…but administrative bottlenecks need fixing
Nigeria’s private healthcare sector is experiencing a revival, driven by recent foreign exchange reforms that have eased access to imported medical equipment and enabled smoother repatriation of capital.
The cost of foreign healthcare has also jumped, creating demand for local alternatives.
The policy shift is unlocking long-delayed investments. Hospital operators are scaling up facilities, upgrading technology, and tapping into the growing demand from a growing population priced out of foreign medical care.
This development could reduce outbound medical tourism, estimated at around $11 billion in the past decade and create new local jobs that could halt the tsunami brain-drain of health workers in Africa’s most populous nation.
After the coronavirus pandemic in 2020/2021 that exposed Nigeria’s underinvestment in healthcare systems, private hospitals like Evercare and Duchess International have officially launched to tap the underserved market.
Two years later, the Central Bank of Nigeria (CBN) unified exchange rates and eased restrictions on medical imports, a landmark move that has begun to lure foreign-backed hospitals to the shores of the country.
According to Kenneth Okolie, CEO of Synlab Nigeria, one of the country’s biggest medical wellness and diagnostics providers, the reforms, which removed the opacity in the exchange rate and narrowed the arbitrage in the informal market, have eased his firm’s access to FX.
“We have continued to experience stability in accessing foreign exchange through the market,” Okolie told BusinessDay.
Projects are accelerating, and diagnostic labs are expanding, citing improved business climate and confidence in the country’s economy. Investors say the various policy shifts have reduced repatriation risk and improved access to medical equipment.
While the African Medical Centre of Excellence (AMCE), a $300 million multi-specialist hospital in Abuja, had its groundbreaking ceremony in 2021 (the pre-float era), it has opened its doors to Nigerians and Africans alike with the sole intent to curb medical tourism this year.
The hospital, backed by Afreximbank and King’s College Hospital London, is expected to generate 3000 jobs directly and indirectly, and offer advanced diagnostics, oncology, and cardiology services to an estimated 350,000 patients.
In the same vein, Roche Diagnostics, the world’s largest biotechnology company, recently announced its expansion plans in Nigeria after many years of staying in the country as a distributor.
Though the company is looking to leverage the country’s vast population, the newfound stability of the macroeconomic fundamentals must have supported its move into one of Africa’s top economies.
“Nigeria is a critical market, and this investment supports our long-term vision for healthcare in Africa,” said Jonathan Keytel, director, strategy and innovation, Roche Diagnostics, Africa.
Synlab Nigeria is also looking to expand and collaborate with other health companies and government agencies to halt medical tourism, while Lagoon Hospitals and Evercare have begun upgrading surgical and maternal units.
Many are sourcing MRI scanners, lab analysers, and intensive care equipment from Europe and Asia without the long wait times that previously hampered supply chains.
“The most effective part of the FX reforms for healthcare providers sourcing equipment abroad is the predictability of the exchange rate. No sharp swings. And for me, that’s helped our planning,” a top executive of a Lagos-based hospital, who didn’t want to be named, told BusinessDay.
“I’m sure that’s the reason for the influx of foreign-backed investments in the sector in recent times.”
Investors are targeting a slice of Nigeria’s outbound medical spending, which drains between $1.2 billion and $2 billion annually, according to PwC and government estimates. Nigerians make over 9,000 trips abroad for healthcare every month, with most procedures paid for out-of-pocket.
“Even capturing 10 percent of that outflow could fund several world-class facilities,” said Omotayo Akanni, a Lagos-based health economist.
According to Joseph Aniekan, a public health analyst, Nigeria’s growing population, rise of the middle class, growing medical consumerism and the FX reforms that have reduced repatriation risks are fuelling healthcare investments in the country.
“Recent foreign exchange reforms have improved the investment climate by reducing repatriation risks and making Nigeria a more predictable environment for foreign capital,” Aniekan, who served as resource mobilisation consultant at UNICEF, told BusinessDay.
“This is particularly beneficial for the healthcare sector, as challenges related to currency uncertainties have started to diminish. Nigeria’s strategic position as a regional hub for West Africa adds to its attractiveness.”
Corroborating Aniekan’s position, Segun Bello, a private stakeholder in the healthcare sector, stated that Nigeria’s population and the recent forex market reforms have created a veritable space for investments.
“The forex policy is part of the reasons investments are emerging in the health sector. But I think for foreign-backed investments like the AMCE, it’s to reverse medical tourism,” Bello said.
Beyond the FX liberalisation that has moved Nigeria from a fixed rate regime to a more market-determined rate, government support and policy shifts are fostering a more conducive environment for investment. Initiatives like the Health Sector Renewal Investment Initiative signal progress in attracting private investment.
Challenges remain
Despite the momentum, challenges remain. Nigeria’s sky-high inflation, though has slowed for two straight months, continues to weigh on operational costs.
The naira, which has now been freely floating, has lost over 70 percent of its value since the reforms began in mid-2023, creating volatility for dollar-denominated contracts. But stability has been the new norm.
Finbas Odey, managing director of Abuja-based Brighter Life Hospital, which recently acquired four machines – including a haematology analyser, ECG machine, and an automated operating table – said the naira’s sharp depreciation is squeezing margins.
“The automated operating table that used to cost N2 million now goes for N5 million,” Odey said.
Healthcare growth
Private healthcare spending accounts for about 75 percent of total health expenditure in Nigeria, among the highest globally, World Bank data show. Yet access remains limited – just five hospital beds serve every 10,000 people, compared to 13 in Ghana and 29 in South Africa.
But the increasing private medical investments, thanks to the much friendlier FX rules, are poised to fill the gaps and potentially slash the rising medical trips that occur each month.
“With rising digital engagement in healthcare, including telemedicine and insurance, there’s a growing opportunity for foreign entities to scale solutions across Nigeria,” said Aniekan, quoted earlier.
“Investors are strategically betting on the transformation of Nigeria’s healthcare landscape in the next few years.” (BusinessDay)
