Investment in Africa’s healthtech innovations slows by 2% in 2023

Africa’s healthtech sector saw a modest two per cent decline in investments in 2023 despite raising a total of $167 million. According to a report by Salient Advisory, online pharmacy solutions emerged as the top priority for investors, attracting the bulk of the capital. Yomi Kazeem, Engagement Manager at Salient Advisory, recently appeared on CNBC Africa to delve into the key findings of the report. Kazeem highlighted the resilience of the healthtech sector in the face of broader challenges seen in other tech ecosystems across the continent. He pointed out that while the two per cent decline may seem negative, it actually indicates a positive trend given the significant declines reported in other sectors like fintech. The report signifies that the healthtech sector remained strong and attractive to investors in the past year. The focus on online pharmacy solutions was a standout feature in the investments made in the sector in 2023. Notably, three start-ups, including Katamai Dawa in Kenya and Yodawi in Egypt, raised substantial Series B deals, indicating investor confidence in their growth potential. The investment landscape in Africa's healthtech sector also saw a boost in funding for women founders. The report revealed a significant increase in funding for companies founded by women, with a growth of over 2,000% from the previous year. Companies like Cash in Kenya, Sheffa in Egypt, Masha Mates in Kenya, and Dowry Clinics in Egypt led the way in securing investments. The data also showed a rise in funding for companies with mixed-gender founder teams, reflecting a more equitable distribution of capital. Equity investments dominated the funding landscape, accounting for 91% of all investments tracked. However, grants played a crucial role, representing 52% of all deals in 2023. Kazeem emphasized the importance of grants in enabling innovators to test and validate their business models. Debt funding remained scarce, with only one debt-based investment identified in 2023. The report highlighted a doubling in mergers and acquisitions activity within the healthtech sector, suggesting a potential trend towards market consolidation in the coming years. Looking at regional sensitivities, Nigeria, Kenya, and Egypt emerged as the top markets for healthtech investments, with Nigeria leading the way with 35% of total funding. Kazeem noted significant increases in funding for Egypt and Ghana, while highlighting the growth potential in Francophone Africa, particularly in Cote d'Ivoire. Senegal, however, was notably absent from the tracked data, raising concerns over the country's investment activity in the healthtech space. As global headwinds continue to impact markets, the healthtech sector in Africa remains resilient and a promising area for investors to explore.