Entrepreneurs in Nigeria have been slowed down from transforming Africa’s most populous country’s healthcare delivery ecosystem thanks to old technologies and an unreachable pool of local funds.
People familiar with the matter say investments into new medical technologies have fled Nigeria due to high customs duties, taxes and other government levies which sometimes more than double the cost of bringing in these much needed new technologies that are available in a country such as India, which had worse healthcare infrastructure than Nigeria three decades ago. The lack of new technologies fuels an estimated $1.3 billion medical tourism industry from Nigeria to India, yearly.
Local commercial banks are also having a tough time understanding healthcare delivery as a business that can be profitable in addition to being social service. Interest rates run in double digits, sometimes as high as 26 percent. But commercial lenders would rather not lend to healthcare entrepreneurs.
“When I started my journey as a healthcare entrepreneur, I approached three banks for loans. I wanted to buy some new equipment for operations two years ago. For six months no bank was interested in my business,” Grover Anil, a pharmacologist and founder of Grover Lifestyle Clinic said in an exclusive interview with BusinessDay. “The banks wanted collateral when I am willing to invest my life’s savings to develop healthcare infrastructure in Nigeria.”
Anil never got the loan of N50 million he needed and his story, according to him is typical of the struggles of entrepreneurs in Nigeria’s healthcare industry. Although in 2019, seeing the success story of the Grover Lifestyle Clinic, a global financing institution in the health and development space in Europe offered the clinic some loan to improve their operations.
“Our clinic is now a full-fledged hospital with this foreign injection of capital. Nigerian banks did not support us,” he said.
Nigeria has lessons to learn from India’s two-decade-long push to transform healthcare delivery. In the 70s and 80s, the government of India did not open up the healthcare industry. It was treated like a social service. Many doctors left India. There was a brain drain to the United States of America and the United Kingdom just as it is happening in Nigeria now. Those days, the Indian government was old school and operated by a script of the British colonial school of thought that saw healthcare mostly as social service. At this point, India was on a similar pedestal if not worse than Nigeria, Anil said.
Adeyinka Shoroye, secretary, Board of Trustees, Nigerian-American Medical Foundation (NAMF) has attributed Nigeria’s current poor healthcare infrastructure to failed primary healthcare, uncoordinated tertiary health care, corruption and mismanagement. “Those who can afford the treatment go to Europe, North America or South Africa which has very good infrastructure.”
Things started to change in India 20 years back ago. The government of India designed many incentives to attract investments in healthcare. The first incentive targeted investors who wanted to build a big hospital or diagnostic centre. Those who wanted to invest in new technology paid no import duties on such equipment. There were no customs duties of any kind. Then there were five to ten years of tax holidays.
“Big new hospitals enjoyed tax holidays. Then the government of India invited Indian doctors living in the USA and the UK back to the country. The government promised to offer lands at subsidised rates for those willing to set up hospitals,” Anil told BusinessDay.
This has made India a global healthcare destination in the last 20 years. In this light, there is hope for Nigeria if the government heeds calls to intervene. There are signs of government interventions though. President Muhammadu Buhari has approved that import duty is waived for medical equipment and supplies to strengthen health infrastructure in response to the COVID-19 pandemic in Nigeria. The Central Bank of Nigeria has also established a fund to support entrepreneurs in the healthcare ecosystem. However, these initiatives need to be systematic and sustained post COVID-19.
