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PUBLIC HEALTH EXPENDITURE AND HEALTH OUTCOMES IN NIGERIA 1986-2016
Abstract
Conventional wisdom holds that health is central to human general well-being, as well as a prerequisite for increased productivity, and overall economic growth and development of an economy. This explains why governments across the globe are making enormous efforts to achieve good health for all and Nigeria is no exception. Regrettably, despite government’s efforts to improve the health situation of the citizens through massive health care expenditure, the Nigerian health outcomes (such as life expectancy and mortality rate) are still considered one of the poorest and most miserable in the world. Thus, the study follows a causality approach to examining the relationship among government health expenditure, health outcomes, and economic growth in Nigeria during the period 1986 – 2016.
CHAPTER ONE
INTRODUCTION
1.1 Background to the study
The reform of health delivery system is one of the essential elements of overall development of a country. Most common policy response to the demand for improved healthcare is to increase the public health expenditure. However, taking into account the complexity of the determinants of health outcomes, it can be naïve to presume a direct positive relation between public health expenditure and health outcome. The Governments in developed countries with better health indicators have large growing public health expenditures; nevertheless the role of public expenditure in health care provision has been constantly debated. Conventional wisdom holds that health is central to human general well-being, as well as a prerequisite for increased productivity, and overall economic growth and development of an economy. Health is also a driving force upon which other human capitals such as education, skills, etc, rely on. Oni (2014) posits that healthy workers lose less time from work and are more productive when working. According to (WHO, 2005), good health has the consequence of widespread economic growth, and an escape of ill – health traps in poverty. As pointed out by Barro (1996), health is a capital productive asset and an engine of growth. Therefore, it is rather instructive to appreciate how dramatic the improvements in World’s Health have been over the past decades. In 1950, some 280 out of every 1000 children in developing countries died before their fifth birthday. By the year 2000, the number had reduced to 126 per 1000 in low-income countries, 39 per 1000 in middle-income countries, and 6 per 1000 in high-income countries (Todaro and Smith, 2006). This is the result of total eradication of some important killer diseases such as small pox as well as some major childhood illnesses such as rubella and polio, through the use of vaccines.
Following the reports of the World Health Organization (2005), about fifty percent of economic growth differentials between developed and developing nations are attributed to ill-health, and low life expectancy. This is because developed countries spend higher proportion of their Gross Domestic Products (GDP) in providing health care services to their citizens, while some of the developing countries exhibit great variability in health care expenditure. The reports also show that there exists very great variability in the performance of health system at each income level, and in each country. According to the same report, both developed and developing countries were ranked according to the proportion of income spent on health care. While Singapore was ranked 6th, Costa Rica was 36th with Colombia, Chile, and Morocco as 22nd, 23rd and 29th respectively. However, it should be noted that all of these developing countries ranked higher than the United States. This is an indication that much can be done with relatively modest income. The Nigerian economy has been backward for the past two decades despite its independent status since 1960. The petroleum rich Nigeria economy long hobbled by political instability, corruption and poor macroeconomic management, is undergoing substantial economic reform under the new civilian administration. Nigeria’s economy is struggling to leverage the country’s vast wealth in fossil fuels in order to displace the crushing poverty that affects about 57 percent of its population. Economists refer to the coexistence of vast natural resources wealth and extreme personal poverty in developing countries like Nigeria as the “paradox of plenty” or the “curse of oil” Nigeria’s exports of oil and natural gas - at a time of peak prices - have enabled the country to post merchandise trade and current account surpluses in recent years. Reportedly, 80 percent of Nigeria’s energy revenue flows to the government, 16 percent covers operational costs, and the remaining 4 percent go to investors (Odusola, 1998).
Health is a very important aspect of an individual’s wellbeing, and since individuals make a nation, therefore, healthcare could be regarded as one of the necessary conditions to achieving a sustainable longterm economic development. Health can be defined to mean general physical condition i.e. condition of the body or mind especially in terms of the presence or absence of illness, injuries or impairments. The issue of health is a very sensitive one because it deals with not just humans but with human body. Without a good health condition it is almost impossible to carry out any economic activity and if at all there is any it will certainly not be efficient and so we really have to take this subject seriously (Cremieux, et al., 1999). It has been established in the literature that improvement in health care is an important prerequisite for enhancing Human Capital Development (HCD) in any and every economy.
