Africa: Financing Healthcare in Nigeria is Beyond Allocating 15% of National Budget To Health

Next Level Agenda in the journey towards UHC: Health for All Nigerians.
19 May 2021

Twenty years ago, African heads of states and governments gathered in Abuja to address infectious diseases in Africa. The declarations by the heads of States, popularly known as 'Abuja Declarations', was the meeting's highlight. One of the most popularly referenced portions of these declarations is the pledge by the heads of states to allocate at least 15% of their national budgets to the health sector. This was a lofty goal for all the countries and remains so for many African countries twenty years after.

Since this declaration, some countries have made progress in health financing. Rwanda has achieved Universal Health Coverage; by allocating more than 15% of its annual budget to health and implementing Community-Based Health Insurance in its population. Gabon and Ghana have adopted innovative financing mechanisms for their health systems, earmarking special resources for health; Gabon raises funds to subsidize care for the poor through 10% levy on mobile phone companies' turnover, excluding tax, with an additional 1.5% levy on money transfers outside the country. Ghana earmarks 2.5% on 17.5% VAT for the health sector, paid to her National Health Insurance Fund.

However, many countries have not met the ambitious target of 15%. A World Health Organization review of countries compliance to the 15% benchmark show that only five countries (Botswana, Rwanda, Zambia, Togo and Madagascar) had attained this target, 20 allocated between 10-15%, the remaining countries allocated less than 10% of the budget. Unfortunately, Nigeria is one of the countries that have allocated less than 10% of its national budget to health.

The country's allocation to health has averaged below 5% over the past five years. The country's out of pocket expenditure as a percentage of total health expenditure stands at 76.6%, far above the Sub Saharan Africa average of 33.3%. The non-compliance to the Abuja declaration is a missed opportunity to invest millions of naira in the country's health sector and loss of economic fortunes that would have otherwise accrued to the country due to her investment in health.

The COVID-19 pandemic that has ravaged the world in the past year has shown how vital health is - it is important for sound economies and the stability of nations. We propose three ways to improve health financing in Nigeria beyon just allocating 15% of the country's national budget.

First, improve health Insurance coverage in Nigeria. Health insurance based on the principle of risk pooling and cost-sharing offers a way out for the prevalent out-of-pocket expenditure in Nigeria, which has affected the demand for health services by Nigerians. Though the National Health Insurance Scheme has not performed up to expectation, the decentralization of health insurance through the creation of state health insurance schemes is a step in the right direction.

Respective state governments should strengthen these schemes by ensuring the full implementation of the equity funds – committing 1% of Consolidated Revenue Fund (CRF) to pay insurance premiums for the poor and vulnerable. Innovative sources should be considered for the payment of premiums for members of the informal sector that prove difficult to capture and sustain on the scheme.

Second, focus on getting value for current budgetary allocation. More does not necessarily translate to better For increased budgetary allocations to translate to commensurate health outcomes, efficiency must be prioritized. Efficiency in health budgets can be achieved through public financial management and cost-efficiency.  The 2012 high-level dialogue between health and finance ministers in Africa towards and beyond the MDGs recommended concrete measures in all African countries to enhance value for money, sustainability, and accountability in the health sector to reach universal health coverage.

These measures can be summed up in implementing public finance management in utilizing public funds through the budget cycle from formulation to implementation. This will help maximize resources available for health in the continent. It includes measures to eliminate corrupt practices. Furthermore, it is also important that the poorest and most vulnerable in Nigeria are prioritized to ensure that no one is left behind.

Third, let health equity reign in healthcare financing at national and sub-national levels. The crux of the message of the Abuja declaration is for leaders to prioritize the health sector in national budgets. Not much of this has been seen in Nigeria,  especially at sub-national levels.

Indeed, the Nigerian government must commit more resources to health to get the best economic returns. It is crucial for politicians and health planners to allocate resources across all levels of governments. States and local councils in Nigeria must take responsibility for financing healthcare within their domains.

The 15% allocation to health remains a laudable goal. However, that is not enough to fund a health system for 200 million Nigerians. An efficient, publicly funded and equitable health insurance system would ensure that every Nigerian has access to healthcare. This would reduce catastrophic health expenditures and unlock the country's economic potential.

Dr. Ifeanyi M. Nsofor is the CEO of EpiAFRIC and Director of Policy and Advocacy at Nigeria health Watch. He is a senior Atlantic Fellow for Health Equity at George Washington University and a senior New Voices Fellow at the Aspen Institute. You can follow Ifeanyi @ekemma on Twitter.

Dr. Toluwani Oluwatola is a dentist, with interests in financing health systems in SubSaharan Africa. He is presently a Research Officer at the Lagos State Health Management Agency. You can follow Toluwani @Tolu_oluwatola on Twitter.

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