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Nigeria’s economic future function of present investment in health

Paradigm shift towards sustainable health financing in Africa

An individual’s health is essential because it improves the efficiency and productivity of an individual who will consequently contribute to the development of Nigeria’s economy. Therefore, it is crucial for the government to adequately fund health services as a public good that is equitably and readily available to all.

In a summit held by the Heads of States of African countries in Abuja in 2001 on the challenges of HIV/AIDS, Tuberculosis, Malaria, and other diseases in the region, the government pledged at least 15 percent of the annual budgetary allocation would go to the health sector. However, Nigeria has not been able to meet the target for over 20 years of pledging.

The government of Nigeria spent 3.9 percent of the national budget on health in 2010, 4.7 percent in 2011, 5.8 percent in 2012, 5.7 percent in 2013, 5.6 percent in 2014, and 5.8 percent in 2015, a decline to 4.1 percent in 2016, 5.1 percent in 2017, 3.9 percent in 2018, and 4.1 percent in 2019. In 2020, the government budget allocation to the health sector was 4.16 percent and 4.5 percent in 2021. The proposed 2022 budget presented by President Muhammadu Buhari in October also shows that health only accounts for 4.97 percent of the budget. This indicates that a small fraction of the budget is still committed to the funding of health, of which a significant proportion of the budget allocation goes to recurrent expenditure while capital expenditure takes a small proportion of the budget allocation.

In contrast, the cost of subsidizing premium motor spirit (PMS) is higher and unsustainable to the detriment of human and physical capital. In 2022, the Nigerian government planned to subsidize PMS cost by N13,000 per person per year, while N3,000 is budgeted per person per year on health. The World Bank report shows that most of the oil subsidy is to the benefit of wealthy Nigerians and oil smugglers while the poorest 40 percent consumes less than 3 percent of the total PMS consumption in Nigeria. This implies that PMS subsidy is encouraging smuggling due to the price differences between Nigeria and neighbouring countries.

Furthermore, the GDP growth rate has been lower than the population growth since even before the pandemic in 2015. The expectation is that the GDP growth rate will surpass the population growth rate in 2021-2022. However, the predicted GDP per capita growth rate of 0.1 percent is still meagre to bring Nigeria on the path of sustainable development. Expert projected that it would take Nigeria 50 years to reach the 2019 income level with the 0.1 percent GDP per capita growth rate.

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The health sector has faced several challenges, including lack of funds, inadequate equipment and infrastructure, brain drain, lack of welfare to medical practitioners and other health workers. Despite these problems, the sector faces the problem of resolving the COVID-19 virus that affected the world, of which Nigeria is inclusive, exposing its loopholes.

The report has it that the main leading cause of death in Nigeria are neonatal disorders (12.25%), malaria (12%), diarrheal diseases (11.36%), low respiratory infection (10.85%), HIV/AIDS (5.18%), Ischemic health disease (4.37%), stroke (3.98%), congenital disabilities (3.26%), tuberculosis (2.84%) and Meningitis (2.82%). The N3,000 budgeted per person cannot even cure malaria, which is one of the leading causes of death in the country.

Also, the highest maternal mortality rate is in the African region, with Nigeria being no four with the worst maternal mortality rate of 977 deaths per 100,000 live births. This makes Nigeria one of the dangerous countries to give birth in the world.

Due to insufficient funds provided by the government to this sector, an individual has to use the bulk of their money to finance health challenges. Statistics from the World Development database show that the direct spending on health by household increased from 60.16 percent in 2000 to 76.6 percent in 2018.

World Health Organization (WHO) said that 100 million people are pushed to poverty annually due to their out-of-pocket payment for health services. Nigerians may go into more hardship in 2022 as a result of rising expenditure on health.

The simultaneous problem of COVID-19 and socio-economic crises that the Nigerian government is trying to solve negatively impact the economy. This makes people vulnerable to fall more into poverty. Thus, the government should come up with policy interventions that can help mitigate such adverse impacts. They should incorporate a risk-sharing plan in health care financing that can minimize the burden of funding sudden health challenges from the individual. Government should also prioritize the welfare of medical practitioners and other health workers. Finally, sufficient funds must be made available by the government to cater to the people’s health care to avoid households being impoverished because they need to use health care services.

Busayo Aderounmu is an economics lecturer at Covenant University, Ota, Ogun State.