Thursday, June 17 2021 / 02:19 PM / by CSL Research / Header Image Credit: Healthcare Finance
The sustained surge in consumer prices in Nigeria has not gone unnoticed and the effect of rising food prices has been extensively discussed overtime. A significant driver of inflation which has not received much attention in recent times is the continued rise in health care cost, which going by the Inflation report of May 2021, rose by 15.8% y/y and 1.1% m/m.
In a recent statement, the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele noted that a key factor that has impeded access to healthcare for Nigerians is the prevailing cost of healthcare services, amid the erosion of consumers' purchasing power.
In the five years preceding May 2020, the Health care sub-index of the core inflation grew at an average rate of 10.0%. Following the Foreign Exchange (FX) concerns in 2020, healthcare cost has been on the rise.
The rise in the cost of pharmaceutical products, medical services, dental services, paramedical services, and hospital services have jointly accounted for the 15.8% y/y rise in health care cost in the last 12 months ending May 2021. Urban health inflation rose the most by 16.7%, while rural health inflation trailed at 15.1% within the period.
One of the major challenges in the industry overtime is the reluctance of the average Nigerian to take on health care insurance, as out of pocket payment constitutes c. 76.0% of total healthcare expenditure. As of Q1 2021, the health care sector contributed 0.7% of total Gross Domestic Product, that portends more room for improvement given how pivotal the strategic is to the economy
In our view, cost, and accessibility of healthcare services in Nigeria must be an area of focus for the government and we believe both public and private sector participation will be required.
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