In February 2017 the Nigerian government approved the second National Strategic Health Development Plan (NSHDP II). Announcing the policy, Isaac Adewole, the minister of health, said that a technical working group headed by his predecessor, Eyitayo Lambo, had identified the key challenges and mistakes of the past in order to reposition the country’s health care sector.
Adewole noted that the policy “lays emphasis on primary health care as the bedrock of [Nigeria’s] national health system, in addition to the provision of financial risk protection to all Nigerians, particularly the poor and vulnerable”. The new policy also aims to fast-track the operationalisation of the 2014 National Health Bill, which overhauled the organisation and funding of the health care system and allowed private sector participation to expand. These policies will address the current issues of insufficient coverage and quality of treatment. At a time when the government’s budget is shrinking, the private sector has emerged as a crucial player in the country’s bid to improve efficiency as well as access to health care services.
Indicators & Goals
In September 2000 Nigeria, along with 188 other countries, adopted the UN Millennium Declaration and committed to achieving the Millennium Development Goals (MDGs). These were introduced with a baseline year of 1990 and a deadline of 2015. Three of the MDGs are health-related: signees of the declaration committed to reducing their under-five and infant mortality ratio by two-thirds, reducing the ratio of maternal mortality by three-quarters, and not only stopping, but reversing the spread of AIDS, malaria and other major diseases.
The goals were ambitious by design, and many areas have significantly improved since the turn of the millennium, but Nigeria still has much to do if it is to reach many of these targets. According to a UN report on Nigeria’s MDGs, the under-five mortality ratio in Nigeria stood at 89 deaths per 1000 live births in 2014. This represented a marked improvement on the rate in 1990 – 192 per 1000 – but fell short of the target of 64. The infant mortality rate also fell substantially, from 91 deaths per 1000 live births in 1990 to 58 in 2014, but was well short of the target of 30. This is partly due to limited health personnel, with skilled staff present at only around one-third of births.
Nigeria also continues to struggle in the fight against AIDS. As of 2015 approximately 3.5m Nigerians were HIV positive, with a prevalence rate of 3.1% in the 15-49 age bracket. In 2015, 322 per 100,000 citizens suffered from tuberculosis, and 380.8 of every 1000 at-risk people had contracted malaria. While the country did not manage to meet its MDGs regarding under-five and infant mortality, it did successfully meet its goals for maternal health. In 1990 the maternal mortality ratio was 1000 deaths per 100,000 live births, which fell to 243 in 2014, surpassing the goal of 250 and signifying a very important achievement in Nigeria’s health sector.
Nigeria’s public health care system has to provide for a population of some 186m, growing at a rate of around 2.6% per year. The federal government is responsible for policy development, the regulation of the health care sector and the provision of tertiary care, which consists of specialised consultative treatments. State governments are responsible for providing secondary health care, and local government areas (LGAs) are tasked with supplying primary health care.
In 2005 the government introduced the National Health Insurance Scheme (NHIS) in an attempt to move towards universal health coverage. Under the scheme, companies register with one of 60 health maintenance organisations (HMOs), which manage treatment at the country’s health care facilities. All companies with five or more staff members are required to provide health insurance for employees. Public sector employers contribute the equivalent of 3.5% of an employee’s salary, and the employee puts up a further 1.75% towards their premium. In the private sector the rate is higher: the employer contributes an amount equal to 10% of an employee’s salary, and the employee 5%. Upon its introduction, there were high hopes that the NHIS would be a vital tool in expanding coverage. However, enrolment has remained low. Estimates of the 2017 rate of insured individuals range from just under 10% – as per local media figures – to only 2%, according to the Guild of Medical Directors. As the informal sector is largely organised by trade unions, some states have attempted to encourage enrolment through them.
The growth of national insurance has been hampered by regulation and fraud. As the majority of citizens are employed in the informal sector, they are not obligated to join the scheme, and the vast majority of enrolees are employed by the public sector. In July 2017 investigations into the finances of the NHIS revealed that only 25% of the N381bn ($1.3bn) invested had been paid to health care facilities. HMOs withheld the rest, and some created falsified records of enrolees to receive more funds: as of July 2017, 23,000 fake enrolees had been discovered. HMOs have an estimated total debt of N3.5bn ($12.4m) to health care facilities.
