Health Economics as a Growth Driver
Third part of the dossier on health as a growth driver in Africa, covering productivity, infrastructure, investment attractiveness, R&D, clinical trials, intellectual property and regulatory stability.
In Africa, health is no longer only a social issue: it is now emerging as a major economic lever. Far from being a burdensome expense, investment in health systems generates multiplier effects comparable to those of road or energy infrastructure, by stimulating productivity, consolidating social stability and strengthening the attractiveness of territories for foreign investors.
In a context where the continent is experiencing rapid demographic growth, accelerated urbanization and an epidemiological transition marked by the rise of chronic diseases, African countries’ ability to turn health into a driver of development is decisive. Whether through improving human capital via life expectancy, the role of health infrastructure in economic integration, or the innovation potential linked to research and development (R&D) and clinical trials, health appears as a strategic pillar of competitiveness and economic resilience.
Health: A Strategic Investment for Economic Growth:
Life Expectancy and Economic Productivity:
Health is an essential strategic investment for stimulating economic growth, particularly in Africa. Numerous studies show a direct correlation between improved population health, measured notably through life expectancy, and GDP growth.
As Dr. Karim Bendhaou recalled during the US-Africa Business Summit, better public health can increase GDP by around 4% per year. This link is explained by multiple spillover effects: a more productive workforce, reduced absenteeism and longer active working lives. A healthy population therefore contributes more effectively and sustainably to the economy, supporting overall growth. This dynamic is particularly evident in sub-Saharan Africa, where several studies confirm that increased public health spending has a positive and lasting impact on economic growth through improved life expectancy.
Following an econometric analysis conducted in Mali and published by the Journal of Economics, this relationship was clearly demonstrated: a 1% increase in health spending leads to a 1.67% increase in GDP by improving productivity and reducing absenteeism.
Health Infrastructure and Economic Growth: A Key Lever for Attracting Foreign Investment in Africa:
Investing in health systems stimulates economic growth, much like road or energy infrastructure. Strong health systems increase worker productivity and active longevity while strengthening social stability, a key factor in attracting foreign investment.
One concrete example is Nigeria, which increased its health budget to more than 15 billion dollars in 2023, thereby supporting the development of modern health infrastructure and the establishment of universal health-insurance schemes. These efforts help attract foreign investment into the health sector and beyond, strengthening the national economy as a whole. Similarly, Egypt has invested heavily in building and renovating hospitals as well as in public-private partnerships, making it a leader in medical tourism in the Middle East-Africa region and generating more than 12 billion dollars in revenue in 2022.
In 2025, Morocco invested around 1.7 billion dirhams in modernizing five strategic university hospital centers in major cities (Casablanca, Rabat, Fez, Marrakech, Oujda) and 6.4 billion dirhams to rehabilitate 1,400 local health centers, 949 of which have already been put into service. This program helps strengthen equitable access to care and generates thousands of skilled jobs in related sectors such as construction, logistics and pharmacy. Telemedicine is also expanding rapidly in Morocco, broadening access to specialized care in remote areas while generating structural savings estimated at between 3 and 4 billion dirhams per year.
At continental level, the African Development Bank confirms and supports these ideas, estimating that closing the infrastructure gap could increase GDP growth by around 2 percentage points each year. This estimate includes health infrastructure, which is essential for improving quality of life, strengthening the business environment and promoting social cohesion.
R&D and Clinical Trials: New Actors in the Global Health Economy:
Attracting Investment in R&D and Clinical Trials:
Investing in R&D and clinical trials is a major strategic opportunity for Africa. According to a report by Fortune Business Insights, nearly 250 billion dollars are devoted each year to pharmaceutical research worldwide, around 70% of it for clinical trials, a rapidly expanding market. Although Africa currently captures only around 1%, this already represents nearly 2 billion dollars in direct returns, alongside considerable intangible benefits: skills transfer, strengthened academic capacity and development of local expertise.
To maximize this impact, structuring continental initiatives are emerging, such as the Clinical Trials Community in Africa (CTCAN), which, through international partnerships, facilitates research coordination, defines local priorities and strengthens the technical capacities of laboratories and research centers. South Africa illustrates this potential well: with an R&D intensity of 21.7%, its pharmaceutical industry has participated in more than 380 clinical trials since 2016, mobilizing more than 100,000 participants and generating many skilled jobs in biomedical sciences.
In other countries such as Malawi, the emphasis is on sustainability, through the transfer of skills from international projects to local researchers. Training in sample management, test conduct and regulatory mastery helps consolidate endogenous expertise, supported by strong agreements between local institutions and international partners.
Beyond these initiatives, Africa is also attractive because of a lower cost of conducting clinical trials than in Western countries, a competitive advantage that appeals to multinational pharmaceutical companies. This dynamic creates a unique opportunity to develop a local, innovative and competitive pharmaceutical industry, reducing dependence on imports. By stimulating endogenous R&D, the continent can strengthen its long-term health autonomy and develop treatments better adapted to the genetic specificities of its populations.
Thus, investment in R&D and clinical trials in Africa is not only a source of direct revenues estimated in the billions, but also an important lever for scientific development, skills transfer, skilled-job creation and strengthening local health systems. However, large-scale investment must take place within a stable regulatory framework with intellectual-property protection:
Importance of Intellectual-Property Protection and Regulatory Stability:
Intellectual-property (IP) protection and regulatory stability are essential elements for attracting and securing investment, particularly in Africa’s health and pharmaceutical sectors. IP encourages innovation by guaranteeing inventors and pharmaceutical companies exclusive rights over their discoveries, stimulating local research and international partnerships. In Africa, however, patenting remains limited, which can weaken investor confidence in R&D return prospects.
According to a report on the African pharmaceutical industry, most countries have legislation allowing compulsory licensing and parallel imports, but often lack strong legal infrastructure and specialized courts, as is nevertheless the case in South Africa. This situation creates regulatory uncertainty that can slow investment in local pharmaceutical research. Regulatory stability is also crucial. International investors, particularly in clinical trials and medicine manufacturing, seek transparent and predictable environments.
South Africa illustrates this well, with a robust regulatory framework for the health sector, particularly through the South African Health Products Regulatory Authority (SAHPRA), which supervises medicines, medical devices and clinical trials and ensures compliance with international standards.
Finally, from a regional perspective, organizations such as the African Intellectual Property Organization (OAPI) and the African Regional Intellectual Property Organization (ARIPO) are playing a growing role in promoting and securing intellectual-property rights in Africa. They seek to reconcile the need to protect pharmaceutical innovations with African specificities, particularly by integrating protection for traditional pharmacopoeia knowledge, an essential issue for valuing these resources while preventing abusive exploitation.
Conclusion:
Far from being a burden, health is a strategic investment with multiple economic returns: improved human capital, greater attractiveness for investors and the continent’s gradual integration into the global research and innovation economy. Turning this potential into sustainable growth nevertheless requires strengthening regulatory frameworks, protecting intellectual property and consolidating infrastructure, so that health becomes a structuring pillar of African development. But for this dynamic to reach its full effectiveness, another lever is essential: data and digitalization. It is mastery of information, its use and its protection that will make it possible to guide investments, improve transparency and give Africa genuine digital sovereignty in health. This will be the subject of the fourth and final article in this dossier.