THE BUSINESS OF HEALTH IN AFRICA The Power of Two

1. THE BUSINESS OF HEALTH IN AFRICAThe Power of Two Khama Rogo MD PhD Lead Health Sector Specialist & Head, Health in Africa Initiative, World Bank Group

2. Contents • Private Sector Participation in the Health Sector • Constraints to Private Sector Participation • Addressing the constraints- HiA’s work in Africa • HiA’s Objectives, goals and work streams • Coverage in Africa • Concrete Results • Strengthening Health Systems • Opportunities in East Africa • Recommendations from the HP report • Catalyzing openness prudence and growth

3. The private sector plays a dominant role in health

4. The “Red Report” and Key Findings Key Findings • 60% of health care in SSA is financed by private sources • 50% of health care in SSA is provided by private sector • The private sector serves all segments of the population • Government constraints means the private sector will continue to play an important role in the medium term • Investment demand is expected to be $25-30 billion over the next ten years • Most investments in the private sector will be in SMEs • The role and potential of the private sector is not well understood. It is ignored by governments and donors alike Dec 2005 – August 2006 Formulate Partnership IFC and the Bill & Melinda Gates Foundation formulate partnership Dec 2007 Scoping Study & Strategy Development The Business of Health In Africa Report published and strategy presented to the Board IFC’s Strategy to the Board • Use IFC’s core competencies; apply market principles • Work with local businesses, financial intermediaries, and policy makers plus the international community • Comprises: i) Investment, including an equity vehicle; increasing availability of long-term debt; and increased focus on life sciences; ii) advisory services to complement the Bank’s work with governments; iii) health worker education; and (iv) risk pooling • Aspiration of investingUS$1 billion over 5 years Jan – Dec 2008 Initial Preparation Phase Report dissemination, fundraising formation of joint IFC-World Bank Team based in Nairobi, Kenya and Washington DC Jan 2009 Onwards Implementation Research & Analysis, Policy Advice, Debt & Equity Financing We are approximately three years into a five year program

5. Increase Access to Capital Improve Regulatory Environment Promote Risk Pooling Vehicles Alleviate the human resources shortage Limited access to capital, including both debt and equity, is a significant constraint to growth and a driver of sector fragmentation The regulatory environment often impedes growth of the private healthcare sector in many SSA nations Risk pooling vehicles are superior financing mechanisms to out-of-pocket payments and can help mobilize revenue for providers, supporting the growth of a formal, organized private sector Though the private sector receives most of its revenue from the general population, the public sector, international donors, and employers are alternative sources of funds Short supply of skilled health workers and healthcare managers has an adverse impact on the potential for healthy, sustained private sector growth Constraints to Private Sector Participation and HiA’s role in addressing the issues The investment strategy of the WBG’s Health in Africa Initiative addresses the need to increase capital for private sector entrepreneurs The policy and analysis strategyof the WBG’s Health in Africa Initiative proposes advocacy and technical assistance mechanisms to address the other major challenges faced by the private sector in SSA Increase Revenue Flows from Alternative Sources

6. Engagement scores across SADC

7. HiA: Goals and Organization Approach: Three Workstreams Mission Catalyze sustained improvements in: • access to quality health-related goods and services in Africa; and • financial protection against the impoverishing effects of illness, with an emphasis on the underserved. Local govern’t Local s/holders Donors B. Advisory Services to governments Goals C. Access to Debt/Equity Financing A. Research, Analysis, and Dissemination • US$1b mobilized • 8 countries deeply engaged – 20 reforms • Advocate for the positive role of the private sector Bank experts Funds External experts Banks Other investors Research partners

8. Overview of the HiA Initiative: Coverage (as at Nov 2012) Key In-depth policy work + all investment activities Policy work only All investment activities Investment through AHF/IFHA only

9. Policy Workstream Public-Private Dialogue Support public and private sectors in engaging in dialogue Establish formal platforms for continued dialogue Insurance & Investment Policy & Regul. Reform More investment capital Increase insurance coverage; enhance quality through accreditation Facilitate contracting between public and private sectors Simplify registration and licensing Improve quality standards and inspections of private providers Expected Impact Increased in Private investment Private sector savings/pass on to consumers % firms compliant with patient safety standards # of people with access to new/improved health services # of people effectively covered by health insurance

