Health sector growth in Nigeria spurred by rising incomes, young population and mature law

Although outcomes across several key indicators have improved in recent years, efforts to develop the health care system are hindered by several notable challenges, including limited public funding, a high communicable diseases (CD) burden, rising incidence of non-communicable diseases (NCDs), and elevated rates of infant and maternal mortality. However, Nigeria’s large, young population, widening deficits in primary and specialty care, and the state’s encouragement of investment have created opportunities for growth across all levels of service provision. While reduced consumer purchasing power remains a significant constraint in the near term, the rising emphasis on public-private partnerships (PPPs) should help to narrow the sector’s widest service gaps and set the stage for robust long-term growth.

Oversight 

The Federal Ministry of Health (FMH) is responsible for working with relevant stakeholders to design and implement policies that strengthen the health care system and expand access to affordable services. Under this mandate, the ministry oversees a host of departments, units and agencies – such as the National Agency for Food and Drugs Administration and Control, the National Primary Health Care Development Agency, the National Health Insurance Scheme (NHIS) and the National Institute of Medical Research – that specialise in health planning, research and statistics, public health, family health, hospital services, food and drug services, ICT, procurement, PPPs and the like.

The NHIS was established by Decree No. 35 of 1999 as part of the broader National Health Policy (NHP), which targets universal health coverage. The NHIS aims to provide access to “good-quality and cost-effective health services” through the establishment of social insurance schemes. Members pay fixed, regular amounts to health maintenance organisations (HMOs) that are themselves regulated by the NHIS. These pooled fees form common funds that are used in turn to pay for health services rendered to HMO members. Despite efforts at public outreach and advocacy, the nationwide rate of health insurance penetration remains low, with just 5.1% of Nigerians estimated to have coverage as of May 2018, according to a report by Agusto & Co.

Structure

The primary role of the Federal Government of Nigeria (FGN) in health care consists of implementing the sector’s regulatory framework. The 36 states are in turn responsible for discharging operational functions in the delivery of primary and secondary services. The FGN, through the Department of Hospital Services at the FMH, coordinates teachers hospitals and federal medical centres – which serve as the main providers of tertiary services – and manages general hospitals. Some states own university teaching hospitals or specialist facilities that provide tertiary care services. As of 2014 health care services were delivered at over 34,000 health centres included on the FMH’s master facility list, two-thirds of which were publicly administered; the other third were run by private firms. Of the total, 88% were primary facilities, 11.6% offered secondary services and 0.25% engaged in tertiary care.

A September 2018 report in the Nigerian newspaper Leadership painted a stark portrait of the sector’s resource deficit. The publication found that, while roughly 72,000 doctors held licenses from the Medical and Dental Council of Nigeria, only 40,000 were practising in-country, owing chiefly to the so-called brain drain – the emigration of professionals to markets where their qualifications net higher living standards. The by-product is a patient-to-doctor ratio of 2500:1, more than four times higher than the World Health Organisation’s recommendation of 600:1. Given this gap and current demography, the country needs up to 10 times its current number of, per the president of the Nigerian Medical Association. However, of the country’s 164 universities, only 41 are accredited to teach medicine, and they have often failed to train personnel quickly enough to replace those that emigrate.

Health Policy

The National Health Act (NHA) of 2014 established a legal framework for the development, regulation and management of a national health system and set standards for service provision. Among the NHA’s integral components are sections delineating various rights and obligations of health care users and personnel; guidelines for conducting health research and coordinating health information systems; recommendations on meeting the system’s human capital demands; and the powers delegated to the FMH and other bodies charged with implementing the act.

In February 2017 the government approved the third iteration of the NHP, following its inauguration in 1988 and a revision in 2004. The latest version, which dovetails with the NHA in an effort to fulfil the UN’s Sustainable Development Goals, particularly on universal coverage. It establishes a framework for harnessing health development resources, with a focus on primary care networks, and seeks to increase the efficiency and affordability of service delivery. It contends to do so via 10 “policy thrusts” in areas as varied and connected as governance, financing, medicines and vaccines, infrastructure, data systems, research and development, PPPs and community participation.