The NHIS now stands at a crossroads, with various actors pushing to reform the programme’s regulations. Adewole previously indicated that the government had considered making enrolment compulsory, a proposal backed by the Guild of Medical Directors. Other suggestions include changing regulations to place greater onus on the role of states to increase enrolment rates, and introducing incentives for HMOs to enrol members in rural areas. Increased outsourcing to private institutions could also raise enrolment rates.
The 2017 national budget allocated N252.9bn ($893.7m) to the health care sector, representing 3.5% of the total. This fell short of the World Health Organisation (WHO) recommendation that Nigeria allocate at least 15% of the national budget to health care, which would translate to at least N1.1trn ($3.9bn). According to the Ministry of Health, federal funds represent 12% of the country’s total health care expenditure, with state governments providing a further 8%, LGAs and development partners contributing 4% each, and private companies providing 3%, with the rest covered by donors. This means that as much as 69% of health care expenditure is out-of-pocket for households.
Nigeria has approximately 35,000 doctors, 11% of the 310,000 that would be required to meet the WHO’s recommendation of one physician per 600 citizens. Around 70% of doctors work in urban areas, leaving rural areas particularly understaffed. Monthly salaries for doctors in the public sector – both federal and state – range from N150,000 ($530) to N240,000 ($848). In some states the delayed payment of wages has led to protests by doctors.
Given the challenging conditions, many local health care practitioners seek work overseas. In March 2017 Dr Mike Ogirima, president of the Nigerian Medical Association (NMA), told local media that between 10,000 and 15,000 Nigerian doctors were practising in foreign countries, primarily in the US and the UK. Another NMA official cited that Nigeria loses 500-700 doctors – 90% of whom were trained domestically – annually to other countries. According to Ogirima, in order to reverse this brain drain the country must prioritise improving working conditions for doctors.
Some are hopeful that the success of Nigerian doctors abroad may bring long-term benefits to the local health care sector. “Nigerian medical graduates are very intelligent, but they need additional training when they are hired by private clinics and hospitals,” Dr Abayomi Ajayi, managing director of the Lagos branch of the Nordica Fertility Centre, told OBG. “There is certainly a brain drain out of Nigeria, but there are also Nigerians abroad who want to come home, having developed competence in the US or the UK. They are waiting for the local infrastructure to improve so they can return. This country has a strong pull on its diaspora.”
It is not just doctors who are looking overseas, patients with the means to do so frequently travel abroad to receive treatment. The Nigerian Sovereign Investment Authority estimates that the country spends $1bn on outbound medical tourism each year, with most of this money going to Asian countries. In 2016 the Indian High Commission announced that 20,000 Nigerians visit India every year in search of medical treatment, accounting for 50% of all visas issued to Nigerians. In a 2016 report, global accountancy firm PwC estimated that the country loses 3.7m patient treatments per year to medical tourism. These numbers highlight not only a need for improvements in local health care, but also a significant opportunity to increase the sector’s productivity.
The exact number of medical facilities in Nigeria is hard to ascertain, as many private institutions are not registered with the government. According to the Ministry of Health, as of mid-2017 there are 53 federal tertiary hospitals, comprising 20 teaching hospitals, 20 federal medical centres, eight neuro-psychiatric hospitals, three national orthopaedic hospitals, the National Eye Centre and the National Ear Care Centre. As of 2014 there were around 30,000 primary health facilities, and almost 4000 secondary health facilities. Since 2009 the number of hospital beds in Nigeria has grown at a compound annual growth rate of 3.7%, but there were only 134,000 in 2014 – equivalent to less than one bed per 1000 inhabitants. This is well below the WHO’s recommendation of five beds per 1000 inhabitants.
In April 2017 Lagos State governor Akinwunmi Ambode announced construction of three new general hospitals, expected to begin before the end of the year. The move follows the May 2016 approval to construct a $247.3m medical park, a public-private partnership project to be built on the site of the School of Nursing in Ikoyi, Lagos State. In March 2017 media outlets also reported that the International Finance Corporation was considering an $8.2m equity investment in a 150-bed hospital in Lagos State, sponsored by AXA Mansard Insurance. However, other hospital investment plans have proven hard to follow through, especially given state financial difficulties: in 2011 the state of Imo set out plans to build new hospitals in each of its 27 local government areas, but by June 2017 only one was complete.
