Imperatives of Investing in Nigeria’s Healthcare Sector

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By
Nkemchor Omife

The Nigerian healthcare sector needs a swift turnaround that can help the country align with staying through to development that is necessary for sustainable healthcare delivery and wellbeing. In December 2020, the Honourable Minister of Health, Dr Osagie Ehanire unveiled Nigeria’s health sector roadmap which was guided by the President’s “Health Sector Next Level Agenda” of 2019 in Abuja.

The plan is a nine-point, medium-term plan, to facilitate the push towards Universal Health Coverage. The Minister stated as part of the plan an active, collaboration with the private sector to create a large number of well-paying jobs for Nigerian youths; and a contribution to the realization of Mr President’s promise to take 100 million Nigerians out of poverty in the next 10 years.

If such level of private investors’ involvement is what Nigeria requires, leaders in the health sector must be willing to abide by the rules of engagement, particularly when they eventually get investors to stake their monies in their businesses. What the sector cannot afford now is a bad reputation that may jeopardize its prospects for attracting the desired investment.

An instance is drawn from the recent controversy around Health Plus Limited, a foremost pharmaceutical retailer, majority owned by UK private equity firm Alta Semper Capital. The Founder of HealthPlus, Mrs. George, saw her appointment as CEO terminated by the Board in September 2020 in accordance with the terms of her management agreement. Despite remaining a director and a shareholder, Mrs. George opted to launch relentless attacks against the brand she built, including rapid institution of court cases, a cloudy intervention by the House of Representatives, which was subsequently withdrawn, and a recent communication by the Pharmacist Council of Nigeria (PCN) announcing the withdrawal of a ‘no objection’ letter written to HealthPlus to allegedly allow for investment from Alta Semper.

The PCN action alone raises serious question as such a letter is not required for investment in a pharmaceutical business in Nigeria. The PCN simply does not have the authority for such a letter to have any effect, especially regarding investments of this nature.

These incidences validate concerns about how investors in the sector are been treated by their local partners and the system in general. There is certainly a need for a deliberate policy review as it relates to FDI and driving a positive outlook for investment in Nigeria.
As Nigeria make attempts to move away from been a mono-economy, foreign investors must not be vilified, hounded or bruised into regretting venturing into arguably the biggest economy in Africa with over 180 million people and counting. An economy as huge as that will only capitulate under the pressure of dearth in capital investment.

Sadly, over the years, the Nigerian government has not been able to fully implement the resolutions of Heads of State made in Abuja in 2001 where African leaders pledged to commit at least 15% of their annual budgets towards the improvement of the health sector. According to the World Health Organization (WHO) Health Expenditure Database, only four countries- Ethiopia, Malawi, Swaziland, and the Gambia have met their 15% target in 2014, living out Nigeria. To succeed, pharmaceutical companies must take care to design trade terms and affordability strategies that will help Nigeria manage its healthcare spending and develop its pharmaceutical market.

A 2017 McKinsey report on healthcare financing in Nigeria, with particular reference to what happens in the pharmaceutical sector stated that healthcare spending in Nigeria is predominantly a private affair. For example, out of estimated total health expenditure (THE) in 2015 of $15 billion, out-of-pocket spending accounted for approximately 70 per cent, compared with just 7 per cent in France and South Africa. Private health insurance, mostly the preserve of senior staff in large corporations, accounted for about 5 per cent of THE, compared with 14 per cent in France and 45 per cent in South Africa.
According to experts, the Nigeria pharmaceutical industry is projected to be a $4 billion industry in the next ten years amidst an improved GDP growth. Therefore, in reference to the Minister’s notes on private investment in the health sector, more investors must be encouraged through good policies by the government; an effective legal system that would be prompt in delivering judgement in case of litigation, following the rule of law and supporting enabling laws that creates a conducive business environment.
Nigeria’s large, young population, widening deficits in primary and specialty care, and the state’s encouragement of investment have created opportunities for growth across all levels of service provision. The government’s willingness to plan and partner with private investors should help to considerably improve the quality and access to good healthcare services in the years to come. Therefore, necessary measures must be adopted to ensure investors get an equitable return on their investments. This is still achievable and will help towards attracting the right investors that can significantly contribute to the sorely needed development in healthcare delivery in Nigeria.

Omife is a public relations expert with an interest in strategic corporate communications.