More recently, the Economic Recovery and Growth Plan 2017-20 affirms the government’s medium-term development commitments and iterates specific and measurable interventions for achieving its goals, including revitalising 10,000 primary health centres, establishing at least one primary health centre in every ward, ramping up vaccination and antiretroviral therapies, using PPPs to develop at least one mega-health centre in each state, adopting an e-health scheme, providing a rural service allowance and encouraging medical professionals in the diaspora to volunteer in Nigeria.

Health Care Access

In its analysis, the NHP emphasises the weaknesses and underperformance of the system with respect to governance, where it suffers from “an almost total absence of financial risk protection” within a “largely unresponsive” system. Moreover, the NHP identifies inequities in service access that break sharply along socio-economic and geographic lines. For example, only 11% of births to uneducated women occur in certified facilities, whereas 91% of mothers who have completed secondary school give birth in such facilities. Similarly, 86% of mothers in urban areas receive prenatal care from skilled providers, against 48% of mothers who receive such care in rural areas.

The NHP also identifies a curative bias that persists across all levels of service delivery, to the detriment of preventive care. It also stresses the negative impacts of service inefficiencies, the unaffordability of private services and the limited availability of specialty services, such as those that mitigate the personal and communal harms of HIV/AIDS, including voluntary counselling and testing, prevention of mother-to-child transmission and antiretroviral therapy. Additional structural challenges include low confidence in public health facilities, the lack of public-private coordination and inadequate referral systems. Although the country has made strides in fighting some CDs, including eradicating guinea worm, quarantining an outbreak of Ebola and reducing the incidence of polio, these challenges continue to stress the system’s capacities, stymie its expansion and worsen patient outcomes.

Major Indicators

Obstacles to sector development are reflected across several central indicators. In 2017 the World Bank estimated that Nigeria was home to 191m people, making the country the most populous in Africa. Moreover, its population is young, with the NHP reporting a median age of 18.2 years in 2016. Likewise, its dependency ratio, which uses age to approximate labour participation, stood at 89.2% that year, meaning there were roughly nine dependants – or persons under 15 and over 65 – for every 10 working-age adults.

Life expectancy has improved considerably over the past two decades, though different authorities have given different estimates of the scale of that improvement. The World Bank reports that it rose between 1998 and 2016 from 46 to 53.4 years, equivalent to a 16% increase, with females currently living slightly longer on average than males, at 54.2 and 52.7 years, respectively. Meanwhile, the Institute for Health Metrics and Evaluation (IHME), a US-based research centre working in demography and public health, reported more optimistic figures of 66.4 years for females in 2016, against 63.7 years for males.

Meanwhile, per additional World Bank data, the total fertility rate, measured in births per woman, dropped from 6.16 in 1998 to 5.53 in 2016, representing a net decrease of 11.4%; IHME, for its part, contends that the fertility rate had fallen as far as 5.1 by 2016. While that decline is recognised as a positive, the NHP attributes its gradualness to the fact that contraceptive usage has remained relatively static in recent years.

Mothers & Children

The risks associated with high fertility rates, a youth bulge and limited access to primary health care services are reflected in infant and maternal health indicators. World Bank data indicates that Nigeria ranks poorly among other sub-Saharan African countries in per capita mortality rates for these vulnerable categories. Neonatal mortality, or deaths per 1000 births among those less than one month old, stood at 32.9 in Nigeria, compared to 27.2 regionally, while under-five mortality was 100.2, against a sub-Saharan rate of 75.5. According to BudgIT, a Nigerian NGO that uses IT tools to increase government transparency, the divide between Nigeria and its peer nations is more acute for measures of maternal mortality. Despite halving between 1990 and 2013 the proportion of women who die of pregnancy-related problems, maternal mortality still stood at 560 deaths per 100,000 live births in 2013, the highest such figure in Africa.

