Lack Of Mandatory Participation In The NHIS Act Impeding Growth Of Health Insurance Coverage In Nigeria

…As Federal Government incapable of fulfilling obligations to the Health Sector…


Over the past decade, less than 7 percent of Nigeria’s annual budget has been allocated to healthcare. At no time in the last decade has government budget met the agreed budgetary provision of the Abuja Declaration of 2001, which recommended that at least 15 percent of annual budgets of signatory countries should be devoted to healthcare on the African continent.

For instance, in 2013, the Federal government budgeted 270 billion Naira for the health sector, representing 5.5 percent of the federal budget. In 2014, the federal government budgeted N216.40 billion representing 4.4 percent of the national budget, this marked a 20.73 percent drop in the actual value of the health budget and in its share of the national budget. The health budget in 2015 was 237 billion Naira and about 5.5 percent of the national budget of N4.36 trillion. In 2016, total health budget of N282.1 billion accounted for 5 percent of the federal budget and in 2017, the amount was N304 billion representing 4.6 percent of the total budget.

In 2018, the Federal Government has allocated N340.45 billion, which will account for 3.9 percent of the N8.6 trillion expenditure plan for the fiscal year. As a result of the significant financing gaps resulting in inadequate medical facilities and healthcare services, life expectancy rate in Nigeria of 53 years is way below the global average of 72 years. Overall, in terms of per capita public funds for health, Nigeria ranked in the 26th position out of 42 countries based on data collated between 2003 and 2014 (and published in 2016) by the World Health Organisation (WHO).






2013 270,000,000 1,571
2014 216,040,000 1,226
2015 237,000,000 1,308
2016 282,100,000 1,517
2017 304,000,000 1,634
2018 340,450,000 1,637


Nigeria’s population is estimated at 186 million and is growing at 3 percent annually, with more than half of the populace under 30 years of age, according to the National Population Commission (NPC). Population breakdown by the World Health Organisation (WHO) reflects that 44.3 percent of the population is under 15; those above 60 years are 4.5 percent while 15-59 year olds account for 51.2 percent of the population.

The size and composition of Nigeria’s population makes it a vibrant health sector opportunity.

Yet, government is incapable of fulfilling its obligations to the sector, thus placing a huge burden on the citizenry.

It is for this reason that the National Health Insurance Scheme was passed into law in May 1999 and the NHIS Act became fully operational in 2005. The vision that undergirded the agency was to have a strong, dynamic and responsive National Health Insurance Scheme that is totally committed to securing universal coverage and access to adequate and affordable healthcare; in order to improve the health status of Nigerians, especially for those participating in the various programmes and products of the Scheme.


As at 2017, only an estimated 5 to 6 million people out of the total Nigerian population of 186 million, representing about 3% of the populace, are covered by health insurance. The reason for this is not farfetched. Part V, Section 16 of the Law states that “An employer who has a minimum of ten employees may, together with every person in his employment, pay contributions under the Scheme, at such rate and in such manner as may be determined, from time to time, by the Council…”

As a result of this clause of optionality, many Nigerians are not mandated to register for health insurance and consequently, there is an over-reliance on out-of- pocket payments in Nigeria.

According to the World Bank, out-of-pocket expenditure accounted for 72 percent of private expenditure on health in 2014 alone, in a country where 112 million people are living on less than a $1 (£0.63) a day. Furthermore, the 72 percent expenditure allocation to healthcare by citizens placed Nigeria in the second position behind Sudan in terms of cost of private individual healthcare. This is abysmal.

Consequently, analysis by BusinessDay Research & Intelligence Unit (BRIU) indicates that, with about 60 Health Maintenance Organisations (HMOs) operating from approximately 600 branches nationwide; and catering to only 5 to 6 million enrollees out of a population of 186 million people, the Health Insurance Industry can be described as emerging.

Despite this, the top 10 players account for a huge chunk of market share of estimated 55 percent of the total enrollees in the Industry, leaving the remaining 50 operators to cater to the balance of 45 percent.

Overall, the Industry employs over 2,000 employees and provides health insurance services via a network of over 1,200 healthcare providers across the country.

The Industry size, in terms of revenues, is estimated to be over N300 billion.

Subsequently, stakeholders in the Industry have posited that the NHIS Act 35 of 1999 regulating the practice of health insurance in the country needs to be amended to make participation in health insurance mandatory to both the formal and informal sectors.


Another challenge plaguing the industry is the role of the NHIS as both regulator and player.


Health, longevity of life and well-being is critical to human development and functionality. Making health insurance mandatory for all employers in Nigeria is highly important for the nation’s human productivity, economic growth and national development.

For instance, the Pension Reform Act of 2014 makes pension contributions for employers with 3 or more employees in the private sector mandatory. As a result of this, by the end of 2016, a total of N6.164 Trillion had accumulated in the Retirement Savings Accounts of the workers registered under the scheme.

If that amount is compared with the federal health budget, the figure represents 20 times the total health budget for Nigeria and 75 percent of the total federal budget for 2018. Imagine, the quality of healthcare that would be achievable if the NHIS Act is made mandatory, in terms of enhanced services, improved remuneration for medical practitioners and staff, significant investment in healthcare services, provision of improved treatment and drugs, among others.

Health, as they say, is wealth!

Overall, the healthcare industry in Nigeria is one of the most critically important and crucially fundamental sectors to any economy.

Globally, the industry is one of the world’s largest and fastest-growing industries. Consuming over 10 percent of gross domestic product (GDP) of most developed nations, healthcare can form an enormous part of a country’s economy and Nigeria’s as well, if it is taken critically.


For more information on the health insurance industry, visit to view and download a free e-copy of the HMO report gauging insights from leading players in the Industry on the issues, challenges and recommendations for health insurance in Nigeria.


BusinessDay also plans to publish a larger report covering the entire spectrum of the health market in Nigeria titled “Health Financing in Nigeria Report: Issues, Trends & Outlook.”



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