Minding the Gap: Blending Capital for Africa’s Health Sector

Africa faces a US$66 billion annual health financing gap, compounded by a sharp decline in official development assistance and persistent constraints on domestic public expenditure. While domestic allocation remains central to health financing, it alone cannot compensate for this critical gap. Blended finance, the strategic use of public or philanthropic capital to mobilize private investment for development outcomes, presents a credible opportunity to narrow this gap in parallel with increased domestic allocations.

This commentary examines how existing platforms in Africa could advance blended finance for health. The Program for Investment and Financing Africa’s Health Sector (PIFAH) serves as a continental platform for pipeline development and investment structuring, offering AU endorsement, government buy-in, and a pool of bankable health investment opportunities through its Health Market Atlas. This creates a fertile ground for collaboration with health-focused blended-finance initiatives such as the Transform Health Fund (THF), which bring the financial structuring expertise and an established track record needed to attract development finance institutions and private investors to health.

We argue that PIFAH’s sovereign-anchored pipeline, when overlapped with health-focused blended finance facilities like THF, can generate the early evidence needed to establish African health markets as a credible destination for commercial capital. While structural risks around equity, governance, and capital concentration require deliberate design, an operational framework anchored by PIFAH linking the Health Market Atlas to a cohort of facilities could offer a scalable and replicable pathway to strengthen private capital-supported health financing that neither public platforms nor blended finance facilities can mobilize alone.

Background

The global health financing landscape is experiencing major shifts that are reinforcing the rapid transition from aid to domestic financing in low and middle-income countries. Africa, historically a recipient of the majority of external assistance for health[1], reported a US$66 billion annual health financing gap in 2019[2], even before these major changes took place. The economic cost of this burden was estimated to be upwards of US$2.4 trillion per year [3]. While domestic allocation is central to health financing, it cannot solely compensate for the unprecedented shifts. Blended finance could play a significant role in narrowing this health financing gap on the continent.

Africa, home to 19% of the world’s population and carrying 22% of the global burden of disease, spent less than 2% of global health expenditure in 2022[4,5]. On average, government allocations account for 35% of total health expenditure in the region[5]. In response to this, the continent has taken multiple steps to increase domestic allocations to health. Africa CDC’s high-level meeting on domestic financing in February 2025 focused on fostering high-level political commitment, driving country-led investments, aligning partner contributions with continental health priorities, and mobilizing diverse resources to strengthen domestic health financing mechanisms[6]. Its latest effort to leverage debt swaps for health indicates a strategic use of innovative mechanisms to expand fiscal space by redirecting debt repayments and interests into investments in health[7]. Key regional partners, such as the African Development Bank, have committed US$6 billion to support quality health infrastructure and local pharmaceutical manufacturing[8]. However, with rising healthcare costs, a wide range of healthcare priorities, and the effects of conflicts and climate change, domestic allocations alone are not sufficient to achieve Universal Health Coverage and Sustainable Development Goal (SDG) 3 targets by 2030 [9].

The WHO advocates for the strategic engagement of the private sector in service delivery to achieve health system strengthening objectives, UHC, and other health-related SDGs[10]. The private sector already plays a significant role in LMIC healthcare systems on the continent, from service delivery and digital health systems to medicine and equipment manufacturing and distribution[11]. Beyond service delivery, the private sector is also a strong investment partner with diverse financial resources. A 2016 OECD report cites the SDGs as “business opportunities”, indicating a shift in the future of development assistance as it applies not only to traditionally profitable enterprises but also to social sectors like health and education. Innovative mechanisms that attract private capital toward social development sectors are therefore on the rise [12].

Blended finance, the strategic use of public or philanthropic capital to mobilize additional private investment for development initiatives, has emerged as a sustainable solution that complements domestic allocation across multiple development sectors, such as energy and infrastructure[13]. In 2024, Sub-Saharan Africa was the most frequently targeted region in blended finance transactions globally, accounting for approximately 40% of deals, although this constitutes a disproportionately small share of total mobilized capital[14]. The Alliance of African Multilateral Financial Institutions (AAMFI) and the African Union Development Agency (AUDA/NEPAD) have launched a US$ 1.5 billion Infrastructure Financing Facility to support infrastructure development, reflecting the growing appetite on the continent[15].