NCD

In June 2017 the Association of Resident Doctors at the University College Hospital (ARDUCH) in Ibadan reported that NCDs cause 24% of Nigerians deaths, led by cardiovascular disease, which was followed in frequency by cancer, diabetes and chronic respiratory diseases. ARDUCH attributes the rising prevalence of NCDs and resulting fatalities to, among other factors, rising life expectancy, deteriorating infrastructure, higher levels of tobacco and alcohol consumption, shifts in preference towards Western diets and less exercise. ARDUCH’s report went on to note that the FMH has neither an operational unit dedicated to dealing with the particular causes and effects of NCDs, nor a policy, strategy or plan designed to address them.

Public Spending 

Per BudgIT, federal health care spending must increase significantly to address systemically poor outcomes, especially elevated incidences of infant and maternal mortality. While the FGN’s outlays grew by more than 20-fold between 1999 and 2018, allocations to health care as a share of expenditure have declined from a high of 5.9% in 2012 to 4% in 2018. Even in 2012 the state fell short of the target that it set at the 2011 Abuja conference, where African Union members pledged at least 15% of public spending towards health care. The recent macroeconomic slowdown, punctuated by the 2016 recession, and shortfalls in tax revenue have not helped. Since 2011, 78-95% of FMH funding has been earmarked for recurrent expenditure. The emphasis on paying immediate overhead and personnel costs has left capital investment projects underfunded and curbed needed development. These shortages have downstream effects. “Primary health care delivery on the public side has a heavy funding gap, so typically what you find is a pay-for-play system where you pay for the services you receive from the provider. There is also a shortfall of skilled health personnel, again due to the primary health care financing deficit,” Efe Anthony Erhabor, head of coverage and corporate banking services at FBN Quest Merchant Bank, told OBG. That said, the NHA took an initial step towards remedying this fiscal ill, as it established the Basic Health Care Provision Fund and mandated that 1% of the FGN’s consolidated revenue be earmarked therein for various gateways in primary health care provision.

Similarly, there is also a shortfall of skilled doctors in the speciality and super-specialty segments of the private health sector. “The diaspora provides a potential source of doctors, but they are costly as this means Nigerian hospitals have to compete with those in the US and the UK,” Narayanan Prakash, managing director of Lagos-based Vedic Lifecare Hospital, told OBG.

Closing the Gap

Limited access to and confidence in public facilities have created opening for private investment. Demand for health services, particularly treatments of maternal health and NCDs, is projected to rise with income and demographic growth, while the low rate of insurance penetration, the economic recovery and policy incentives should create long-term opportunities. The state has demonstrated an interest in utilising PPP frameworks to entice businesses to make up the deficit. In August 2018 the Infrastructure Concession Regulatory Commission (ICRC), the agency tasked with PPP development, was issued a compliance certificate for its Warehouse in a Box project. In order to reduce the $3.2m lost in 2017 to drug expiry, the project aims to create the infrastructure needed for the refrigerated storage and distribution of perishable medicines. With the certificate secured, the ICRC and the FMH have procured a five-year contract with a firm that will manage the modular units. The ICRC the FMH are working to develop PPP frameworks for new oncology centres, staff housing and a facility that can produce an antidote for snake venom. These initiatives offer encouragement, even as wider economic indicators pose questions for investors. “Largely because of poor purchasing power, most Nigerians have had to make do with poor-quality health care. Health institutions under a lot of pressure financially because there is limited demand, and they cannot raise prices. This is compounded by pressures from large buyers, which keep prices artificially low,” Abayomi Sule, CEO and managing director of Tillit MSME Microservices, told OBG.

Outlook

Although Nigeria continues to underachieve on various national and international metrics for health care development, the industry remains well positioned for strong future growth. While recent macroeconomic headwinds have affected the affordability of treatment, the country’s large and growing population, rising demand for specialty services and the government’s willingness to plan and partner with private providers should help to considerably improve the quality, access and outcomes of patient care in the years to come.