10. Policy Work – In-depth country work South Sudan • Six new health laws prioritized • 3 PPP projects under consideration • HR training by private institutions started • 3 new private hospitals targeted Nigeria • NHIS reform/health financing reform project on course • Regulatory and PPP priorities identified • AHME project Mali • Country assessment and engagement completed • Reform agenda: PPD Committee/PS Alliance; Management of PHC; API -adapting generic private sector investment facilities to health; licensing Kenya • Country assessment and engagement completed • New Health Bill passed • NHIF audit/New NHIF Bill in Parliament • Joint inspection tools/Revision of regulatory laws • AHME project Burkina Faso • Country assessment and engagement completed • Reform agenda: review of all legal and regulatory texts; enforcement of regulations; PPPs in reproductive health, public health programs and training. Uganda • Country assessment completed (with USAID) • New PPH policy passed • Regulatory bodies and Acts reforms underway • PPP transactions on course • Financial instrument for health SMEs by USAID Ghana • Country assessment and engagement completed • New PHS policy adopted • 3 PPP transactions signed • 3 new laws passed • AHME project Congo (Brazzaville) • Country assessment and engagement completed • 3 Presidential decrees • Parliamentary endorsement

11. Results: Analytical Work • Title: “The Business of Health in Africa: Partnering with the Private Sector to Improve People’s Lives” • Purpose: To demonstrate the importance of the private sector in delivering healthcare to Africans • Target audience: The international donor and NGO community, African governments, the private sector both in Africa and outside, and other stakeholders • Publication date: December, 2007 • Title: “Healthy Partnerships: How Governments Can Engage the Private Sector to Improve Health in Africa” • Purpose: To demonstrate to governments the ways in which the private sector can be engaged in health and to show how they are performing in doing this compared to their peers • Target audience: Primarily national governments in Africa • Publication date: June, 2011 • Title: “Private Health Sector Assessments” (country specific reports) • Purpose: To document the role that the private sector is playing in particular countries and a reform agenda. These reports were developed within a framework of engagement with policy makers, the private sector, donors and other stakeholders • Publication dates: Various, beginning with Kenya in 2010 • Title: Health Policy Toolkit, an online website • Purpose: To provide health policy practitioners access to information about policies and practices that can enhance the contribution of the private sector to health goals • Target audience: Primarily, policy makers in Africa • Publication date: June , 2011

12. Result: Investment IFC Direct Investment (total $107.4m) • Hygiea (Nigeria/$2.2m) - Hospital & HMO • Life Healthcare(South Africa/100.0m) - Hospital • Nakasero Hospital (Uganda/$3.0m) - Hospital • IMG (Uganda/$2.2m) - Hospital & HMO Fund Investments - Investment Fund for Health in Africa (IFHA) – (total Eur 13.6m) • Hygeia (Nigeria/Eur 2.0m) – Hospital and HMO • Pyramid Pharma (Tanzania/Eur 1.4m)- Pharmaceutical distributor • Strategis Insurance (Tanzania/Eur 0.6m) - Health insurer • Hello Doctor (South Africa/Eur 0.6m) – Telemedicine provider • AAR (East Africa/Eur 7.0m) – HMO • Sourcelink (Eur 2.0m) - Singaporean diversified medical holdings company seeking to expand its operations in the manufacture of medical disposables (gloves, masks etc.) into Africa Fund investments - Equity Vehicle for Health in Africa (EVHA) – (total $15.52) • Nairobi Women’s Hospital (Kenya/$2.67m) – Hospital • C&J Medicare (Ghana/$1.0m) – Hospital/Specialist clinic • Revital (Kenya/$2.75m) – An early stage manufacturing company (Conventional Single use syringes and Auto-Disable syringes) • Avenue Group (Kenya/$2.5m)–Hospital & Managed Healthcare plan provider  • Biasa Clinic (Togo/ $1.6m)– Clinic (inpatients & outpatients) • Bridge (Nigeria/$5.0) - specialized fertility treatment and medical laboratory services Pipeline • IFHA’s active pipeline consists of transactions totaling Eur 22.0m • EVHA’s active pipeline consists of 37 transactions totaling $138.5m