According to Siddiqui, Afridi and Haq (1995), they opined that improved health status of a nation creates outward shift in labour supply curve/increase productivity of labour with a resultant increase in productivity of investment in other forms of human capital. Thus, the level of government expenditure on health determines the ultimate level of human capital development which eventually leads to better, more skilful, efficient and productive investment in other sector of the economy (Muhammad and Khan, 2007). The financial commitments of government to the health sector are both the recurrent and capital expenditure on health. The capital expenditure of government decrease from N7.3million in 1970 to N4.88 million in 1972 before it rose again to N126.75 in 1994. It dropped sharply to N79.2 million in 1982. From 1982 to 1987, capital expenditure on health declined from N72.9m in 1982 to an all time low of N17.2m in 1987. This development is occasioned by the fact government was more preoccupied in the business of paying workers salaries with less attention being paid to capital expenditure. In 1988 there was a significant rise to N297.96m. By 1991, the statistic dropped to N137.3m but plummeted to N33.72m in 1992. The figure rose steadily from N586.2 million in 1993 to N17,717.42m, N33,396.97m and N34,647.9m in 2003, 2005 and 2007 respectively the capital expenditure on health stood at N64,922.9m in 2008 and N79,321.09m in 2011. The recurrent expenditure on health also follows a similar trend. It rose gradually from N12.48m in 1970 to N59.47m in 1977 but fell to N40.48m in the successive year.
The pattern of health expenditure at this period is a reflection of both the product of the disposition of government policy towards health issue and the determination of the Federal Government to improve the health care system with the wind fall of oil revenue. Recurrent expenditure nosedived into N15.32m in 1979 before it rose to N52.79m, N84.46m N82.79 million in 1979, 1987 and 1983 respectively. From 1984 to 1986, recurrent expenditure rose from N101.55m to N134.12m when the recurrent expenditure as a percentage of total expenditure stood at 77.4 percent. The value of recurrent health expenditure reduced significantly in 1987 to N41.31m before it rose steadily from N422.80 in 1988 to N24,522.27m in 2001. This figure rose again from N40,621.42 in 2002 to N44,551.63, N58,686.56 and N72,290.07 in 2005, 2006 and 2007 respectively. Recurrent expenditure on health stood at N18,200.0 million in 2008 and N21,542.9m in 2011. Economic theory has established a positive mutual interaction between the health of a worker and his productivity. First, it is widely known that a healthy worker is more fit both physically and mentally, to contribute to production as well as increase productivity more than a sick worker. On the other hand, a sustainable growth and development of an economy can offer the people the access to a better nutrition and disease treatment opportunities. This explains why governments across the globe are making frantic efforts to achieve good health for all. Thus, following the recommendations of the United Nations (UN) that countries should budget at least 8 to 10 percent of their GDP as a benchmark expenditure on health, the Nigerian government has been making efforts to increase its expenditure on health.
The government tried to meet up with the benchmark by increasing the total expenditure on health from N84.46bn in 1981 to N134.12bn in 1986. By 1987, it dropped to N41.31bn, and skyrocketed to N575.30bn in 1989. In 2002, the total expenditure on health has risen to N40, 621.42bn, and dropped to N33,267.98bn in 2003, and later appreciated to N104,810.08bn in 2010. Between 2011 and 2014, the total expenditure rose to N113, 766.30bn, in 2011, N122, 722.60bn in 2012, N131,678.87bn in 2013 and N140,635.10bn in 2014. A cursory look at these figures reveals that health as an important facilitator of economic growth has attracted the attention of the government, and has as well received a fair share of the country’s gross domestic product over these years
1.2 STATEMENT OF THE PROBLEM
Better health condition improves or shift labour supply curve to the right, increase the level of production and advancement in the performance of macroeconomic variables. Moreover, the extent of share of government expenditure on health to some extent determines the ultimate level of human capital development which then metamorphosizes to a better skillful efficient productive investment in other sectors of the economy. Increase in budgetary allocation to social services is required in developing countries especially Nigeria. In Nigeria, despite the relative huge budgetary allocation for health sector, this has not really manifested in the health status of an average Nigerian. The health status of Nigerians is consistently ranked low. Nigeria is ranked 74th out of 115 countries based on the performance of some selected health indicators. ( World Bank, 1999). Nigeria over all heath system performance was equally ranked 187th among the 191 member states by the World Health Organization (WHO) in 2006 (National Health Policy, (2008). The infant and child mortality rate in Nigeria are among the highest in the world. It is in view of the above that the researcher intends to investigate the public health expenditure and health outcomes in Nigeria.
