Medical City Highlights Opportunities In the Sector
In August 2012 the Nigerian government announced what could best be described as a healthcare master plan. A 20-man committee headed by the known Nigerian business leader Tony Elumelu and the Minister of Health, Professor Onyebuchi Chukwu, was put together to boost private investment into the Nigerian health sector, but also to rein back the estimated US$500mn lost to medical tourism.
Hence, in line with the scheme, on February 13 2013, a consortium (Ceinsa Consortium) comprising IBT, KMD Architechts and Sucomex presented a US$650mn proposal to build Abuja Medical City: a multi-hospital complex for 1,687 beds, including seven hospital areas, facilities and residences. The project is expected to be completed within 24 to 36 months.
Nigeria's healthcare sector already has a prominent position, in relative terms, within the region. Yet a project of this scale, if successfully implemented, would certainly boost its ranks on the continent. The project would unlikely affect the majority of the population that would still be unable to afford any healthcare treatments (in February 2012, authorities claimed that only 3mn Nigerians were enrolled on the National Health Insurance Scheme initiated in 2005, very poor considering a population of over 160mn).
Instead we assume the medical city will be targeting the relatively small, but increasing, wealthy middle to upper class. Hence, not only those that would otherwise travel aboard for specialised treatment, but those at home who can now afford it.
For Nigeria's residential / non-residential construction sector the Abuja Medical City would provide a boost to our already healthy outlook, where we forecast a 7.9% real growth in 2013. If a project of this magnitude does come on line it would signify an important upside risk to the sub-sector in particular, but also the construction sector in general (where we currently forecast 8.0% real growth in 2013).
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The Abuja Medical City is not the only project in the pipeline. Less of a magnitude, but serving as a good example, is the China-funded and recently commissioned China-Nigeria Friendship Hospital. The 150-bed hospital will have a budget of US$12mn and scheduled to be completed within 22 months.
With firm government backing and with Elumelu in the lead the Nigerian health sector, and as a consequence its residential / non-residential sectors, looks set on growth (with corresponding opportunities for its industry players). However, as experienced in the wider construction sector, delays are common and often exacerbated by persistent corruption and layers of heavy red-tape. The Abuja Medical City represents a significant upside risk - and thus we will keep it on top of our watch-list - but for now we will tread with caution.