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E gypt is seeking to revolutionise its healthcare sector. The passage of the Universal Health Insurance (UHI) Law in 2018 marked a break from the past and an opportunity to reimagine the goal of providing healthcare coverage to all Egyptians. The law is the most significant legislative reform in the healthcare sector since the 1960s and it tackles Egypt’s fragmented healthcare system.

It is rolling out in six phases with each phase focusing on a particular geographic region. It started with a pilot programme in Port Said in July 2019 and will culminate with implementation in Cairo. The programme roll-out prioritises the lowest-income citizens. The goal is to cover all governates by 2028. The new scheme is forecast to cost EGP 210 billion (USD 13.38 billion) per annum when all eligible people have registered on the new system.

Drivers of healthcare reforms

Egypt’s healthcare systems are bracing for additional pressure in the coming years. The country is experiencing rising life expectancy, a growing population and an increase in lifestyle diseases. Population growth is running at a rate of 2.5 percent per annum. This is placing pressure on existing infrastructure, particularly healthcare and education.

In August 2022, the government reiterated its plea for parents to restrict themselves to two children per family. Prime Minister Moustafa Madbouli  stated, “the coming period requires everyone’s solidarity to implement a 10-year program whose objectives are based on a two-child policy, which will contribute significantly to reducing population growth rates, allowing citizens to enjoy newly implemented state projects and compensate for the accumulated gap in schools, hospitals and services over the past 30 or 40 years.”

Egypt’s population is forecast to grow by nearly 30 million to 130 million by 2030 and 175 million by 2050. Over 70 percent of the population is under 40. Although the country has a young population, demand for healthcare services will come from all quarters.

Egypt has made significant strides in improving life expectancy from birth. It has increased from 54.47 in 1975 to 72.54 in 2023; the UN forecasts this to increase to 76.51 in 2030. This achievement is highly lauded and is undermined by the rise in lifestyle diseases such as diabetes, obesity and hypertension. According to a 2021 study, over 80 percent of Egyptians died from non-communicable diseases (NCDs) in 2018. The NCDs include cardiovascular diseases, cancer, chronic respiratory diseases, diabetes and kidney diseases. One in three people suffer from high blood pressure and almost half of the adult male population smokes tobacco, according to the study.

Policymakers are aware that prevention is better, and cheaper, than the cure. In 2019 President Abdel-Fattah el-Sisi launched the “100 Million Health” initiative, which started as a campaign to highlight the importance of early detection and treatment of a number of diseases. It started by encouraging people to seek screening and treatment of Hepatitis C. Over 60 million people were screened for Hepatitis C because of this intervention. The “100 Million Health” initiative has since expanded to include awareness raising of women’s reproductive health, free breast cancer examinations detect and treat hearing loss and impairment for new born babies, and early detection of kidney diseases. An estimated 86 million people have benefited from the early detection and treatment provided by initiative to date.

Revolutionising healthcare

Two competing ideologies have historically characterised Egypt’s healthcare sector. The first is “gratuitousness” – state-funded, state provided healthcare services – which was strongly influenced by Arab socialism in the 1960s. The second is a more neo-liberal position that placed emphasis on individual contributions from the middle and upper class, which would subsidise the cost of healthcare for economically marginalised citizens. Although “gratuitousness” dominated until the early 1990s, a more hard-nosed approach started to gain ground as the state’s capacity (and coffers) dwindled. The enactment of the UHI law in 2018 is the culmination of this ideological debate.

The law’s central aims are two-fold: extend the health insurance system to all citizens and improve the health services. All citizens are covered by the law irrespective of gender, age, whether they are private or public sector employees, employed (formally or informally) or unemployed. It is mandatory for all local Egyptians and optional for those working abroad. Foreigners living in or earning an income in Egypt are also included, subject to reciprocity.

Citizens will receive three levels of healthcare services. The first is health units, which include a family doctor/GP, dentistry, pharmacy, paediatrics, obstetrics and gynaecology, laboratory and radiology facilities. This is the first port of call before progressing to the second level, which consists of hospitals. If there is a need to escalate the matter, then patients are referred to level three facilities – specialist hospitals.

