Bridging Africa’s health financing gap: The case for remittance-based insurance

Summary

Remittance-based health insurance represents one critical, underused tool for reducing out-of-pocket spending and strengthening health system resilience in an era of constrained development finance. To unlock the potential of this intervention, this policy memo proposes the need for an ecosystem-building platform to transform remittances into structured health protection. This “HealthBridge” platform would address coordination failures between diaspora senders, insurers, remittance providers, and regulators through three core functions: a technical advisory “product lab” to develop compliant, affordable insurance products; policy engagement to overcome cross-border regulatory barriers; and partnership brokerage and ecosystem coordination to align diverse stakeholder incentives.

1. Introduction

This memo puts forward a bold, experimental idea: Africa’s vast diaspora remittance flows, frequently already used to cover health costs informally, can be transformed into a reliable source of structured, pooled health protection. The concept is ambitious, and the pathway is unproven. But recent shifts, such as reduced transaction costs, growing digital rails, and rising interest in diaspora engagement, make this a timely moment for innovation. Success will require problem-solving across multiple sectors, with shared commitment from governments, insurers, and remittance providers.

As context, health system financing in sub-Saharan Africa (or hereafter “Africa”) is undergoing a fundamental shift. Donor support, which accounted for an average of 13.5% of the region’s health expenditure in 2022, is declining just as domestic fiscal pressures intensify and health needs expand. Climate change, a retreat from multilateralism, and large-scale human displacement from conflict are exacerbating vulnerabilities, further straining already fragile systems. This new reality demands a new generation of development finance solutions that strengthen African health systems despite global development financial constraints.

Formal insurance markets have failed to fill the health financing gap despite their theoretical potential. Penetration rates in the vast majority of countries across the continent remain well below the global average. Uptake is constrained on both the demand and supply sides. On the demand side, pervasive informality, irregular incomes, limited financial literacy, and a persistent trust deficit discourage voluntary enrollment. On the supply side, insurers face high operating costs, thin data for pricing, and low confidence in the quality of health care providers while experiencing limited product innovation. These operational barriers are compounded by macroeconomic volatility and misaligned incentives among insurers, regulators, and health ministries, presenting an opportunity for stronger integration between broader national health systems and insurance.

Affordability remains a critical barrier. In contexts of extreme poverty and informal employment, even low-premium insurance products may be out of reach without subsidies. Uptake is sensitive to premium levels, and there is evidence suggesting that partial subsidies significantly improve enrollment among low-income groups.

Underlying these financial constraints is another critical pressure point: the health workforce. Across many African countries, health care workers are overstretched, underpaid, and unevenly distributed—particularly between rural and urban areas. The result is both a delivery gap and a trust barrier. Limited provider availability undermines confidence in insurance coverage and service delivery. Any effort to expand health financing through remittance-linked products must therefore consider the capacity and distribution of the workforce it relies on to deliver care.

Beneath these immediate constraints lies a deeper structural problem. Fragmented national regulatory frameworks prevent insurers from achieving economies of scale and impose duplicative compliance burdens. Limited coordination between health and finance authorities further results in policies that evolve in isolation from Universal Health Coverage strategies. Together, these fractures reinforce the inefficiencies that constrain Africa’s health financing landscape.

African diaspora communities have stepped into this vacuum as informal health insurers for their families. In 2023, African countries received over $55 billion in annual remittances—around 3% of the continent’s gross national income (GNI). A share of these transfers already finances households’ ad-hoc out-of-pocket health costs, such as relatives’ medical expenses, transportation to health facilities, and income replacement during illness. In addition, diaspora populations often cover funeral expenses linked to premature deaths, often associated with emergency hospital visits and delays in seeking care.

Across Africa, household health spending typically goes toward transportation to facilities, outpatient consultations, medication, and hospital fees, often related to preventable or delayed conditions. Costs are also driven by maternal and child health needs, injuries, and chronic conditions requiring frequent care.

While remittance-linked insurance can mitigate financial shocks, public-good interventions such as improving transport networks, subsidizing essential medicines, expanding primary care coverage, and ensuring community health worker availability can materially reduce the frequency and severity of out-of-pocket spending. These efforts remain essential complements to insurance-based mechanisms.

