, where they voluntarily pledged to allocate a minimum of 15% of each country's national budget to health.
However, 19 years later, there have only been modest increases in the budgets of a few African countries. According to the World Health Organisation's (WHO) State of Health Financing in the African Region, only three countries had attained the percentage pledged: Botswana (17%), Rwanda (20%), and Zambia (16%).
Out-of-pocket expenditure remains a significant challenge in Africa, with the average amount allocated to the health sector standing at 9.8%. Only 10 African countries provide free and universal healthcare, and out-of-pocket expenditure is higher than 40% of the total health expenditure in 20 of the 45 countries, according to subsequent studies by World Health Organisation.
Despite the challenges, there are opportunities for raising health capital. If governments have prioritised infrastructure bonds, what stops them from issuing medical or healthcare bonds? These special bonds can help finance a wide array of areas, including hospitals, medicines, medical devices, clinical trials, outsourcing, health insurance, and medical equipment.
Structured well, these bonds could play a key role in strengthening health financing systems in the region and ensure that investors get value for money for their investment in health. More importantly, they can aid efforts to move Africa towards meeting the Sustainable Development Goals.
Africa has a unique opportunity to leverage medical innovations and invest in new healthcare delivery models to close the healthcare gap in the continent. Healthcare bonds is one of the solutions out of this problem.
Mwanyasi is managing director, Canaan Capital Ltd.
