Health & Fitness

Investors in healthcare need to be supported

healthcare

Summary

  • On the part of financiers, there is a general lack of information on the nitty-gritty of health business, thereby labelling healthcare startups as ‘un - bankable’.
  • Potential borrowers fear approaching lenders due to a misnomer that healthcare-related loans are more highly-priced.

According to a recent report by Statista, a German company specialising in market and consumer data, Nairobi is ranked second after Lagos in leading cities for start-ups in Africa. The ranking methodology is based on quantity, quality and business performance scores for start-ups.

Underpinning this top ranking for Kenya’s capital city is the number of healthcare-related startups that have burgeoned in the recent past spanning outpatient care, inpatient care, telemedicine and pharmaceutical services.

However, a lot remains to be done to bolster this growth. In my recent tête-à-tête with Kennedy Okongo, Director of Medical Credit Fund; a leading healthcare financier in East Africa, I sought to understand the most prevalent gaps for healthcare-related startups in Kenya.

The main challenges are twofold. Firstly, there is a general lack of information among entrepreneurs and mainstream financiers. On the part of entrepreneurs, there is a general lack of understanding of alternative funding models for their start-ups, besides the well know tier-one lending institutions.

On the part of financiers, there is a general lack of information on the nitty-gritty of health business, thereby labelling healthcare startups as ‘un - bankable’.

Another ubiquitous gap is fear. Potential borrowers fear approaching lenders due to a misnomer that healthcare-related loans are more highly-priced. Similarly, potential lenders continue to keep healthcare entrepreneurs at arm’s length due to a consideration that health businesses are extremely high risk.

The net effect of these inter-related gaps is that access to healthcare in our setting continues to be low. This occurs despite our current understanding that more than half of the Kenyan populace seek medical care in private facilities.

Therefore, it is critical for the ministries of finance and health to make considerations for enabling investments in healthcare. These include incentivizing organizations that dare to delve into healthcare financing such as through tax reliefs.

Also, the two ministries could consider incentivizing healthcare entrepreneurs. Ultimately, positive and inclusive movements in both public and private healthcare providers will enable giant strides towards increasing access to high-quality healthcare services.