Research for Policy Action

Political Economy of Health Financing in Nigeria

LEAPs review of health financing in Nigeria presented a system-wide view of the Nigerian health sector with a focus on 1) how more resources can be generated locally, 2) how spending can be more efficient and 3) how government can better regulate the sector, i.e. working better with other players. Available evidence from past government and donor programs were reviewed in order to identify what has worked, what has not and why. The research indicated the importance of considering the efficiency of spending to the health sector before proceeding to allocate more resources to the sector. It also indicated the need to explore viable options for working better with the private sector to ensure effective healthcare delivery. In terms of health funding allocation, the study finds that resource allocation is not based on evidence in Nigeria and is neither efficient nor strategic. More than 50% of public health financing goes to the tertiary health institution. Despite the fact that the National Health Policy’s focus is on preventive care, only 15% of total health expenditures is spent on preventive care. Much of the funding to the health sector comes from the private sector, with out of pocket spending accounting for 96% of private expenditure. Out of pocket spending on its own accounts for between 60-70% of total health expenditure. The fact that health financing in Nigeria principally comes from payments by individuals at the point of assessing a health service implies that Nigeria operates a regressive and inequitable health financing system as the poorest households who can least afford healthcare are the most affected. In working better with the private sector, a different approach will be required given the distinctive characteristics between the northern and southern parts of Nigeria in terms of private sector provision for health services.

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health financing, Nigeria, health policy

Focus Area(s): health financing

Country of Reform: Nigeria

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