The Nigerian tech startup ecosystem has grown significantly. This has been powered by venture funding and an innovative youthful population. But while this growth appeared to be propelled by tech sectors like financial technology, agritech, health tech and more recently, climate tech, Nigeria’s health tech sector seems moribund, lacking lustre, and generally uninspiring.
But this hasn’t always been the case.
Starting modestly, the sector witnessed a boom with the COVID-19 pandemic as health technology innovations became sought-after. In 2020 alone, health tech startups across Nigeria raised more than $100 million with startups like 54Gene and Helium Health leading the pack in Nigeria.
But rather than have a launchpad effect on the space, the cookie crumbled afterwards. As COVID-19 became demystified as another flu-like ailment and the world returned to normal, the hype behind health tech companies faded, rendering their innovations irrelevant and the space in disarray.
54Gene, the largest beneficiary of the boom, has since shut down despite raising $45 million.
The sector has not since recovered from that downturn. Coupled with numerous other challenges, it has struggled for relevance despite the obvious need for disruption in the deeply traditional healthcare space.
For Afrihealth CEO, Linda Obi, the post-pandemic slowdown was inevitable due to the sector’s crisis-driven growth.
“The pandemic created a surge in funding for solutions like telemedicine, vaccine distribution platforms, and remote diagnostics, but these were tailored to an immediate crisis rather than sustainable models,” she said in a chat with Technext.
She said that the situation led to unrealistic growth expectations as startups faced pressure to scale quickly during the pandemic. This, she said, led to operational inefficiencies and unmet expectations when the COVID-19 crisis subsided.
Now, there is a need to focus on sustainable innovations that address everyday healthcare challenges, not just emergency scenarios.
Little disruptions despite major readiness
The Nigerian market is burgeoning, especially for tech solutions. This is powered by increasing smartphone penetration and internet access with over 51% internet penetration, a growing middle class and one of the largest youth populations in the world.
For digital healthcare, the foundation for readiness includes raising awareness of quality healthcare and government initiatives such as the National Health ICT Strategic Framework which demonstrates institutional interest in digital health innovations.
Despite these tendencies for disruption, health tech adoption remains very low. And, Linda chalks it down to limited spending for healthcare.
“With 70% of healthcare spending out-of-pocket, many Nigerians cannot afford premium health tech services. In essence, while readiness exists, affordability and trust will determine the pace of adoption,” Linda Obi said.
She further pointed out that innovative pricing models, such as subscription tiers or pay-per-service, coupled with public-private partnerships, could make health tech solutions more inclusive.
The trouble with health tech in Nigeria
In many African societies, including Nigeria, there is a persistent reliance on traditional healthcare systems which typically involve dependence on local pharmacies and clinics. While these traditional systems remain highly valuable, they cannot scale to effectively serve Nigeria’s 200+ million population.
There is, therefore, the need for innovation through telemedicine, AI-powered diagnostics, and electronic health records which can address gaps in accessibility and efficiency. Despite the all-important nature of the service, digital health solutions are still the least sought-after in the broader tech services.
According to Linda, this is reflective of systemic and cultural attitudes toward healthcare and innovation:
“Historically, healthcare in Nigeria has been viewed as a reactive service, with attention only drawn to its significance during crises. In contrast, fintech and agritech provide immediate and visible solutions tied to economic growth and food security, making them more attractive to investors and the public.”
For startups operating within the space, she pointed out that health tech requires intricate collaborations across multiple stakeholders—regulators, providers, patients, and investors—making it more challenging to deploy and scale than other tech sectors.
She also noted that the space is regularly overlooked due to limited local success stories:
“Unlike fintech, which boasts high-profile success stories, health tech lacks similar benchmarks, creating a perception that the sector is unscalable or less profitable.”
Talking about the challenges in the space, Linda Obi said Nigerian health tech companies face a unique blend of operational, cultural, and systemic challenges. They include infrastructural deficiencies, regulatory uncertainty and cultural resistance:
“Poor electricity and internet access, particularly in rural areas, limit the reach of digital health solutions. Inconsistent policies around telemedicine licensing and health data protection discourage innovation. Due to cultural inclinations, many Nigerians are wary of replacing face-to-face consultations with virtual care, creating a barrier to adoption.”
Other challenges include the talent gap as the brain drain of medical professionals also affects health tech, with skilled healthcare and tech talent often leaving for better opportunities abroad. Finally, there are funding shortages occasioned by limited access to patient capital which restricts startups’ ability to scale or invest in research and development.
“Addressing these challenges requires collaborative efforts across stakeholders, including regulators, investors, and innovators,” she said.
The dwindling funding debacle
Venture funding into the Nigerian health tech space has continued to dwindle over the years. To be fair, the dwindling fortunes are not limited to Nigeria alone as funding into digital health startups across the African continent suffered a 61 per cent decline in share of total funding into the continent in 2024
The Afrihealth CEO believes that health tech in Nigeria struggles with funding due to several interlinked challenges. The first is the long return on investment (ROI) cycle. Unlike fintech, where revenue generation is immediate, health tech solutions often require long-term investment before yielding significant returns.
There is also the issue of perceived complexity as many investors shy away from the sector due to the intricate interplay between technology, healthcare policy, and patient adoption. There is also a lack of local precedents and with limited examples of large-scale health tech success stories, investors perceive higher risks.
She, however, maintained that the sector remains a highly attractive one for the right investors.
“Health tech presents untapped opportunities for impact-driven investments. Solutions like AI-based diagnostics, telemedicine platforms, and pharmacy delivery services are ripe for scaling in Nigeria. Health tech may not yet be mainstream, but its societal impact and profitability potential make it a sector worth betting on,” she said.
She, therefore, encouraged startups playing in the space to focus on demonstrating clear metrics (e.g., cost savings, expanded access, improved outcomes) to attract venture capital and patient funding.
Moving forward…
The Nigerian digital health space has endured a rather mixed existence, going from being the pearl of the tech space during the pandemic to struggling for relevance a few short years later. Setting the space right is of utmost importance.
To thrive, Linda Obi says several structural and strategic changes are essential: They include policy reforms like establishing clear regulations for telemedicine and health data protection and incentivising innovation through tax breaks and government grants for health tech startups.
There is also a need for infrastructure investments like collaborating with telecom companies to improve broadband access in underserved areas and establishing shared facilities or health-tech innovation hubs to support startups.
Other areas of improvement include awareness and education like launching public health campaigns to improve digital health literacy and partnering with schools and workplaces to promote the benefits of telemedicine and digital health tools.
There is also a need to create specialized funding vehicles or partnerships focused on health tech such as impact-driven venture funds, and showcasing success stories to build investor confidence in the sector. Finally, she advocated for the integration of traditional medicine into modern health platforms for greater cultural acceptance.
“With deliberate actions, Nigerian health tech can emerge as a global leader, offering scalable solutions for the continent and beyond,” Linda Obi said.
See also: Fintechs rule: Moniepoint, Tyme, others raised 47% of $2.2bn African startup funding in 2024