1.3 OBJECTIVE OF THE STUDY
It is pertinent to say that the main objective of this study is to investigate public health expenditure and health outcomes in Nigeria 1986-2016, but to aid the successful completion of the study the researcher intends to to achieve the following specific objective;
(i) To examine the relationship between public health expenditure and health outcomes in Nigeria;
(ii) To ascertain the relationship between literacy rate and health outcomes in Nigeria; and
(iii) To assess the relationship between environmental factors and health outcomes in Nigeria.
(iv) To evaluate the impact of public health expenditure on the life expectancy level of Nigerians.
1.4 RESEARCH HYPOTHESES
The researcher formulated the following research hypotheses to guide the study through;
H0: there is no significant relationship between public health expenditure and health outcomes in Nigeria
H1: there is a significant relationship between public health expenditure and health outcomes in Nigeria
H02: there is no significant relationship between environmental factors and health outcomes in Nigeria
H2: there is a significant relationship between environmental factors and health outcomes in Nigeria
1.5 SIGNIFICANCE OF THE STUDY
It is believed that at the completion of the study, the findings will be of importance to the ministry of health as the study seek to elaborate on the merit of adequate and prudent investment in the public health sector. The study will also be of great importance to the management of public hospital in the country as the study seek to remind the policy makers of the need to effectively monitor and ensure that the resources allocated to the health sector is judiciously utilized for the purpose it was budgeted for. The study will also be useful to academia’s, lecturers, researchers, students and the general public as the study will contribute to the pool of already existing literature and knowledge on the subject matter
1.6 SCOPE AND LIMITATION OF THE STUDY
The scope of the study covers public expenditure and health outcomes in Nigeria, but ion the cause of the study, there were some factors which limited the scope of the study;
a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.
1.7 OPERATIONAL DEFINITION OF TERMS
Health: Health is the level of functional and metabolic efficiency of a living organism. The World Health Organization (WHO) defined human health in its broader sense in its 1948 constitution as "a state of complete physical, mental, and social well-being and not merely the absence of disease or infirmity
Public health: Public health is "the science and art of preventing disease, prolonging life and promoting human health through organized efforts and informed choices of society, organizations, public and private, communities and individuals
Health outcomes: Health outcomes are changes in health that result from measures or specific health care investments or interventions
1.8 ORGANIZATION OF THE STUDY
This research work is organized in five chapters, for easy understanding, as follows Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study.
Abstract
Conventional wisdom holds that health is central to human general well-being, as well as a prerequisite for increased productivity, and overall economic growth and development of an economy. This explains why governments across the globe are making enormous efforts to achieve good health for all and Nigeria is no exception. Regrettably, despite government’s efforts to improve the health situation of the citizens through massive health care expenditure, the Nigerian health outcomes (such as life expectancy and mortality rate) are still considered one of the poorest and most miserable in the world. Thus, the study follows a causality approach to examining the relationship among government health expenditure, health outcomes, and economic growth in Nigeria during the period 1986 – 2016.
CHAPTER ONE
INTRODUCTION
1.1 Background to the study
The reform of health delivery system is one of the essential elements of overall development of a country. Most common policy response to the demand for improved healthcare is to increase the public health expenditure. However, taking into account the complexity of the determinants of health outcomes, it can be naïve to presume a direct positive relation between public health expenditure and health outcome. The Governments in developed countries with better health indicators have large growing public health expenditures; nevertheless the role of public expenditure in health care provision has been constantly debated. Conventional wisdom holds that health is central to human general well-being, as well as a prerequisite for increased productivity, and overall economic growth and development of an economy. Health is also a driving force upon which other human capitals such as education, skills, etc, rely on. Oni (2014) posits that healthy workers lose less time from work and are more productive when working. According to (WHO, 2005), good health has the consequence of widespread economic growth, and an escape of ill – health traps in poverty. As pointed out by Barro (1996), health is a capital productive asset and an engine of growth. Therefore, it is rather instructive to appreciate how dramatic the improvements in World’s Health have been over the past decades. In 1950, some 280 out of every 1000 children in developing countries died before their fifth birthday. By the year 2000, the number had reduced to 126 per 1000 in low-income countries, 39 per 1000 in middle-income countries, and 6 per 1000 in high-income countries (Todaro and Smith, 2006). This is the result of total eradication of some important killer diseases such as small pox as well as some major childhood illnesses such as rubella and polio, through the use of vaccines.