Although the application of blended finance in global health hasn’t been robust compared to other sectors, its potential role has been recognized for some time[16]. The Program for Investment and Financing Africa’s Health Sector (PIFAH) of the AUDA/NEPAD is advancing that effort in Africa [17].  Established as a continental platform to enhance fiscal governance, efficiency, and public investment in health, PIFAH recently launched Africa’s Health Market Atlas, an initiative that views health as a marketable and economically viable sector. The platform aims to identify, structure, and pipeline health investment, supporting organizations to develop bankable health projects – those able to generate sufficient revenue, have sufficient demand, and recognized social impact[18]. This leverages AUDA/NEPAD’s continental reach, convening power, and technical expertise to collect marketable healthcare initiatives proposed from the public sector, the private sector, or public-private partnerships across Africa.

PIFAH’s move to establish and support marketable health projects that have both social impact and economic viability creates a fertile ground for partnership with organizations that have the technical expertise to execute blended finance transactions. One example in Africa is the Transform Health Fund(THF). Managed by AfricInvest,  THF raised US$ 111 million through commercial, public, and private donor investments since 2022[19]. It primarily targets small to medium enterprises, and has supported the Africa Healthcare Network, the largest dialysis chain across Sub-Saharan Africa, invested US$ 10.5 million in HewaTele, a Kenyan medical oxygen provider, and US$ 8.5 million in Promamec, a Moroccan supplier of medical equipment and consumables[20,21].

Among the growing number of blended finance actors, THF is a particularly compelling example, sharing PIFAH’s exclusive focus on health rather than general infrastructure or multi-sector investment, and its continental orientation rather than global interests. THF brings the technical expertise to implement blended finance structures for health, leveraging concessional capital to attract private capital. Its established track record of mobilizing commercial capital is a critical reassuring signal to development finance institutions and private investors, who are more likely to engage with a pipeline anchored by a specialized blended financing organization than one originating solely from a public entity. PIFAH, on the other hand, is positioned as an AU-endorsed continental health financing platform, offering government buy-in and wider implementation capacity for multi-national programs. Such a continental mandate offers a significant opportunity for scale and may be the missing piece that addresses the limitation in blended capital mobilization observed on the continent. If combined, they could demonstrate a model for how much capital can be attracted from the private sector when a health-focused blended finance facility engages with a sovereign-anchored pipeline.

Transitioning from supporting small and medium enterprises to country or regional-level mobilization requires building capacity to accommodate large-scale enterprises to meet the continent’s demand. Additionally, the central role of PIFAH may introduce additional layers of coordination that could add to the cost of implementation. Blended finance in health carries inherent structural risks in that private capital tends to favor revenue-generating services over essential public health functions, where market returns are limited, but population impact is highest[22]. Inequities in capital allocation are a known concern, with investment gravitating toward middle-income markets and urban centers over low-income and rural populations. Without strong governance and accountability frameworks, blended structures risk serving financial objectives at the expense of equity ones.

These risks are real, but they are addressable, and the scale of the opportunity is precisely what makes PIFAH’s pipeline attractive to a broader class of health-focused blended finance actors. PIFAH’s AU endorsement and continental mandate add not only scale but credibility, regulatory coherence, and government buy-in, expanding the pool of viable projects while embedding public interest into the deal structuring. The Health Market Atlas, grounded in public and public-private sector proposals across the continent, provides a pipeline that is accountable to sovereign health priorities rather than investor preferences alone[22]. PIFAH’s broad partner network further expands not only the pool of potential projects but also that of investors. Facilities like THF can bring the structuring capacity to deploy concessional capital to de-risk investments in underserved markets that private capital would otherwise bypass. They bring the track record to quell private investor reservations on purely public-anchored financing structures, making the case that health in Africa is a viable space for commercial capital[22].


Conclusion

The Africa Health Market Atlas has the potential to become the deal-origination engine for blended finance funds like the Transform Health Fund, turning AU‑endorsed priorities into a living pipeline that investors can underwrite. A PIFAH-THF collaboration could position the continent to demonstrate the viability of a sovereign-anchored blended finance model for health. If operationalized thoughtfully, a PIFAH-led blended finance ecosystem could mitigate the structural risks inherent in blended finance and attract reputable health-focused initiatives to mobilize the capital that meets the scale of demand. This could open a sustainable pathway to attract significant private capital to the African health market, complementing domestic public investment, which remains central to equitable health financing.

Call to Action

PIFAH should develop an operational framework that enables the systematic engagement of blended finance facilities to pilot select projects from its Health Market Atlas, beginning with facilities that share its continental and health-sector orientation, and expanding as the pipeline matures. Health-focused blended finance facilities, development finance institutions, and philanthropic capital providers are encouraged to leverage this sovereign platform to scale their investment initiatives. Public and private sector actors are encouraged to engage the technical support these platforms offer, and to hold them accountable for translating their complementary mandates into financed, equity-conscious investments in Africa’s health.