Wednesday, July 07, 2021 / 10:20 PM / Proshare Research
/ Header Image Credit: Ecographics/Pixabay
When COVID-19 broke out in late 2019 the world thought it was dealing with a major health problem, but everybody has since become wiser in realizing that the global pandemic has come to redesign human reality, from healthcare to economy and technology the landscape has shifted.
In a matter of eighteen months, the world has become a new place with social and economic interactions that never existed, and this has changed the nature of relationships between governments and private companies, creating a situation where collaboration has become the new fetish. COVID-19 appears to have brokered a fresh partnership.
The partnership has taken a bigger dimension as several countries are beginning to see a triple-dip in their economies as they pass from a second wave of the virus to a potentially more deadly third wave. India has been hard hit by the third wave as the gradually recovering economy got pushed back down with a resurgent spike in daily COVID-19 infections even though the country manufactures the AstraZeneca/Oxford version of the vaccine. Global private enterprises have partnered with governments, but challenges remain especially in emerging and frontier economies that are on the wrong side of what has been termed global vaccine 'inequity'. A situation where large and stronger economies prioritize their citizens and stockpile vaccines to the detriment of weaker economies.
The Nigerian Gambit
In Nigeria, COVID-19 has had a disruptive impact on the domestic economy and people's livelihoods. Economic output slumped from a growth rate of 1.87% in the first quarter (Q1) of 2020 to a negative growth of -6.1% in Q2 and -3.62% in Q3 before reversing in Q4 to 0.11%. In Q1 2021 the economy has done a bit better with a growth rate of 0.55%. However, the growth rate is fragile as a further lockdown like the recent India experience would hurl the country back into a recession which would worsen already painful socioeconomic indices such as high inflation rate (17.92%), high unemployment rate (33%) and rising insecurity and substance abuse.
To avoid or at least cushion the severity of a third COVID-19 wave in 2021 the Nigerian private sector needs to give additional skin to the game as the government attempts to avoid a prospective lockdown. Some reasons for added private sector support would include but would not be limited to:
Illustration 1 Vaccine Inequity and Matters Arising
Source: HFN, Proshare research
The Private Nature of Healthcare
Healthcare in Nigeria is still primarily private sector driven. While the public sector hugs the klieg lights and gets the daily headlines, most Nigerians receive their medical support through private healthcare channels. Healthcare spending in 2021 is assumed to make up 2.94% of gross national output (GDP) with the private sector accountable for 74% of the amount.
According to the Health Federation of Nigeria, roughly two-thirds of healthcare spending comes from the private sector of which 95% comes out of pocket. Indeed only 4% of the population (mostly public servants) have access to health insurance. Another interesting statistic is that about 70% of healthcare establishments in Nigeria are privately owned and managed. Between 2019 and 2021 healthcare spending by the government has increased 11.4% compounded annually, while private sector spending has grown at the slower pace of 7.5% over the same period.
Nigeria's private sector spending on healthcare needs to grow faster but the framework must be made clearer as the national and sub-national health policies need to bring in the sector as a partner rather than as a channel. As partners, the private sector would think with the public sector to design a health framework that enables all citizens to gain access to affordable medical assistance. Already the private sector is responsible for 60% of all healthcare delivery in sub-Saharan Africa (SSA) and delivers over 75% of health products and medical equipment (see illustration 2 below).
Illustration 2 COVID-19, Ramping Up Private Sector Support
As things stand today, millions of people in Africa and Nigeria are outside the national and subnational public health net. Lagos state with an estimated population of 22m, for example, through a state health insurance programme has tried to extend the reach but even at that coverage remains low. The private sector could prove useful in broadening coverage, but service delivery cost still represents a potent barrier.
In 2021 only about 2% of the Nigerian population has received the first dose of the COVID-19 vaccine while only 1% has received the second dose. The implication is that it would take much longer than expected to achieve the World Health Organisation's (WHO's) prescribed 60% vaccination to achieve herd immunity (see illustration 3 below).
Illustration 3 COVID-19, Nigeria's Vaccination Story So Far
In other words, both state and federal governments must rethink healthcare coverage particularly with the recent persistence of the virus to see how service delivery costs can be reduced; COVID-19 needs to be treated as a 'public good' or a negative health event whose cost cannot be covered through normal private market channels. The benefit of one person not having the virus is communal and gives what economists call a 'positive externality' or benefit beyond the person that produces a product or service or in this case does not get infected.
To encourage private sector commitment to a fast and thorough healthcare intervention programme, the various governments need to give tax incentives to COVID-19 private partners towards a reduction in the viral spread or the treatment of infection. In addition, the different tiers of government need to:
A Movement for Action
The government has done a good job of responsiveness but much more is needed if a third and more devastating wave of COVID-19 is not to hit the public and the economy. The travails of India in Q1 and Q2 2021 have shown that the COVID-19 problem has in no way disappeared and that the battle for a recovery from the pandemic is still a moving target. The presumption by several Nigerians that the worst is over concerning the virus is as dangerous as the assumption that the COVID-19 vaccine is now irrelevant. The lack of herd immunity makes Nigerians vulnerable to a resurgence of the virus that could lead to an India-type reversal of the earlier gains from social distancing, face mask-wearing and regular washing of hands.
