Sangu Delle, Africa Health Holdings, on building sustainable healthcare in Africa

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In this episode, we sat down with Sangu Delle, the Chairman and CEO of Africa Health Holdings. Africa Health Holdings is focused on building a sustainable healthcare ecosystem in Africa through its network of healthcare facilities that it owns and manages. To date, Africa Health Holdings portfolio companies have served over 510,000 patients through malaria treatment, family planning, community outreach programs, and more. Africa Health Holdings currently has 40 facilities across Kenya, Nigeria and Ghana serving 200,000 patients every year.

What we discussed:

• From a young age, Sangu Delle developed a pan-African consciousness and the desire to create sustainable and positive change in Africa in part from early exposure to African refugees through his doctor and human rights activist father.
• Given the disproportionate disease burden the African continent faces and the brain drain of Africa-born healthcare workers practicing outside of Africa, Africa faces large gaps in healthcare. The private sector must supplement fiscally-constrained African governments to improve healthcare access, quality, and affordability.
• Africa presents an attractive investment opportunity given secular population growth in the region outpacing every other country in the world. Investments in Africa have picked up traction recently through major funding for African startups such as FlutterWave, and the acquisition of Nigeria-based payments startup Paystack by Stripe.

Start to 11:43: Developing pan-Africa awareness and the role of investment and entrepreneurship in creating sustainable growth

• On growing up with a pan-African consciousness: Growing up in Ghana, Sangu Delle was always aware of pan-Africanism. Many members of his family hail from across the African continent. Sangu was also exposed to events happening across the continent from a young age. His father is a doctor and human rights activist, so Sangu grew up around refugees from Sierra Leone and Liberia. He met refugees with limbs chopped off, and grandmothers who faced violence from rebels. These experiences shaped his consciousness and helped him realize he would be doing something that has something to do with pan-Africanism through his work.
• On inequalities in Africa: There are many examples of inequality and injustice across the African continent. There are countries like Rwanda that lead the continent with gender representation in government. There are also significant shortcomings in many other African countries across metrics such as gender parity and socioeconomic equality. There are also ethnic inequalities such as apartheid and its vestiges in South Africa.

“The Economist had a cover: pitch black with the contours of the Africa continent and the label ‘the hopeless continent’ and I remember having a discussion with my father at the time, wondering ‘Why do they think we are hopeless?’ I felt motivated and inspired to fight against that egregious narrative and challenge the misconception of my continent as a place without hope.”

• On entrepreneurship and investing in startups: Growing up, Sangu was a self-proclaimed human rights “down with the system” activist. If you had asked the younger Sangu leading a mass demonstration for workers rights in college whether he would work in business, he would say “no way.” A few things changed his mind. The first was when he set up a water nonprofit in Africa. Their first project was to install water and sanitation infrastructure in Ghana. At one of the community meetings, Sangu asked the attendees what were the greatest needs in the community. A member of the community said, “We want jobs,” which sparked a broader conversation where it became clear that while the community appreciated the water and sanitation infrastructure, they wanted more to be empowered to achieve a sustainable level of economic productivity. This opened Sangu’s eyes to using entrepreneurship and investment as tools to bring sustainable change to Africa.

11:43–21:34: Healthcare gaps in the African continent and Sangu Delle’s personal motivation for focusing on healthcare

• A personal tie to healthcare: Healthcare is very personal for Sangu Delle. Sangu had a cousin who lived 100 miles from Accra in a town that did not have access to quality healthcare. His cousin was sick, and without receiving the right type of lab test he was misdiagnosed and treated for malaria when in reality he had a problem with his kidneys. By the time they discovered the misdiagnosis, his cousin had already passed away. This was very painful for Sangu’s family because his cousin’s disease was a very needless death. If his cousin had had access to a decent, basic level of healthcare, he would still be alive.

Africa has ~15% of the global population, yet accounts for ~26% of the global disease burden.

