In an interview with the Health Finance Coalition, Rowena Luk, founder of Africa Heath Ventures and host of “The Africa Health Ventures Podcast”, discusses investing in early-stage health ventures in Africa.
You’ve described yourself as “insanely passionate about healthtech ventures in Africa.” Why is that?
There’s so much to unpack here. “Why Africa? Why healthcare? Why tech?”
On Africa: when you look at the most significant opportunities worth dedicating a life to, Africa stands out. This continent looks nothing like it did 50 years ago, when many of her countries were first born. In 50 years, it’ll look nothing like it looks now.
Healthcare is foundational to Africa’s growth — if you don’t have your health, nothing else matters.
Technology, because it offers the most efficient way to scale systemic change.
Consider this: Africa is home to the fastest growing populations and economies in the world. Half of the world’s population growth today is happening in Africa, and by 2050, one in four people on the planet will live here. At the same time, the median age is only 19 years old, and we’ve already seen the continent leapfrog into the mobile phone era. This young, tech-savvy population will inevitably demand access to essential services like healthcare at scale. That’s the opportunity healthtech will address.
To unlock this opportunity, we need to invest in African founders who understand African markets and are accountable to the African consumer. The private sector has always been the birthplace for disruptive innovations, and we have the opportunity today to create the foundational payments, drug delivery, and self-care tools that will empower a quarter of the world by 2050.
Can you tell us more about your background and what led you to found Africa Health Ventures?
I’ve spent my life working on healthcare and technology in Africa. I’ve built digital health products, companies, and communities across the continent. I started as a software engineer and have been a founder or early employee at two digital health startups and two non-profits. Through these roles, I’ve had the privilege to deploy digital health products in 40 countries here, several of them scaling nationally and internationally.
In 2020, as a digital health executive amid the COVID-19 pandemic, I faced my own existential crisis. During that time, I needed to pop my head above the mechanics of company-building and find a better perspective on “What’s really going on with this industry? Is it working?” As part of that, I launched the Africa Health Ventures Podcast to explore deeper approaches to driving health systems change.
After 70+ interviews with industry-leading donors, investors, founders, and health system changemakers, I found my new mission to empower the next generation of healthcare entrepreneurs. I saw numerous high-impact, scalable, and profitable innovations that were simply not getting the funding they needed to take off. Philanthropy struggles to support profitable enterprises, while private investors shy away from the complexity of healthcare markets. I recognized this gap in seed capital, and understood I have a unique ability to address this gap. So, Africa Health Ventures was born.
What potential do you see for healthtech businesses in Africa?
The media often portrays Africa as a basket case, but that’s a gross misrepresentation. Yes, the continent has challenges, including political instability, poverty, and unemployment. But the same was true of India and East Asia 20 years ago. Alongside all the work that’s already being done to address Africa’s poverty, Africa Health Ventures exists to invest in its prosperity.
Africa is home to some of the fastest-growing economies in the world. By 2035, it’ll be home to 2B people. And when people have money, the first thing they spend it on is the health of their loved ones—parents, children, family.
What’s often overlooked in the public health conversation is that most of the healthcare spending in Africa is out-of-pocket. If we ignore private markets, we’re neglecting most of the available capital to deliver essential health services to this massive population. By leveraging these markets, and over time aligning them with public services and funding, we can unlock healthcare for every tier of the population.
The private sector is the natural space for experimentation and the birthplace of innovation. If we can build, de-risk, and scale innovations in the private sector, not only does that mean better healthcare; it means businesses that are directly accountable to African consumers; it means creating jobs and keeping talent in Africa; it means long-term sustainability and ownership of such innovations; and it means these validated innovations can still be transferred with lower risk towards scalable public health systems.
Despite the innovation taking place in Africa, healthtech companies often struggle with sustainability. What do you see as the biggest challenges?
One significant hurdle is the regulatory framework. Africa comprises 54 different countries, so you’re not just dealing with regulatory issues in one country but getting regulatory approvals across 54 different countries. That’s a huge barrier to access, particularly to medicines and other controlled substances.
A second challenge is that healthcare, by its very nature, is such a physical thing. While there’s promise in wellness/self-care, telemedicine offerings, and community-based diagnostics, at the end of the day, healthcare professionals often need to work directly with the body to treat it. That’s not a challenge the popular fintech (financial technology) startups need to navigate in the era of online transfers and digital currencies.
The last barrier that makes healthcare a challenging market to work with is because the market itself is highly fragmented. While most healthcare spending is out of pocket, there’s also a lot of healthcare funding that comes from governments, donors and multilaterals, as well as private health insurance and employers. That’s a complex market to navigate. For a healthtech startup, it can be a surprisingly complex journey from “I’ve delivered a service I know the African consumer values and would pay for” to “How do I actually get paid for this?”
What can be done to support startups in this sector?
Going back to that first hurdle I mentioned, which is the fragmented regulatory market: address that fragmentation. I’m very excited by the leadership demonstrated by Africa CDC in establishing the African Medicines Agency. This multilateral effort aims to establish a single regulatory framework for medicines across the continent. If successful, it could create the largest and fastest-growing medicines market in the world. At the same time, the African Union is also developing The Africa Continental Free Trade Agreement to create a free trade area across Africa, which would be a massive global opportunity not just for healthcare across multiple sectors.
As for the physical nature of healthcare delivery: investors need to give entrepreneurs the runway and the flexibility to scale within the reality of these markets and its existing distribution channels. For example, recognize the demonstrated success of large agent networks (including community health workers) in bringing services to last-mile populations; the need for asset financing to deliver medical supplies to remote locations; and the development of accessible tiers of care providers (such as community-based diagnostics or vision care). These are just a few examples of how distribution channels are different on this continent, and why international investors need allies here to re-shape misconceptions of what to look for in an investment-worthy business model.
On market fragmentation: healthcare funders need to continue developing the market-shaping efforts and the payment mechanisms needed to incentivize social enterprises that are effective at driving positive health outcomes. This effort includes private and public entities who are acutely aware of the challenges in existing healthcare markets and are well positioned to reward innovations that will address them.
What do you think are the most effective solutions to address the ecosystem and company challenges? Who are best positioned to address these challenges?
There’s a lot to be done.
For individuals, I’d encourage you to take a deeper look at the social enterprises driving health systems change in Africa – particularly the ones that are locally founded and led. Whatever resources you have – be it your time, your network, your investment or your donations, consider how some of that might go to support African-led healthcare entrepreneurs.
For healthcare programs and implementing agencies, consider new partnerships, including contracting and payment approaches, that can deliver healthcare effectively while also supporting and investing in healthcare entrepreneurs.
For governments, simplify regulatory pathways, supply chain barriers, and investment channels for bringing new products to market and for unlocking domestic manufacturing and job creation.
For donors and investors, if there’s a part of your mandate that looks at catalyzing and scaling game-changing innovations, build pathways to support local healthcare entrepreneurs, enabling job creation, talent retention, and home-grown innovation.
To stay up to date on Africa Health Ventures, you can subscribe to their monthly newsletter here.
###
