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Economic reforms and rising inflation are putting significant pressure on Nigeria’s healthcare sector, prompting experts to advocate for new business models to ensure the long-term sustainability of the industry.
This call was highlighted at a Lagos Business School webinar entitled “Building a Profitable Healthcare Business in Nigeria” where industry leaders discussed the impact of economic changes on healthcare growth, profitability and service delivery. I considered it.
Reforms that destroy stability Dr. Doyin Salami, Chairman of the Presidential Council of Economic Advisers, stressed that the country’s economic reforms are aimed at stabilizing the economy, but have initially upset the balance and created serious challenges, especially in areas such as health care. did.
“The challenge facing the economy is that, like any reform, it destabilizes the initial equilibrium and the economy is trying to regain stability,” he said.
He emphasized that inflation is a pressing issue and has a disproportionate impact on consumer prices, especially compared to ex-factory prices. He explained that “factory prices have risen by about 13%, while consumer prices have risen by more than 30%,” and this rise is due to rising logistics costs and market inefficiency. I explained that there is.
Regarding health care, he said, “The contribution of the health care sector to GDP remains very small, less than 1%, and growth has slowed significantly since 2015.”
Despite slow growth, Salami highlighted an encouraging trend of increased consumer spending on health services. “Consumer spending on health care has increased from 1.4% of household spending in 2003 to 3% now and is projected to rise to 6.1%,” he said.
However, Salami questioned whether this increase in spending was due to a lack of adequate government provision, forcing more Nigerians to pay out-of-pocket for private healthcare.
He called for more detailed data to identify which socio-economic groups are driving increases in health care costs.
Meanwhile, the Chief Executive Officer of Nairametrics, Ugodole Obi-Chukwu, also expressed concern about the representation of the health sector in the overall Nigerian economy. “The sector contributes NOK 1.2 trillion to the country’s GDP and accounts for about 0.7% of the total economy.”
“Many people may find it hard to believe, but based on GDP data, Nigeria’s health sector accounts for about 0.7% of the economy,” Ugodre said. “We also rank 24th in economics. If you break it down further, health care ranks 46th or 47th among subsectors in this country.”
One of the most notable trends Ugodre has observed is the consistent growth in the healthcare sector since the start of the COVID-19 pandemic in 2020.
“It’s interesting to see the healthcare sector growing every quarter since 2020,” he said. “We don’t know if there was negative growth during this period. However, in the last quarter it lagged behind the general economy, growing at 2.4% compared to the overall economy’s growth rate of 3.19%.”
Ugodre said that although the healthcare sector has grown steadily since the COVID-19 pandemic, it remains undervalued on the Nigerian Stock Exchange (NSE), with only 160 listed healthcare companies. We observed that only 7 medium-sized companies did so.
He warned: “If more companies in this sector do not list on exchanges, it will be difficult to raise the funds needed for further development.”
He also pointed out that the market capitalization of healthcare and pharmaceutical companies listed on the NSE is only N100 billion, a fraction of the exchange’s overall market capitalization of N56 trillion.
Profitability and Sustainability Chidi Okoro, a strategic management expert at Lagos Business School, stressed that profitability remains the key to sustainability in the healthcare sector. He noted that several trends are shaping the post-COVID-19 healthcare landscape, including the influx of foreign investment. But he warned that despite growth in the sector, significant challenges remain, including intense competition, declining consumer incomes and a lack of marketing and business coordination.
“Health care is not a priority when the per capita GDP is below $3,800,” Okoro said, noting that the current economic situation is limiting consumer spending on health services.
In his call to action, Okoro urged healthcare professionals to rethink their approach to business, with a focus on marketing, collaboration and innovation. “We need to understand the difference between growth and expansion. Growth does not equate to profitable expansion,” he said.
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