Nige­ria's low ca­pac­ity to re­ceive health in­vest­ment

Financial Nigeria Magazine - - Contents -

Last year, the Min­is­ter of Health, Prof. Isaac Ade­wole, told the Punch news­pa­per that Nige­ria's health sec­tor “has suf­fered from chronic un­der­fund­ing for many years now.” Ac­cord­ing to him, “we are even be­hind South Su­dan, An­gola and Ethiopia.” Even if he was en­gag­ing in the blame game, which the Pres­i­dent Muham­madu Buhari's ad­min­is­tra­tion uses to de­flect its lack of per­for­mance, the Nige­rian health sec­tor is in a par­lous state.

Ac­cord­ing to the World Bank, to­tal health spend­ing as a share of Nige­ria's GDP has been be­low 5% since 2000. To­tal health spend­ing in 2014 was 3.7%, out of which only 0.9% rep­re­sented public spend­ing. This data shows that Nige­ria's pri­vate sec­tor spend­ing – much of which is out-of-pocket – is three-quar­ters of the coun­try's to­tal health ex­pen­di­ture.

This year, the to­tal amount spent by Nige­ri­ans seek­ing med­i­cal treat­ment abroad will ex­ceed public ex­pen­di­ture on health. N304 bil­lion is the al­lo­ca­tion for health in the 2017 bud­get. Us­ing the in­ter­bank ex­change rate of N307/$1, the es­ti­mated $1.3 bil­lion the coun­try spends on ex­ter­nal med­i­cal tourism an­nu­ally will ex­ceed the health bud­get by 31%.

Re­struc­tur­ing the public ex­pen­di­ture for more al­lo­ca­tion to health has been a clar­ion call in health pol­icy cir­cles for some time. The ad­vo­cacy is in recog­ni­tion of the role that gov­ern­ment plays in the over­all per­for­mance of the health sec­tor. But gov­ern­ment's role ex­tends be­yond fi­nanc­ing to gover­nance of the health sys­tem, which is a de­ter­mi­nant of pri­vate sec­tor in­vest­ment into the sec­tor. But here, a new study has re­vealed the spec­tac­u­lar fail­ure of the Nige­rian gov­ern­ment.

Last month, the Washington DC-based think tank, the Brook­ings In­sti­tu­tion alerted Fi­nan­cial Nige­ria on the re­sult of its new health­care study. In its study – Health Gover­nance Ca­pac­ity: En­hanc­ing Pri­vate Sec­tor In­vest­ment in Global Health – which sur­veyed the health gover­nance ca­pac­ity of 18 low- and mid­dle-in­come coun­tries in sub-Sa­ha­ran Africa and Asia, Nige­ria is placed at the very bot­tom of the rank­ing, be­low Pak­istan and Demo­cratic Repub­lic of Congo. Liberia and Sierra Leone – two of the three West African coun­tries worst af­fected by the 2013-2016 Ebola out­break – rank bet­ter than Nige­ria.

Three African coun­tries – South Africa, Ghana and Mozam­bique – are among the top-five rank­ing coun­tries on the Health Gover­nance Ca­pac­ity Index (HGCI). These coun­tries, in­clud­ing Viet­nam (1st) and China (3rd), are be­lieved to have the great­est po­ten­tial to at­tract pri­vate sec­tor in­vest­ment in health R&D be­cause of their high per­for­mance on over­all health gover­nance.

The HGCI was com­piled by com­bin­ing five di­men­sions of health gover­nance rel­e­vant for pri­vate sec­tor in­vest­ment. The five di­men­sions are Lead­er­ship and Man­age­ment Ca­pac­ity; Reg­u­la­tions; Poli­cies; In­fra­struc­ture and Fi­nanc­ing; and Health Sys­tems. The study then as­sesses 25 in­di­ca­tors re­lated to the five di­men­sions.

In the di­men­sion where Nige­ria scored low­est, namely Lead­er­ship and Man­age­ment Ca­pac­ity, Ghana and Liberia re­ceived their high­est points. The in­di­ca­tors un­der this di­men­sion pro­vide a clue as to why Nige­ria is out­per­formed by its smaller West African neigh­bours. The in­di­ca­tors in­clude Trans­parency In­ter­na­tional Cor­rup­tion Index Score, Po­lit­i­cal Sta­bil­ity Index, and ex­ter­nal re­sources as a per­cent­age of to­tal health ex­pen­di­ture.

Un­der Reg­u­la­tions, where Nige­ria re­ceived its high­est score, the coun­try is on par with Liberia and only two points be­hind Ghana. Some in­di­ca­tors un­der this di­men­sion are: health ex­pen­di­ture as per­cent­age of GDP, busi­ness cli­mate, and the pres­ence of phar­ma­ceu­ti­cal drug reg­u­la­tory bod­ies.

Last year, the IFC and Nige­ria Sov­er­eign In­vest­ment Author­ity an­nounced they were map­ping out strate­gies to de­velop Nige­ria's pri­vate health­care sec­tor and re­verse the med­i­cal tourism trend. This ef­fort will yield re­sults, only to the ex­tent they in­flu­ence gov­ern­ment's pol­icy for marked im­prove­ment in the gover­nance of the health sec­tor. But there is hope that the IFC – NSIA part­ner­ship sym­bol­izes po­ten­tial so­lu­tion. The NSIA is the gov­ern­men­tal in­sti­tu­tion that man­ages the Nige­rian sov­er­eign wealth fund. To what ex­tent it can in­flu­ence gov­ern­ment health pol­icy re­mains to be seen. But the NSIA can act as a bridge be­tween pol­icy and mar­ket, given that the IFC is the arm of the World Bank that lends to the pri­vate sec­tor.

The Brook­ings' study de­fines health gover­nance ca­pac­ity as the abil­ity of a na­tion's in­sti­tu­tions to im­ple­ment health poli­cies, pro­vide med­i­cal ser­vices, al­lo­cate re­sources ef­fi­ciently, and help the coun­try re­spond to health crises. “Good gover­nance is a foun­da­tional con­di­tion for global health in­vest­ment,” the au­thors – Dar­rell West, John Vil­lasenor, and Jake Sch­nei­der – said. “It con­di­tions the over­all en­vi­ron­ment in which both public and pri­vate sec­tor health in­vest­ment takes place.”

In light of this, it is hoped that on­go­ing ef­forts to im­prove the ease of do­ing busi­ness in Nige­ria – which es­sen­tially tar­gets mak­ing the coun­try more at­trac­tive for for­eign in­vest­ment – will fac­tor re­form needs in the health sec­tor into the agenda.

Ex­ter­nal med­i­cal tourism is not a cred­i­ble so­lu­tion in ad­dress­ing the health­care needs of Nige­ri­ans, al­though it is in­creas­ingly the op­tion em­braced by the priv­i­leged class. Nei­ther would mere clam­our­ing for pri­vate sec­tor in­vest­ment – do­mes­tic or for­eign – de­liver the good. The gov­ern­ment has to cre­ate the con­di­tions for the in­vest­ments.

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