GOVERNMENT HEALTHCARE FINANCING AND ECONOMIC GROWTH IN NIGERIA

ABSTRACT

The nature of a country's financing of its health care systems is a prime determinant in the health care financing system. It determines whether or not the health services provided are within the reach of those who need them. In Nigeria, there are different sources and mechanisms of financing the health sector. The difference in the proportionate contribution from these stated sources determines how far such health sector will go in achieving successful health care financing system. Unfortunately in Nigeria, getting the correct blend of these sources remains a challenge. This papers looks at the relevant contribution of existing literature in the area of health care financing toward presenting an overview and the state of health care financing in Nigeria, including its policy in place to enhance health care financing. According to him, health care financing in Nigeria is derived from several sources, though majorly the sources are composed of, but not limited to, tax revenue, out-of-pocket payments (OOPS), donor funding, social, and community health insurance. This research investigates the effect of health financing on economic growth in Nigeria by applying the ARDL model estimation technique on time series data from 2014 to 2024. It should be noted that the study also controls for the potential impact of inflation and investment. Results showed that while inflation is bad for economic growth, infrastructure investment and investment in other productive sectors complement the increase in health expenditure and magnify its positive impact on the economy. The recommendations to those at the helm include increased and optimized funding for healthcare, alongside broader economic strategies that incorporate large investments in infrastructure. It thus leads to the recommendation specifically for sustainable economic development in Nigeria, which entails ensuring that the economic growth of Nigeria is driven by a healthy and productive population. This paper adds to the debate on the role of public healthcare financing in economic development and adds value to the design of future policy in Nigeria.

Keywords: Health Financing, Government, Private Health Expenditures, Economic Growth, Patients

TABLE OF CONTENTS

.

Abstract

Introduction

Conceptual Review.

Healthcare Financing

Theoretical Framework.

Endogenous Growth Theory

Empirical Framework

Gaps in Literature

Research Design

Model Specification.

Presentation and Discussion of Results

Regression Analysis

Diagnostic Tests for Regression Analysis.

Discussion of Findings.

Conclusions And Recommendations.

References

Appendix: Data

LIST OF TABLE

Table 1: Descriptive Statistics

Table 2: Regression Model

Table 3: Analysis of Variance

Table 4: Coefficients of Variables

Table 5: Residuals Diagnostic Tests

INTRODUCTION

Government healthcare financing is a critical component in the broader context of economic development, especially in developing countries like Nigeria. Effective healthcare financing is essential for improving health outcomes, which in turn can lead to enhanced productivity and economic performance. The correlation that exist between healthcare financing and economic growth has been widely recognized, with various studies demonstrating that investments in healthcare are crucial for fostering a healthy and productive workforce (Bloom et al., 2014). Despite the significance of healthcare financing, many developing countries face challenges in allocating adequate resources to their health sectors, resulting in poor health outcomes and limited economic growth.

The challenges associated with healthcare financing in Africa especially in Nigeria are profound. The country faces significant issues related to inadequate funding, inefficient allocation of resources, and poor healthcare system. These issues are exacerbated by some high levels of poverty, corruption, and political instability, which further hinder the government’s ability to effectively finance the healthcare sector (Ogunleye et al., 2021). As a result, Nigeria's healthcare system remains underdeveloped, with poor access to quality healthcare services, particularly in under-developed location where the majority of the individuals resides. This has led to widespread health disparities, high mortality rates, and a generally low life expectancy, all of which negatively impact the country's economic performance.

The issues of inadequate health financing in Nigeria is compounded by rapid population growth which burdens already-scarce resources as far as healthcare is concerned. The rapid rates of growth of demand for healthcare services, which the government cannot match, have led to a decline in the quality of care as well as an increase in out-of-pocket expenses to those seeking medical attention. This disproportionately affects low-income households and hampers general economic productivity, as a lot of individuals are not able to effectively participate in the economy because of poor health status (Amakom & Ogujiuba, 2016).

Moreover, the lack of a uniformly viable healthcare financing model has made Nigeria vulnerable to health crises. Notably, Pandora's box was opened in the country by the COVID-19 pandemic, which exposed major weaknesses in the nation's healthcare system and laid out the need for urgent action towards change. Addressing these challenges is of grassroots importance to enhancing access to healthcare, ensuring better health outcomes for all citizens of Nigeria, and expressing sincere gratitude to local heroes.

The main objective of this study is to examine the relationship between government healthcare financing and economic growth in Nigeria. The study aims to analyze how government expenditure on healthcare influences economic outcomes, such as GDP growth, labor productivity, and overall economic stability. By linking the problem of inadequate healthcare financing to the broader objective of economic growth, this study seeks to provide insights into the potential economic benefits of increased and more efficient government investment in the healthcare sector. The findings from this study could inform policymakers on the importance of prioritizing healthcare financing as a means of promoting sustainable economic development in Nigeria.

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