Good Health is Good Business: Business Investing in Health

Ian MatthewsArticle, News

Countries benefit from healthy populations; health is key for economic development. As Ismaïl Omar Guelleh, President of Djibouti, explains, “No country can achieve economic development without a physically, mentally and socially fit population.” Health is just as important for the companies that operate within those countries, echoing this sentiment, Aliko Dangote, Founder, Dangote Group, wrote, “to me, business and healthcare are interwoven, and only a healthy population can ensure the best labor force to build any economy successfully.”

But, many countries struggle to fund the health programs needed to support their population and catalyze growth and prosperity. Therefore, motivating investment from both public and private sources is vital. In an article titled Investing in health is investing in prosperity, Vera Songwe, Executive Secretary, UNECA and Michel Sidibe, Minister of Health and Social Affairs of Mali, summarized this imperative, writing, “how do we ensure that [Africa’s] incredible source of human energy and capital drives future growth, well-being and prosperity, not only on the continent… but globally? Investment in health is key.”

It is in the private sector’s best interest to invest and partner with the public sector to improve the health of nations to encourage economic development. Increasing interest in health by the private sector demonstrates that they view this investment not only as a moral imperative but as an economic opportunity. Let’s look at some recent examples:

Investing in Primary Healthcare

There is a massive funding gap for health spending in African countries, as documented in the Healthcare and Economic Growth in Africa (HEGA) report, a joint publication of UNECA, GBCHealth and Aliko Dangote Foundation which was launched in 2019 at the Africa Business: Health Forum in Addis Ababa. The report found that there is a financing gap of US$66 billion per year to meet a “conservative target of government health expenditure of 5 per cent of GDP,” further reiterating the role and opportunity for public-private partnerships to invest in health. The report, and Forum discourse, focused on subjects at the heart of the matter, such as challenges faced, the private sector’s role in financing African healthcare, and the nexus between health and economic growth.

Combine the funding gap with the continent’s growing population, and there is an immense opportunity to invest in health in the region. Speaking on the subject, Aigboje Aig-Imoukhuede, Founder and Chairman of the Africa Initiative for Governance and Co-Chairman of GBCHealth, said “It is impossible for the Nigerian government on its own to meet the SDGs. The private sector and the civil society must join the efforts. [The government] in Nigeria only controls 10 percent of the entire GDP while the private sector controls 90 percent. This shows the strength of the private sector in our country.”

Regarding the incentives for the private sector, he added, “There is excellent incentive for private sector participation in the business of health – Africa’s population is expected to hit two billion by 2050. This is a huge market with potential to drive Africa’s economic prosperity into the next century.” Reflecting these beliefs, Mr. Aig-Imoukhuede recently “pledged to build a world-class Primary Healthcare Centre in each of the 774 Local Governments in Nigeria and called on other wealthy Nigerians to commit to different initiatives that would help the country to meet other objectives of the SDGs by 2030.”

UHC and the Private Sector

Universal Health Coverage (UHC) is a natural target for investment in national health systems, with the aim of supporting economic development, because UHC aims to make care available to even the poorest and most remote populations around the world who are most in need of health interventions.

Tying UHC to economic growth, the World Bank stated in its High-Performance Health Financing for Universal Health Coverage report:

“People in developing countries pay over half a trillion dollars annually out-of-pocket for health services, which is pushing about 100 million people into extreme poverty each year. The evidence is strong that progress towards UHC would spur not just better health but also inclusive and sustainable economic growth, yet this report estimates that in 2030 there will be a UHC financing gap of US$176 billion in the 54 poorest countries. This threatens decades-long progress on health, endangers countries’ long-term economic prospects, and makes them more vulnerable to pandemic risks.”

Stressing the need for the private sector’s involvement, World Bank Group former President Jim Kim wrote, “In many countries I don’t see [that the public sector is] capable of bringing about change [in healthcare] by themselves. A lot will be with non-profits, the private sector and others.”

