By Ayomide Adewoyin
Program Officer, DGI Consult
Nigeria, with an estimated population of 208 million people, is the most populous country in Africa and the seventh most populous country in the world. With an annual population growth rate of 2.58% and a total fertility rate of 5.3 births per woman, the country is projected to be the third most populous country in the world by 2050. The fertility patterns in the country have resulted in a young population structure, and over 40% of the current population are dependents (children under 15 years). This high population growth rate and high dependency ratio have negative economic, social and health implications in Nigeria. These include a poor economic growth rate of only -1.92% (2020), a poverty rate of 40% and an unemployment rate of 33.3%. Likewise, health indices are poor, including a high maternal mortality ratio of 512 deaths per 100,000 live births and 132 under-five deaths per 1,000 live births.
The low level of family planning (FP) access in Nigeria has been identified as a major factor in the high fertility and population growth rate as well as the social, economic and health implications. FP is very central to improving Nigeria’s health indices, increasing economic development and achieving demographic dividend in the country. Thus, the increased attention on expanding access to FP services and commodities, i.e. contraceptives, towards alleviating these issues.  However, only about 36% of FP demand is satisfied by modern contraceptives in Nigeria and the modern contraceptive prevalence rate (mCPR) is still very low at 12%. This is a far cry from the Federal Government’s target of achieving a 27% mCPR by 2020. The situation is attributable to the suboptimal budget spending for the procurement of FP commodities (contraceptives) and services at both the national and sub-national levels in the country, and the funding gap keeps widening as FP demand increases. Therefore, the critical need to increase government spending on FP at the federal, state, and local government levels in Nigeria.
In line with Nigeria’s FP2020 commitment, the federal government (FG) is expected to contribute $4 million annually (N1.2 billion) for the purchase of contraceptives through a ‘Basket Fund’ that is operated alongside external donors. However, the FG only released the committed amount in 2018 while N915 million and N300 million were released in 2017 and 2019 respectively; leaving a deficit of N2.2 billion between 2017 and 2019. The states and local governments do not currently contribute to the basket at all, but they are expected to budget for the last mile distribution of FP commodities and the provision of FP services. However, many states rely heavily on donor interventions for these. Evidence from the past nine years shows that contributions from donors (e.g. UNFPA, FCDO, USAID, BMGF, Global Affairs Canada) account for more than 70% of all funds used for FP commodity procurement in Nigeria.
Towards ensuring sustainable financing for FP commodities and services in Nigeria and reduce the severe donor dependency, especially in the face of dwindling foreign aid, it is imperative to increase domestic financing for FP commodities and services. However, it is necessary to assess the capacity of the government to provide additional financial resources for FP commodities without jeopardizing the sustainability of governments’ financial position.
Fiscal Space Assessment (FSA) for FP Commodities Financing in Nigeria
DGI Consult supported the Clinton Health Access Initiative (funded by BMGF) to conduct an FSA for FP Commodity Financing in Nigeria, to identify the opportunities to increase the FG’s budget allocation for the procurement of FP commodities and funding opportunities from other sources. The FSA was conducted using the five pillars of Peter Heller’s 2006 Theoretical Framework, revised by Tandon and Cashin 2010, regarded as the key sources that could be used to generate fiscal space for health. The FSA provided insights into the extent of government, private sector, and donors ability to improve spending on FP commodity as well as possible gains from improving the efficiency of FP spending. These are detailed below.
a. Conducive Macroeconomic Conditions
Nigeria’s macroeconomic conditions are currently unfavourable, characterized by dwindling oil revenue and a high debt-to-revenue ratio. The COVID-19 pandemic, resultant oil shock and economic decline in 2020 further aggravated Nigeria’s fragile fiscal landscape. Thus, conferring a fiscal constraint on the government in financing social priorities such as FP. However, the return of Nigeria to the January-December fiscal year has increased the functional duration of budget implementation, which will alleviate the problem of late budgetary releases which negatively affects the procurement of FP commodities. More so, with the effective implementation of fiscal interventions by the government, e.g. optimizing revenue generation and ensuring sustainable deficit and debt levels, the unfavourable macro-fiscal outlook could be changed significantly.
b. Reprioritization of FP funding by the Government
Nigeria currently spends only about 4% of the total government expenditure, far below the 15% Abuja Declaration benchmark. Likewise, only about 0.09% of the general government health expenditure (GGHE) is spent on FP in Nigeria. This is a sharp contrast from other Lower-Middle Income Countries (LMICs) who spend an average of 1.33% of their GGHE on FP, with some countries such as Cote d’Ivoire spending almost as high as 8% (Figure 1). Therefore, with the reprioritization of health spending by the FG to 15% of total government expenditure and FP spending to at least 1% of GGHE, there will be a significant fiscal space for FP financing. With this, FP spending will potentially increase to $55 million annually, a great leap compared to the less than $4 million which is currently obtainable. Also, with the timely and complete releases of budgetary allocations for FP, there will be timely procurement and long-haul distribution of FP Commodities. Embedding the FP commodity allocation in the Service Wide can enable this.
