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Nigerian Health-techs Lead $160m Funding Surge in West Africa

More Nigerian health technology companies have secured a significant chunk of the $160 million surge in external funding raised by innovators in West Africa, the first pan-African landscape market intelligence report by Salient Advisory has revealed.

The healthcare consulting firm found that 69 percent of 122 innovators headquartered in the region are Nigerian and African governments collaborating more to strengthen local health supply chains.

With nearly 50 partnerships between health startups and African governments, there is a growing focus on optimising local health supply chains and improving health outcomes across the continent. They are leveraging tech-enabled solutions to resolve long-term challenges around the availability, accessibility, and quality of health products in public health supply chains.

Funded by the Bill and Melinda Gates Foundation, the report titled “Innovations in Digitising Health Supply Chains in Africa”, the report tracked nearly 350 technology-enabled innovators digitizing supply chain processes across 27 African countries.

As a wave of supply chain innovations emerged amid the COVID-19 pandemic, their business models’ long-term viability and impact were unclear.

Nearly half of the identified partnerships focus on enabling governments to digitize ordering and inventory management to improve efficiency and minimize wastage, highlighting governments’ growing interest in adopting digital order and inventory management solutions.

While most innovators working in partnership with governments are more mature, like Zipline and mPharma, several younger companies have also established public sector partnerships early on, including Nigeria’s Figorr and Zimbabwe’s Vaxiglobal.

Governments’ interest in supporting innovations that deliver social impact – while creating jobs – appears to be developing along with the growth of Africa’s tech scene, the report states.

The consulting firm sees the growing emergence of these partnerships well boded for the development of innovation-friendly regulations by governments across the continent.

Remi Adeseun, director at Salient Advisory said it was surprising to see so many government partnerships with innovators underway at both national and sub-national levels, speaking on the launch of the report.

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“We urge global health donors, agencies, and industry partners to join with governments and investors in supporting high-potential innovators, helping foster more efficient and resilient healthcare supply chains while creating jobs,” Adeseun said.

Disparities in funding trends remain apparent across the health supply chain innovation ecosystem, according to the report. While innovators have raised $2.6 billion in funding since their founding, US and Europe-based e-commerce companies and medical drone delivery operators account for 77 percent of all funding raised; the remaining innovators have raised $584 million since their launch.

Government interest in innovations in ordering and inventory management appears strong as startups in this category have raised only 9 percent of all funding since their founding.

In terms of the number of deals, Plug N Play Ventures and Launch Africa stand out as the most active sources of equity funding in this space. The Investing in Innovation program, the Bill & Melinda Gates Foundation, and Google’s Black Founders Fund provided the highest number of grants.

The 29 women-led companies active across the African continent (with a large concentration in Nigeria and Kenya) still suffer from poor access to equity financing, resulting in heavy reliance on debt and grants.

Innovators headquartered outside the continent have also raised 83 percent of total funding ever reported, with large e-commerce giants and medical drone delivery operators capturing the bulk of the external investment.

Similarly, gender financing gaps are also evident as companies founded solely by women make up 8 percent of all startups but have received only 2 percent of all reported funds overall time.

Lack of access to equity financing results in women-led companies relying more heavily on debt and grants.

As the ecosystem matures, innovators are expected to provide supply chain solutions at a greater scale to governments, industries, global health agencies, and more.

The report advocates for the design and launch of trade financing and insurance solutions to enable mature innovators to distribute larger volumes of health products for institutional customers, an adjustment of purchasing processes by global health agencies to facilitate the participation of innovators in donor-funded supply chains, and the continued deployment of grants to foster inclusive and effective innovation ecosystems.

Hany Abdallah, senior program officer, Supply Chain Systems at the Bill and Melinda Gates Foundation said “African health innovators have demonstrated an impressive ability to utilize technology for the optimization of supply chain solutions and the improvement of access to medicines. We are delighted to witness this progress, particularly as it coincides with an increase in government partnerships, which will advance positive health outcomes.”

SOURCE: Business Day