The Federal Government has unveiled plans to reduce Nigerians’ out-of-pocket healthcare spending from 70% to 20% in a bid to ease the financial burden on households and expand access to quality health services.
John Ataugba, Executive Director of the Africa Health Economics and Policy Association, disclosed this during his presentation on the state of healthcare financing in Nigeria at the day two National Health Financing Dialogue in Abuja on Tuesday.
The event was themed “Reimagining the Future of Health Financing in Nigeria.”
The dialogue aims to build a strong evidence base to support increased and sustained financing commitments and to facilitate policy reforms that encourage private sector involvement in the health system.
“Out-of-pocket spending in Nigeria is really problematic. It currently accounts for over 70% of total health expenditure. But our goal is to bring this down as quickly as possible to less than 20%,” Ataugba said.
He explained why the 20% target is critical, noting that evidence suggests that when out-of-pocket spending falls below 20% of total health expenditure, countries are more likely to achieve better financial protection.
Government’s role in health financing
Currently, government spending on health in Nigeria accounts for less than 15% of total health expenditure.
Ataugba emphasized the need for stronger public financing “We want to reach a stage where government contributes at least 50% of total health expenditure, ensuring greater access to health services for all.
“We are pursuing this because if the government takes a larger share of financing health services, people will have better access, and there will be greater opportunities for equity in how health services are funded,” Ataugba said
He noted that external funding currently accounts for less than 8% of total health expenditure, which is positive.
“However, our goal is to minimize reliance on external financing as much as possible, particularly for per capita spending on public primary healthcare,” he added.
Ataugba highlighted the low level of spending on primary healthcare, noting that Nigeria currently spends about $7 per person per year very meager and insufficient.
He said the target is to increase this to roughly 30% of $30 per person to strengthen primary healthcare, which he described as the bedrock of every health system, especially in low- and middle-income countries, where most health service utilization occurs at this level.
Abuja Declaration target still elusive
He also reminded participants that Nigeria has yet to meet the Abuja Declaration target of allocating 15% of government spending to health, adding, “We are currently at less than 8%.
Ataugba urged stakeholders to consider the implications of low government participation in health financing.
“When the government’s share of health in the economy is very small, it limits its influence. He who pays the piper calls the tune,” he said.
More insights
He highlighted the challenge of increasing public spending, noting, “The challenge is how to move from 8% to above 15%, especially given that Nigeria’s tax-to-GDP ratio is below 12%. This means the government’s share in the economy is very low, and the country is primarily driven by the private sector.”
Currently, out-of-pocket spending in Nigeria averages about $70 per person per year, meaning households shoulder the bulk of healthcare costs. Government spending, by contrast, is only about $14 per person annually.
“Our goal is to reduce out-of-pocket spending to around $15 per person and increase government spending to $86 per person, which aligns with the level needed to provide acceptable services for the population,” Ataugba said.
He emphasized the need to increase tax revenue, aligning with ongoing tax reforms, and suggested that a target of about 35% of GDP from taxes would provide the government with the fiscal space to fund health, education, and social services effectively.
