External environment


Trend Understanding the trend
in our context
How we're responding strategically
COVID-19

Understanding the global trend
The global spread of COVID-19 has impacted the lives of individuals from all walks of life. The severe and contagious nature of the disease has the potential to overwhelm health systems and trigger lasting geopolitical change.

According to the International Monetary Fund, the global economy is facing its worst downturn since the Great Depression, and resultingly, Oxfam International warned that half a billion people could be pushed into poverty1. Globally, multi-tiered efforts are under way to contain the outbreak.

COVID-19 has already had a noteworthy impact on consumer behaviour. One of the key elements of the crisis has been the way in which it has accelerated the pace of digital transformation.
On 15 March 2020, our State President, the honourable Cyril Ramaphosa,  addressed the country and declared a National State of Disaster in terms of the Disaster Management Act. On 23 March 2020, a national lockdown was announced, starting on 26 March. The lockdown was introduced to flatten the curve of infections while bolstering healthcare interventions. On 23 April, it was announced that from 1 May a gradual and phased easing of the lockdown restrictions would begin by lowering the national alert level to level 4, which was part of a risk-adjusted strategy to reintroduce economic activity. At the time of publication, the nation had been moved to level 1.

The advent of the COVID-19 pandemic and the subsequent lockdown had an adverse impact on the economic trajectory of the country. The downgrade of the country to junk status and the increased loss of jobs due to the lockdown exposes the business' clients to reduced membership, and this has a direct bearing on revenue streams. In this volatile context, constructive relationships with key regulators and policymakers are crucial to the short, medium and long-term interests of the Group.

We see the COVID-19 triggered digital acceleration as an opportunity to increase access to care while reducing costs.
During this time, we focused on ensuring our people are kept safe and that we create capacity and accelerate the delivery of necessary care through simplifying processes and fast-tracking digital solutions, wherever possible. Our intention post-crisis is to harness the functional, value-adding changes made during this time and to assess learnings, applying them to our day-to-day operations to establish a new, more efficient 'normal'.
   
Ageing populations

Understanding the global trend
As populations tend to live longer, while birth rates continue to decline, there has been a shift in global demographics. This is a pertinent trend for the healthcare sector as ageing populations face more complex healthcare issues.

Investing intelligently as part of the healthcare value chain to support healthier ageing processes could help combat related health conditions, improve functional ability, and increase productivity1.
It is expected that Africa's population of older adults will more than triple over the next 10 years, from 46 million in 2015 to 157 million by 2030. The World Health Organization's (WHO) report on ageing and health projects that the number of older adults in South Africa will increase to 15.4% of the population by 2050. In light of these trends, we anticipate the demand for healthcare services to increase and change over time. As a diversified healthcare business with growing exposure across the healthcare value chain in South Africa, we are in a position to evaluate the entire value chain to better place ourselves to meet the complex needs of an older population.
     
1 World Economic Forum, Strategic Intelligence platform https://intelligence.weforum.org/
Healthcare data and technology

Understanding the global trend
In an era where advances in data collection and analysis are ever-expanding, these developments are driving better healthcare through evidence-informed healthcare strategies. New tools and technologies are curing previously fatal diseases and making chronic disease more manageable.
The proliferation of mobile devices used in South Africa allows the population to communicate with one another and with computers in new and ever-accelerating ways. This, combined with emerging technological advances, sets the scene for digital health to have a more significant contribution to our health and wellbeing. The development of the National Digital Health Strategy for South Africa, 2019 to 2024, launched in the context of the massive reorganisation of the healthcare system required for the NHI implementation, will see many changes to the way healthcare is delivered in our country. To achieve our vision and remain competitive, AfroCentric is leveraging technology to innovate
a new integrated model of sustainable healthcare solutions that measurably improves access to quality healthcare. Our growing data capabilities support our strategy to eliminate inefficiencies within the healthcare industry and optimise the value chain.
     
Access and affordability
Despite some improvement in facilitating global access to healthcare, inequalities remain. Of concern too, is the rising cost of healthcare globally.

According to a report published in late 2017 by the World Bank and the WHO1, at least half of the world's population cannot obtain essential health services, and large numbers of households are pushed into poverty every year because they have to pay for healthcare out of their own pockets.
The rising costs of healthcare continue to affect the affordability of medical scheme cover for millions of South Africans. There is a need to curb the overutilisation of services through innovative service delivery models that are linked to better reimbursement. Apart from the drive to make the products more easily understood by beneficiaries, there is a need for the industry to address governance inadequacies where they exist.

The Competition Commission's Health Market Inquiry (HMI) identified many issues that contribute to the increasing costs of healthcare and impact the market forces at play within the private healthcare market.

The NHI bill has come about to address universal access to healthcare in our country. To support this aim, the bill paves the way for the establishment of an NHI Fund, which will purchase services from accredited public and private healthcare providers.
Our mission is to innovate a new integrated model of sustainable healthcare that measurably improves access to quality healthcare. AfroCentric, therefore, supports the principle of universal healthcare and is positioning itself as a private sector partner with the expertise and experience to constructively participate in an evolving healthcare environment.

We are confident that numerous opportunities will continue to exist for the development, testing and implementation of mutually beneficial and innovative healthcare delivery models and solutions through partnerships with National and Provincial Departments of Health. The Presidential Social Compact on Health details some of the action plans that the public and private sectors can work on collectively in meeting the health needs of the population through well designed and implemented partnerships in the areas of infrastructure funding, service provision and overall strengthening of the health system.

Furthermore, our diversification strategy bodes well for our future in healthcare. Over the years, AfroCentric has been pursuing the diversification of its involvement in the health sector, and this places the Group in a strategic position to work with government on the NHI processes as implementation progresses.
1 Tracking Universal Health Coverage: 2017 Global Monitoring Report.
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AfroCentric is now the most diversified healthcare company in Southern Africa. We also adapted our strategies to align our business model to the government's health policy direction and have successfully demonstrated our abilities in these strategies. A number of our subsidiary entities are already working closely with government in delivering innovative and sustainable services, such as the provision of chronic medication to government clinic patients across four provinces.