As the coronavirus disease exposes Nigeria to a new normal, new investment opportunities have opened up in the country’s health, agriculture and financial technology sectors. This reality, along with that of other countries on the African continent was highlighted in the 2021 Edition of The Africa Risk-Reward Index.
The Africa Risk-Reward Index is intended to highlight key trends that investors should be thinking about.
Apart from the African Development Bank’s commitment to support the development of the pharmaceutical industry on the continent with $3 billion, of which Nigeria is poised to be a major beneficiary, the report’s reward segment highlighted that Africa Finance Corporation (AFC) and Afreximbank have committed financial support for vaccine manufacturing on the continent of which Nigeria is a prime target for investment.
In April 2021, the African Union (AU) and Africa Centres for Disease Control and Prevention (CDC) launched the Partnerships for African Vaccine Manufacturing (PAVM), an initiative that aims to develop the capacity to manufacture 60 percent of Africa’s vaccines on the continent by 2040. Nigeria’s teeming and educated population puts her at an advantaged position to attract these investments.
Already, Nigeria is showing signs of embracing investment in the new normal. Nigeria, for example, amended its National Biosafety Management Agency Act of 2019 to provide the necessary framework for modern biotech research. This is coupled with the country’s developing genome sequencing capacity.
“Beyond vaccines,” according to the report, “Africa’s capacity in all other areas of its pandemic response has similarly improved. Every country in Africa now has domestic COVID-19 testing capacity, compared to just two before the pandemic struck. In Nigeria alone, the number of laboratories capable of testing for the virus has increased from six to 124, raising its daily testing capacity almost tenfold. Genome sequencing capacity, previously only available in South Africa, is now being established in Liberia, Nigeria, Senegal and Sierra Leone. Analysis by the World Health Organisation (WHO) in October 2020 identified 120 health innovation technologies created or piloted in Africa during the pandemic, from self-diagnostic tools to mechanical ventilators.”
The report stated that Nigerian biotech start-up 54Gene launched Africa’s first private lab for human whole-genome sequencing in December 2020 after raising USD 15m in funding earlier that year; the company plans to create Africa’s largest biobank.
These improvements have been facilitated in large part by multilateral financial institutions and other development partners. Most of the vaccine manufacturing projects and many of the new laboratories have been pushed forward with financial support from the EU, the World Bank and bilateral donors.
About the wider African continent, the report stated that while there are intellectual property rights issues being obstacles to the continent’s development in the health sector, individual countries have taken steps to address regulatory issues. It added that the African Continental Free Trade Agreement (AfCFTA) will help address some of these issues, especially as talks on intellectual property harmonisation begin in late 2021, although progress is likely to be slow.
The report said the private sector is also starting to take notice, spurred by opportunities across biotechnology and e-health services, such as telemedicine and digital healthcare applications. Investment in African health-tech start-ups reached USD 103m in 2020, almost four times the levels seen in 2019, while biotech investment also soared, despite an overall pandemic-related downturn in investment flows into Africa.
South African biotech start-up LifeQ secured USD 47m in funding in May to meet demand for remote health monitoring. Ghanaian start-up Yemaachi Biotechnology, typically focused on developing cancer detection and treatment strategies, received funding from Google to sequence and track COVID-19 variants.
There are restrictions on this growth, however. Biotech start-ups frequently cite access to public funding as a key challenge. This creates a huge appetite for private-sector investment that is increasingly being encouraged by governments. Rwanda, for example, introduced an investment law in February that aims to encourage biotech and other technology investments in a new Kigali Innovation City. In July, Morocco signed a memorandum of understanding with Recipharm, a pharmaceutical contract development and manufacturing company, to invest USD 500m in manufacturing facilities to achieve “vaccine sovereignty and access to future biotherapeuticals”.
“For all the challenges it faces, Africa has a track record of leapfrogging development gaps using innovation and technology. And the motivation to do so is huge. COVID-19 may be the most disruptive pandemic the continent has faced so far, but it is not the first – 41 African countries have had previous experience of pandemics – and will not be the last,” it said.
Over the past five years alone, the number of published academic papers has more than doubled in a number of countries in numerous fields. Looking at the biochemistry, genetics and molecular science subject area, the number of citable academic publications amounted to just under 4,200 in Egypt last year, making it the most prolific producer of this type of research on the continent. South Africa came in at second with 2,255 publications. While the corresponding figures for Nigeria (1,290), Ethiopia (501) and Kenya (408) are much lower, this reflects a remarkable increase from the figures produced in 2015: Nigeria with 477, Ethiopia with 185, and Kenya with 197).
This trend has been driven by a number of factors, including a pick-up in both public- and private-sector funding of research and stronger collaboration between African alumni and their host universities. Looking ahead, the digitalization of education will undoubtedly accelerate this trend. Not only has the technological experimentation stemming from the pandemic made it easier to collaborate across borders, but the pandemic has also highlighted the importance of doing so.
Plans are already in place to adapt the increased capacity and new innovations developed for COVID-19 to new and future challenges. Globally, the success of COVID-19 vaccines – and in particular the mRNA technology – has prompted a renewed interest in vaccines for other diseases. In recent months, pharmaceutical companies have announced new efforts to advance vaccines for HIV and malaria, both diseases that extract a heavy toll on Africa.
BioNTech announced on 27 August that it was considering Rwanda and Senegal as sites for malaria and tuberculosis vaccine production using mRNA technology, while the mRNA vaccine technology transfer hub being developed in South Africa has similar potential to tackle other diseases.
Developing such capacity within Africa would likely make vaccines cheaper due to reduced import tariffs, taxes and transport costs.
Beyond healthcare, the development of an African biotech industry promises advancement for another important sector on the continent: agriculture.
Roughly 60 per cent of sub-Saharan Africa’s population is reliant on agriculture, yet much of this is still at a subsistence level and much of it is threatened by climate change. Tailored biotech capacities could have significant economic implications: various studies have estimated that every dollar invested in biotech crop seeds returns four to five dollars to the farmer. They could also help this hugely important sector adapt to changing climatic conditions, which in recent years have contributed to widespread food insecurity in East Africa and elsewhere.