The growth of any country is largely dependent on its overall health. The growth of any healthcare system is directly tied to the quality of funding available. Many developed countries in the world have better healthcare systems because they have found a way to fund healthcare sustainably. These countries understand that healthcare is vital to economic and societal growth, they have designed their healthcare systems with a financing component that addresses the needs of their citizens. 

Meanwhile, developing countries have a different tale to tell. There is only a little of healthcare funding being undertaken by government budgetary spending. For Nigeria, that is a big problem. 

It is noteworthy that due to the timelines of some private donor funds and Nigeria’s shifting macroeconomic structure, some of the healthcare financing will cease. This includes the Global Fund and World Bank financing. This dire situation prompted former Health minister, Prof. Isaac Adewole to declare that “the health sector has suffered from chronic underfunding for many years now. We are even behind South Sudan, Angola, and Ethiopia”.

While the case can be made that private donor assistance constitutes only 30% of development assistance for health (DAH) and the other 70% comes from governments (according to a report by the International Health Metrics and Evaluation (IHME)) and their development agencies, it doesn’t solve the problem of health underfunding. The truth is those nations with developed health systems marshall internal resources to fund healthcare and translate strategy into tangible results. They don’t wait for assistance from other countries.

For developing countries, there is an urgent need for strategic investments in healthcare giving the numerous health burdens. These burdens are backed by facts: the average life expectancy rate is 55.2 years, out-of-pocket healthcare expenditure is at 77.2%, the maternal mortality rate (per 100,000 live births) is 814, the under-five mortality rate (per 1,000 live births), etc These are indicators that the system needs more investments to reverse the suboptimality that currently characterises the sector.

Nigeria's Healthcare Indicators

 

Therefore, investing in healthcare is not only crucial to deliver better healthcare services and improve the well-being of a population, it will also boost the economy, create more jobs, and increase individual productivity. A Lancet Commission on Investing in Health estimates that about 24% of growth in “full income” in developing countries from 2000-2011 resulted from health improvements. The big question, however, is how do we fund healthcare?

Government Funding

Government funding of the sector has been very low. At the moment, the country’s annual budget for healthcare is barely 4.5% of its total budget. In fact, it has consistently declined from about 6% in the early 2000s to its current levels. Even this is below the 15.0% pledged by the head of African governments in 2001. 

healthcare financing gap

 

While on the one hand, we think government funding is insufficient, we also realize that the government’s fiscal muscle is very tiny. As of 2019, Nigeria’s tax-to-GDP ratio stood at 6.27% – far below the African average of 17.2% per OECD analysis. This is also compounded by our current macroeconomic structure which is dependent on oil rents.

Regardless of the methods the government employs to increase its IGR, it is imperative to improve funding in the healthcare system. Increased funding is only possible if the government gives healthcare a higher priority in the budget allocation. There are several reasons this should be including the fact that there are numerous economic and social benefits of increased investment.

Public-Private Partnership (PPP)

The Public-Private partnership is another way to fund and improve the pitiable state of healthcare in Nigeria. In simple terms, it involves the government and private businesses working together to complete a project and/or to provide services to the population. As a demonstration of the potency of this solution, the recently-launched Cancer Treatment Center at the Lagos University Teaching Hospital (LUTH) was a brainchild of a partnership between the Nigerian Sovereign Investment Authority and the public hospital. So PPPs offer a great pathway out of the morass of low availability of health infrastructure which plagues many developing countries, including Nigeria.

There are a few bottlenecks as regards healthcare and public-private partnerships over the years. While discussions on the ease of business are not new, the concept remains one of the major challenges. It is difficult to run healthcare-related businesses due to infrastructural paucity and other policy and regulatory bottlenecks. A restructuring of policies and regulations for healthcare-related businesses needs to be done for significant growth to be feasible.

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