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Untapped $500m Funding Opportunity For Nigeria Health Sector


While increased efficiency and transparency within the health sector can make us maximise what we have at the moment


The Nigerian health sector is underfunded. While this is no new development, the COVID-19 pandemic brought this to the fore once again. In a previous article, I observed that the allocation to the health sector in the past five years had averaged less than five per cent of total budgetary allocation in flagrant disobedience to the 2001 Abuja declaration made on our soil. While increased efficiency and transparency within the health sector can make us maximise what we have at the moment, we will not experience much progress until the issue of perpetual underfunding is dealt with.


As a speaker at the "Funding the COVID-19 Response in Nigeria" webinar organised by Nigeria Health Watch, Dr Ola Brown ended on a dominant note by stating that: "To solve the issue of underfunding, we need to find a way to implement compulsory taxation to create a prepayment pool for healthcare in the country". She then went on to give the instance of how "telecommunications tax" can serve as a plug to make more funds available for health.


This idea resonates with the proposal in her book: "Fixing healthcare in Nigeria" where she noted that the country could raise an additional $1bn annually by introducing a levy of 1,000 to 2,000 on each telephone subscriber. Dr Ola isn't a solo voice in advocating for telecommunications tax for the health sector. In 2015, a group of leading health policy researchers from University of Nigeria recommended the introduction of solidarity levies on mobile phone call tariffs (telecommunications tax) as an innovative means of solving the challenge of underfunding in the Nigerian health sector. Similarly, in 2018, a group of Civil Society organizations advocated for the introduction of mobile phone (telecommunications) tax to fund the country's healthcare system.


The telecommunications tax is a form of indirect tax in which citizens prepay for healthcare by proxy through telecommunications company. There is no better time than now for the government to tap into this opportunity for financing the country's health sector.


One of the sectors that have continued to grow in Nigeria despite the ongoing pandemic is the telecommunications sector. Between January and June 2020, telecommunications operators earned $5.15bn (N1.97trn) in revenue which represents an increase of $149m (N57bn) compared to the earnings within the same time frame last year. On average, each subscriber spends $4.51 on airtime purchases every month. A tax of 10 Kobo on every naira of airtime purchased would have yielded an additional $515m (N197bn) for the nation's health sector in the first half of 2020, an amount that represents 46 per cent of the total budgetary allocation to health for the year 2020. Why should we continue to allow this golden opportunity slide?


It's been established that focused investment in healthcare boosts national and personal income. However, with a per capita health expenditure of $73.9 (N28,600), the country should expect minimum returns on her citizen's health which will impact the nation's productivity and GDP. In light of this, it is essential to explore available alternatives to improve the nation's health spending. A special telephone tax for the health sector set between (1kobo - 10kobo) for every naira of airtime purchased will contribute a lot to the pool of funds available for healthcare in Nigeria, this fund if utilized judiciously and efficiently will have a tremendous positive impact on the nation's health fortunes.


To make the best of this fund, it will be essential for the government to create a package of highly cost-effective interventions that will guarantee that all Nigerians get quality health care at the primary health care level. This intervention might be an extension of the current Basic Minimum Package of Health Services, covering more population groups or a more comprehensive package covering maternal and child health, non-communicable diseases, Malaria, Tuberculosis (TB), Human Immunodeficiency Virus (HIV), mental health and common oral health conditions.


A portion of the fund should also be dedicated to revamping the infrastructural and human resource capacities of the Primary Health Care system to reposition them to provide quality health care for all Nigerians. Before the rollout of this scheme, adequate sensitization of Nigerians about the scheme should be carried out to get citizens buy-in and awareness, necessary monitoring and evaluation indicators put in place and mechanisms to ensure transparency in the allocation and management of funds put into place.


If implemented, Nigeria will join ranks with Gabon, which already funds healthcare for the poorest members of her society through a mandatory health insurance levy [redevance obligatoire à l’assurance maladie (ROAM), supported by 10 per cent of telecommunications revenue. The rollout of a telecommunication tax for the health sector, if implemented in good faith, will improve the fortunes of Nigeria's health sector and represent a massive stride towards universal health coverage in Africa's most populous nation.


Toluwani Oluwatola is a dentist in Osun State, Nigeria, interested in public health systems especially health financing block. He’s enthusiastic about the transformation of the health financing landscape of Sub-Saharan Africa.


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