Full Text of the Key Note Address delivered by Mrs Toyin Sanni, Founder/CEO Emerging

Africa Capital at the

HALLMARK HMO Stakeholders’ Engagement 2.0 2023

Exploring technology & financing opportunities in the healthcare value chain in Nigeria

The Chairman, Hallmark Health Services Ltd Mr. Eddie Efekoha

Managing Director, Mrs Oladotun Adeogun

Distinguished Guests, Ladies & Gentlemen

It is a great honor to stand before you today to deliver this Keynote on the healthcare sector in Nigeria, addressing the challenges we face and the transformative potential of emerging technologies and innovative financing methods available.

Furthermore, I will also delve briefly into the place of policy formulation and the role of regulatory bodies in the delivery of quality and affordable healthcare to the larger Nigerian society.

To truly understand the current state of healthcare in Nigeria, it is crucial to examine the relevant statistics that highlight both progress and persistent challenges.

With a population exceeding 200 million people, Nigeria faces a high burden of disease, both communicable and non-communicable.

Access to quality healthcare remains a concern, as over 70% of healthcare expenses are paid out-of-pocket, leading to financial hardship for many individuals and families.

Despite these challenges, the healthcare sector in Nigeria has witnessed notable advancements in recent years, with increased investment, improved infrastructure, and a growing focus on universal health coverage.

To navigate the complexities of healthcare in Nigeria, it is essential to grasp the intricacies of the healthcare value chain. This chain encompasses a range of activities and actors including input supply, service provision, financing, and governance. Each segment plays a pivotal role in shaping the quality, accessibility, and affordability of healthcare across the nation.

Input Supply

I begin with the input supply segment, which encompasses the resources necessary for the delivery of healthcare services. In recent years, emerging technologies have revolutionized this segment, bringing innovative solutions to long-standing challenges:-

Cloud computing, for instance, has enabled healthcare providers to store and process vast amounts of data securely, ensuring easy access and collaboration among healthcare professionals.

Augmented reality has found its place in medical education, allowing students and practitioners to gain hands-on experience in a virtual environment.

The Internet of Things (IoT) has facilitated remote monitoring of patients, enabling healthcare providers to track vital signs and intervene promptly when necessary.

Furthermore, blockchain technology has enhanced the traceability and transparency of pharmaceutical supply chains, reducing the prevalence of counterfeit drugs.

Drones have emerged as a game-changer in delivering medical supplies to remote and inaccessible areas, saving lives in emergency situations.

These technological advancements have not only improved the efficiency and effectiveness of healthcare services but have also expanded access to care for underserved populations.

Service Providers

In the service provision segment, we are witnessing even more profound transformation driven by emerging technologies.

Telehealth, for instance, has emerged as a powerful tool in bridging the geographical divide between patients and healthcare providers. Through telehealth platforms, patients can consult with doctors remotely, saving time and money while ensuring timely access to medical advice.

Additionally, artificial intelligence (AI) and robotics have made significant contributions to healthcare delivery. AI-powered systems can analyze vast amounts of medical data, assisting healthcare providers in accurate diagnosis and treatment decisions.

Robotics, on the other hand, have revolutionized surgical procedures, enabling precision, minimizing invasiveness, and reducing recovery times.

Wearable devices have empowered individuals to monitor their health conditions and track fitness goals, promoting preventive care and early intervention.

3D printing has opened new frontiers in the production of medical devices and prosthetics, allowing for customized solutions that enhance patient outcomes.

These technologies have not only transformed the way healthcare is delivered but have also contributed to improved patient experiences and outcomes.

Now to Finance

Innovations have emerged to address the challenges of affordability and access. Mobile money solutions have eased financial transactions providing a secure and convenient way for patients to pay for services and medications.

These digital payment systems have not only reduced reliance on cash but also increased transparency and accountability.

Crowdfunding platforms have gained popularity as a means of mobilizing resources for health causes, enabling individuals and communities to contribute to the medical expenses of those in need.

