Tuesday, January 12, 2021 / 12:30 PM / OpEd by
Abiodun Awosusi / Header Image Credit: Abiodun Awosusi
Nigeria is Africa's largest economy, with a growing population and large healthcare market. Inadequate health financing, high levels of poverty and weak healthcare infrastructure limit access to affordable, high-quality health services. The coronavirus pandemic has exposed the weaknesses of the country's health system: it highlights an urgent need for adequate health investments through efficient institutions and mechanisms that can drive improvement in health outcomes. In this analysis, I explore the country's health market needs, drivers of healthcare investments and steps required for the creation of a proposed Bank of Health.
Current public health investments
A World Bank analysis of Nigeria's health system landscape shows that public health investment is low. Citizens largely pay directly for health services from their income rather than through a risk-sharing mechanism. Most Nigerians patronize private sector providers. Recent efforts by government to improve the health and wellbeing of Nigerians led to the passage of the National Health Act (NHA) alongside health policies, strategic and operational plans to accelerate progress.
A key element of the NHA is the Basic Health Care Provision Fund (BHCPF) which represents at least one percent of consolidated national revenue and additional financing flow from the private sector, philanthropies and donor agencies. Ongoing implementation of the NHA with operationalization of the BHCPF is a key priority of the current administration. In view of this, the government launched the revised BHCPF guidelines in 2020 to fast track implementation.
Several state governments have launched social health insurance schemes hinged on appropriate legislative frameworks. There is also concerted effort to develop and/or strengthen the capacity of state primary healthcare (PHC) development agencies to deliver on their mandates, working closely with other stakeholders particularly the National Primary Healthcare Development Agency. A related initiative under the 9-point health agenda of the current government includes deployment of well-trained community health workers. These steps are expected to increase equitable access to healthcare at primary health centres where a basic package of health services can be delivered to the populace particularly people in rural areas.
Drivers of New Investments In Healthcare
The coronavirus pandemic has highlighted the urgent need to invest adequate resources in healthcare infrastructure across the country and reverse the trend of medical tourism. More than 30,000 Nigerians leave the country every year to seek high-quality specialist health services in other countries: this leads to a loss of over US$1 billion in annual spending on medical and ancillary expenses. Poor medical infrastructure, industrial disputes, referral and brand preferences are leading motivations for Nigerian medical tourists. Reversing the trend requires large-scale investments across the value chain.
Nigeria's health burden is also changing. There is an increase in the incidence of non-communicable diseases (NCDs) such as hypertension, diabetes mellitus and cancers: NCDs account for 29% of all deaths in Nigeria. Treatment of these chronic conditions requires continuous access to high-quality specialist services at all stages of the diseases. Although infectious diseases and maternal and child health-related issues are responsible for more than half of all deaths in Nigeria, the rising incidence in NCDs could lead to an increase in the consumption of health services. Besides, the coronavirus pandemic shows that countries must invest more in public health systems to combat prevalent and emerging epidemics.
A third driver is the opportunity of health market expansion with full operationalization of the African continental free trade area (AFCFTA) agreement. There is significant momentum to boost intra-Africa trade in complementary sectors and create a continental market for free movement of goods, services and capital. This reform is expected to accelerate structural transformation in African countries and help cushion the socio-economic effects of the coronavirus pandemic. With the start of trading under the agreement on January 1, there is an opportunity to invest in viable infrastructure that can support increased local production of health and pharmaceutical products for domestic and continental markets.
Access to Finance in Nigeria's Health Market
Beyond the drivers of health investments, a health market study by the PharmAccess Foundation shows that there is a mismatch between available capital in financial institutions and the capacity of health enterprises to access funding as working capital or for infrastructure expansion. The report shows that most health businesses particularly private health facilities and pharmacies are sole proprietorships with weak governance, business development and financial management structures. There is therefore a need to support these enterprises to build durable systems and processes that can position them for capital to sustain or scale-up operations in order to meet growing demands for high-quality health services.
