Understanding the Concept of Health Care Financing In Nigeria – Reforms, Funding, Problems, Challenges and Prospects.

What are the sources of health care financing in Nigeria? The role of federal state and local government.

Let me explain the healthcare system / financing as simple as possible so that we don’t just shout and rant aimlessly.

Healthcare is on the concurrent list which means that the FG , state and LG all have roles to play. The Federal govt is saddled with the tertiary system.

Health care financing in Nigeria
The role of federal, state, local governments in health care financing in Nigeria

The tertiary system is the advanced level of healthcare which should be obtainable in teaching hospitals, Federal medical centers and specialist centers such as Neuropsychiatric hospitals, Orthopedic hospitals. The FG also handles its agencies such as NAFDAC, NCDC, NIMR etc.

The state and LG are meant to take care of issues at secondary and primary care level. These consists of the general hospitals, health centers and dispensaries. The bread and butter healthcare issues.
The FG through the ministry of health budgets annually for healthcare.

The budget consists of recurrent and capital expenditure. This budget is financed from FG revenues and donor funds. Our recurrent expenditure is huge compared to the capital expenditure because the FG pays lots of salaries for healthcare workers in hospitals and civil servants.

In these agencies. Capital expenditures are spent primarily on infrastructure and equipment in these hospitals.

Healthcare is mostly tax / insurance funded every where in the world. Nigeria has poor tax revenue and a practically non existent insurance scheme.

Ghana raised its VAT to 12.5% and 2.5% of all VAT received is channelled to their Health insurance scheme to provide funds for the healthcare of its citizens.
South Africa moved VAT to 15%, healthcare is financed from tax, social and private insurance.

There is no magic in governance, as we lay our bed so shall we sleep on it.
The FG realized that the state and the LG have failed to play their part in the value chain instituted the Basic healthcare provision fund which is funded from 1% of the consolidated revenue of the FG.

The funds are meant to be disbursed to states / LG primary healthcare centers to treat bread and butter healthcare challenges. The FG then realized that the primary health centers were moribund in most local govt so the idea to renovate them came into place.

There is no reason on earth why a LG should fail to renovate a primary health center. They receive allocations and they collect levies from markets, shops, businesses, motor parks etc on a daily basis. It is dysfunctional system. 5m can renovate a PHC.

To have a robust system every player must rise up and play its part. The FG again instituted the NSIA to intervene in the tertiary healthcare system. The FG is not meant to carry a huge recurrent expenditure. Hospitals generate IGR, they should be able to pay salaries.

With insurance and the abolishment of the unsustainable subsidy in healthcare, each tertiary hospital can function effectively, train doctors and other healthcare workers, pay them well and allocate more resources to research. With a proper primary and secondary healthcare system.

Supervised and managed by states and LG, facilities such as LUTH will be able to train more doctors effectively. Our teaching hospitals are burdened with malaria and other minor healthcare issues they have failed in the aspect of training, research and specialized healthcare.

Our healthcare expenditure will remain meagre if we don’t embrace a sustainable method of financing healthcare. We have to raise taxes or accept social insurance

Healthcare delivery will continue to suffer until we realise that states and LG have major roles to play.

Start the revolution in healthcare today by visiting the PHC in your neighbourhood let us get the LG and states to play their part. States have the license to kick start health insurance schemes, state house of assemblies must pass the law to establish health insurance schemes.

The FG only takes 15% of VAT, if VAT is raised it will be wasted by the states and LG that takes 85%. We need to embrace some radical changes in the system and it has to start at the LG and state level.

I come in peace…

Dr Guendouzi


Please enter your comment!
Please enter your name here