As the sector grows Financial institutions have developed more appetite for the healthcare sector offering loans and noted tailored to the needs of healthcare providers and entrepreneurs.

The Capital Market is equipped through financing innovations to play a crucial role in reducing financial barriers and expanding access to healthcare services for individuals and communities.

Health insurance.a vital component of the healthcare system. The current state of health insurance in Nigeria is characterized by low coverage, inadequate funding, and limited access to quality services.

However, significant steps are being taken to address these challenges. The National Health Insurance Scheme (NHIS) was established to provide financial risk protection and improve access to quality healthcare for Nigerians.

The scheme operates through various programs, including the Formal Sector Social Health Insurance Program, the Voluntary Contributors Social Health Insurance Program, and the Community-Based Social Health Insurance Program.

While these initiatives have made progress in increasing coverage, particularly among formal sector workers, there is still a long way to go in achieving universal health coverage for all Nigerians.

To enhance acceptance and participation in the health insurance industry, emerging technologies and innovative financing methods offer promising solutions.

Firstly, by providing coverage for all Nigerians, regardless of their income, age, gender, or health status, we can ensure that no one is left behind.

The newly signed National Health Insurance Authority Bill 2022 aims to make health insurance mandatory for every Nigerian and legal resident, establishing a Vulnerable Group Fund that targets children younger than five years, pregnant women, older people, people with physical and mental disabilities, and the poor.

Such comprehensive coverage will not only promote equity but will also drive increased acceptance and participation.

Secondly, promoting and integrating health insurance schemes in Nigeria that offer a basic minimum package of health services for all Nigerians will be instrumental in improving access and affordability.

By streamlining and harmonizing the various health insurance schemes operating within the country, we can eliminate fragmentation and ensure a comprehensive and standardized approach to healthcare coverage. Moreover, leveraging private sector participation in the provision of healthcare services is essential.

To facilitate acceptance and adoption of health insurance, digital technologies hold immense potential.

Mobile phones, internet connectivity, and artificial intelligence can be leveraged to increase access, affordability, and quality of healthcare services.

Deployment of Innovative platforms and mobile applications by Health Maintenance Organizations (HMOs), such as Hallmark Health Services Limited, enable customers to manage their plans, book appointments, consult doctors, and access health information.

These digital solutions not only improve convenience but also empower individuals to take charge of their health and make informed decisions.

In addition to technological advancements, innovative financing models can play a crucial role in improving acceptance of health insurance in Nigeria.

Microinsurance, community-based insurance, social health insurance, and public-private partnerships are among the models that can reduce financial barriers and risks for low-income and informal sector workers who are often excluded from formal health insurance schemes.

Tailoring these models to Nigeria’s socio-economic environment and cultural preferences will promote inclusivity and affordability, encouraging wider participation and acceptance.

While emerging technologies and innovative financing methods hold immense promise, it is important to address the affordability of available technologies for healthcare players, the government, and private sector partners.

The exchange rate of the naira to the dollar significantly impacts the cost of importing equipment and drugs. Fluctuations in the exchange rate pose challenges to local providers and consumers alike. Additionally, the availability of funding from public and private sources plays a critical role in supporting the development, adoption, and scaling of health technologies.

While some progress has been made in health-tech related fundraising activities, the total amount raised is still far from the substantial investment required to achieve universal health coverage in Nigeria by 2030.

Now on the Role of the Capital Market

in Healthcare Financing

The Nigerian Capital Market plays an important role in raising funding for the health-care sector through various instruments such as commercial papers (CPs), bonds and equity.

These instruments provide different sources of financing for health-care providers, investors and insurers, depending on their risk appetite, maturity and return expectations.

Commercial papers are short-term unsecured promissory notes issued by corporations or financial institutions to raise funds for working capital or other operational expenses. They typically have maturities of less than one year (180/270 days) and offer higher interest rates than bank deposits or treasury bills. Commercial papers can be used by health-care companies to finance short term working capital.

