Analysts seek special banking initiative for Nigeria’s health sector

Following increasing demand for health services, including diagnostic treatment and care, which presents a growing and untapped opportunity in Nigeria’s health sector, analysts have called for a special banking initiative with low interest rate and spaced out repayment plan that will encourage investors coming into the sector.

With the private health sector becoming patients’ preferred choice due to greater accessibility, higher perceived quality of service, continuity of care it offers and availability of drugs, the current double digit interest rate by banks for loan facilities, analysts say, is high and a disincentive to ensure a Return on Investment (ROI).

Speaking with BusinessDay, Femi Olugbile, immediate past permanent secretary, Lagos State Ministry of Health, disclosed that the private sector contributes over 60 percent of healthcare services with the multi-billion dollar industry continually experiencing growth, driven by national economic development, rising consumer incomes and corresponding ability to pay for healthcare.

Although investors may seek to invest in the sector, Olugbile noted that a number of factors constrain investment and increase their perception of risk. According to Olugbile, many financial institutions have not invested in the health sector due to limited information on size of the market, its financing needs, risks, opportunities, and trends.

“Many investors complain about the type of collateral that health service providers offer, including facilities and specialised medical equipment. Due to the nature of the business, many health service providers require longer-term investments, particularly in the case of equity or project financing for larger organisations such as hospitals,” Olugbile stated.

Sunny Kuku, chairman, EkoCorp Hospital, pointed out that loan facilities from financial institutions with short repayment plan is inimical to investors as healthcare investment globally is often long-term.

Kuku noted that as the government has been proactive in meeting the needs of sectors like agriculture and aviation through intervention funds, it has not extended the gesture to the health sector.

“If government can intervene in agriculture and aviation sectors, there must be intervention in health because health is wealth. In most developed countries, they give priority to health because an individual can work to generate wealth.

“The dearth of facilities had been a major problem in the sector. Some of the equipment cost between $1m to $5m for acquisition, excluding installation and maintenance. Knowing that our country is a developing country, how much will the patient pay?

“Services in Nigeria are fee-for-service, even in the public hospitals. This is why government must come with intervention fund to make these facilities available and at affordable service charge,” Kuku explained.

The call for a special banking initiative is coming as Nigerians in Diaspora have been urged to tap into Lagos medical village initiative located at Lekki Phase 1, Abraham Adesanya Estate, and other parts of the state.

Lekan Pitan, former commissioner for health, Lagos State, told BusinessDay that the purpose of the medical village is to attract both investors (foreign and local) in the health sector, with the aim of making Lagos State a medical hub for Nigeria.

“The Medical Village would be a public-private partnership between the government and health care practitioners in the state and beyond. The medical village will parade a cluster of specialists to take care of ailments that made Nigerians seek treatment abroad. This will help restrain Nigerians from seeking foreign medical service.”

It will be recalled that Onyebuchi Chukwu, the minister of health, in August 2012, inaugurated a ministerial committee to unlock the private sector’s investment into healthcare delivery and improve healthcare availability at tertiary level.

The goal of the committee, chaired by Tony Elumelu, is to enhance the investment of the private sector in order to establish six international – standard hospitals and diagnostic centres in Nigeria by 2015.

The timing of the committee’s formation, experts say, comes at a period when the country takes a critical look at the essential pillars for maintaining a robust health sector and seeking to explore essential requirements of attracting and sustaining appropriate private sector investment.

This, in the long run, would transform the healthcare system, since long-term sustainability of quality healthcare requires holistic considerations of the demand for and supply of healthcare delivery.

Alexander Chiejina