The Managing Director of The Bridge Clinic, Dr. Richardson Ajayi, has called on foreign investors to consider Nigeria’s healthcare sector as their preferred investment destination so they could reap from the ever-growing positive climate that the sector offers. He made the call in Accra, Ghana, at the 4th Annual Africa Hospital Expansion Summit on 22 September 2016.
Dr. Ajayi, in his keynote speech, informed the summit participants that Nigeria’s healthcare sector has consistently shown significant growth over the last five years and will continue to grow despite the current economic climate. He listed the increasing prevalence of non-communicable diseases, reduction in out-bound medical tourism due to the difficulties with obtaining foreign exchange and the increasing access to health insurance as key drivers of the healthcare sector investment opportunity.
He observed that the preference of portfolio investors for short-term investments, which work very well in more developed economies, may not work as much in Nigeria as the country’s healthcare sector lacks the requisite systems to support short term investments.
According to Ajayi, “Investors expect a return for their investments and most prefer the return sooner rather than later. Unfortunately, healthcare in our region is not mature enough for this type of investment strategy. Healthcare in our region is still in a nascent stage and the systems such as supporting government policies as well as the required organised ecosystem are not yet in place to create the platform for growth.”
He, therefore called for a different investment approach that will ensure that investments make the required developmental impact while, at the same time, delivering adequate financial returns to the investors.
“Healthcare investments have to be considered from a developmental and long-term perspective. Investments with a focus on immediate earnings such as earnings before interests, tax, depreciation and amortisation (EBITDA) may institute a profit-driven culture which runs in the face of providing care and the right balance must be struck. A more favourable structure will be for investors to look into making equity investments with a focus on long-term growth rather than a quick exit.”
Ajayi, who was the official VIP Keynote Speaker at the summit, highlighted some of the challenges that could hinder investments into the healthcare sector. They include the predominance of the sole proprietor model that makes the doctor synonymous with the brand, patients’ poor medical procurement decisions that come with a dwindling disposable income, poor customer service orientation, and inadequate skill level in the sector. He called on the entrepreneurs and the investors to be aware of these issues, which actually create the investment opportunities in the sector, and articulate “mitigation strategies as part of the business plan.”
He also called on government to provide the enabling environment that will facilitate investment in the healthcare sector. In his words, “There is a need to influence government policies to develop a more protectionist attitude to healthcare investments with effective regulation, consumer protection and promoting the climate for effective litigation of healthcare facilities that are not providing the right level of care.”
He noted that effective regulation is necessary for inflow of investments as it guarantees patient protection and a level playing field for service providers by ensuring that only such providers that have met certain requirements are allowed to compete in the market. To buttress this point, he informed the participants that it is difficult to run a medical laboratory business in Europe, North America and South Africa without implementing some sort of quality management system such as ISO 15189. This is to ensure that the results from the laboratory are accurate.