In the midst of an economic crisis that undermines Nigerians' access to quality healthcare, President Bola Tinubu's landmark Executive Order, signed in June 2024 and operationalised in October, sets a bold course to improve healthcare affordability, expand access, and position the country as a global hub for health product and technology manufacturing.
With only about 25% of the country's pharmaceutical needs being met by local manufacturing, this policy marks a crucial step towards transforming the sector in alignment with Nigeria's Health Sector Renewal Investment Initiative (NHSRII). It aims to unlock Nigeria's multibillion-dollar pharmaceutical industry, enhancing its contribution to economic development. It also supports broader continental goals set by African leaders at the 2022 United Nations General Assembly, which called for investment in institutions, workforce, and medical manufacturing capacity as part of the New Public Health Order for Africa.
Nigeria's medical import dependency
For decades, Nigeria's healthcare system has relied heavily on imported medicines and equipment. This reliance contradicts Nigeria's National Drug Policy, first established in 1990 and updated in 2005. The policy aimed meet at least 70% of the country's medicinal needs through local production by 2015. However, the reliance on imports exposed the sector to global supply chain disruptions and price instability.
The COVID-19 pandemic exposed these vulnerabilities with shortages of essential medicines, especially anti-malarial, anti-tuberculosis, and antiretroviral drugs. These shortages highlighted the urgent need for a more resilient domestic manufacturing capacity.
Recently, the scarcity of foreign exchange and the depreciation of the Naira have exacerbated these challenges, causing dramatic fluctuations in drug prices and making essential medicines unaffordable for many Nigerians. The change in business model by major multinational pharmaceutical companies like GlaxoSmithKline (GSK) and Sanofi, driven by the tough economic climate, has further strained the system and worsened the already high out-of-pocket health expenditure. The Executive Order was initiated in response to these challenges affecting overall access to healthcare, especially for the poor and marginalised communities.
Unpacking the Executive Order: Key provisions and strategic objectives
The Executive Order represents a strategic move to advance President Tinubu's vision of positioning Nigeria as a global hub for health product and technology manufacturing. This initiative is spearheaded by the Presidential Initiative for Unlocking the Healthcare Value Chain (PVAC). Appointed as National PVAC Coordinator in October 2023, Dr Abdu Mukhtar is tasked with three strategic objectives:
(1) to drive local health product manufacturing
(2) to reduce the over $1 billion annual medical tourism outflow
(3) to create jobs across the healthcare value chain
Dr Mukhtar believes this policy intervention is key to creating a more business-friendly environment that will support local pharmaceutical manufacturers with the potential to generate long-term benefit for the health sector.
In an exclusive interview with Nigeria Health Watch, Dr Mukhtar outlined the Executive Order's two-year validity, and its transformative provisions. Central to this includes the removal of tariffs, excise duties, and value-added tax (VAT) on certain pharmaceutical machinery, equipment, and essential raw materials. These include Active Pharmaceutical Ingredients (APIs), excipients, long-lasting insecticidal nets, and rapid diagnostic kits. By reducing production costs, these measures aim to reduce the price of health products, stimulate local manufacturing, and expand job opportunities within the sector.
While commending this policy development and its potential to "ignite a renaissance in local healthcare manufacturing," Dr Pamela Ajayi, President of the Healthcare Federation of Nigeria (HFN), highlighted the private sector's essential role in driving its success. Leading HFN's advocacy efforts for the Executive Order, Dr Ajayi leveraged the coalition's convening power to facilitate dialogues with key government and industry stakeholders. "For years, Nigeria's private healthcare sector -- which provides over 65% of service delivery nationwide -- has operated with limited government support, despite being at the forefront of healthcare delivery. This Executive Order represents a commendable shift by the current government, acknowledging the private sector as a powerful partner in transforming healthcare in Nigeria," she said.
