Nigeria’s Healthcare Sector: Can Public-Private Partnerships Fix a Broken System?

In Q2 2024, Nigeria’s healthcare sector contribution to the country’s real GDP stood at 0.75%, an increase from 0.72% in Q1 2024, but lower than the 0.77% recorded in Q2 2023. 

The sector did experience a year-on-year real GDP growth of 2.41% in Q2 2024, up from 1.95% in the same quarter the previous year. However, these numbers only float on the surface of the deeper issues in the healthcare system.

Government expenditure on healthcare continues to lag behind the country’s needs. In 2024, ₦1.23 trillion was allocated to health, representing less than 5% of the proposed ₦27.5 trillion aggregate government expenditure. This is still far from the 15% benchmark set by the Abuja Declaration in 2001.

Private contributions, on the other hand, outweigh government spending, with approximately 3% of Nigeria’s GDP invested in healthcare. This is considerably lower than the average among OECD countries, where healthcare investment is much higher.

For the average Nigerian household, healthcare costs are high, representing about 6% of household spending, with rural areas generally experiencing higher expenditures compared to urban centres. These figures reiterate the growing financial burden on citizens, who often rely on out-of-pocket payments for medical services.

The Broken Healthcare System

Nigeria’s healthcare system has long been underfunded, understaffed, and over-reliant on citizens bearing the cost of care directly. Public hospitals, particularly in rural areas, often lack even basic medical equipment, forcing many to travel to urban centres or abroad for treatment. Nigeria loses over $1 billion annually to medical tourism, as citizens seek quality healthcare services unavailable at home.

The situation is worsened by a shortage of medical professionals. Despite a growing population, the country continues to lose doctors, nurses, and specialists to better opportunities abroad. Over 8,000 Nigerian doctors currently practice in the UK, with many others scattered across Europe, North America, and the Middle East. This brain drain has left the healthcare system woefully understaffed, with a doctor-to-patient ratio far below the World Health Organization’s recommended standard.

In addition to these infrastructure and staffing challenges, healthcare access is highly inequitable. Urban areas are far better served than rural regions, where healthcare facilities are often nonexistent. Even in cities, high-quality care is accessible only to those who can afford it, leaving a significant portion of the population underserved.

Public-Private Partnerships: A Possible Solution for Nigeria’s Healthcare Sector?

Public-Private Partnerships (PPPs) have become potential solutions to some of these challenges. In leveraging private sector expertise and capital, PPPs aim to improve healthcare delivery, financing, and infrastructure. 

These partnerships have been successful in other sectors, such as telecommunications and power, and there is hope that similar collaborations can help reform Nigeria’s healthcare system.

One area where PPPs have already shown promise is in the digitization of healthcare. In Lagos State, a partnership with Interswitch eClat has helped digitize medical records and expand access to health insurance, making healthcare more accessible and affordable for residents. PPPs in pharmaceutical production are also helping to reduce Nigeria’s reliance on imported drugs, thereby lowering costs and improving the availability of essential medicines.

However, PPPs in healthcare are not without challenges. Unlike infrastructure projects, healthcare is a more sensitive sector, where the balance between profitability and public service must be carefully managed. Private companies naturally seek to maximize returns, which can lead to higher fees or services designed for wealthier segments of society. This raises concerns about whether PPPs will truly address the healthcare needs of Nigeria’s poorest and most vulnerable populations, particularly in rural areas.

The State of the Economy and Healthcare Funding Gap

A major challenge for Nigeria’s healthcare sector is its reliance on out-of-pocket expenditures. With household spending on healthcare averaging 6% of total expenses, Nigeria’s healthcare financing remains largely informal. This contrasts sharply with OECD countries, where comprehensive health insurance systems relieve citizens of the financial burden of medical expenses.

Government spending on healthcare also remains super low. At less than 5% of the national budget, Nigeria’s health investment pales in comparison to other sectors and falls well short of the Abuja Declaration target. This chronic underfunding has resulted in dilapidated facilities, low morale among healthcare workers, and inadequate healthcare services. For PPPs to succeed, the government must largely increase its investment in the health sector, both in terms of financial resources and policy reforms.

PPPs and Healthcare Innovation

While PPPs are not a panacea for Nigeria’s healthcare sector challenges, they do offer opportunities for innovation, particularly in the areas of telemedicine and pharmaceutical research.