14. Our Private Sector work in Africa contributes to the strengthening of countries’ health system – some examples: Health Systems Pillars Governance Human Resources Pharmaceuticals Service Provision Information Systems Health Financing • 6 countries: • PPD platform – strengthening PP Units in MOH; Private Sector Federations • Mainstreaming PS activities in national health strategies • Uganda, Ghana, Kenya: • Analysis – Role of private sector in training of health workers • Regulation and accreditation of nursing schools • South Sudan: • PPP for managing the pharmaceutical supply chain • Ghana, Kenya, B Faso, Uganda: • Establishment of service standards and quality based inspections regimens • Access to credit to private entities for expansion of quality services to underserved populations (eg: Nairobi Women’s Hospital -$2.5m) • All countries: • e-Registration and digitalization of data by health regulatory bodies • Nigeria, Ghana, Kenya: • Social health insurance – effiecient national health insurance agencies/ universal coverage • PPP transactions – policy/transaction pipelines • Access to credit/Equity financing

15. Opportunities in East Africa OPENNESS • Expanding the definition: Non state actors • Dispelling the myths • Supporting effective public private dialogue • Policy and regulatory reforms • Consumer voices PRUDENCE • Public private partnership transactions • Health financing/Health insurance • Access to credit • Information – HMIS – use of ICT GROWTH • Access to basic and tertiary care (reduce external referrals/invest locally!) • Use of new technologies • HRH training • Production of quality pharmaceuticals/goods • Employment creation

16. Recommendations Donors, Third Parties Government Private Health Sector Organize; then, seek dialogue Encourage members to Formalize Join provider networks Build capacity in clinical practice and in business management Support engagement and take active role Include private sector in country support programs Align programs with priorities coming out of national dialogue • Government must lead • Quick wins • Establish effective dialogue • Know who is doing what • Start now • Review policies and practices • Focus on implementation • Expand insurance • Support quality enhancements

17. Health in Africa Initiative Catalyzing Openness Prudence and Growth: Health in Africa Initiative Brief History HiA Goals HiA Mission Launched by the World Bank Group in 2009 with support from the Bill and Melinda Gates Foundation to address the policy and market failures that constrained achievement of the full private sector potential to address Africa's health care needs. HIA is supporting the governments of Kenya, Ghana, Burkina Faso, Uganda, Nigeria, South Sudan and the Republic of Congo • Improve the regulatory environment for the private sector • Implement reforms leading to expanding coverage of risk pooling mechanisms • Unlock private investments in health through PPPs and innovative financing mechanisms. • Catalyze sustained improvements in: • Access to quality health-related goods and services in Africa; and • financial protection against the impoverishing effects of illness, with an emphasis on the underserved. IFC Direct Investment - (total $104.4m) PE Fund Investments - Investment Fund for Health in Africa (IFHA) - (total Eur 13.6m) IFC Investment Portfolio PE Fund investments - Equity Vehicle for Health in Africa (EVHA) – (total $18.5) IFC Direct Investment - (total $104.4m) Analysis HiA Highlights • Shifting the debate in Africa and the donor community and brought much-needed attention to the role and potential of the private sector, • Mobilized around $350m through two equity investment funds, four IFC direct investments, two output-based aid project, and various donor-supported trust funds; • Published six private health sector country assessments, one major pan-African benchmarking report ("Healthy Partnerships") and developed a web based toolkit for PP sector engagement; • Established PPP platforms to support sustainable dialogue, including PPP units in ministries of health and private health sector federations in six African countries • Initiated multiple priority reforms in policy, regulatory and health financing in eight countries (Burkina Faso, Ghana, Kenya, Mali, Nigeria, Uganda, South Sudan, and the Republic of Congo). Policy Advisory Investment 17

18. THANK YOU