BMI View: South Africa will continue to be one of the most important markets in Africa for pharmaceutical companies, medical device companies and healthcare provider s thanks largely to its economi e s of scale. This report provides an overview of the demographic trends, healthcare resources and public/private sector investment s within South Africa's nine provinces .
South Africa is the largest economy on the African continent with a population of 55.0mn. It also belongs to the 'BRICS' group of emerging world markets. However, economic growth has slowed as of late due to low global commodity prices and weakness in the country's important mining sector. Nevertheless, the economy is showing some signs of regaining traction and this will improve the outlook for the healthcare sector.
According to the UNAIDS Gap Report (2016), South Africa suffers from the biggest and most high-profile HIV epidemic in the world, with an estimated 7mn people living with the disease in 2015. In the same year, there were 380,000 reported new cases and 180,000 deaths from AIDS-related illnesses. Combating the spread of aids is an ongoing battle. The prevalence of infectious diseases, unmet medical needs and growing economic prosperity make South Africa an attractive healthcare market for pharmaceutical companies.
The majority of the South African population resides in the north east and south west parts of the country and the number of hospitals in each province tends to be roughly proportional to regional population figures. However, the degree of public and private healthcare provision varies depending on a province's level of economic development (gross state product per capita) and, to some extent, the burden of HIV/AIDS and other infectious diseases, including cholera and malaria.
More than half of South Africa's population resides within the north east provinces of Gauteng and KwaZulu-Natal and the coastal province of the Eastern Cape. Gauteng has the largest share of the population followed by KwaZulu-Natal and the Eastern Cape. Gauteng is the business hub, boasting the highest absolute and per capita gross state product. It is bordered by provinces whose economies are weaker and are driven by agriculture and mining, and tends to attract those seeking commercial employment opportunities and higher incomes. Healthcare infrastructure is highly concentrated in this densely populated area and, correspondingly, the increase in population and the rise in incomes have boosted the private sector, providing some relief to public sector hospitals. Meanwhile, in the south west of the country the Western Cape follows in second place as the next wealthiest province. It is home to approximately 11% of South Africa's population. Although its relatively strong economic standing is appealing, it does not attract much inward migration, as it is bordered by the sparsely populated Northern Cape, which has the smallest population, and the economically underdeveloped Eastern Cape.
Government healthcare expenditure is likely to be highest in the Eastern Cape, where hospital provision is greatest and personal spending power lowest. On the other hand, government provision for healthcare is somewhat lacking in the wealthiest province of Gauteng, which boasts a high number of private hospitals with healthcare spending driven by private healthcare consumption.
The key trends, by healthcare indicator, are as follows:
Government Healthcare Provision
Provision of healthcare infrastructure and services by the state is largely skewed towards provinces with weak economies and the lowest gross state product per capita - such as those of the Eastern Cape, Limpopo, KwaZulu-Natal and Mpumalanga. South Africa is moving closer to introducing universal healthcare coverage following the release of the White Paper on the country's National Health Insurance (NHI) scheme in 2015. The cost of implementing the scheme is projected to reach ZAR225bn (USD14.9bn) by 2025; however, the source of funding remains largely uncertain, according to South Africa's Health Minister Aaron Motsoaledi. It is expected that it will be financed through an increase in VAT, income tax and a payroll levy on all employed South Africans though this is yet to be confirmed. We highlight that these proposals will put further pressure on already overburdened taxpayers.
Moreover, poverty is widespread in South Africa (43% of the population live on less than USD2 per day). As such, publically subsidised healthcare services are essential for these members of the population, though only 30% of doctors in the country practice in the public sector. If universal healthcare is to be achieved in South Africa, the private sector will have to be engaged in order to bridge the gap in terms of capacity. However, there is currently a great deal of uncertainty as to how the South African government will persuade more private practitioners to work in the public healthcare system.
Maternal And Child Healthcare Services
A steady decline across all provinces in terms of the total number of deaths and death rates over 2008-2013 suggest that widespread improvements are being made in the provision and level of healthcare services. However, despite the generalisation, we note that the quality of maternal and child healthcare services continues to vary across each individual province. Crude birth rates have increased between 2008 and 2014 in Gauteng and the Northern Cape but have decreased elsewhere, giving an aggregated decrease from 25.9 in 2008 to 21.5 per 1000 population in 2014.
Private Healthcare Provision
The three provinces with the highest gross state product - Gauteng, KwaZulu-Natal and the Western Cape - boast the highest number of private hospitals and have attracted the most investment from private healthcare companies. While KwaZulu-Natal continues to attract high levels of public healthcare investment as a result of the significant prevalence of HIV/AIDS, cholera and malaria there, Gauteng, the wealthiest province, has one of the lowest numbers of public hospitals.
The prevalence of HIV/AIDS in South Africa follows provincial divisions. Provinces that recorded the highest HIV prevalence were KwaZulu-Natal (with the lowest life expectancy in 2015) and Mpumalanga. Further, more than half of South African residents with HIV/AIDS are located in Gauteng and KwaZulu-Natal. In contrast, the Northern Cape and Western Cape recorded the lowest prevalence, at less than 10%.
South Africa continues to have the largest state-funded antiretroviral (ARV)-programme in the world. In the country's 2016/2017 budget, the national ARV treatment programme was set to receive funding of ZAR15.4bn (USD960mn), a significant increase from the ZAR13.7bn (USD850mn) in the 2015/2016 fiscal year. The budget also outlined medium-term expenditure plans, including increasing funding towards the country's ARV treatment programme to reach ZAR17.4bn (USD1.08bn) in the 2017/18 fiscal year.
BMI Research’s Understanding South Africa's Regional Healthcare Markets Report allows you to explore South Africa’s regional markets by giving you a practical evaluation of opportunity and risk at the under-appreciated sub-national level.
Rich in statistics, charts and maps, this is the one report you need to fully appreciate South Africa’s diverse regional health environments in the context of neighbouring provinces/states/territories and the national picture.
This unique report uses data sourced in-house, providing analysis and forecasts from our experts covering key areas such as:
- Healthcare Expenditure
- Healthcare Facilities
- Healthcare Personnel
- Economic Activity
Published by BMI Research- experts in the pharmaceutical, medical devices and healthcare field for over 30 years, Understanding South Africa's Regional Healthcare Markets report brings together a range of often difficult to source information in one single, convenient and comprehensive publication.