BUSINESS ANALYSIS: CBN’s N100bn fund as catalyst for health sector development

IN the 1960s, Nigeria was a medical tourism destination with the University College Hospital (UCH), Ibadan, offering a range of specialised health care services. Then, It ranked third best hospital in Africa. However, the health care system has gone from being comparable to the rest of the world between the 60s and the early 80s, to one of the world’s most underfunded and least robust. By the mid-1980s, the Nigerian elite had begun to show loss of confidence in the efficacy of the health system so much so that in his time, military president, General Ibrahim Badamasi Babangida, travelled to Germany on a number of occasions for medical treatment.

Right on the campaign ground in 2007, then incumbent President Olusegun Obasanjo placed a call through to PDP candidate, Umar Yar’Adua who was abroad receiving medical treatment. As president and even as governor of Katsina State, Yar’Adua frequented foreign. Also former vice presidential, Alhaji Atiku Abubakar was flown abroad for treatment after he sprained his ankle during morning exercising. And incumbent President Muhammadu Buhari has travelled abroad for medical treatment numerous times in the last six years.

According to McKinsey, Nigeria’s pharma market is expected to be worth $3.6 billion by 2026 – with most of the value concentrated in urban areas. With endemic infectious diseases like malaria, and the rise in the incidence of non-communicable diseases, access to high-quality, affordable drugs are important for the populace. As health insurance coverage expands through social and private health insurance schemes, it becomes inevitable to have safe and effective drugs especially generic medicines.

Another report by Global Citizen, health care in Nigeria falls short across many indices and the COVID-19 pandemic exacerbated those challenges. The country has 3.8 doctors per 10,000 people or 0.38 doctors per 1,000 people while Global Goals of the United Nations recommended a minimum of 1 doctor per 1,000 people. And despite the 2001 Abuja Declaration mandating African countries to allocate at least 15 per cent national budgets to health care, successive Nigerian governments have consistently allocated under less than 10 per cent to healthcare. In 2019, Nigeria was responsible for 20 per cent of all maternal mortality globally and only has about 24,000 hospitals. Over 70 per cent of health care spending in Nigeria is out-of-pocket as health insurance remain grossly underdeveloped. Real estate consultancy Knight Frank estimated that Nigeria would require 386,000 additional beds and $82 billion of investment in health-care real estate assets to reach the global average of 2.7 beds per thousand people.

At the outset of coronavirus breakout in Nigeria in February 2020, Nigeria had to send samples abroad for testing because there were no laboratories capable of carrying out such tests. It was upon this reality that Central Bank of Nigeria (CBN) launched a N100 billion credit support for the health sector. This was in addition to the Coalition Against COVID-19 (CACOVID), which it spearheaded. CACOVID is mainly a private sector coalition where private and corporate citizens contributed money to cushion the effects of the novel coronavirus.

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CBN said the N100 billion support fund is part of measures to cushion the impact of the coronavirus (COVID-19) pandemic on the economy. “This is with a view to strengthening the sector’s capacity to meet potential increase in demand for healthcare products and services. Specifically, the scheme is to provide credit to indigenous pharmaceutical companies and other healthcare value chain players intending to build or expand capacity. The Scheme is expected to increase private and public investment in the healthcare sector, facilitate improvements in healthcare delivery and reduce medical tourism to enhance foreign exchange conservation.”

Some of the objectives include reduction of health tourism to conserve foreign exchange; provision of long-term low cost finance for healthcare infrastructure development that would lead to the evolvement of world-class healthcare facilities in the country; improve access to affordable credit by indigenous pharmaceutical companies to expand their operations and comply with the World Health Organisation’s Good Manufacturing Practices (WHO GMP); and support the provision of shared services through one-stop healthcare solution to enhance competition and reduce the cost of healthcare delivery in the country.