In view of the vast market needs and growth opportunities, there is a move to set-up a healthcare-focused bank. The bank is envisioned to be a centralized coordinating institution similar to the Bank of Agriculture. Nigeria's Bank of Industry (BoI) currently invests across the healthcare and pharmaceutical value chain. It is possible to expand the Health and Petrochemicals Group at the BoI to avoid inefficiencies inherent in creating a new institution. It is also possible to create a specialized health unit at the Bank of Infrastructure or Development Bank of Nigeria (DBN). However, a lean management approach at the proposed Healthcare Investment Bank could make it a viable centre for coordinating health investments that make the country's mixed health system work for all citizens.
The proposed bank is envisioned to be a strategic hub for players on the finance supply and demand sides, engaging with commercial, investment and development banks, venture capital and private equity firms, regional and multilateral development financial institutions as well as blended finance vehicles. It can also provide advisory and business management services to healthcare enterprises and startups while promoting effective partnership between public and private sectors. The specialized focus on health can potentially improve efficiency in needs assessment, deal sourcing, due diligence, investment appraisal, project preparation, financing and execution. Administration of the health research and development fund can also be domiciled at the bank.
Turning Vision to Reality
Existing financial institutions provide support to the healthcare sector, with funding from BoI, DBN and the Nigeria Sovereign Investment Authority (NSIA). NSIA has dedicated funding for healthcare infrastructure through the NSIA Healthcare Development and Investment Company: It has invested in advanced diagnostic and treatment facilities in three tertiary institutions: Lagos University Teaching Hospital (LUTH), Aminu Kano Teaching Hospital and Federal Medical Centre Umuahia. One of the priority sectors for NSIA's Nigeria Infrastructure Fund is the health sector: its flagship projects, NSIA-LUTH Cancer Centre, NSIA-Kano Diagnostic Centre and NSIA-Umuahia Diagnostic Centre, have been commissioned. These centres are expected to provide optimal health services and contribute to a reversal of medical tourism.
It is crucial to explore the possibility of maintaining the status quo or creating a new institution. While a healthcare investment bank can tackle some of the inefficiencies in Nigeria's health market, there are major hurdles ahead before it can become a reality. First, there is need for a feasibility study to evaluate the need, scope and structure of the organization and potential alignment with systems, strategies and institutions for health in the country. The parliament needs to undertake comprehensive engagement with various national, continental and international stakeholders and interest groups including the Nigeria Governors Forum. Harmonization with regulators in the financial and allied sectors is also crucial.
The bill currently in the House of Representatives will require concurrence with the Senate before Presidential Assent. Although the current relationship between the Executive and Legislative arms of government offers an opportunity to accelerate progress on passing relevant health sector reform bills like the National Health Insurance Commission Bill, the bank may not be a strategic priority. It is also unclear how the economic impact of the pandemic could affect capitalization of the Bank. Even when a law is in place to set up the organization, it could take some time before it becomes fully operational. It is therefore crucial to carefully consider available options and choose the right path to increasing health investments on Nigeria's journey towards Health for All.
About the Author
'Biodun Awosusi is a health economist at Health Systems and Development Enterprise. He is a TEDMED2020 Research Scholar and MIT Technology Review Global Panel Member. Previously, he was health financing advisor at Clinton Health Access Initiative; research consultant on the Bill and Melinda Gates Foundation-funded Learning for Action across Health Systems at Oxford Policy Management; advocacy manager at ACF International; and technical officer on the USAID-funded Program to Build Leadership and Accountability in Nigeria's Health System. He was the Nigeria Coordinator of the multi-country Rockefeller Foundation-funded Health for All Campaign for Universal Health Coverage in 2014. 'Biodun holds master's degrees in International Health (University of Oxford) and International Management (University of Liverpool) with a bachelor's degree in medicine and surgery from Obafemi Awolowo University.
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