Is Nigeria Ready for a Healthcare Investment Bank?

Tuesday, January 12, 2021 / 12:30 PM / OpEd by
Abiodun Awosusi / Header Image Credit: Abiodun Awosusi


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is Africa’s largest economy, with a growing population and large healthcare
market. Inadequate health financing, high levels of poverty and weak healthcare
infrastructure limit access to affordable, high-quality health services. The
coronavirus pandemic has exposed the weaknesses of the country’s health system:
it highlights an urgent need for adequate health investments through efficient
institutions and mechanisms that can drive improvement in health outcomes. In
this analysis, I explore the country’s health market needs, drivers of
healthcare investments and steps required for the creation of a proposed Bank
of Health.


Current public health investments  

World Bank
analysis of Nigeria’s
health system landscape shows that public health investment is low. Citizens
largely pay directly for health services from their income rather than through
a risk-sharing mechanism. Most Nigerians patronize private sector providers. Recent
efforts by government to improve the health and wellbeing of Nigerians led to
the passage of
the National Health Act (NHA) alongside health
policies, strategic and operational plans to accelerate progress.


key element of the NHA is the Basic Health Care Provision Fund (BHCPF) which
represents at least one percent of consolidated national revenue and additional
financing flow from the private sector, philanthropies and donor agencies. Ongoing
implementation of the NHA with operationalization of the BHCPF is a key priority
of the current administration. In view of this, the government launched the
BHCPF guidelines in 2020 to fast
track implementation.


state governments have
social health
insurance schemes hinged on appropriate legislative frameworks. There is also
concerted effort to develop and/or strengthen the capacity of state primary healthcare
(PHC) development agencies to deliver on their mandates, working closely with
other stakeholders particularly the National Primary Healthcare Development
Agency. A related initiative under the 9-point health agenda of the current
government includes deployment of well-trained community health workers. These steps
are expected to increase equitable access to healthcare at primary health
centres where a basic package of health services can be delivered to the
populace particularly people in rural areas.


Drivers of New Investments In Healthcare

coronavirus pandemic has highlighted the
urgent need to invest
adequate resources in healthcare infrastructure across the country and reverse
the trend of medical tourism. More than 30,000 Nigerians leave the country
every year to seek high-quality specialist health services in other countries:
this leads to a loss of
over US$1 billion in annual
spending on medical and ancillary expenses. Poor medical infrastructure,
industrial disputes, referral and brand preferences are
leading motivations for Nigerian
medical tourists. Reversing the trend requires large-scale investments across
the value chain.


health burden is also changing. There is an
increase in the incidence
of non-communicable diseases (NCDs) such as hypertension, diabetes mellitus and
cancers: NCDs account for
29% of all deaths in Nigeria.
Treatment of these chronic conditions requires continuous access to
high-quality specialist services at all stages of the diseases. Although
infectious diseases and maternal and child health-related issues are
responsible for more than half of all deaths in Nigeria, the rising incidence
in NCDs could lead to an increase in the consumption of health services. Besides,
the coronavirus pandemic shows that countries must invest more in public health
systems to combat prevalent and emerging epidemics.


third driver is the opportunity of health market expansion with full
operationalization of the African continental free trade area (AFCFTA)
agreement. There is
significant momentum to boost intra-Africa trade in complementary sectors and
create a continental market for free movement of goods, services and capital.
This reform is expected to
accelerate structural
in African countries and help cushion
socio-economic effects of the coronavirus pandemic. With the start of trading
under the agreement on January 1, there is an opportunity to invest in viable
infrastructure that can support increased local production of health and
pharmaceutical products for domestic and continental markets.



Access to Finance in Nigeria’s Health Market   

the drivers of health investments, a health market
study by the
PharmAccess Foundation shows that there is a mismatch between available capital
in financial institutions and the capacity of health enterprises to access funding
as working capital or for infrastructure expansion. The report shows that most
health businesses particularly private health facilities and pharmacies are
sole proprietorships with weak governance, business development and financial
management structures. There is therefore a need to support these enterprises
to build durable systems and processes that can position them for capital to sustain
or scale-up operations in order to meet growing demands for high-quality health


view of the vast market needs and growth opportunities, there is a move to
set-up a healthcare-focused bank. The bank is envisioned to be a centralized
coordinating institution similar to the
of Agriculture
. Nigeria’s Bank of Industry (BoI) currently invests across the
healthcare and pharmaceutical value chain. It is possible to expand the Health
and Petrochemicals Group at the BoI to avoid inefficiencies inherent in creating
a new institution. It is also possible to create a specialized health unit at
the Bank of Infrastructure or Development Bank of Nigeria (DBN). However, a
lean management approach at the proposed Healthcare Investment Bank could make
it a viable centre for coordinating health investments that make the country’s mixed
health system work for all citizens.


proposed bank is envisioned to be a strategic hub for players on the finance
supply and demand sides, engaging with commercial, investment and development
banks, venture capital and private equity firms, regional and multilateral
development financial institutions as well as blended finance vehicles. It can
also provide advisory and business management services to healthcare
enterprises and startups while promoting effective partnership between public
and private sectors. The specialized focus on health can potentially improve
efficiency in needs assessment, deal sourcing, due diligence, investment
appraisal, project preparation, financing and execution. Administration of the
research and development fund
can also be
domiciled at the bank.


Turning Vision to Reality

financial institutions provide support to the healthcare sector, with funding
from BoI, DBN and the Nigeria Sovereign Investment Authority (NSIA). NSIA has
dedicated funding for healthcare infrastructure through the NSIA Healthcare
Development and Investment Company: It has invested in advanced diagnostic and
treatment facilities in three tertiary institutions: Lagos University Teaching
Hospital (LUTH), Aminu Kano Teaching Hospital and Federal Medical Centre
Umuahia. One of the priority sectors for NSIA’s
Nigeria Infrastructure
is the health sector: its flagship projects, NSIA-LUTH Cancer
Centre, NSIA-Kano Diagnostic Centre and NSIA-Umuahia Diagnostic Centre, have
been commissioned. These centres are expected to provide optimal health
services and contribute to a reversal of medical tourism.


is crucial to explore the possibility of maintaining the status quo or creating
a new institution. While a healthcare investment bank can tackle some of the
inefficiencies in Nigeria’s health market, there are major hurdles ahead before
it can become a reality. First, there is need for a feasibility study to evaluate
the need, scope and structure of the organization and potential alignment with
systems, strategies and institutions for health in the country. The parliament
needs to undertake comprehensive engagement with various national, continental
and international stakeholders and interest groups including the Nigeria
Governors Forum. Harmonization with regulators in the financial and allied
sectors is also crucial.


currently in
the House of Representatives will require concurrence with the Senate before
Presidential Assent. Although the current relationship between the Executive
and Legislative arms of government offers an opportunity to accelerate progress
on passing relevant health sector reform bills like the National Health
Insurance Commission Bill, the bank may not be a strategic priority. It is also
unclear how the economic impact of the pandemic could affect capitalization of
the Bank. Even when a law is in place to set up the organization, it could take
some time before it becomes fully operational. It is therefore crucial to
carefully consider available options and choose the right path to increasing health
investments on Nigeria’s journey towards Health for All.


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