Eligible participants under the Scheme include healthcare product manufacturers (pharmaceutical drugs and medical equipment), healthcare service providers/ medical facilities (hospitals/ clinics, diagnostic centres/ laboratories, fitness and wellness centres, rehabilitation centres, dialysis centres, blood banks etc), pharmaceutical/ medical products distribution and logistics services providers and other human healthcare service providers as the CBN may determine from time to time are eligible to participate under the Scheme.

The Scheme which is funded from the Real Sector Support Facility-Differentiated Cash Reserves Requirement (RSSFDCRR) of the CBN, and disbursements are made by Participating Financial Institutions (PFI’s). The eligible financial institutions are Deposit Money Banks (DMBs) and Development Finance Institutions (DFIs). A body of experts was established by the Bank to review and evaluate submitted research proposals and provide recommendations for financing the identified research and development proposals.

At the last update, CBN had disbursed about N93 billion from the facility. Its governor, Mr Godwin Emefiele, made the disclosure while disbursing N253.54 million to five researchers for the development of Nigerian COVID-19 vaccines and vaccines for other diseases. He explained that 82 projects had been financed through the scheme including 26 pharmaceuticals and 56 medical projects across the country. Major objective for the Bank is to reduce dependence on imported drug products (synthetic and herbal) and vaccines for the control, prevention and treatment of infectious diseases in Nigeria.

To achieve this CBN made it a policy to focus its attention on research projects with high potential to contribute to the development of the Nigerian vaccines that will help curb the spread infectious diseases. Furthermore, the CBN provided grants to biotechnological and pharmaceutical companies, institutions, researchers, and research institutes, to boost domestic capacity to curb the spread of COVID-19 and other communicable or non-communicable diseases.

Setting up the fund was also part of efforts to support capacity of relevant health agencies towards attaining World Health Organisation (WHO) Maturity Level three prerequisite for manufacturing of vaccines in Nigeria. Similarly, the bank is facilitating partnership between researchers, research institutes and universities and industry to research and develop drugs, phytomedicines and vaccines for the control, prevention and treatment of infectious diseases in Nigeria.

Through CACOVID, CBN mobilised billions of naira that was used to support the World Health Organisation (WHO), the Federal Government, and the Nigerian Centre for Disease Control in the fight against COVID-19. It financed construction of isolation centres in Abuja, Lagos, Kano, Ilorin, Port Harcourt, Kano, Enugu and other states including supply of ventilators, PPEs, testing kits. CACOVID funded part of the Surveillance Outbreak Response Management and Analysis System (SORMAS) and provided logistics cost of ambulances and movement of patients. CACOVID Fund also launched a screening tool which administers a five-stage questionnaire for users to determine symptoms they might be experiencing, pre-existing health conditions, recent travel history, and exposure to confirmed cases or risk zones like healthcare facilities.

The coalition purchased molecular testing kits, which helped to ramp up testing across the country. These special interventions by the CBN seem to have served as catalyst for a flurry of investor interest in the health sector. A recent report by New Markets Media & Intelligence highlighted a number of overseas companies and investment vehicles that have begun to invest in health-care infrastructure in Nigeria. International investors are seeking to fill the gaping investment void. A Knight Frank poll of 140 global investors in June found that 80 per cent were considering investment in African health infrastructure in light of the coronavirus crisis. This interest centered primarily on hospital-related real estate and operating companies in collaboration with domestic experts. “There is a very compelling opportunity for the development of world-class healthcare facilities across Africa, but especially Nigeria,” said Hafeez Giwa, managing partner at HC Capital Properties, which has started to invest in health-care assets in Nigeria.

Also consequent upon CBN’s health sector initiatives, Nigeria launched an Economic Sustainability Plan (ESP) in June 2020 as a one-year bridge plan beyond the Economic Growth and Recovery Plan (ERGP 2017-2020). With funding mainly from domestic sources, the plan aims to limit the health and socio-economic impacts of the coronavirus pandemic and other diseases.

 

NIGERIAN TRIBUNE

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