The cost of providing healthcare services in Nigeria has surged to unprecedented levels despite various strategic interventions by the central bank and the government to mitigate the effect of the covid-19 pandemic on the economy.
Data from the National Bureau of Statistics shows the composite consumer price index for health surged by 15.8% year-on-year in May 2021 having reached a ten year high in April 2021 at 15.9%. Urban health inflation also skyrocketed to 16.7%, while rural health inflation tallied behind at 15.1% for May 2021.
According to the latest GDP numbers, the economic size of Human Health Care and Social Services is about N487 billion making up about 0.7% of Nigeria’s GDP. The sector also recorded a GDP growth rate of about 4.65% in the first quarter of 2021, ahead of the broader composite growth rate of 0.51%.
Nigeria continues to face challenges in the healthcare sector largely due to relatively low private and public sector investments, low density of medical personnel to population (1.95 per 1000) and weakening disposable income. This appears to have inadvertently led to rising healthcare cost across the value chain.
There are also external factors that perhaps and in recent times, play a much greater role in rising health care cost.
What they are saying
In a conversation with Mrs. Eniodunmo Olanike, a healthcare practitioner in Lagos, she identified exchange rate devaluations as a major cause of the sudden spike in the cost of health care services in Nigeria, which has consequently increased mortality rate in the country.
According to her, most of the equipment and drugs used in Nigerian hospitals are imported, and rely heavily on exchange rate. Recall that naira has undergone a series of devaluation in the past two years, currently trading around N410/$1 at the official window and N502/$1 at the parallel market.
She also highlighted that Nigerians are still very much afraid of visiting hospitals due to the covid-19 disease which broke out earlier in 2020, hence affecting the revenue of the hospitals, to the extent that they are downsizing staff and also raising prices just to breakeven.
“The implication of reduced patients in the hospitals is that, those who eventually visit the hospital bear the financial burden of paying high cost, so as to cover for the lack of customers on the part of the hospitals,” she added.
Also, the Chief Medical Director at the Lagos State University Teaching Hospital, Professor Adetokunbo Fabanwo, attributed the rising cost of healthcare to limited number of health practitioners in the country.
He stated further that Nigeria needs 237,000 doctors to achieve Universal Health Coverage as of 2019. This shows a mismatch between demand and supply in the health care sector.
Meanwhile, at the conference themed: “Challenges of Inadequate Human Resources in The Health Sector,” the Chairman of the Medical Guild, Dr Saheed Babajide, said shortage of health practitioners in the country was caused by lack of decent treatment by their Nigerian employers.
“Increased infrastructure and increasing patient load require an increase in the number of health workers, but there is often an unwillingness to do this,” he said.
How do Nigerians pay for healthcare?
According to the World Bank, Nigeria spends about 3.89% of its GDP on Health Care Expenditure, a significantly high amount when compared to the GDP of Human Health Sector. Nigerians pay for healthcare via private pockets, community funded programs, or via private sector or government-supported medical insurance via the NHIS or the 54 Health Maintenance Organizations (HMOs).
Unfortunately, the number of people who pay for health care via medical insurance is not enough to drive down healthcare cost, worsening an already bad situation. To pay for their health care, most Nigerians often rely on self-medication in pharmacies and roadside chemists. Yet, it is these shops that have seen prices rise the most since the pandemic.
Rich Nigerians on the other hand spend more abroad fueling a growing medical tourism industry that gets more money out of Nigeria
Lack of Healthcare Investment
A recent report from Knight Frank, a real estate consultancy, indicates Nigeria will need about $82 billion in investments to achieve the global average of 2.7 beds per thousand people or 386,000 additional beds.
Investment in healthcare soared in recent years particularly in Health-Tech with several Nigerian Startups attracting significant investments from foreign investors. According to data from Nairametrics Deal Book, Nigerian Startups raised about $29.3 million in Health-tech related fund-raising activities. This is nowhere close to the $82 billion required.
The Central Bank of Nigeria has also intervened in the form of concessionary targeted healthcare support funding. According to the Central Bank, under its N100 billion healthcare support intervention fund, N97.4 billion has been disbursed for 91 health care projects as of May 2021, 26 of which are pharmaceutical and 65 hospital services.
Also, a total of N232.5 million has been disbursed to 5 beneficiaries under the CBN health care grant for research on Covid-19 and Lassa Fever. These are part of series of interventions carried out by the apex bank taken to grow output and fasten Nigeria’s economic recovery.