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Nigeria, We have a Hearing Problem! – On Nigeria’s Affordable Healthcare and Housing Conundrum

June 18, 2016

Nigeria’s Healthcare and Housing challenges have one thing in common, both are primarily financing model problems, unavailability of guaranteed off-take. All the other issues in both sectors are mostly either secondary causes or subordinate resultant effects.

When our politicians and coupists are out of Government they refer to our hospitals as mere consulting clinics. Yet once they are given a shot at governance, providing affordable housing and affordable, accountable and appropriate health care to all Nigerians suddenly becomes Winch and Ojuju craft plus rocket science.

Its either that we no dey see other countries, we no dey hear word or we no dey listen.

On the health sector I have consistently argued that all that is required to transform the sector is a government driven universal healthcare insurance and financing model, partnering with private sector health insurance providers (Tax based Health Insurance + Social Health Insurance + Private Health Insurance). Only this will ensure that quality health service is delivered cashless and with equity to all Nigerians. Not Coup speeches! Not poorly thought through election campaign rhetoric! Not propaganda!

I also appreciate the argument that given our extant tax base and tax payment habits, workers in the formal sectors mostly bear the burden of tax payment.  A situation which is further compounded given that this represents a small share of Nigeria’s 180 million citizens.
 
But this is when and if we are focused on payroll taxes. What if our Tax Based Health Insurance framework is mostly driven by consumption and earmarked / hypothecated taxes? import duty, value added tax, sales tax, premium alcoholic beverage tax, special cigarette taxes, private jet tax; adult entertainment tax (why not?) etc.
 
Of course we can also look at Capital Gains Tax, Tax on rent, etc. the canvas is actually blank and ours is to paint whatever consumption tax picture we desire. Back this with Social and Private Health Insurance systems that rely predominantly on a share of formal workers’ salaries.

On Affordable housing I have argued that all that is required to remedy our affordable housing stock deficit is a government driven wholesale purchaser of mortgages, partnering with private sector wholesale purchasers, other institutional investors (both local and foreign) as well as Sovereign Wealth Funds.

Our people are quick to run to India when they fall sick yet the transformation we see today in India’s healthcare system was driven mainly by the country’s Insurance Regulatory and Development Authority (IRDA) legislation of 2000 which opened up the Health Insurance sector to private players.

Prior to this framework, healthcare delivery in India was very much like what is currently obtainable in Nigeria. After the framework was introduced, Health insurance membership in India quadrupled between 2007 and 2011 and by 2010 more than 25% of India’s 1.3 Billion population had access to some form of Health Insurance.

What was the result?

Though India currently spends cumulatively 4.2 per cent of its GDP on healthcare (of which just 1 per cent is being contributed by the public sector), yet the healthcare sector is one of the country’s largest sectors in terms of employment generation.

Investment opportunities in the Indian healthcare sector has also increased significantly and the sector (comprising hospitals, medical device manufacturers, clinical trial centers, telemedicine companies, medical tourism, health insurance and medical equipment) is one of the country’s most attractive investment targets for Private Equity (PE) and Venture Capital (VC) firms. This sector was worth US$100 Billion in 2015, and is expected to grow at a CAGR of 22.9% to US$280 billion in 2020.

Chineke! US$280 Biiiillllion!!!!

By the way, Medical tourism in India (the wan wey our people dey follow contribute to) was a US$3 Billion market in 2015 and expected to grow to US$10.6 billion by 2019. Even equally interesting is the fact that the average investment size by PE firms in India’s healthcare chains has already increased to US$20-30 Million from US$ 5-15 million per deal. To put this in proper perspective, India’s hospital and diagnostic centers alone attracted Foreign Direct Investment (FDI) worth US$3.41 billion between April 2000 and December 2015, according to data released by the country’s Department of Industrial Policy and Promotion (DIPP).

Nigeria una dey see una sef?

Investments of this nature would have been impossible if India was to rely on our current style of out-of-pocket spending to attract investors as there would have been no predictability of cashflows required for investment decisions. An interesting corollary is that such private sector investments in Nigeria’s health sector will ultimately trigger the much needed reverse brain drain. All those our plenty plenty brilliant brothers and sisters practicing medicine in the US, Canada, UK and the rest of the world will flock home.

No need for Andrew to checkout..na checking-in we go dey do!

Now…the problem with our housing sector is also ‘familiarly-similar’.

Where will the US Housing market be today without a wholesale purchaser of mortgages from the PMIs? Again I have argued that only this can turn on the funding conveyor belt that provides the short to medium term construction finance (likely provided by commercial banks) that funds housing stock creation, funds the writing of mortgages (provided by PMIs) that acts as exit for the construction finance providers, then provides a platform for PMIs to sell those mortgages to the earlier mentioned wholesale purchasers in a bid to liquefy their assets and write additional mortgages to take-out construction finance.

In summary, Nigeria’s housing problem is based on the lack of an appropriate financing model and not a brick and mortar problem.

It’s the result of a poverty of ideas, not that of lack of funds.

Our healthcare problem is mainly that of the absence of a sustainable financing solution…the much touted lack of infrastructure, drugs and skilled personnel is how the problem presents…a symptomatic manifestation of the problem.

A poverty of ideas.

You see….was that difficult?

No!

Are these novel solutions?

No! They have all been tried and tested in jurisdictions similar to ours.

So what is the issue nah?

I guess that we have a major hearing and ‘seeing’ problem in this our country.

What else can I say?

P.S – In all this..make una beg oga Fashola to give us light make we take see road!

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