These reforms are funded through contributions from employees, employers and other insured persons. Employees contribute 1 percent of their salaries, employers must deduct and pay 4 percent from their employee’s salaries, with a minimum payment of EGP 50 (USD 1,62) per month to cover employee’s treatment for sickness and work-related injuries.  Other contributions come from other economically active citizens such as businessowners, Egyptians working aboard and members of professional associations such as lawyers or doctors. These citizens are required to contribute 5 percent of their salary as stated on their tax return or a maximum limit of their salary – whichever is greater. The government guarantees free healthcare services to those unable to make financial contributions to the system.

Minister of Health and Population Khaled Abdel-Ghaffar

Investment opportunities

Reforming the healthcare sector is a national imperative. It also presents a unique investment opportunity. The government is facilitating the creation of “healthcare cities” – mixed-use developments that have a combination of commercial, retail, residential and hospitality premises. For example, Health Care City in New Cairo, built in the south-east Cairo governate to reduce congestion in the traditional capital. In July 2022 the International Finance Corporation announced a partnership with Egyptians for Health Care Services (EHCS), a local company founded by medical professionals in 2014 whose aim is to invest in and develop Egypt’s healthcare infrastructure. This partnership has spawned the CapitalMed project, which will create an 80-acre campus that includes nine speciality medical institutes, a 2,000 bed medical facility, 13 buildings and a 100-room 5-star hotel in New Cairo. The government also aims to develop Egypt’s medical tourism sector and enhance its reputation as an attractive beauty and cosmetic surgery destination in the North Coast.

Local demand for healthcare is baked in and investors are scrambling to close the gap between supply and demand. The Covid-19 pandemic highlighted systemic shortfalls in the healthcare system, but the longer-term trend indicates strong, continued demand. The sector has witnessed robust M&A activity, with the healthcare sector coming in the top five target sectors for inbound investment in 2021.

The consolidation of the sector is expected to continue but slow in pace in the medium term as investors seek greenfield investments. Recent investments have focused on hospitals and diagnostic centres but investor interest in pharmaceuticals, insurance, health-tech as well as medical research and development is forecast to increase.

The pandemic underlined the need to localise supply chains, particularly those in healthcare. Egypt has a well-established pharmaceutical manufacturing capacity and already produces roughly 90 percent of its local medicinal needs. Generic medicines are widely used and dominate the local market. Urban centres such as Cairo and Alexandria receive a disproportionate amount of interest, where the internal rate of return (IRR) hovers around 20 percent. Investors will struggle to hit these figures in other, more sparsely populated governates.

The government has increased public spending on healthcare as it seeks to create a regional competitive advantage. The 2017 Investment Law coupled with the government’s active promotion of public private partnerships and use of bilateral trade agreements to boost investment in the healthcare system will create local momentum and attractive conditions for a range of investors including multinational firms seeking to enter or grow their presence in the MENA region. However, the operating environment remains challenging. Egypt is not immune to high inflation and currency devaluation. The Egyptian Pound has lost nearly half its value in the last 12 months and headline inflation is at a 5-year high. Resultant belt tightening by the middle class is expected to negatively affect the private healthcare ecosystem in the short term.

Regarding public healthcare, the introduction of the UHI law places the funding burden on the middle class and relies on their contributions to create an effective national healthcare system. It remains to be seen how the heady combination of rising inflation, currency devaluation and the removal of key subsidies – all resulting in even less money in people’s pockets – will impact the rollout the next few phases of the healthcare reforms. This initiative is one of el-Sisi’s flagship programmes. He has already reduced the implementation timetable by four years to 2028 and he pressed for a range of new incentives and greater investment in healthcare three months ago. The roll-out may be uneven but ardent political backing will ensure that a large part is achieved by the target deadline. Shrewd investors will pro-actively seek opportunities amid this period of change.