Experts advocate domestic capital as health funding shrinks

Leading financial stakeholders and healthcare investors have called for the urgent establishment of a stronger domestic capital ecosystem to address Africa’s critical healthcare financing needs.

The call comes at a pivotal moment, as international donor funding, historically anchored by programmes such as the United States Agency for International Development continues to shrink, leaving significant funding shortfalls in public health infrastructure across Sub-Saharan Africa.

The strategic imperative was detailed during the Private Markets and Healthcare Roundtable convened by HealthCap Africa in Lagos, themed “Healthcare as an Asset Class.”

The meeting brought together key regulators, pension fund managers, development finance institutions, and healthcare operators to deliberate on strategies for mobilising private and institutional capital, particularly across Nigeria. Pension fund representatives at the session notably managed a collective asset pool exceeding $5bn.

The shift toward local private capital gains urgency when set against the structural deficits of African healthcare finance. Participants highlighted that while Africa accounts for 22 per cent of the global disease burden, the continent receives merely one per cent of global health expenditure, creating an estimated annual financing gap of $1.1tn.

Contrastingly, over the past decade, approximately 505 specialist healthcare and life-sciences investment managers across North America and Europe have raised over $300bn. Stakeholders emphasised the need for African economies to transition away from over-reliance on foreign assistance towards a sustainable financing structure where government intervention, philanthropy, development finance, and private enterprise operate symbiotically.

The timing of the roundtable coincides with rapid growth in Nigeria’s domestic capital market. Local pension assets managed under the National Pension Commission framework have expanded significantly to exceed N30tn, though allocations remain predominantly concentrated in government securities.

To translate market interest into deployable capital, participants outlined several strategic priorities, starting with the deep mobilisation of local assets, including pension funds, insurance capital, family offices, and entrepreneur-led funds. Institutional stakeholders, including the Securities and Exchange Commission and PenCom, were urged to collaborate with fund managers to design investment instruments that satisfy strict fiduciary standards while delivering competitive institutional-grade returns.

Additionally, development finance institution frameworks, such as the Africa Finance Corporation’s $100m venture capital fund-of-funds model, were cited as effective risk-mitigation tools for pension managers entering the sector.

Highlighting the critical role of state facilitation in unlocking these institutional assets, World Bank representative, Chishamiso Mawoyo, stated: “Government policy remains important, and government has a role to play in creating the environment private investment needs to work.”

The roundtable also underscored the importance of matching capital to project risk stages, noting that dedicated early-stage capital is essential to building a solid enterprise pipeline from private markets through to public exchange listings.

Demonstrating the potential of local private investment, Humphrey Oriakhi of PAC Capital cited his firm’s successful funding of a 250-bed multi-specialty tertiary hospital in Abeokuta, Ogun State, built entirely through private financing, alongside HealthCap Africa’s pilot fund, which achieved a 25 per cent Internal Rate of Return while impacting over two million lives.

Addressing the structural shortage of early-stage funding in the market, Chief Executive Officer of ABC Health, Dr Mories Atoki, said, “There needs to be more early-stage investors. There’s no such thing as an unbankable project; there’s only such a thing as a risk-investor match. Some are early-stage, some are later-stage, and we need to match the right investors, or we need to invest in the early-stage ecosystem if we want to get to growth.”

Drawing international comparisons, Founder and General Partner of HealthCap Africa, Dr Ola Brown, referenced India’s healthcare investment landscape, pointing to Quadria Capital’s expansion into a healthcare-focused platform managing over $4bn in assets.

“Quadria Capital is one of the largest VC funds in Asia focused on healthcare. They have raised over $1 billion and have an AUM of over $4 billion. As you know, many Nigerians go to India for healthcare. Now imagine how much private capital has gone into building their healthcare sector,” Brown noted, adding that sustained private capital injection in India coincided with a sharp drop in maternal mortality from 384 to 80.5 per 100,000 live births between 2000 and 2023. “The opportunity here for Africa is not necessarily to replicate India’s model, but to consider what similar pools of specialised capital could achieve for African healthcare.”

Reinforcing the capacity of market players to navigate existing regulatory hurdles, Founder and Chairman of ARM, Deji Alli, remarked, “Innovation can overcome regulation.”

With Nigeria capturing 513 Seed+ deals between 2021 and 2025, representing more than a quarter of Africa’s early-stage deal activity, stakeholders concluded that the continent must now concentrate its expanding capital base on high-demand sectors like healthcare to ensure long-term sustainability.

Experts advocate domestic capital as health funding shrinks