Indeed, to keep the economy open for business and ensure the protection of life and livelihoods both the private sector and government actors must collaborate to sustain a campaign of COVID-19 awareness and push back the COVID-fatigue that appears to have set in within the cities and rural communities. The national and state governments need to act now to create a movement against the virus by continuing awareness campaigns and partnering with the private sector to fund programmes that keep the COVID-19 protocols top-of-the-mind of citizens.
COVID-19; The Private Play
The private sector is a crucial part of the mechanism for containing the coronavirus as the government's resources are lean and its high fiscal leverage gives it limited headroom for capital intervention in the healthcare sector.
The five key areas that the private sector could support the public sector are the areas:
The private sector has helped immensely through the Collaboration Against COVID-19 (CACOVID) but this is insufficient and appears to lack steam and sustainability. The infighting amongst alliance members and the weak monitoring and evaluation framework of the body has made it necessary to evolve a more sustainable organized private sector support structure to keep the virus at bay (see illustration 4 below).
Illustration 4 COVID-19: The Private Play
A failed partnership between the public and private sector could result in dire health, economic and social outcomes for the country. The potential challenges showed up clearly in 2020 with the nationwide restriction of movement of persons and goods disrupting domestic supply chains, shutting down manufacturing and smothering social life as we know it (see illustration 5 below).
Illustration 5 Nigeria's COVID-19 Resilience, Matters of Debate
Analysts, nevertheless, note the spartan effort of zealous private sector actors in addressing the pandemic. For example, private companies such as Sterling Bank Plc, have picked up the gauntlet and are leading the charge of a broader collaboration with COVID-19 management institutions.
According to the bank's Managing Director, Mr. Abubakar Suleiman, at a recent event where he spoke on the "Economics of a Successful Covid-19 Vaccine Intervention," he remarked that those who will benefit significantly from the opening of the economy must pay for those who cannot afford to pay to be vaccinated so that the economy can function again.
The cross-subsidy would place society on a higher social indifference curve meaning that society as a whole would benefit when the haves support the have nots.
Suleiman further noted that "The money which the government must put out is not for vaccination per se even though that is what it is buying. It is to ensure that the economy does not go back into a lockdown with its attendant social crisis in the form of massive unemployment and security challenges. Then, suddenly we can find one or two billion dollars when we could not find one million dollars because we did not do the vaccination."
At the institutional level the banker pointed out that, "For Sterling Bank as a corporate, we have remained committed to the vaccination exercise by participating in every single path of the fight against Covid-19."
"We participated in activating the testing centres and some of the first experiments that Biobank did. We have actively participated in fixing isolation centres and in contributing to CACOVID. One of our most important feats is our set up of a Health Workers' Fund for the health care experts at the forefront of tackling the coronavirus".
It is through private sector engagements such as these that the country would need to accelerate the resolution of a looming socio-economic disaster if a private-public partnership (PPP) is not forged to handle the devastation that could occur if the delta variant of the virus is allowed to spread.
Getting Past the Pandemic- An EndNote
The partnership between the public and private sector to manage the COVID-19 threat is not temporary but permanent. The structures put in place to cope with the socioeconomic consequences of the virus must be built into a permanent framework for domestic health management at all levels of government.
The public and private sector collaboration will have to achieve sustainability by leaping through the cold chain loop (see illustration 6 below).
Illustration 6 The Cold World of COVID Hoops
The private sector will have to understand the virus prevention and remediation value chain and mobilise investments for each value node. Entrepreneurs would be needed from vaccine manufacturing to vaccine distribution and on to storage and treatment facilities before addressing administration and monitoring through health tech options. Driving through the loops the vaccine must be kept at prescribed cold temperatures hence the 'cold chain' prefix.
While the private sector raises and deploys funds for R&D, production, and distribution, the various governments need to support public enlightenment, laws, and legislation that internalize safe social interaction. The governments would also be required to enforce the social rules to keep citizens on the smart and narrow road of compliance.
Rethinking the way people interact is a necessity and not a luxury as the coronavirus becomes less of a black swan. Indeed, the nature of the virus is known and its disruptive socio-economic impact is well documented and experienced.
If the future is to be secured and pandemics are to be handled swiftly, deliberately, and forcefully the interaction between private and public sector actors needs to go beyond just a handshake, it needs to turn into a bear hug (see illustration 7 below).
Illustration 7 The Private Sector COVID Collaboration; From Handshake to Bear Hug