• Telemedicine: The COVID-19 pandemic accelerated the adoption of telemedicine, and this trend has continued to grow in Nigeria. With increasing internet penetration, telemedicine presents a cost-effective solution for extending healthcare services to remote and underserved areas. By using telehealth platforms, private companies can provide consultations, diagnoses, and even prescriptions without the need for physical infrastructure. Companies like Helium Health have already started to integrate telemedicine and electronic medical records, improving the efficiency and accessibility of healthcare services.
• Pharmaceutical Research and Development: Another area where PPPs could have a changing impact is in pharmaceutical research and development (R&D). Nigeria remains heavily dependent on imported drugs, which increases healthcare costs and reduces access. By investing in local R&D, PPPs could help develop treatments for diseases that disproportionately affect African populations, such as malaria and sickle cell anaemia. This would not only improve health outcomes but also create jobs and stimulate the local economy.

Addressing the Human Resource Issue

One of the most significant challenges facing Nigeria’s healthcare sector is the loss of skilled medical professionals. PPPs could help address this issue by investing in medical training and retention programs. Partnerships that focus on building medical schools, offering competitive salaries, and improving working conditions could slow the exodus of healthcare workers and ensure that Nigeria’s growing population has access to qualified doctors, nurses, and specialists.

Improving working conditions in hospitals, particularly in terms of equipment availability and facility management, is also essential. Many Nigerian doctors leave the country because they are unable to practice in conditions that allow them to provide high-quality care. Addressing these issues will ensure PPPs help retain more healthcare professionals and improve the overall quality of care.

A Timely Check on Nigeria’s Healthcare Sector 

The truism “health is wealth” remains relevant and key;  thus, one cannot start the discussion about Nigeria’s ill-designed and malfunctioning healthcare sector without recognizing its importance. It’s like the proverbial elephant: every chunk is valuable, and no part is wasted. However, before diving into details, we must acknowledge from the outset that the success or failure of this sector is critical to the nation’s overall development.

I think it safe to take my bearings from the thoughts of a former Minister of Labor in Nigeria, who, during the impasse surrounding incessant strikes by Nigeria’s medical professionals, asserted that Nigeria has enough medical practitioners to export abroad. This former doctor-turned-politician went a step further, claiming that exporting these excess medical professionals would, in the long run, generate foreign earnings for the country. While I wouldn’t say he was entirely right or wrong, let the figures decide who benefits from their exit.

As of my last count, the emigration of medical professionals from Nigeria incurs significant monetary losses, estimated between $500 million and $1 billion for training costs alone if 10,000  doctors leave. Additionally, a shortage of approximately 200,000 healthcare workers leads to increased healthcare costs, potentially exceeding $1 billion annually (WHO). This brain drain also affects economic productivity, with poor health reducing GDP by up to 10%. While remittances from emigrants reached about $24 billion in 2021, the long-term impacts of a declining healthcare system may overshadow these benefits (World Bank, 2021). Overall, Nigeria faces substantial financial challenges from this trend.

What Would a Health Insurance Scheme Offer Nigerians?

1. Increased Access  

Health insurance can significantly improve access to medical services. As of 2020, only about 5% of Nigeria’s population was covered by health insurance (National Bureau of Statistics, 2020), limiting access to necessary healthcare services. Expanding insurance coverage can help more individuals seek medical attention without financial constraints.

2. Financial Protection 

Catastrophic health expenditures can push families into poverty. According to the World Bank, approximately 70% of Nigerians face out-of-pocket health costs that can lead to financial distress (World Bank, 2021). A robust health insurance scheme can alleviate this burden, providing a safety net for families during health crises.

3. Preventive Care  

Health insurance schemes often promote preventive care. Studies show that countries with higher insurance coverage see lower rates of preventable diseases. For example, Nigeria has high rates of diseases like malaria and maternal mortality, which was approximately 512 deaths per 100,000 live births in 2019 (UNICEF, 2019). Insurance could incentivize preventative measures like vaccinations and regular health check-ups.

4. Quality of Care

With insurance coverage, healthcare providers may be motivated to improve service quality to attract insured patients. A 2018 survey indicated that only 38% of Nigerians were satisfied with the quality of healthcare services (Nigerian Health Review, 2018), underscoring the need for improvement. Insurance schemes can provide the necessary funding to enhance facilities and services.

