Smart policies, not more dependence, will boost Africa’s health financing

This year’s abrupt cuts in foreign aid have exposed vulnerable health systems across Africa, disrupting lifesaving care for millions of people. The collapse in official development assistance has damaged myriad programs — from HIV treatment to maternal care — but the seismic shifts are also a unique opportunity to develop more sustainable financing systems that move away from dependence. To meet this moment, African governments must prioritize smart domestic resource mobilization, while investors — both local and global — should recognize the untapped potential of Africa’s health care sector. The case for change is overwhelming. Africa is home to the world’s youngest population, and the continent is projected to make up a quarter of humanity by 2050. Yet people living in Africa, who face the bulk of the global disease burden, are typically last in line to receive essential health care. Lack of access to medicine is not only costing lives; it is also undermining development, since a healthy population is a prerequisite for economic growth. Today, although African nations are investing in health care, the amounts are woefully inadequate. Two decades after the Abuja Declaration pledged to allocate at least 15% of national budgets to health, the average spend across the African Union’s 55 member countries was just 7.4% in 2021, with only Cape Verde (15.8%) and South Africa (15.3%) meeting the target. It does not have to be this way. There are multiple levers that governments can pull to secure the sustained financing that is needed to not only close current gaps in access, but to match future health care needs. They include fiscal policies, local manufacturing, improved debt management, using diaspora capital, and leveraging the potential of artificial intelligence. Here is a deep dive into each of these levers: 1. Recognize the potential of smart health taxes Smart health taxes offer a double dividend of healthier populations and stronger public finances. By increasing taxes on tobacco, alcohol, and sugary beverages by 50%, governments around the world could prevent more than 50 million premature deaths over the next 50 years and raise some $20 trillion of additional revenue, according to the Task Force on Fiscal Policy for Health. While more can be done to counter the rising burden of noncommunicable diseases, which already account for 37% of deaths across Africa, some countries on the continent are already leveraging this potential. In Ghana, an increase in tobacco tax from 23% in 2020 to 38% in 2024 more than doubled tax revenue, while South Africa’s Health Promotion Levy excise tax on sugary beverages raised $319 million in its first two years. 2. Promote local manufacturing Producing vaccines and medicines locally on the African continent will reduce reliance on imports, shorten supply chains, increase resilience, and lower long-term costs — provided the right products are chosen and governments commit to long-term local procurement. Africa already has some strong foundations here, with manufacturers on the continent producing quality medicines for HIV, malaria, and tuberculosis. In 2025, this capacity expanded further with approved local manufacturing of diagnostic test kits for malaria, HIV, and sickle cell disease, as well as platforms for the local production of mRNA vaccines and the first-line HIV treatment TLD (tenofovir, lamivudine, and dolutegravir). Encouragingly, the 2024 Access to Medicine Index found 14 technology transfers in place across the continent. With a combined market of 1.4 billion people, Africa has the potential to cut its 99% dependency on imported vaccines and 95% dependency on all imported health products. By boosting domestic production and increasing local procurement, African countries can increase health security and build a sustainable market for health care products. 3. Improve debt management New financing models offer smarter ways to borrow for health care investment. Many African countries face mounting debt pressures that constrain social spending, including on health, aggravating pressures on a continent that has seen a 41% increase in public health emergencies from 2022 to 2024. The good news is that new approaches are emerging. Afreximbank, for example, has pledged a $2 billion facility to support health care and product manufacturing, while blended finance and volume guarantees can further attract private and philanthropic investment. Philanthropy, a critical source of capital in Africa, can play a catalytic role by seeding early-stage health care initiatives and building confidence for larger institutional investors. This is important when it comes to private equity, where health investment is still lagging far behind other sectors, despite a sharp rise in overall private equity activity in Africa in recent years. 4. Leverage the continent’s middle class and diaspora Health care systems can tap into the wealth of Africa’s rapidly growing middle class, while simultaneously meeting its demand for quality health care. Private providers have already demonstrated how profitable and impactful this can be. Launched in 2018, Ghana’s DentalKing software has pioneered the digital transformation of dental clinics, expanding across Nigeria, Kenya, Egypt, Morocco, and South Africa. Similarly, the Africa Healthcare Network, founded in Rwanda in 2015, operates more than 60 renal care dialysis clinics. These initiatives show how African health care can be a profitable business, with models such as these opening discussions on how to leverage private sector health care models to contribute to public health care needs for poorer communities. The same thinking could be applied to diaspora capital. Annual remittances totaling $100 billion are a lifeline to 200 million Africans and already finance health care at the household level. With the right digital and financial tools, a portion of these flows could be channeled toward predictable health financing rather than out-of-pocket payments. 5. Lean into technology Finally, governments need to harness the potential of Africa’s big demographic shift. Within five years, half of all Africans will be Generation Alpha, or born after 2010. These digital natives represent the future of the workforce and a vast consumer market, and their coming of age presents a unique opportunity to apply technology, data, and AI to drive efficiencies and improve productivity across the health care sector. Even modest improvements from the application of technology to telehealth or other data-driven systems can raise health care quality significantly by expanding coverage and reducing costs. Africa’s health financing challenge is real, but so too is its potential. By channeling investment into innovation, local industries, and smarter financial tools, Africa can build health care resilience while fueling economic growth. The prize is twofold: to close the health gap and drive prosperity for generations to come.