State Governments Rely on External Aid for 16% of Health Budgets, Report Reveals
A state-level report released on Monday highlights that Nigerian state governments depend on external sources, including aid, grants, and loans, for 16% of their health budgets. The report indicates that international aid and grant programmes are the primary sources of non-discretionary capital funding for most states, with fewer than 25% of states exploring loan options to finance capital projects in the health sector. The low interest in loans is attributed to difficulties in securing them or a lack of enthusiasm for pursuing these financing avenues.
Total health expenditure by the 36 states reached N505 billion in 2022, accounting for 7% of their total spending, an increase from N484 billion in 2021. In 2023, the states budgeted N923.31 billion for the health sector, marking an 83% increase from the previous year. However, the report warns that, based on historical trends, the actual spending may fall significantly short of the N923.31 billion target, as state governments have consistently underperformed in executing their health budgets, with an average performance rate of just 63% annually.
On average, state governments allocate N14 billion annually to healthcare, although there is considerable variation in spending across states. Only 15 states have a medium-term health sector strategy (MTSS) in place that covers at least the 2024 budget year. Some states have opted to use alternative planning frameworks developed internally by health ministries to guide resource allocation, though these may not be as comprehensive or structured as the MTSS.
The report also reveals that 61.83% of the aggregate health budget for 2021-2023 was allocated to public health services and health administration, with 38.17% earmarked for hospital services, outpatient services, medical products, and health research and development. The allocation to hospital services stood at 26.17%, while just 1.22% was allocated to medical products, and only 0.28% was designated for health research and development.
One of the challenges identified in the report is the lack of clarity in how states report health expenditure by specific services such as primary, secondary, and tertiary healthcare, as well as by disease categories. This issue stems from the National Chart of Accounts (NCOA), which follows global standards and does not include these detailed classifications. The full implementation of the NCOA’s programme segment in future years is expected to address this gap and improve transparency in health spending reporting.