• Disproportionate disease burden and healthcare funding in Africa: Africa is massive and very diverse. At a high level, Africa has ~15% of the global population, yet accounts for ~26% of the global disease burden. However, Africa only has 3% of healthcare workers globally, and are only responsible for 1% of global health expenditure. Africa’s population is forecasted to grow to 2.5 billion over the next 29 years, which is an increase of approximately 1.5 billion people. This population growth will continue to tax the existing healthcare infrastructure.
• Healthcare gaps across Africa: Africa faces several challenges in building a sustainable and effective healthcare system. First, there is a problem of unequal access to healthcare services. Healthcare services are also massively fragmented, leading to a lack of economies of scale. Quality is another issue, where standardization of care delivery is critical. There are also gaps in the affordability of services. These issues differ in severity across African countries. For example, South Africa and Kenya have more sophisticated healthcare markets while Liberia has a bigger healthcare infrastructure deficit. However, the totality of the healthcare gap in Africa is large.
• On the brain drain of healthcare providers: Research indicates that as of 2000, 65,000 Africa-born physicians or ~20% of all Africa-born physicians and 70,000 Africa-born nurses or ~10% of Africa-born nurses were working in a developed country outside of Africa. The brain drain of African-educated healthcare workers migrating to countries such as the U.S. with higher wages has been well-documented.
• Role of the private sector in addressing healthcare inequities in Africa: African governments suffer from fiscal constraints that limit their ability to independently plug the healthcare gap. As a result, the private sector needs to step in to supplement government healthcare initiatives. In particular, the private sector can provide better financing to address the affordability issue and enable better infrastructure and access to more doctors and nurses with higher retention. Financing is an especially pertinent issue as insurance penetration in many African regions is less than 10%.
• Potential for scaling across borders: Digital technology adoption in healthcare is a potential solution to alleviate the challenge of sourcing local healthcare providers, especially specialists. Progress in telemedicine combined with the recent passage of the Africa Free Trade Agreement, creates an opportunity for a harmonization of regulation across countries that will enable information sharing and scaling emerging digital health technologies.

21:34–31:12: Deep dive on Africa Health Holdings and how its model can unlock synergies of scale

• On Africa Health Holdings’ goal: The mantra of Africa Health Holdings (AHH) is “We are building Africa’s healthcare future.” AHH aims to solve the healthcare needs of the African consumer. AHH democratizes access through adapting telemedicine for the Africa context and scaling a hybrid model of virtual and in-person care delivery. Smartphone penetration is still limited in many African countries despite its recent growth, and mobile data affordability is still an issue. Thus, traditional telemedicine models administered through smartphones may be prohibitive for many African populations. To address this, AHH installs clinics along with telemedicine options, where patients can come into clinics to use the free Internet to interact with doctors virtually. This is one example of how AHH uses innovative technology and adapts them to serve the African consumer.
• On Africa Health Holding’s operations: AHH acquires, owns, and manages subsidiary companies. AHH consolidates portfolio companies under one central management structure to take advantage of economies of scale to achieve synergies and lower cost. AHH intentionally chooses to own companies instead of acting as advisors.
• On areas of focus within AHH: Digital healthcare solutions have been a focus of AHH’s investment thesis. AHH had invested in telemedicine and remote monitoring pre-COVID. COVID has accelerated consumer adoption of telemedicine and other digital methods, expanding opportunities to continue pushing digital healthcare solutions to meet African consumer needs. AHH also focuses on pan-African solutions. For example, one telemedicine solution AHH piloted in Ghana is now being launched in Nigeria and Kenya.
• Biggest challenges and benefits of AHH’s model: One of the biggest benefits of the AHH model is the ability to scale. Through acquisitions, AHH can leverage purchasing power and data aggregation across its portfolio companies. Another upside of the model is the ability to implement change and operationalize synergies. As an advisor, AHH has no direct control over the operations of portfolio companies. Fundamentally, Delle believes that AHH unlocks greater return on investment from ownership through the ability to directly make the operations of subsidiary companies more efficient.
• On building an investor base: Africa Health Holdings has been able to attract leading global investors through its ability to successfully tell its story and demonstrate impact on the ground. AHH has U.S.-based investors such as Breyer Capital, Romulus Capital, TRB Advisors, Valiant Capital, as well as investors in Asia (M3, Inc.) and Africa (4DX Ventures, Kepple Ventures, SUNU Capital). AHH looks for investors that are aligned on the values and mission of the company. The diverse investor base has enabled AHH to leverage the rich expertise of investors to guide its mission to improve Africa’s healthcare system.
• On their role in building broader healthcare infrastructure: Partnerships are key to Africa Health Holding’s growth strategy. AHH focuses on developing technologies, but also on partnering with others, especially in deploying AI. AHH recognizes the massive potential of AI in healthcare, and seeks to collaborate with others to ensure AI technology is not inadvertently racist or sexist.