5. Sustainable Funding

A well-structured health insurance system can provide stable funding for healthcare services. According to the National Health Insurance Scheme (NHIS), the goal is to increase health insurance coverage to 30% by 2025 (NHIS, 2020). This increased coverage can lead to more consistent funding streams for hospitals and clinics, improving overall service availability.

6. Public Health Initiatives

Health insurance schemes can facilitate public health initiatives by ensuring funds are allocated for preventive measures and health education. The Nigerian government allocated about 5% of its budget to health in recent years (Budget Office of the Federation, 2021), but increased insurance coverage could help supplement these funds, enhancing initiatives to combat diseases like HIV/AIDS, which affects over 1.9 million Nigerians (UNAIDS, 2020).

However, the public-private synergy also faces the twin problems of commitment from the federal government regarding the sector and an avalanche of stereotypes that have plagued the insurance industry. 

In a recent webinar organized by Clinitouch, the discussion explored how remote patient monitoring (RPM) could reduce costs for health insurers in Nigeria and Ghana. Clinitouch’s technology connects patients with clinical teams, enabling proactive management of non-communicable diseases (NCDs) and reducing costly hospital admissions. For instance, managing hypertension via RPM could lower annual costs from over $190 to $76.32 per patient, resulting in significant savings.

Key takeaways from Clinitouch’s webinar included insights from Dr. Noel O’Kelly, John Adesioye, and Bruce Adams, who emphasized the importance of public awareness, proactive patient management, and customer loyalty in enhancing service quality and competitive advantage for insurers. Engaging patients and clinicians is crucial for the successful adoption of RPM.

If we envision a reversal in the current trend of turning the Western world into the “Mecca” or “Jerusalem” of health, then creating the right environment through people-centered policy and investment-conscious actions is key. The trend of health service providers, such as pharmaceutical companies, leaving the shores of Nigeria is concerning.

Regarding the stereotypical perception of the insurance sector in Nigeria, although the Nigerian government has set the pace through the NHIS to cater to the health of the people, unfortunately, the NHIS only addresses civil servants, who constitute less than 2% of the population. The majority of those working in the informal sector are not captured by these provisions.

The truth is, with our teeming population, we cannot rely exclusively on government provisions for health; traditional ideas of meeting our health needs may not be the solution. What is evident from the discussions surrounding public-private initiatives in the health sector and the role of insurance is that government input is critical for success. While the maxim that “government has no business in business” holds some truth, it is undeniable that the government needs to create an environment for business to thrive.

For record-keeping, in 2022, Nigerians reportedly spent around $800 million on medical treatments abroad, highlighting persistent challenges in the domestic healthcare system. This trend continued in 2023, with expenditures exceeding $1 billion, further underscoring the difficulties faced by local healthcare infrastructure. As many individuals seek better medical services overseas, this financial outlay reflects an urgent need for improvements within Nigeria’s healthcare sector (The Guardian, 2022; Punch, 2022; The Guardian, 2023).

Just like other critical issues—security, economy, and politics—health ranks the highest. The truth is that no government has been able to navigate economic issues single-handedly; the same applies to health-related challenges.

For instance, the number of employees on the payroll of multinationals such as Apple, Nvidia, Microsoft, and Meta, all based in the United States, is overwhelming. The government must provide the necessary environment for them to thrive—a situation that may not be fully obtainable in Africa’s most populous country, Nigeria, where the likes of Dangote, Elumelu, and other private enterprises are front-liners in providing not just services but employment opportunities beyond what any government agency offers.

This scenario demonstrates that massive investment from the private sector, particularly through health insurance packages, is key to addressing these challenges. Although a government may not have any  business, in business, But it does need to create an environment in the Economy.

Outlook and Recommendations

Public-Private Partnerships offer a promising, albeit partial, solution to Nigeria’s healthcare sector challenges. Lagos has set an example with its successful PPP initiatives, but these models need to be adapted and expanded to other states, particularly in the Northern and rural regions where healthcare access is weakest.

To ensure that PPPs have a lasting impact, the government must play a more active role in healthcare reform. This includes increasing public investment, enforcing regulations that ensure service quality and affordability, and creating incentives for private companies to invest in underserved areas. Tax breaks or subsidies for private investors who build hospitals or medical research facilities in rural areas could help balance profitability concerns with public health needs.

Ultimately, while PPPs can drive short-term improvements, a more comprehensive approach is needed. The government must prioritize health insurance reform, reduce out-of-pocket expenses, and invest in the infrastructure and human capital necessary to build a healthcare system that works for all Nigerians.