The African Development Bank (AfDB) has approved a $20 million equity investment in Rx Healthcare Fund in Nigeria and six other African countries.

This approval, according to the bank, is aimed at improving healthcare delivery across the continent.

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The RxHF aims to address the increasing demands for adequate high-quality healthcare services in various countries of North African and Sub-Saharan Africa.

To provide increased capital

The fund is expected to provide increased capital to the companies which show high potential for growth in diagnostics, hospitals and pharmaceutical.

The bank confirmed that the investments will be made in Egypt, Tunisia, and Morocco and then scaled up into Ethiopia, Kenya, Nigeria and Sudan with substantial transfer of lessons learned and latest healthcare technology.

Africa is hampered by the widening healthcare delivery gap that is characterized by insufficient healthcare infrastructure, workforce shortages and low insurance coverage in the face of a disproportionate disease burden.

The region’s high level of disease, combined with its growing population base and changing lifestyle calls for a long-term improvement of healthcare system and significant participation of private healthcare providers.

“Africa’s rising middle class is expected to reach 50 per cent of the continent’s population by 2020, underpinned by robust macro fundamentals and continuing progress towards achievement of the Sustainable Development Goals, providing a boost to the healthcare market,’’ AfDB said in a statement.

It targets middle income class

The target client of the RxHF is the middle income class that needs specialized high quality, but affordable healthcare service within Africa to benefit from the Fund’s investments geared towards mid-size healthcare facilities.

The healthcare-focused private equity (PE) funds in Africa with the capability to build an integrated healthcare eco-system across healthcare facilities, service providers and equipment are very limited.

The Rx Healthcare Fund management team will tap into the EFG Hermes Private Equity teams’ combined 110 years of private equity management experience and the operation team’s over 70 years of knowledge as well as network in healthcare industry.

The Bank’s participation in this Fund will help advance the agenda of the Bank’s High 5 priority areas – in particular, “Improve the quality of life for the people of Africa” – through creation of affordable high-quality healthcare infrastructure.