Following the reports of the World Health Organization (2005), about fifty percent of economic growth differentials between developed and developing nations are attributed to ill-health, and low life expectancy. This is because developed countries spend higher proportion of their Gross Domestic Products (GDP) in providing health care services to their citizens, while some of the developing countries exhibit great variability in health care expenditure. The reports also show that there exists very great variability in the performance of health system at each income level, and in each country. According to the same report, both developed and developing countries were ranked according to the proportion of income spent on health care. While Singapore was ranked 6th, Costa Rica was 36th with Colombia, Chile, and Morocco as 22nd, 23rd and 29th respectively. However, it should be noted that all of these developing countries ranked higher than the United States. This is an indication that much can be done with relatively modest income. The Nigerian economy has been backward for the past two decades despite its independent status since 1960. The petroleum rich Nigeria economy long hobbled by political instability, corruption and poor macroeconomic management, is undergoing substantial economic reform under the new civilian administration. Nigeria’s economy is struggling to leverage the country’s vast wealth in fossil fuels in order to displace the crushing poverty that affects about 57 percent of its population. Economists refer to the coexistence of vast natural resources wealth and extreme personal poverty in developing countries like Nigeria as the “paradox of plenty” or the “curse of oil” Nigeria’s exports of oil and natural gas - at a time of peak prices - have enabled the country to post merchandise trade and current account surpluses in recent years. Reportedly, 80 percent of Nigeria’s energy revenue flows to the government, 16 percent covers operational costs, and the remaining 4 percent go to investors (Odusola, 1998).
Health is a very important aspect of an individual’s wellbeing, and since individuals make a nation, therefore, healthcare could be regarded as one of the necessary conditions to achieving a sustainable longterm economic development. Health can be defined to mean general physical condition i.e. condition of the body or mind especially in terms of the presence or absence of illness, injuries or impairments. The issue of health is a very sensitive one because it deals with not just humans but with human body. Without a good health condition it is almost impossible to carry out any economic activity and if at all there is any it will certainly not be efficient and so we really have to take this subject seriously (Cremieux, et al., 1999). It has been established in the literature that improvement in health care is an important prerequisite for enhancing Human Capital Development (HCD) in any and every economy.
According to Siddiqui, Afridi and Haq (1995), they opined that improved health status of a nation creates outward shift in labour supply curve/increase productivity of labour with a resultant increase in productivity of investment in other forms of human capital. Thus, the level of government expenditure on health determines the ultimate level of human capital development which eventually leads to better, more skilful, efficient and productive investment in other sector of the economy (Muhammad and Khan, 2007). The financial commitments of government to the health sector are both the recurrent and capital expenditure on health. The capital expenditure of government decrease from N7.3million in 1970 to N4.88 million in 1972 before it rose again to N126.75 in 1994. It dropped sharply to N79.2 million in 1982. From 1982 to 1987, capital expenditure on health declined from N72.9m in 1982 to an all time low of N17.2m in 1987. This development is occasioned by the fact government was more preoccupied in the business of paying workers salaries with less attention being paid to capital expenditure. In 1988 there was a significant rise to N297.96m. By 1991, the statistic dropped to N137.3m but plummeted to N33.72m in 1992. The figure rose steadily from N586.2 million in 1993 to N17,717.42m, N33,396.97m and N34,647.9m in 2003, 2005 and 2007 respectively the capital expenditure on health stood at N64,922.9m in 2008 and N79,321.09m in 2011. The recurrent expenditure on health also follows a similar trend. It rose gradually from N12.48m in 1970 to N59.47m in 1977 but fell to N40.48m in the successive year.
The pattern of health expenditure at this period is a reflection of both the product of the disposition of government policy towards health issue and the determination of the Federal Government to improve the health care system with the wind fall of oil revenue. Recurrent expenditure nosedived into N15.32m in 1979 before it rose to N52.79m, N84.46m N82.79 million in 1979, 1987 and 1983 respectively. From 1984 to 1986, recurrent expenditure rose from N101.55m to N134.12m when the recurrent expenditure as a percentage of total expenditure stood at 77.4 percent. The value of recurrent health expenditure reduced significantly in 1987 to N41.31m before it rose steadily from N422.80 in 1988 to N24,522.27m in 2001. This figure rose again from N40,621.42 in 2002 to N44,551.63, N58,686.56 and N72,290.07 in 2005, 2006 and 2007 respectively. Recurrent expenditure on health stood at N18,200.0 million in 2008 and N21,542.9m in 2011. Economic theory has established a positive mutual interaction between the health of a worker and his productivity. First, it is widely known that a healthy worker is more fit both physically and mentally, to contribute to production as well as increase productivity more than a sick worker. On the other hand, a sustainable growth and development of an economy can offer the people the access to a better nutrition and disease treatment opportunities. This explains why governments across the globe are making frantic efforts to achieve good health for all. Thus, following the recommendations of the United Nations (UN) that countries should budget at least 8 to 10 percent of their GDP as a benchmark expenditure on health, the Nigerian government has been making efforts to increase its expenditure on health.
