• Tuesday, July 23, 2024
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Nigeria’s 2023 health budget big on paper, light on expectation

Nigeria’s 2023 health budget big on paper, light on expectation

Africa’s most populous country has struggled to reform its healthcare amid major funding constraints and the pressure mounted by the COVID-19 pandemic on the already stretched workforce.

But in his bid to change the narrative, President Muhammadu Buhari has allocated N1.58 trillion to the health sector in the 2023 budget, compared to N278.31 billion in 2015.

At first glance, it looks good. On Buhari’s watch, the health sector’s recurrent budget increased from N237.31 billion in 2015 to N580.82 billion for 2023 while the capital expenditure increased from N22.68 billion to N404.08 billion.

The N1.58 trillion allocated to the health sector is also 8 percent of Nigeria’s total budget N20.51 trillion, compared to 5.35 percent for 2022.

The President, who is in his second and final term, has promised that the government will focus on equipping existing hospitals, rehabilitating health infrastructures, and seeing through the local production of essential medicines including vaccines in 2023.

Nigeria has again failed to meet the commitment made by African leaders under the 2001 Abuja Declaration to allocate at least 15 percent of its annual spending to the sector.

“During the Abuja Declaration on Health, member states committed to allocating 15 percent of their government budgets to health in 2001. But where are we two decades later? We need to invest more in health if we must improve the population’s health,” Amarakoon Bandara, senior economic advisor at United Nations Development Programme, said at a recent event.

Stakeholders who spoke to BusinessDay see the 2023 health budget as a featherweight that can’t stand an economy submerged in a debt crisis and a mere tool to accommodate currency devaluation.

For some analysts, the budget still counts as a broad reflection of a collective decision that issues such as debt servicing and petrol subsidies are more important than strengthening the health system.

Olamide Brown, founder of Flying Doctors Healthcare Investment Group, said in a telephone interview with BusinessDay that the amount spent on petrol subsidy, which has become a political tool wielded in winning elections, is more than the combined budget for health and education sectors.

But if the country decides to curb wastage on petrol subsidy, she predicts that substantial funding could be recovered and applied to help Nigeria meet its commitment to apply 15 percent of its total budget to healthcare yearly.

Another area of the budget she suggested can generate funds for the health sector is to earmark a direct proportion of oil revenue for healthcare without interference.

“I don’t see any other area of the budget where we can take from to put into health, except the subsidy money or increasing taxation, which will be politically unpopular. The bottom line is that Nigeria is not generating enough revenue and it affects healthcare,” Brown said.

Nigeria spends the bulk of its money on recurrent expenditures, from subsidy bills to interest payments on debt.

Data from the Budget Office show that every year since 2015, the federal government has spent more money servicing debt than it has on critically needed healthcare.

The trend of spending more on debt servicing than the health sector, which is set to stretch for the ninth straight year, according to the 2023 budget proposal, could see the government spend N6.31 trillion on debt. This will mean a 75 percent increase in the amount budgeted in 2022 and 50 percent more than the actual amount spent in 2021.

Development economists have long argued that developing countries like Nigeria should spend more on critical capital healthcare projects that are desperately needed in a country where a yawning infrastructure deficit has undermined economic growth and tormented businesses.

Read also: 2023 budget at risk as FG borrowings miss target

“If there is somebody who is bold enough to put the money going into under-recovery in healthcare instead of petrol that we should not even be importing in the first place, I think that will make a difference,” Brown said.

Apart from not performing adequately as the chief health financier in the country, stakeholders are also worried that the government has been weak at spurring new private investments into the sector, a development that has prompted many of the country’s health workers to leave the country.

The country has 0.4 doctors per 1,000 people, according to the World Bank’s latest data, less than the global average of 1.8 doctors. It also has a fledgling health insurance sector, which has struggled to increase enrollees.

The potential of operating in the largest African market is often charming but some investors can’t seem to overlook the difficulty posed by the multiple foreign exchange rates and the declining purchasing power of Nigerians.

Sammy Ogunjinmi, vice president of Nigerian Representative of Overseas Pharmaceutical Manufacturers, in an interview with BusinessDay, lamented that even multinationals now struggle to access the dollars needed to import major raw materials for production.

They are also challenged by the effect of currency devaluation on taking out their investment in dollars after sales in naira.

Ogunjinmi is, for instance, building a health kit production plant in the country. But the Central Bank of Nigeria has only met five percent of his foreign exchange needs, pushing him to resort to the black market to source a chunk of his needs.

“Just imagine someone who wants to come and set up afresh in Nigeria, the first thing they will be thinking about is whether they will be able to take their money out. That’s a big problem,” Ogunjinmi told BusinessDay.

“If the exchange rate is the same in the parallel market and official market, it will cut a lot of middlemen who are profiting from the imbalance.”

For Brown, the government can make the sector more attractive and viable by giving it the kind of backing that the banking sector gets, such that the Asset Management Corporation of Nigeria was established to handle recklessness and prevent banks from collapsing.

“I think that banking is essentially a government-backed business and healthcare isn’t. That is because those in the banking, cement, oil, fertilizer, and oil sectors have done a better job in advocating for their industry,” she said.