Nigeria’s health sector loses steam in first half

Weighed against a year that at least saw renewed private investment in bridging part of the infrastructural and skill deficit in health services, the healthcare sector seems to have lost steam in the first half of 2022, defying analysts’ expectation of higher growth.

The sector has not seen the replication of some capital-intensive facilities driven by investors’ interest in the potential of reversing Nigerian’s medical spending abroad, which kicked off operations during the first half of 2021.

Rather most private facilities have had to grapple with worsening inflation that has raised the cost of energy and virtually all other costs for operators, leaving patients to face the brunt of hiked out-of-pocket spending.

The government’s failure to solve the perennial migration of healthcare workers from an already short-staffed system also adds more woes to accessing care.

However, a few reforms that hold a significant impact on access to care for all and sourcing finance for the system have been introduced by the federal government in the first half.

Read also: Nigeria’s health sector misses opportunity to reform through COVID-19

The most significant is the National Health Insurance Act 2022, which has made insurance coverage compulsory for everyone. Industry analysts see this as the most viable option to deliver healthcare to everyone while lowering personal expenses on health.

If well implemented with the provision of coverage for more than 80 million indigents, analysts say the policy will boost private investment in the sector, with the large population of the country being the attraction. It is expected that existing facilities that have made huge investments in their capacity can also tap into the insured market to expand their patronage.

“People who put billions of naira into setting up ultra-modern hospitals and staff with highly paid consultants and other personnel who get salaries that are on such a magnitude that they are not tempted to go away and be part of the brain drain should at least be able to generate such traffic that can sustain the cost of the service,” Femi Olugbile, former permanent secretary, Lagos Ministry of Health said. “Health funding that is sustainable is crucial even for the business case of the private sector.”

In terms of funding sourced from tax, the federal government said it has commenced implementation of a new three-year tobacco tax regime beginning from June 1, 2022, to an unspecified date in 2024. The federal government in a tweet last Wednesday said the new regime increased the ad-valorem tax rate from 20 percent to 30 percent.

In addition to the 30 percent ad-valorem, a specific excise rate has been increased from N58 to N84 per pack of 20 sticks of cigarette. It will be further increased to N94 per pack in 2023 and then N104 per pack in 2024, the government said.

Also, Shisha, a form of tobacco smoked in long pipes, often mixed with flavours, is now taxed at the rate of N3,000 per litre and N1, 000 per kilogram and will be increased yearly by N500.

“These pro-health taxes are an effective public health control measure against behavioural risk factors as it has the capacity to reduce demand and consumption of tobacco products. It also prompts tobacco users to switch expending their resources on tobacco products to healthy alternatives such as education, health, nutrition, and others,” the federal government tweeted.