However, informal health financing operates without the structural efficiency advantages that formal health insurance systems can have. Currently, remittance-based health support is reactive rather than protective. Emergency funds flow when crises strike rather than through predictable contributions that enable systematic risk pooling. This approach bypasses quality controls that ensure appropriate care, regulatory protections that prevent exploitation, and economies of scale that reduce per-beneficiary costs, representing a significant missed opportunity for improved health outcomes and financial protection.

Inefficiency in the current remittance-based health financing model raises the question of how remittance flows across multiple migration corridors can be effectively harnessed to finance affordable, sustainable, and inclusive health insurance products that reduce out-of-pocket costs while strengthening national health system priorities. Normalizing remittance-linked insurance alone cannot meet Africa’s comprehensive health financing needs, but it could represent one critical and underused ingredient in a broader strategy to finance more resilient African health systems.

Existing attempts to develop remittance-based insurance products have proven difficult. Leveraging remittance flows for health insurance premium financing requires coordinated action across multiple stakeholders with different needs and incentives. Given high remittance costs, remittance senders need agency, trustworthy information, and affordable insurance options that give them confidence their contributions provide genuine protection. Recipients require clear information about service coverage, seamless and speedy claims processing, and reliable financial protection when health emergencies arise. Remittance service providers must see attractive business propositions that complement rather than complicate their existing operations, while domestic insurers need regulatory clarity and viable distribution partnerships that penetrate deep into the customer base, generate trust, and enable them to develop and scale appropriate health service products for low-income populations.

A range of regulatory and operational challenges makes it difficult to satisfy this range of needs. For example, cross-border regulatory frictions create legal uncertainty about premium payments and data sharing between jurisdictions, with some regimes explicitly prohibiting the marketing of insurance products or payment of premiums across borders. Anti-money laundering requirements add compliance complexity that can deter remittance partners from engaging and make small-value insurance premiums economically unviable. Traditional insurers struggle with misaligned incentives—their business models are designed for higher-income customers and comprehensive products, not the simple, short-tail, low-premium offerings that require larger scale and would work for remittance-based health protection.¹

Local insurance technology companies (“insurtechs”) may have innovative solutions but lack access to willing underwriters, supportive regulation, and the capital needed to scale operations across multiple countries.

These challenges suggest that at the heart of remittance-based health insurance is a fundamental coordination problem. No single actor—whether insurer, remittance provider, technology company, or government—has the capacity or incentives to address all the barriers simultaneously. Remittance providers excel at moving money efficiently but lack expertise in insurance product design and health system integration. Insurers understand risk pooling but depend on distribution partnerships to effectively reach customers and struggle with cross-border regulations. Technology companies can build seamless user experiences but depend on willing investors to make products available. Governments have unique capacities to provide public health services but typically lack the capacities or political mandates to create market-focused products.

Success will therefore likely require a coordinated approach that can align diverse stakeholders around shared objectives while providing the technical assistance, policy coordination, and partnership facilitation needed to overcome systemic barriers.

2. HealthBridge: The need for an ecosystem-building platform

To address this need, leading experts in health financing, insurance innovation, diaspora engagement, and global advocacy convened as part of Room 3—a working group linked to Sustainable Development Goal 3 for good health and well-being—within the 17 Rooms initiative. Through a rapid sequence of intensive virtual meetings, participants discussed ways in which previous attempts to link remittances with formal health insurance had encountered regulatory complexity, misaligned incentives, and the absence of trusted intermediary institutions as barriers to scale.

The Room concluded that overcoming these challenges would likely require more than building another digital platform or direct service. Instead, an agile ecosystem-building approach—one that could facilitate partnerships between governments, (re)insurers, and remittance providers—can help these actors collectively overcome regulatory barriers and provide technical assistance for developing appropriate products while respecting both diaspora preferences as well as recipient country health system priorities.

In this spirit, the Room developed an initial framework for “HealthBridge”: a platform designed to catalyze the development of remittance-based health insurance ecosystems across multiple African countries and diaspora corridors.