One of the NSHDP II goals is to establish greater private participation in the sector. Foreign groups have been active in building general hospitals, including the Turkish Nizamiye Hospital and the Indian Primus Hospital, both of which are located in Abuja. Nigerian health care specialists in the diaspora, backed by local funding, have also built specialist hospitals. For most private clinics in Nigeria, finding niche work is the key to success. “The sector suffers from a lack of accurate data, so planning is a big challenge,” Ajayi told OBG. “While some private initiatives have focused on rural treatment, we focus on providing fertility treatment and endoscopic surgeries to the growing middle class. Health care in Nigeria needs to grow from a collection of one-man-owned clinics to efficient big business with world-class hospitals. Nigeria is a virgin land for private firms wanting to invest in primary, secondary or tertiary health care.”
In 2017 two significant new investments occurred. First, in April, the African Export-Import Bank ( Afreximbank) chose Nigeria to host the first of its Centres of Excellence for Health Care in Africa, a network of tertiary health care centres aiming to stem the flow of African patients abroad. In partnership with the UK’s Kings College Hospital, in April 2017 Afreximbank asked the Ministry of Health to formalise responsibilities of implementation. A month later the Breast and Gynaecology Centre opened in Lagos. A result of a partnership between local private hospital Reddington and the US’s General Electric, the centre is the first facility in Lagos dedicated to women’s health, and boasts 3D mammography and ultrasound equipment.
Given its population size and relatively low penetration rate, the Nigerian pharmaceuticals market holds promising long-term potential. According to the Pharmaceutical Group of the Manufacturing Association of Nigeria (PGMAN) the Nigerian drugs market was valued at $1.8bn in 2017, which represented growth of 13% over the previous year. The country acts as a regional hub, producing 60% of ECOWAS pharmaceuticals through an industrial base of more than 150 companies, nine of which are listed on the Nigerian Stock Exchange. However, production is mainly restricted to over-the-counter products such as anti-malaria medication, vaccines, antibiotics and some oncological and diabetic drugs.
Like other industrial sectors, a lack of reliable electricity supply requires firms to invest heavily in generators and alternative sources of power. Furthermore, counterfeit drugs are widely available, which put pressure on the industry. The weakening of the naira also makes the importation of finished products and pharmaceutical ingredients far more expensive. The ECOWAS common external tariff policy – which places an import tax on ingredients, but allows finished products to enter tariff-free – has also led to more Chinese and Indian drugs on the market.
However, industry insiders have noted a change in government attitudes. “The Nigerian pharmaceuticals industry is heavily constrained by the weakening exchange rate and energy problems. However, in recent years we have seen the legislative and executive branches of government working together to unleash the potential of the industry and move Nigeria towards medicine security, making it less dependent on imports and making the pharmaceuticals industry an important economic driver,” Lekan Asuni, CEO of Lefas Group, a consultancy, told OBG. “To achieve this, the industry must maximise the use of technology to boost production of existing drugs, then look to expand intoproducts that can be produced in the five-to-10-year timeframe, before looking at more specialised, long-term products.” In 2017 representatives of the PGMAN lobbied the Nigerian government and the ECOWAS Health Ministries Assembly to introduce regulations to incentivise domestic production of pharmaceuticals.
Opportunities for private firms extend well beyond the pharmaceuticals industry. For instance, the federal government is pushing states to contract private third-party logistics providers to meet some of their medicines storage and distribution needs. Furthermore, an October 2016 article by Alpha Mead Facilities, a management and consultancy firm, highlighted demand for modern medical equipment, facilities maintenance services and effective waste management services in the health sector. Partially due to the scope of the NSHDP II, in highest demand are magnetic resonance imaging, digital X-ray, ultrasound and mammography machines, and anaesthesia kits. These areas hold great potential as Nigeria looks to expand health care access and coverage.
The government’s policy goals, such as the expansion of health coverage, the focus on primary care and the development of a domestic pharmaceuticals industry are well-conceived, but there are persisting challenges. Problems that have hamstrung the development of the health care sector – such as lack of coordination between federal, state and local governments, and a lack of financing – could potentially be mitigated by greater political will. However, the large population and lack of resources mean that public policy is likely to be increasingly dependent upon support from the private sector and NGOs. Investors and philanthropists hope that the NSHDP II will succeed in facilitating effective health intervention.
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