Given this economic imperative to fight for UHC, it’s no surprise that UHC2030, a global movement to build stronger health systems for UHC, includes a Private Sector Constituency. The group works to foster dialogue and cooperation between the private sector and UHC2030’s partners and health systems networks. The group’s statement on UHC from September listed seven ways in which the private sector can help foster UHC:

  1. Continue to offer high-quality products and services, and make these affordable, accessible and sustainable
  2. Incorporate UHC principles, including to leave no one behind, in core business models and objectives and in any philanthropic activities
  3. Develop, test and scale up innovative business models
  4. Create, adapt, apply and scale up innovations
  5. Help strengthen the health workforce
  6. Contribute to efforts to raise the finance available for UHC
  7. Engage in, champion, and build capacities for relevant policy dialogue and partnerships with government and other stakeholders

Commenting on the statement, South African Minister of Health Dr. Zwelini Mkhize said, “To achieve UHC, it is critical to ensure strong cooperation and partnership between public and private sectors.”

Global Fund Investment Case Demonstrates ROI for Global Health Investment

In October, the Global Fund raised US$14 billion in support of its 2020-2022 strategy to help fight the epidemics of AIDS, tuberculosis and malaria. Founded as a public-private partnership, engagement with the private sector lies at the core of the work of the Global Fund. More than US$1 billion of the total amount was pledged by the private sector and private foundations.

The Global Fund shared data with potential funders that showed staggering ROI for investments in the Fund’s fight against the three diseases. The Fund said that the successful fundraising of US$14 billion for the next three years will, among other benefits:

  • Yield a return on investment of 1:19 with every dollar invested resulting in US$19 in health gains and economic returns, further contributing to the achievement of the overall SDG agenda, and;
  • Spur domestic investment of US$46 billion toward ending the three diseases and strengthening health systems through co-financing requirements, and technical assistance on health financing.

The investment by the private sector – as well as the rest of the donors – demonstrates the economic value in investing in global health programs and supporting public health in high-burden areas.

Focus Areas for Investment: WASH

These examples share a theme; allocating resources to areas of greatest need, where interventions can make the biggest difference. An example of this is the greater focus on inadequate access to water, sanitation and hygiene (WASH), especially at healthcare facilities. As mentioned above, primary healthcare facilities are the first line of defense against health challenges, and consequently make for an opportune investment. A recent World Bank report showed that “The world faces an invisible crisis of water quality that is eliminating one-third of potential economic growth in heavily polluted areas and threatening human and environmental well-being.”

Commenting on the report, World Bank Group President David Malpass said, “Clean water is a key factor for economic growth. Deteriorating water quality is stalling economic growth, worsening health conditions, reducing food production, and exacerbating poverty in many countries.” More on how “investing in… more efficient water use… not only provides immediate economic benefits, but… also safeguards future economic gains” can be found in WHO’s report, Making Water a Part of Economic Development.

WHO estimates that investing in WASH can result in 1.5% total global GDP growth, with a return on investment of US$4.30 for every dollar invested. Similarly, the Ripple Effect Study on the effects of improved water access shows how lower cost of water, and reduced time spent gathering water, gives people “opportunities… to save money and seek income-generating activities and entrepreneurship.”

Focus Areas for Investment: Women & Girls

Another documented ‘good investment’ is investing in the demographic dividend – the youth bulge which many countries are now experiencing. The HEGA report describes the challenge and opportunity of Africa’s rapidly-shifting demographics: “As a result of high fertility rates, in spite of declining mortality rates, Africa’s population is expected to double between 2015 and 2050, and nearly one-third of the population will be below the age of 14 years by 2050. This… potentially offers the hope of greater productivity and economic growth if backed by commensurate skills growth.”

From a population perspective, UNFPA Regional Director for West and Central Africa (WCARO) Mabingué Ngom said, “capturing the demographic dividend will kick-start the continent’s long-awaited economic boom. For this to happen, it is vital to change the discourse on population issues by linking demography to unmet social demands, the labor market, migration and, of course, instability.”

He added, “It is estimated that achieving the [demographic] dividend could generate exceptional economic growth in Africa, of around $500 billion a year for at least 30 years… This unprecedented potential requires changes in the population structure, the empowerment
of women and improvements to health and education… At national and continental level, coherent policies and investment in human capital are needed. While African countries have all the resources required to move the demographic dividend forward, they need strong international partnerships.”

GBCHealth will continue to work to foster public-private partnerships to increase funding for these areas of great need and great economic opportunity. Subscribe to our monthly newsletter and follow us on social media for the latest on the synergies between health, development and economic growth.

Ian MatthewsGood Health is Good Business: Business Investing in Health