HealthBridge would function as a platform with three core capabilities: technical advisory “product lab” services to help develop regulation-compliant insurance products suited to remittance flows; policy engagement and coordination to address cross-border regulatory barriers that have historically blocked such initiatives; and partnership facilitation to connect insurers, remittance providers, technology companies, and government stakeholders around viable business models.

A. Technical advisory and product lab

Technical design and deployment can make or break insurance products. Most existing insurance products are unsuitable for remittance-based health protection because they are designed for higher-income customers with comprehensive coverage needs rather than simple, affordable protection. Cross-border regulatory compliance requirements vary significantly between jurisdictions, creating legal uncertainty for product design and premium collection. Traditional insurers lack expertise in diaspora customer needs and remittance integration, while insurtechs have innovative approaches but insufficient capital and regulatory support.

To address these challenges, a technical advisory service could develop standardized frameworks and principles for establishing and adapting insurance products across different remittance corridors and regulatory environments. This function would gather relevant actors to co-design and test regulation-compliant insurance products optimized for remittance flows, focusing on simple, short-tail offerings that build trust through quick claims settlement.

A product lab could develop a handful of standards, easily regulated templates—such as hospital cash, transport support, and short-term income replacement—then adapt them to local rules while preserving a simple, trust-building user experience. To blend compliance with speed, the lab could match established insurers’ regulatory capabilities with insurtech partners who specialize in rapidly designing user-friendly products. Enrollment could be completed digitally through existing mobile-money systems, making sign-up and payments familiar and effortless. Tail risks may be addressed through pooled reinsurance mechanisms or specific benefit triggers for high-cost, low-frequency events, which are disproportionately burdensome for low-income households.

Technical advisory services would seek to answer questions such as:

• What premium levels will diaspora senders accept, and how can the value proposition be structured so that the product remains both attractive to them and viable for insurers?
• How can products balance simplicity for user understanding with regulatory compliance requirements?
• Which specific product features (coverage types, benefit levels, waiting periods) will drive voluntary uptake versus abandonment?

B. Policy engagement and enablement

Regulatory barriers represent a formidable obstacle to scaling remittance-based health insurance. Cross-border regulatory restrictions explicitly prohibit premium payments across some jurisdictions, making remittance-linked insurance legally impossible in those markets. Anti-money laundering compliance requirements and access to partnerships further create prohibitive costs for small-value insurance premiums, particularly in high-risk remittance corridors like France-Senegal, where Room members noted that such requirements have proven fatal to previous initiatives.

To address these regulatory chokepoints, HealthBridge would coordinate targeted policy engagement efforts across multiple levels of government to create enabling policy environments. This function would map specific legal barriers in priority corridors, develop model regulatory guidance for financial supervisors, and leverage regional economic communities to promote harmonization rather than pursuing resource-intensive country-by-country approaches. In parallel, HealthBridge would help align national insurance regulation with health-sector priorities by facilitating coordination between finance and health ministries, ensuring that emerging policies advance Universal Health Coverage objectives rather than operate in isolation. The engagement component could also work at the inter-governmental level in key corridors to promote alignment of stakeholder incentives, standard-setting bodies, and broader regulatory frameworks.

HealthBridge would require governments to be actively engaged due to their critical enabling role. Their prospective contributions could include regulating cross-border premium flows, providing partial premium subsidies for low-income households, and mandating minimum coverage for specific high-risk groups. Under the right conditions, such as through digital identity systems, interoperable payment infrastructure, and political support, governments can de-risk private sector participation and drive equitable scaling.

A HealthBridge policy engagement arm could address regulatory challenges by maintaining a dynamic map of regulatory and operational barriers specific to each corridor, transforming this intelligence into practical guidance for insurance supervisors and financial regulators. Instead of pursuing country-by-country negotiations, the platform could engage with regional economic communities like the Economic Community of West African States (ECOWAS) and Common Market for Eastern and Southern Africa (COMESA) to drive regulatory harmonization at scale, while fostering bilateral alignment between governments in key corridors to minimize transaction costs. By further engaging platforms such as the Access to Insurance Initiative, which partners with insurance supervisors to advance accessible and responsible insurance, thereby reducing vulnerability, HealthBridge could support broader regulatory frameworks, creating clear legal pathways for remittance-linked insurance to scale.