The government tried to meet up with the benchmark by increasing the total expenditure on health from N84.46bn in 1981 to N134.12bn in 1986. By 1987, it dropped to N41.31bn, and skyrocketed to N575.30bn in 1989. In 2002, the total expenditure on health has risen to N40, 621.42bn, and dropped to N33,267.98bn in 2003, and later appreciated to N104,810.08bn in 2010. Between 2011 and 2014, the total expenditure rose to N113, 766.30bn, in 2011, N122, 722.60bn in 2012, N131,678.87bn in 2013 and N140,635.10bn in 2014. A cursory look at these figures reveals that health as an important facilitator of economic growth has attracted the attention of the government, and has as well received a fair share of the country’s gross domestic product over these years
1.2 STATEMENT OF THE PROBLEM
Better health condition improves or shift labour supply curve to the right, increase the level of production and advancement in the performance of macroeconomic variables. Moreover, the extent of share of government expenditure on health to some extent determines the ultimate level of human capital development which then metamorphosizes to a better skillful efficient productive investment in other sectors of the economy. Increase in budgetary allocation to social services is required in developing countries especially Nigeria. In Nigeria, despite the relative huge budgetary allocation for health sector, this has not really manifested in the health status of an average Nigerian. The health status of Nigerians is consistently ranked low. Nigeria is ranked 74th out of 115 countries based on the performance of some selected health indicators. ( World Bank, 1999). Nigeria over all heath system performance was equally ranked 187th among the 191 member states by the World Health Organization (WHO) in 2006 (National Health Policy, (2008). The infant and child mortality rate in Nigeria are among the highest in the world. It is in view of the above that the researcher intends to investigate the public health expenditure and health outcomes in Nigeria.
1.3 OBJECTIVE OF THE STUDY
It is pertinent to say that the main objective of this study is to investigate public health expenditure and health outcomes in Nigeria 1986-2016, but to aid the successful completion of the study the researcher intends to to achieve the following specific objective;
(i) To examine the relationship between public health expenditure and health outcomes in Nigeria;
(ii) To ascertain the relationship between literacy rate and health outcomes in Nigeria; and
(iii) To assess the relationship between environmental factors and health outcomes in Nigeria.
(iv) To evaluate the impact of public health expenditure on the life expectancy level of Nigerians.
1.4 RESEARCH HYPOTHESES
The researcher formulated the following research hypotheses to guide the study through;
H0: there is no significant relationship between public health expenditure and health outcomes in Nigeria
H1: there is a significant relationship between public health expenditure and health outcomes in Nigeria
H02: there is no significant relationship between environmental factors and health outcomes in Nigeria
H2: there is a significant relationship between environmental factors and health outcomes in Nigeria
1.5 SIGNIFICANCE OF THE STUDY
It is believed that at the completion of the study, the findings will be of importance to the ministry of health as the study seek to elaborate on the merit of adequate and prudent investment in the public health sector. The study will also be of great importance to the management of public hospital in the country as the study seek to remind the policy makers of the need to effectively monitor and ensure that the resources allocated to the health sector is judiciously utilized for the purpose it was budgeted for. The study will also be useful to academia’s, lecturers, researchers, students and the general public as the study will contribute to the pool of already existing literature and knowledge on the subject matter
1.6 SCOPE AND LIMITATION OF THE STUDY
The scope of the study covers public expenditure and health outcomes in Nigeria, but ion the cause of the study, there were some factors which limited the scope of the study;
a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.
1.7 OPERATIONAL DEFINITION OF TERMS
Health: Health is the level of functional and metabolic efficiency of a living organism. The World Health Organization (WHO) defined human health in its broader sense in its 1948 constitution as "a state of complete physical, mental, and social well-being and not merely the absence of disease or infirmity
Public health: Public health is "the science and art of preventing disease, prolonging life and promoting human health through organized efforts and informed choices of society, organizations, public and private, communities and individuals
Health outcomes: Health outcomes are changes in health that result from measures or specific health care investments or interventions
1.8 ORGANIZATION OF THE STUDY
This research work is organized in five chapters, for easy understanding, as follows Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study.
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