Bonds are long-term debt instruments that pay a fixed or variable interest rate to the bondholders until maturity, when the principal amount is repaid. Bonds can be issued by corporations to raise funds for various purposes, such as infrastructure development, capital expenditure or social services.

Bonds can be used by health-care entities to finance large-scale projects, such as building or upgrading hospitals, clinics or laboratories.

In 2021, the Emerging Africa Group partnered with other CMOS to support the Lagos State Government to raise over 130bn billion bond to fund key infrastructure projects, including health and education facilities.

In 2020, Fidson Healthcare Plc, a leading pharmaceutical company in Nigeria, issued a N10 billion CP programme to refinance its existing debt and support its working capital needs.

Equity instruments can be issued by public or private companies to raise funds from investors who are willing to share the risks and rewards of the business.

Equity instruments can be used by health-care companies to finance their growth strategies, such as expanding their market share, diversifying their product portfolio or acquiring other companies.

For example, in 2018, Another Health insurance company in Nigeria, sold a 6.5% stake to Verod Capital Management, a private equity firm, for N2.8 billion to fund its expansion plans eventually leading to the 100% acquisition of the company by same Verod in 2020.

Role of Private Equity (PE) & Venture Capital (VC) in Healthcare Financing:

Private equity and venture capital firms have played a pivotal role in funding and scaling innovative healthcare startups in Nigeria. These investment firms provide not only financial support but also strategic guidance and expertise to emerging companies.

Innovative Healthcare

Emerging Africa Group: Driving Innovation and Investment in HealthTech and InsureTech:

I am proud to share that Emerging Africa Group, a pan-African investment banking group headquartered in Lagos, is actively involved in driving innovation and investment in the HealthTech and InsureTech spaces. Through the Emerging Africa Technology Fund (EATF) and EA Technology Ltd, which has recently been registered and licensed in Mauritius, we are committed to raising and deploying USD 50 million for African Tech companies, including those in the healthcare and insurance technology sectors.

Emerging Africa Technology Fund (EATF): The EATF focuses on identifying and investing in high-growth technology startups across Africa. By strategically allocating funds to promising HealthTech and InsureTech companies, EATF aims to foster innovation and contribute to the advancement of healthcare services and insurance solutions on the continent.

EA Technology Ltd: With its registration and licensing in Mauritius, EA Technology Ltd serves as the investment vehicle for deploying capital raised by the EATF. This entity will facilitate investments in various African countries, including Nigeria, supporting the growth and development of HealthTech and InsureTech companies that demonstrate exceptional potential.

By combining our expertise, resources, and network, Emerging Africa Group aims to catalyze sustainable growth, improve healthcare accessibility, and drive positive social and economic impact across the African continent.

In conclusion

In conclusion, the healthcare landscape in Nigeria is evolving, driven by emerging technologies, innovative financing methods, and progressive policy reforms. By harnessing the potential of these advancements, we can address the challenges facing the healthcare value chain, improve acceptance of the health insurance industry, and achieve universal health coverage for all Nigerians.

It is crucial for policymakers, regulators, healthcare providers, and stakeholders to collaborate effectively, align business models with Nigeria’s socio-economic environment, and prioritize the delivery of quality healthcare to the larger Nigerian society. Let us seize this opportunity to transform healthcare in Nigeria and ensure a healthier and more prosperous future for all.

The role of financial markets, private equity, and venture capital in healthcare financing cannot be overstated. The capital market provides avenues for raising funds through instruments such as Commercial Paper, Bonds, and Equity, while private equity and venture capital firms fuel innovation and growth in the healthcare sector. Furthermore, Emerging Africa Group, through its Emerging Africa Technology Fund and EA Technology Ltd, is dedicated to fostering technological advancements in HealthTech and InsureTech, contributing to the transformation of healthcare delivery in Nigeria and beyond.

Thank you.