31:12–39:20: Forward-looking projections, and reasons for investing in Africa

• Short-term and long-term healthcare views for Africa: In the short-term, there is a large opportunity in consolidation to create scale because of the level of fragmentation. This will also lead to an improvement in current operations. For example, there is a huge wave of doctor-owned facilities with no succession plans. Professionalizing these facilities and improving them would unlock a lot of value. In the long term, digital health is an attractive segment to bring greater access and affordability to healthcare in Africa.
• On high potential applications of digital health: Virtual care delivery is particularly effective for some health verticals such as mental health. Telemedicine in behavioral health helps solve the issue of stigma that may deter people from visiting a mental health facility in person. Dermatology is another area that benefits from virtual care. Skin problems are among the top 5 disease burdens in Africa, and are often linked to other diseases. Telemedicine can make dermatology services more accessible for more people. Wearables and individualized genetics data can also better enable preventative care.
• On COVID-19 vaccine distribution and economic recovery: COVAX has supported vaccine distribution in parts of Africa which has impacted ~1% of the local populations. There is still a massive gap in vaccine access and serious concerns that despite the support from international initiatives such as COVAX, Africa will not approach optimal numbers for vaccination. Here, the private sector can play a major role. Africa Health Holdings has partnered with mPharma, which has elevated an ambitious program to vaccinate 100 million Africans by leveraging public-private partnerships and private sector funding. This project ties public health to economic recovery. Unlike the U.S., where there have been massive stimulus bills, most African countries lack the financial resources to pass stimulus bills. As a result, there is a compelling need to get people back to work and get the economy back on track.
• Reasons for investing in Africa: Africa will not provide the highest returns in the world, but Africa is currently the fastest growing region globally and will continue to grow the fastest through the foreseeable future. From now until 2050, the world’s population will be flat or declining except for Africa and Asia. From 2055 onwards until the end of the century, population growth in Asia will decline while Africa’s population will continue to increase until 2100. From this perspective, it makes sense for investors to seek exposure to this level of growth.
• Investors taking notice of investment opportunities in Africa: Golden Palm was an early investor in FlutterWave when it was at a $2.5M valuation. Recently, FlutterWave announced a Series C round where Tiger Global, Avenir Growth Capital, Salesforce Ventures, and others participated in the funding round, driving FlutterWave’s valuation at over $1B and elevating its status as a unicorn. In another example, U.S. payments company Stripe recently acquired Nigerian-based fintech startup Paystack to expand its operations in the African continent. These acquisitions and large funding rounds for African startups are validating investment opportunities on the African continent. While serious investment in Africa is still in the early stages, there is vast potential for additional investment opportunities.

In 2040, 1 in 4 people globally will be African.

39:20-End: Taking a broader perspective on life

• On general advice for listeners: A mentor told Sangu Delle to imagine it was his 60th birthday and he needed to give a speech reflecting on his life. It was an interesting exercise because when he removed himself from focusing on the day-to-day, Delle could think about his life at a high level and ask the difficult question of “What do I want my life to look like?” Delle also recognized that life is a gift, though people often take life for granted. Delle advises everyone to consider life from a broader perspective and use these reflections as a guide in life.
• On the important things in life: According to Sangu Delle, the most important aspects in life are people and experiences. Too often, people are consumed by juggling the day-to-day dimensions of life and need to be intentional with their time to invest in relationships. Delle suggests talking to people at a real level, not with the intent of networking, to build genuine relationships and community.

“Immerse yourself in experiences, see the world. Everyone should visit an African country. Put yourself out of your comfort zone. Look out for diverse experiences and communities. Treasure life.”