Policy as tool for improving access to finance and investments in Nigeria’s private health sector

Nigeria’s health care financing conversation has long been dominated by shortages: chronic underfunding, negligible insurance coverage, and crippling out-of-pocket payments. These problems are real, but they are not destiny. If Nigeria is committed to achieving universal health coverage (UHC) and engaging the private sector as a partner, it will be important for policymakers to view policy not just as background regulation, but as a proactive tool to unlock financing, encourage investment, and create opportunities that deliver measurable improvements in both health outcomes and economic returns.

Investors and lenders finance ventures where risks are transparent, revenues are predictable, and governance is reliable. In health care, the environment is largely determined by policy decisions, including who pays, how payments are made, which providers are eligible, what quality safeguards are in place, and how data are managed and shared. Large, predictable public purchasers and clear contracting frameworks convert health services into predictable revenue streams, attracting private capital. Conversely, fragmented financing, opaque tariffs, and delayed payments can lower investor confidence. Thus, policy is the critical lever that can turn Nigeria’s private health sector from a fragmented set of small operators into a financeable, growth-oriented partner for UHC.

Reframing health as an economic sector

In Nigeria, health care is often viewed as a social good, which has led to limited investment in the sector. The evidence is clear: health spending is also an investment in productivity and jobs. A 2024 International Council of Nurses (ICN) report estimates that every $1 invested in health yields up to $4 in economic returns, and the World Bank highlights the role of health systems in inclusive growth and job creation.

This fiscal argument is highly significant for Nigeria, as Nigeria’s UHC Service Coverage Index is very low, at around 38, which is well below the African average of 44 and the global average of 68, indicating significant gaps in essential health care service coverage and financial protection for its population. Bridging that gap will require policies that position health as economic infrastructure, enabling investable platforms with clear social and long-term financial returns

If implemented strategically, Nigeria already has powerful policy instruments that can be repurposed to expand access to financing for private providers, some of which are;

First, the National Health Act and the Basic Health Care Provision Fund (BHCPF), a statutory window for Primary Health Care (PHC), which can be used to contract accredited private primary care providers, provide matching grants for facility upgrades, and deliver performance-linked payments. Such predictable public purchasing can stabilise private clinics’ revenues and make them bankable.

Second, national and state health insurance frameworks, such as the NHIS and state schemes. By empanelling private providers and using mixed payment methods—capitation for PHC, case-based/Diagnosis Related Group (DRG) for inpatient care—insurers can provide steady cash flows that reduce risk for lenders and investors.

Third, PPP policy and procurement laws, and fiscal incentives. Public procurement/PPP frameworks enable longer-term contracting and infrastructure financing. Tax incentives and duty exemptions can further reduce capital costs for health investors.

Lastly, Digital health policy (Nigeria Digital in Health Initiative): A unified digital health backbone—encompassing Electronic Health Records (EHRs), interoperable claims, and payment systems—will make provider performance, utilisation, and revenues transparent, dramatically reducing information asymmetry for financiers.

Digital infrastructure: the indispensable enabler

It is no coincidence that most successful purchaser–provider models in other countries rely on robust data and digital claims. Nigeria’s overreliance on paper records and fragmented EMRsweakens monitoring, billing, and fraud control. The Nigeria Digital in Health Initiative (NDHI), launched in 2024, presents a timely opportunity to correct this. National standards for EMRs, interoperable claims platforms, and a secure patient identifier will make private provider revenues auditable and predictable. This innovative approach represents a significant step toward enhancing confidence among banks and investors in financing small and medium-sized enterprises (SMEs) and healthcare clinics.

Harnessing donor and blended finance intelligently

Donor financing, when closely aligned with national policy priorities, can catalyze private investment. For example, the World Bank approved a $1.57 billion package for Nigeria, including $570 million for primary health care. However, donor funds should be combined with domestic policy tools such as credit guarantees, matching grants, PBF windows, and escrow mechanisms to reduce risks for private capital and attract additional commercial lending.

Well-designed blended finance can lower the effective cost of capital, making expansion projects viable for private operators serving low-income or rural populations. The FOR M(om) project, led by Helium Health, has demonstrated the possibility of this through their Maternal Health Fund. The Maternal Health Fund (MHF), implemented by Helium Health, seeks to transform maternal health care in Nigeria through affordable financing for impact, quality improvement, and capacity building. By blending funds from multiple investment sources at varying rates, MHF can offer private health facilities, provide quality maternal care, and offer more reasonably priced loans to meet working capital, asset acquisition, and new location financing needs.

By bridging financial institutions and frontline private providers, the Promoting Accreditation for Community Health Services (PACS) Access-to-Finance intervention has demonstrated a practical, scalable, and data-anchored financing modality capable of transforming how Nigeria’s private health sector accesses and manages growth capital.

Championed by the Pharmacy Council of Nigeria and implemented by Solina Center for Development and Research (SCIDaR) and the Society for Family Health (SFH), PACS is deploying a model for providing institutional microcredit to accredited community pharmacies and patent & proprietary medicine vendors (PPMVs). The intervention has created an ecosystem linking licensed providers, regulated financial institutions, and business development service providers under a shared framework of credit readiness, responsible lending, and performance monitoring.

In the first 12 months of implementation, this model has reached over 20,000 women with access to quality family planning services; expanded access to finance, mobilising over N100 million for 150 accredited community-based providers; and strengthened the repayment culture.

Collectively, these results demonstrate that private primary-care actors can support UHC goals, while being both profitable and reliable borrowers when supported with structured technical assistance and transparent monitoring.

Call to action

Policy should be the blueprint that transforms potential into investment. Nigeria already has the institutional instruments, including the National Health Act, BHCPF, NHIS, and the NDHI. Aligning these tools into coherent, performance-driven approaches that create predictable demand, protect quality, and lower the cost of capital for private providers is the way to strengthen policy.

To policymakers: Leverage policy as a tool to signal a total market approach to meeting UHC, and that health is worth investing in. Clearer contracting guidelines, cost-based tariffs, quality accreditation standards, and guarantee mechanisms to ensure timely payments are examples of policy signals that will promote private investments in health. Additionally, brokering and supporting blended finance instruments with private investors and donor partners to de-risk commercial lending to health SMEs, as demonstrated by the Maternal Health Fund. With modest policy adjustments—such as integrating accredited health MSMEs into national MSME credit schemes or offering partial guarantees through development-finance institutions—models like PACS could be scaled nationwide.

To health care practitioners and private providers: organise into networks or franchises to pool demand and improve creditworthiness; prioritise accreditation and digital readiness; and engage proactively with state authorities to test contracting models.

To private investors and financiers: Look beyond tertiary hospitals in major cities. Policy reforms are creating demand certainty at the PHC and secondary levels. Partner with accredited networks, participate in credit-guarantee facilities, and explore blended finance and pay-for-success models.

If Nigeria pursues these policy choices decisively, the private health sector can become a reliable partner in expanding access, improving quality, and driving economic returns. Policy is the lever — now is the time to pull it!

Olubode is the Nigeria director for MSD for Mothers, MSD’s global initiative to help create a world where no woman has to die while giving life. Applying MSD’s business and scientific resources, MSD for Mothers works with grantees and collaborators to improve the health and well-being of women during pregnancy, childbirth, and the months after. MSD for Mothers is an initiative of Merck & Co., Inc., Rahway, NJ, U.S.A. For more information, visit www.MSDforMothers.com.