Policy engagement efforts would seek to answer questions such as:

• Can regional economic communities support the establishment of enabling regulatory frameworks?
• How can anti-money laundering compliance be streamlined without compromising financial integrity oversight?
• What evidence will be needed to convince regulators that benefits outweigh the risks of cross-border premium flows?

C. Marketplace for partnerships

Until now, sustainable business models for remittance-backed health insurance remain elusive because of fundamental misalignment between stakeholder incentives and capabilities. Several factors are at play. First, mobile money operators (MMOs) typically make money from currency-exchange spreads on high volumes of remittance flows. But once insurance premiums are layered into the transaction, the business model is disrupted: The operator must manage underwriting, regulatory compliance, and periodic payments, which dilutes their low-cost, high-speed value proposition. Second, the cost of establishing partnerships between individual insurance providers and MMOs prohibits individual insurers from achieving sufficient scale to make low-premium products viable. Finally, the absence of blended financing structures limits early-stage risk-sharing, leaving initial losses and learning costs to fall disproportionately on private actors and thereby discouraging engagement.²

Insurance must also be paired with reliable provider-side guarantees: fast claims settlement, standardized benefit packages, and incentives for providers to deliver timely care. Capitation or performance-based payments may align provider incentives with outcomes and reduce service fragmentation.

To overcome these coordination challenges, HealthBridge could broker partnerships between governments, insurers, and MMOs around innovative financing mechanisms and sustainable business models. This function would engage non-traditional outreach partners like diaspora associations rather than relying solely on MMOs and could structure donor and government subsidies or impact-bond-like financing to pre-fund early losses with clear sunset provisions as experience matures. By developing shared technology infrastructure for enrollment, claims processing, and data exchange, the platform could dramatically reduce operational costs across all participating partners, making low-premium products economically viable at scale.

Partnership facilitation would seek to answer questions such as:

• What commission structures will incentivize distribution partners without making products unaffordable?
• What arrangements need to be structured to satisfy different national regulatory requirements?
• What level of catalytic funding will be required to demonstrate viability and attract private sector participation?

3. Shaping a five-year strategy for HealthBridge

Room members generally agreed that realizing this three-pillar model—technical innovation, regulatory alignment, and market coordination—requires a phased approach that builds capabilities sequentially while managing risk. The Room identified near-term piloting opportunities in key corridors bridging Senegal with France and Sierra Leone with the U.K. and U.S.

Experiment and learn (months 0-18). HealthBridge could launch corridor pilots in Senegal and Sierra Leone, supporting local champions and early adopters while testing diaspora customer journeys from enrollment through instant hospital-cash payouts. Parallel legal scans would assess premium legality, Anti-Money Laundering/Know Your Customer mandatory customer identity verification thresholds, and reinsurance permissions, while teams broker MOUs among insurers, remittance providers, and technology firms and build shared technical assistance resources.

Refine and scale (months 18-30). Pilot lessons could crystallize into a practical playbook featuring regulatory templates, product designs, and operating procedures ready for deployment across ten additional corridors. Partnerships would deepen through diaspora organizations and community channels, integrating with mobile-money agents for last-mile delivery while structured education programs build trust and reduce churn.

Coordinate large-scale investment (months 18-36). With proven evidence, HealthBridge could launch a blended capital platform underwriting scale through pooled reinsurance and geographic diversification. Sustainable financing structures would phase out donor dependence while aligning with national health coverage strategies, connecting provider networks, and establishing interoperable claims systems that strengthen rather than fragment health financing architectures.

4. Conclusion

Africa cannot build its health future on shrinking aid flows and potentially catastrophic out-of-pocket payments. Remittance-based health insurance will not solve everything, but it represents an overlooked opportunity to reduce household vulnerability and complement essential domestic health financing.

