In a quiet residential estate in the upmarket Ikoyi district of Lagos, off a gridlocked main road, the staff of health technology company Medsaf busily fill boxes with medicines.
The company supplies drugs, mainly to pharmacies and hospitals, through its digital platform and offers quality assurance in a market awash with counterfeits. Vivian Nwakah, Medsaf’s founder, says the company has benefited from the extra demand during the coronavirus pandemic.
“We’ve reached new customers and expanded rapidly,” notes Nwakah, adding that Medsaf, which operated only in Lagos state when it was set up in 2017, expanded into 15 other Nigerian states last year. She hopes Medsaf, which will launch its Series A funding round in June, will benefit from a surge in investment in technology firms specialising in health and education.
Nigerian payment companies are at the vanguard of innovation in Africa, with investment levels to match. But, with the coronavirus pandemic focusing attention on healthcare, companies that offer services from technology for remote consultations to the digitisation of medical records are becoming increasingly appealing to investors. Nigerian distance learning companies have also enjoyed a rise in investment over the past two years.
“Funding for both sectors, for Nigeria and Africa as a whole, increased significantly in 2020-21, especially for the healthcare sector,” says Maxime Bayen, a senior venture builder at consulting firm BFA Global, who tracks tech investment across the continent in a database called Africa: The Big Deal.
Of the $209mn raised by African health technology companies in 2021, around a fifth went to Nigerian firms, according to the database — putting the country second only to South Africa. The $41mn invested in those Nigerian companies was up from $30mn in 2020, and just $6mn in 2019 — though it was dwarfed by the $835mn raised by all Nigerian companies last year.
In education technology, Nigeria is doing even better. Of the $267mn raised by education and training companies across Africa in 2021, $229mn of that was invested in Nigeria.
However, most of this money — $200mn — went to Andela, a school for software developers whose engineers have worked for clients including software development platform GitHub and entertainment group ViacomCBS. Its backers include the Chan Zuckerberg Initiative, the charitable venture set up by Facebook co-founder Mark Zuckerberg and his wife Priscilla Chan, which chose Andela for its first private-sector investment in 2016.
Iyinoluwa Aboyeji, a technology entrepreneur and investor, says he has seen the increased interest in health and education in his role as general partner at Future Africa, a venture fund and asset manager.
Aboyeji — who co-founded Andela and payments company Flutterwave, which last year raised $170mn, pushing its valuation to more than $1bn— says he plans to launch a $15mn fund for education start-ups later this year.
“What we’re betting on is that people from anywhere can learn new skills that are globally valuable,” Aboyeji says.
He adds that Nigeria’s population of 200mn people, nearly two-thirds of whom are under 24, is a huge market for remote learning.
In healthcare, Aboyeji says the coronavirus pandemic has revealed the demand for diagnostic tests, not just for Covid-19 but also for other diseases.
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Lagos-based 54gene, a company that focuses on genomics research, raised $25mn in September to fund the development of its sequencing capabilities and expansion into Africa. Since it was set up in 2019, the company has attracted investment totalling $45mn.
As part of its expansion, in December the company launched a new arm — 7RiverLabs — that offers molecular diagnostic services to African healthcare providers. The company has opened sample collection centres in four Nigerian cities — Lagos, Abuja, Kano and Port Harcourt — and is also planning to establish centres in other African countries.
“We want to scale our contribution to global drug discovery by extensively developing life science capabilities on the continent,” said Abasi Ene-Obong, 54gene’s chief executive, when the latest round of investment was announced. “We believe the world will benefit from an African global drug discovery company that leverages the deep insights found in genomics research in diverse populations.”
The pandemic has enabled many Nigerian health tech companies to prove their usefulness in the real world.
“It’s shown the value we offer and heightened our visibility,” explains Oghenetega Iortim, chief executive and founder of Gricd, which makes coolboxes to keep medical items at the correct temperature while being transported. The boxes are WiFi-enabled so that they can be tracked. He says the company, set up in 2018, previously transported products for routine immunisation of children but Covid has raised its profile.
Nigeria’s primary healthcare agency, the National Primary Health Care Development Agency, enlisted Gricd for nationwide distribution of 4.2mn doses of the Moderna vaccine, which requires cold storage, between August and November 2021.
Iortim says the company also worked for clients in Ghana and Gabon last year — transporting vaccines, Covid test reagents and insulin.
Lifestores, which provides an electronic inventory service for nearly 500 pharmacies in Lagos using proprietary software, experienced a similar boost.
Bryan Mezue and Andrew Garza, who founded the company in 2017, say the pandemic helped demonstrate its worth because pharmacies have long been the first port of call in African countries for patients, many of whom cannot afford to visit a clinic.
Mezue and Garza add that Lifestores, whose software also enables pharmacies to cut costs by aggregating orders, plans to expand into Kenya this year through partnerships with a pharmacy chain and a hospital.
While fintech companies continue to dominate Nigeria’s start-up landscape, Aboyeji foresees that the interest in health and education will continue to grow in Africa’s most populous country, because companies focusing on them offer solutions to “hard problems in large markets”.
“Both sectors provide the opportunity to scale returns while at the same time bringing about change.”