Tax reforms, economic growth critical to Nigeria’s health financing – Official

The Coordinating Minister of Health and Social Welfare, Muhammad Pate, has identified tax reforms and economic growth as critical to expanding domestic resources for financing healthcare in Nigeria.

Mr Pate made the observation on Monday in Abuja during a fireside chat at the Health Sector Reform Coalition (HSRC)/Nigeria Universal Health Coverage (UHC) Civil Society Organisations-Media Mid-Year Review of Nigeria’s Health Sector Reforms.

The event brought together government representatives, civil society organisations, development partners and the media to review progress on health-sector reforms and efforts to improve health outcomes in Nigeria.

The fireside chat was moderated by Moji Makanjuola, a veteran journalist and broadcaster.

From donor dependence to domestic financing

For a long time, Nigeria’s health programmes have benefited from substantial support from bilateral, multilateral and philanthropic organisations, particularly in areas such as HIV and immunisation.

While acknowledging the contribution of these interventions, Mr Pate noted that changing global priorities and financial pressures in donor countries meant Nigeria could no longer assume that external funding would remain available at the same level.

He pointed to competing demands, including defence, climate change and migration, which he said were forcing wealthier countries to reassess how they deploy their resources.

For Nigeria, he argued, the implication is clear: the country must take greater responsibility for financing its own health needs.

“The path out of that dependency that we have enjoyed over the last several decades is to put domestic resources, federal, state, local government, to invest in health for people,” he said.

That responsibility, however, is tied to the amount of revenue the government can generate. Mr Pate, therefore, linked sustainable health financing to the broader economic reforms of the federal government.

Creating fiscal space for health

According to Mr Pate, the removal of the fuel subsidy and ongoing tax reforms are among the measures that can create additional fiscal space for social sectors.

He argued that resources previously absorbed by subsidy could instead be channelled towards areas such as health and education, provided governments at the federal and state levels prioritise such investments.

“The implication of removing the subsidy is that it provides added revenue to the government, federal and state, that ideally should be channelled more towards social sectors, because you are creating fiscal space,” he said.

Mr Pate further connected health financing to economic growth, explaining that a stronger economy would expand government revenue and, consequently, the resources available for public services.

This, he said, makes economic growth an important part of Nigeria’s strategy for sustaining investments in healthcare.

Improving revenue collection

Beyond generating additional revenue through economic growth, Mr Pate said Nigeria also needed to improve the share of its existing tax base it actually collects.

He explained that the government’s tax reforms were not simply about imposing higher taxes but about improving the collection of taxes already due.

Nigeria’s revenue-to-gross domestic product (GDP) ratio, he noted, remains relatively low.

“If we are collecting 7.8 per cent of GDP as revenue, that’s lower than the average of 15 per cent,” he said.

Increasing the amount of revenue available to the government, according to Mr Pate, would provide a larger pool from which the country could finance healthcare, education and other social sectors.

The argument becomes even more important, he added, as donor countries and development partners face their own fiscal pressures.

Rather than building health programmes around the assumption that external partners will always be available to fund them, Mr Pate said the government must ultimately take responsibility for sustaining services for Nigerians.

A more coordinated approach to donor support

The shift towards greater domestic financing is also being accompanied by efforts to change how external support is coordinated.

Mr Pate described the previous donor landscape as fragmented, with development partners sometimes supporting selected states and programmes without sufficient coordination with the government.

“There wasn’t as much coherence,” he said.

The government, he added, is now seeking to bring these interventions into closer alignment with national and state health priorities.

According to Mr Pate, states have operational plans aligned with broader national objectives, while quarterly performance dialogues are being held with states to assess progress using available data.

According to him, the government has also introduced joint annual reviews and the State of Health for the Nation report to provide a more comprehensive picture of health-sector performance.

The aim, he explained, is to reduce duplication, improve accountability and ensure that the government has a clear understanding of the totality of interventions taking place across the country.

More importantly, he noted that the approach places responsibility for health outcomes on the government, regardless of how much support is available from development partners.

Local production and health security

Mr Pate’s argument for greater domestic capacity extends beyond financing to the production of the medicines, diagnostic kits and medical equipment needed to run the health system.

Mr Pate highlighted growing investments in local pharmaceutical manufacturing and the production of rapid diagnostic test kits, describing domestic production as an opportunity to retain economic value within Nigeria while creating jobs.

He also linked local manufacturing to the cost of healthcare commodities, particularly after the depreciation of the naira increased the cost of imported products.

“When the naira was devalued, the cost went up significantly. Now some of the production is here. So there’s a bit of an import substitution component,” he said.

With more health products manufactured locally, he explained, Nigeria could reduce some of its dependence on imports while gradually developing local supply chains for raw materials and other inputs.

For Mr Pate, this is part of a broader transition from a health system that largely consumes products manufactured elsewhere to one that can produce more of what its population needs.

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Sustaining the reforms

Ultimately, Mr Pate said the gains from the current reforms would depend on their continuity and the ability of the government to deepen them.

He pointed to improvements in indicators such as contraceptive use, antenatal care and skilled birth attendance, arguing that sustained implementation could lead to further reductions in maternal, neonatal and child mortality.

He also stressed that progress in Nigeria would have implications beyond its borders, given the country’s size and influence on health outcomes across the continent.

“If Nigeria doesn’t move, Africa doesn’t move,” Mr Pate said.