HealthBridge is designed to cut through the deadlock that has stalled past efforts, bringing regulators, insurers, remittance providers, diaspora groups, and governments to the same table. By piloting trusted products in a few model countries, removing regulatory roadblocks, and structuring partnerships that align incentives, it can turn diaspora solidarity into formalized health protection.

The stakes are urgent: Each year of delay leaves households alone to absorb shocks they should not bear. With clear leadership and bold collaboration, Africa can unlock the power of remittances to build stronger, more resilient health systems.

Appendix: Country profiles

Republic of Senegal

Senegal is a lower-middle-income country of approximately 18.5 million people, characterized by rapid population growth and a highly urban-concentrated economy. The World Bank estimated average per capita income at $1,680 in 2024, and that nearly 18% of the population lived in extreme poverty as of 2021. More than 95% of the labor force works in the informal sector, leaving most households without access to payroll-based social protection. Approximately 4-5% of Senegal’s population lives abroad—one of the highest proportions in sub-Saharan Africa—and this diaspora plays an outsized role in household resilience. Relative to the region, Senegal is among the top recipients of remittances, with these flows representing roughly 12% of GNI, with France as the dominant corridor.

Senegal’s health system is led by the Ministry of Health and Social Action at the central level, followed by regional medical regions, and peripheral health districts and health posts. The country has approximately 31,000 health workers, with a large share in the capital city of Dakar, creating pronounced geographic disparities. The physician-to-population ratio stands at roughly 1 per 10,000 people, and capacity constraints are compounded by infrastructure deficits and staffing shortages. Prior to recent reductions in donor flows, external partners’ health finance was estimated at $236 million in 2021. The government allocated roughly $452 million to health in 2024 (3.9% of the national budget). Households account for approximately 43% of current health expenditure—more than double the WHO’s recommended ceiling of 20%.

Formal insurance penetration remains very low, despite policy initiatives to expand coverage. Less than 20% of the population benefited from any form of health protection as of 2022. Community-based mutual health schemes exist, but enrollment and retention are inconsistent, and benefits vary. The government launched a national strategy in October 2025 to extend Universal Health Insurance to informal workers, targeting 75% coverage by 2029.

Senegal also has strong digital adoption, an emerging insurtech ecosystem, and strong digital-finance rails (including widespread mobile money use), making it technically feasible to design low-premium, mobile-enabled products.

Republic of Sierra Leone

Sierra Leone is a low-income West African country of approximately 8.6 million people, with one of the fastest urbanization rates in the region and a predominantly informal economy. The World Bank estimated average per capita income at $840 in 2024, with fully half the population living in extreme poverty. More than 85% of the labor force works outside the formal sector, limiting access to contributory social protection and employer-based insurance. Sierra Leone has an active diaspora, and remittances account for around 4% of GNI.

The health system is organized as a three-tier structure. Peripheral Health Units—including maternal and child health posts, community health posts, and health centers—form the foundation and deliver most preventive and primary care, supported by community health workers. District hospitals serve as secondary referral centers, while regional and tertiary hospitals deliver specialized services. Alongside the public system, a fragmented private sector—composed of faith-based facilities, for-profit clinics, and informal providers such as traditional birth attendants and herbalists—plays a significant role but remains weakly regulated and poorly integrated into national planning. The Ministry of Health and Sanitation is the lead authority for policy, regulation, partner coordination, and service delivery, guided by the National Health Sector Strategic Plan (2021–2025), which prioritizes progress toward Universal Health Coverage and Sustainable Development Goal 3 for good health and well-being. The physician-to-population ratio stands at roughly 0.4 per 10,000 people.

Public financing for health remains structurally constrained. Total health spending in 2022 was $39 per capita. In 2023, out-of-pocket health spending accounted for 54% of current health expenditure, and external sources accounted for 29%. Government allocations to health accounted for 6% of the national budget the same year.

Sierra Leone’s formal health insurance remains underdeveloped. The Social Health Insurance Scheme (SLeSHI), initiated in 2017, continues to be in early operationalization. Coverage of any form of prepaid or contributory health insurance remains extremely low—below 1% of the population in some assessments.