10 Steps to Unlock Africa's Potential as a Global Health Innovator

The African continent has a chance to become a global innovator in healthcare. For years major health programs have been led by non-profit or government institutions. However, many interventions struggle to sustain and to scale without adequate innovation. We argue that a new paradigm is needed to build health systems in a more sustainable, agile way—and startups have a huge role to play.

Written by Lorraine Muluka , Isis Nyong'o Madison , Andrew Bredenkamp, PhD. , and Pascal Koenig

Background

African healthcare systems face multifaceted challenges. Outcomes across the spectrum of care are less favorable compared to other continents. Public healthcare systems are often underfunded, bureaucratic, and opaque, making it unlikely that the necessary innovations will emerge from these channels. While non-profit organizations (NPOs) have excelled at piloting new ideas, they are typically reliant on project-based external funding and less focused on iterating towards sustainable health economics—key to driving systems change.

The combination of Africa's high rate of mobile internet usage and the relative lack of entrenched health systems create a unique opportunity for innovation. Just as Africa led the world in mobile payments, there is potential for the continent to leapfrog into the forefront of digital health.

For startups to be the catalysts to improve healthcare in Africa, they will need to navigate significant obstacles. In this article, we outline a 10-step framework to enhance their chances of success. We intend this to not be prescriptive advice but rather to share insights from?the collective experience of the authors in building tech companies globally as well as from the early years of work at the Kenyan health tech startup Malaica .

Step 1: Pick a well-understood patient journey

In markets with advanced healthcare systems, startups often begin by focusing on a highly specific niche, such as developing a method to diagnose ovarian reserve for assessing conception chances. In contrast, early innovators in African healthcare have taken on the challenge of building entirely new hospital groups, pharmacy chains, or broad telemedicine solutions. This difference in approach is understandable: African healthcare markets are much smaller, with less existing infrastructure, requiring startups to capture a larger market share to achieve meaningful revenue.

However, creating such structures is complex, costly, and hard to differentiate. We believe the more effective strategy is to focus on a specific vertical, building a comprehensive patient journey within that area. At Malaica, for example, we are laser-focused on maternal health, but there are many other verticals that could be developed similarly.

Step 2: Start urban

The need for improved healthcare is greatest in low-income rural areas. While many NPOs and startups aim to address this challenge, building a successful business in these regions is extremely difficult. The limited disposable income makes it hard to generate meaningful revenue, let alone trying to achieve positive unit economics.?

We strongly believe that starting in upper and middle-income urban areas is the more viable approach for many healthcare solutions. Focusing on these segments will lead to break-even much more quickly. Remember that the African continent only gets a tiny fraction of global venture capital (VC) or startup funding, and early stage grants will oftentimes restrict startups from iterating fast and getting to product-market fit.?

We will talk about lower income/rural markets again later in Step 7.

Step 3: Go for a hybrid offering

Online care surged during the pandemic. But most experts agree that the future of healthcare lies in hybrid models—seamlessly combining online services with brick-and-mortar care. Starting in urban areas, as we propose, naturally lends itself to this hybrid approach—something that would be much more challenging to implement in rural settings.

Hybrid care not only tends to be more trusted by patients but it also offers a less obvious advantage: it significantly boosts customer lifetime value (LTV). Given that customer acquisition costs are often higher than anticipated, a meaningful LTV is essential for building a sustainable business.

It is important to note that hybrid care doesn’t necessarily mean building brick-and-mortar facilities yourself. At Malaica, we’ve developed innovative ways to deliver hybrid solutions while remaining asset-light.

Step 4: Start B2C

Many African healthcare investors shy away from B2C (business-to-consumer) models due to the lack of successful benchmarks. However, despite this common skepticism, we believe that starting with a B2C approach is a good strategy: It forces startups to refine their products based on direct feedback from end customers rather than being driven by the needs of providers or payers. High customer satisfaction leads to strong retention rates and valuable word-of-mouth referrals—both essential for building a robust business over time. Last but not least, B2C models typically allow for faster iteration and growth compared to B2B (business-to-business) models.

Step 5: Phase in B2B partners

Once your product gains traction with B2C clients, it's time to initiate discussions with B2B partners.?

Depending on your startup's focus, B2B partners might include insurers, healthcare providers (such as hospitals, doctors, and pharmacies), employers, or businesses with complementary offerings and relevant distribution channels such as telcos.