While some stakeholders in the pharmaceutical industry argue that the cost reductions resulting from the Executive Order's provisions have been minimal, Dr Mukhtar emphasised that the long-term benefits present a significant opportunity. He outlined plans to establish "a public-private partnership platform that aggregates demand, ensuring consistent and reliable market access for locally manufactured health products". This initiative aligns with a key innovation of the Executive Order- introducing market-shaping initiatives like framework contracts and volume guarantees. These long-term agreements between the government and suppliers will facilitate the purchase of specific health products over a defined period. As Dr Ajayi notes, this 'Nigeria First' approach, aims promote "the uptake of locally manufactured health products and will block the importation of counterfeit and low-quality alternatives into the country."
This support comes at a critical time, as Nigeria's pharmaceutical industry faces significant challenges. These include high import costs for essential inputs, limited petrochemical infrastructure, and soaring energy expenses, that can consume up to 40% of manufacturing budgets. Many manufacturers now rely on expensive alternatives, like gas or diesel, due to unreliable electricity supply. These challenges have hindered local production capacity and increased dependence on imports, highlighting the need for strategic policy interventions.
Potential challenges and gaps to address
While the President's Executive Order represents a significant step towards transforming Nigeria's health ecosystem, several challenges and potential gaps must be proactively addressed to ensure its long-term success. One major issue is Nigeria's reliance on imported pharmaceutical raw materials, made worse by the volatility of the Naira. This could drive up production costs, despite the removal of tariffs and excise duties, emphasising the need for a more integrated strategy.
To meet the demand generated by this policy, private healthcare providers require streamlined, transparent regulatory support for quick approvals of new products, equipment, and facilities. According to Dr Ajayi "it is crucial that regulatory bodies are well-equipped and responsive to enhance private sector efficiency."
Dr Abdu Mukhtar, National PVAC Coordinator, acknowledged that Nigeria has seen well-intentioned policies falter due to bureaucratic inefficiencies and inefficient inter-agency coordination. However, he emphasised that the Harmonisation Implementation Framework -a key provision of the Executive Order-currently undergoing finalisation, aims to address these gaps. This framework aligns the roles of critical organisations, including the Federal Ministries of Health and Social Welfare (FMHSW); Finance (FMF); Industry, Trade and Investment (FMITI); National Agency for Food Drug Administration and Control (NAFDAC); the Federal Inland Revenue Service (FIRS) and the Nigerian Customs Service (NCS); ensuring that incentives offered to industry players directly reduce out-of-pocket costs for Nigerians.
Moreover, Nigeria's infrastructural deficit and the high cost of doing business, with borrowing rates exceeding 26%, may limit manufacturer's capacity to scale local production. This underscores the critical need for access to financing and affordable credit which Dr Ajayi describes as a "primary concern" for local manufacturers in need of capital to expand production, upgrade technology, and meet the growing demand, as she acknowledges ongoing discussions with PVAC are focused on addressing this critical challenge.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
Navigating the path forward
Several countries have successfully harnessed their pharmaceutical industries, improved self-reliance and attracted both local and foreign investment. Nigeria, like other nations, can draw valuable lessons from India's biotechnology journey. With government support through political commitment and investment, India transformed its biotech sector into a global force, reaching over $70 billion by 2020, and projected to grow to $150 billion by 2025, while creating employment opportunities for its vibrant population.
Similarly, on the African continent, South Africa's attainment of WHO's maturity level three in vaccine regulation, strengthened by the mRNA vaccine technology hub in Cape Town, demonstrates how robust regulatory frameworks can empower African nations to achieve self-sufficiency in medical product manufacturing.
Despite Nigeria's projected population surge, expected to make it the world's third most populous country by 2050, with an urban growth rate of 4.7 percent, the nation has yet to fully leverage its most valuable asset -a young dynamic population- to tackle critical development challenges. The Executive Order lays a foundation for addressing key issues within Nigeria's healthcare sector by incentivising local manufacturing, increasing investment, and streamlining regulatory processes.
However, realising the President's ambitious health sector vision, which earned him recognition as the African Union health champion, will require coordinated action from all stakeholders.
Therefore, a balanced perspective -acknowledging both the immediate gains and long-term challenges- is essential. With strategic planning and steadfast commitment, Nigeria has the potential to build a self-reliant healthcare value chain that meets the needs of its rapidly growing population.
