Click to watch🍔 Quick Bite: Africa’s healthtech sector is having a reality check. From Ilara Health’s layoffs in Kenya to Medsaf’s shutdown in Nigeria and 54gene’s collapse, startups that once rode the pandemic-era hype are now struggling with cash flow issues, cautious investors, and reduced donor support.
🧠 The Breakdown
Africa’s healthtech story has never been short of promise. The continent carries some of the world’s lowest doctor-to-patient ratios, sometimes as stark as one doctor for every 5,000 people. The potential for technology to close these gaps drew investor interest, especially during the COVID-19 pandemic, when digital health solutions seemed indispensable.
Yet, five years later, African healthtech is in a moment of reckoning. Most recently, Ilara Health restructured and laid off staff despite closing a $4.2 million round last year. YC-backed Reliance Health reportedly laid off more than 100 employees earlier this year as it sought to break even. Nigeria’s Medsaf shut down after struggling with fundraising and unpaid invoices. And 54gene, which raised roughly $45 million amid the pandemic boom, began winding down in 2023 after revenue collapsed.
These stories demonstrate that the sector’s promise has collided with harsh economic realities. The global digital health market is forecast to reach $1.5 trillion by 2030; yet, beneath the promise lies a deeper story about how innovation collides with fragmented systems, limited purchasing power, and slow regulatory regimes.
A sector born in crisis
The rise of healthtech in Africa has always been tied to crisis. From inadequate hospitals and fragile pharmaceutical supply chains to overburdened public systems, the gap for innovation was clear. Startups rushed to fill it, buoyed by investor optimism during the pandemic years. According to Partech’s 2021 report, healthtech attracted nearly $392 million in funding that year, making it one of the fastest-growing verticals on the continent.
Click to viewYet the cracks appeared once global funding began to slow. Investors became cautious as startups struggled to translate growth into profitability. 54gene experienced a significant decline in revenue as COVID-19 testing demand decreased, ultimately leading to its closure in 2023. Medsaf’s shutdown underscored the same reality: unit economics in fragmented health markets are unforgiving without deep pockets and patient capital.
When investor risk appetite tightens, healthtech gets hit hard. Models that depend on capital to finance inventory, diagnostic devices or long sales cycles suddenly show steep cash-flow risk. Medsaf’s shutdown laid bare a fragile reality: customers often don’t pay on predictable schedules. Weak payment discipline turns suppliers into lenders, and when a large contract is lost, the dominoes fall.
Beyond company balance sheets, the human cost is immediate. Layoffs ripple through fragile ecosystems of suppliers, lab technicians and sales teams. The sector’s talent gap, worsened by brain drain as skilled clinicians leave for better pay abroad, compounds the problem. Another structural shock is the shifting donor landscape. Recent changes in the US foreign aid policy reshaped grants and programme funding that many health projects rely on.
Where value still lies
Healthcare is not software that can be scaled purely through distribution or network effects. Supplying drugs, diagnostics, or imaging requires stock, logistics, maintenance and compliance. Regulatory approval timelines from bodies such as Nigeria’s National Agency for Food and Drug Administration and Control (NAFDAC) can delay launches and add cost. Patients often prefer in-person care, but clinics frequently lack reliable power and internet, and the talent mix required is rare and expensive.
That said, parts of the market are finding traction. Drone logistics firm Zipline has demonstrated the value of last-mile delivery for blood and vaccines in Rwanda and Ghana. Insurance-tech hybrids are another place to watch. Startups that bundle pre-paid or employer-sponsored insurance with telemedicine services help mitigate the issue of one-off payments and create more stable revenue streams.
Donor programmes are also shifting. Investing in Innovation (i3), a Gates Foundation-backed initiative, has deployed approximately $1.6 million to a cohort of 15 African health tech startups and $3 million in direct grants over the past two years. These grants are small compared with VC rounds, but they buy time for pilots and partnerships that de-risk follow-on capital.
The second curve: Resilience or retreat?
Despite the setbacks, healthtech in Africa is not in retreat. Instead of growth-at-all-costs, investors and founders are emphasising sustainability and partnerships. mPharma’s restructuring reflects this pivot, with a focus on doubling down on partnerships with pharmacies and hospitals, rather than pursuing expansion across multiple countries.
There are bright spots. Helium Health has successfully expanded into Saudi Arabia since 2021, showing that African healthtech can compete globally when it finds scalable models. In Rwanda, Babyl has leveraged government partnerships to reach millions via digital consultations. These examples suggest that while rapid, well-funded experimentation may be over, a more grounded phase where only the strongest models survive is emerging.
Some models are adapting. Insurance-technology hybrids, such as Reliance Health in Nigeria and Turaco in East Africa, address the payer problem by spreading risk across larger groups. In Uganda, Rocket Health has blended telemedicine with physical diagnostic hubs and home delivery. Increasingly, startups are choosing to partner with corporates and governments as service providers rather than chasing fragmented individual customers.
Africa’s health challenges remain massive; that is why founders continue to enter the space despite the setbacks. But that ambition must now be matched by resilience.
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