If done well, B2B partners will be able to drive massive revenue growth.

Step 6: Get unit economics right

With your product offering resonating and the business model gaining traction, it’s time to focus on optimizing unit economics. While some (few) startups get this right already before, this is usually very hard work: Iterate until the customer lifetime value is 3 times higher than customer acquisition cost. Or in more technical terms: LTV:CAC = 3+

This is the way to get the core business break-even, and with this become independent of (unpredictable) fundraising markets.

Step 7: Radical cost reduction

The previous steps have helped to understand customer pain points, build a product that patients love, and establish a business that is financially sustainable. However, this does not yet mean that the startup is making the world a better place or that it reaches relevant scale.?

At this step we propose to consider radical cost reduction. Aim high—what would need to be done to offer the product or service at half the cost? At a tenth of the cost? At Malaica we have been surprised to see what is possible if the team thinks outside of the box. The use of AI, task shifting and organizational redesign have been key factors for us to come up with massive potential for cost reduction.

Here’s where the real magic happens: With significantly lower costs, the startup can serve and appeal to much larger customer segments, potentially even in the lowest-income and most rural markets. Funding from donors can significantly de-risk such efforts at this stage: Many donors are eager to support ventures that reach lower-income segments with financially sustainable models.

Step 8: Get into public health systems

It is possible to run (unpaid) pilot studies with public health systems relatively quickly. However, few startups have actually been able to build a meaningful business this way. Things typically get complicated, with many stakeholders involved and little room for the fast iterations needed in early-stage startup development.

So while we recommend not to partner too quickly with public health systems, it is now time to do this. You have a great product at the right price point to make it accessible to the mass market. Something that is differentiated and helps public providers to step up their game.

Various African countries have introduced “devolved” structures, where decision power and financing lies with regional rather than national bodies. This is good news for startups: Rather than being dependent on the decision of one high-level authority there is a chance to select the places that are most open to your solution, and iterate your way up to get meaningful coverage across the country.

Step 9: Internationalize

Most startups internationalize too early: While founders get a lot of “high fives” for every new country they are launching, this is typically leading to a lot of waste. Every new country adds massive complexity and requires substantial investment.

But once the core business is profitable and stable is the time to internationalize.?

While some initial piloting may be done out of the home market, the startup will most probably need to build a local team to develop a meaningful business. A local CEO may be supported by some core people who relocate from the headquarters or at least spend significant time there.

Rather than starting with B2C you will probably directly build a B2B business in the new market. Ideally powered by partners that you already work with in your home market. Last but not least, don't be afraid of entering the market via an acquisition: E.g., the merger of Malaica with MumsVillage has been very valuable for us to accelerate traction in Kenya.

Step 10: Spark a virtuous circle

Getting to scale triggers various positive effects:

• Improved care: Innovators who reach this step will improve the lives of many patients. Think diabetics who don’t lose their eyesight due to frequent hyperglycemia. Think children that can play soccer again after a broken limb. Think mothers who don’t lose their baby due to preeclampsia.
• Jobs: Africa is losing medical providers at a massive scale. This is not just due to higher pay in other places, but also because they are often poorly treated in (public) health systems. Creating opportunities in an entrepreneurial setting can go a long way: Malaica has the vision to create thousands of jobs over this decade, investing heavily into a healthy company culture.
• Shareholder value: Successful exits lead to higher investments. This correlation is direct and well documented. Rather than being dependent on development banks and philanthropists, African countries should generate their own innovation ecosystems. Successful ones such as Silicon Valley, Shenzhen and Bangalore have created immense value for their countries.
• Public health systems: Last but not least, we hope that successful startups will positively impact public health providers. Various (European) countries have gotten a good mix between strong, accessible public health systems enhanced by (mostly private) innovators. This is where we would love to see African countries heading over the coming decades.

There will always be a place for non-profit health programs, especially in areas which are hard to build sustainable business models around. But we think these should be the exception rather than the rule. The huge advantage of the approach described above is financial sustainability and little dependency on outside donors or government intervention to deliver impact.

While we are convinced that this could be a blueprint for a systemic change, we have not proven it yet. Would you challenge any of the proposed steps? Are we missing anything? We would love to hear your thoughts!