Figure 1: Proportion of GGHE spent on FP by LMICs in 2018
Data source: WHO Global Expenditure Database
The two major sources of earmarked funds or health sector-specific resources in Nigeria i.e. health insurance and the Basic Health Care Provision Fund (BHCPF), do not currently offer promising fiscal space expansion, as the Health Benefits Packages do not make the provision for FP Commodities financing. However, there will be additional fiscal space if FP Commodities Financing is reprioritized within the BHCPF and the National and State Health Insurance Schemes. For instance, if 1% of BHCPF is allocated towards the procurement of FP commodities, it will generate an additional N442 million annually. Likewise, the reprioritization of FP within the health insurance benefits package will improve the access to modern contraceptives and eliminate inefficiencies in FP service delivery in Nigeria.
d. External Financing
The number of donors contributing to the basket fund has declined over the years. With this trend, additional fiscal space from external assistance for FP commodity financing may not be very expansive, and funding may be expected to remain constant or even decline. More so, the current focus of contributing donors is towards ensuring that there is increased domestic financing and sustainability of FP programming in Nigeria. Nevertheless, the FSA revealed that UNFPA, USAID and FCDO still have plans for financing FP commodities in the next few years. If current levels of donor funding are kept constant, around USD20 million will be accrued for FP commodities financing annually. Also, donor funding can be more strategically channelled into catalysing domestic government and private sector investment in FP.
e. Private Financing
The private sector remains a largely untapped source for gaining additional fiscal space for FP programming. Presently, private sector contributions in the FP landscape range from procurement, wholesale and retailing of FP commodities, service delivery, social marketing and local manufacturing of the commodities. Many of these private sector actors also receive support from development partners in terms of subsidized supply of commodities, capacity building, and loan portfolios. However, there’s still a lot of ground that could be covered in harnessing private sector investment into FP financing. This could be achieved through Blended Financing, Philanthropy, Social Marketing and Logistics Management, alongside collaboration and coordination (Figure 2).
Figure 2: Private Sector Engagement Framework for FP Commodity Financing
f. Efficiency Gains
The FSA revealed the commonest sources of inefficiencies in FP contraceptive financing to be the unreliability of data from subnational levels, which in turn leads to deficiencies in the quantification and forecasting of commodities. Also, some FP commodities wastage and expiration have been recorded due to impediments in the logistics management system. Others include the suboptimal coordination of FP program and the lack of technical capacity at the subnational level, especially in states without any donor or partner support. Therefore, some efficiency gains can be realized by addressing these bottlenecks. Although these may not translate into a significant amount of additional fiscal space, they would surely ensure the efficient use of available resources and cut out avoidable wastages.
Table 1: Summary of Findings – FSA for FP Commodities Financing in Nigeria
|Fiscal Space Pillar||Potential for increased Fiscal Space for FP Commodities|
|Macroeconomic Conditions||Prevailing fiscal constraint (slow economic growth, low tax/GDP ratio and high debt burden) suggests limited fiscal space is accruable. However, a regular budget cycle will ensure timely releases of funds for FP Commodities procurement.|
|Reprioritization||There is a large room for increased fiscal space for if health budget is reprioritized to 15% of total FG budget and FP is reprioritized to at least 1% of total health budget.|
|Earmarking||Current arrangement of earmarked funds for health (BHCPF & SSHIS) do not offer additional fiscal space for FP. Reprioritization of FP financing for both sources can improve the potential.|
|External Financing||Donor funding may remain constant or decline in the coming years, leaving little to no room for fiscal space expansion. Strategic investment of available donor fund to stimulate domestic public and private funding for FP will enhance the outlook.|
|Private Financing||Current level of private financing does not offer much room for additional FP spending. Strategic engagement of the private sector through the elements of the engagement model (Figure 2) can stimulate increased private financing for FP.|
|Efficiency Gains||Addressing inefficiencies will result in the efficient use of available resources and elimination of wastages, thus, providing greater outcomes with the existing resources.|
Achieving sustainable financing for FP Commodity
The National FP Blueprint 2020-2024 outlines the projected cost required for FP programming, and based on the findings of the FSA, the additional fiscal space accruable from different government financing scenarios for FP versus the cost projections are shown in Figure 3. The most significant source of fiscal space (Scenario 2B) will be the reprioritization of health (to 15% of total FG budget) and FP funding (to at least 1% of the total health budget). With this, the full costs of FP Commodities procurement can be provided by the FG. Also, in addition to the contributions from other sources (earmarked funds, subnational governments, donors, private sector), there will be full availability of the projected costs for FP financing. This will also ensure that the bulk of spending on FP will be from the government, which guarantees sustainability, as opposed to the current donor dependency for FP commodity procurement.
Figure 3: FP Financing Scenarios vs Cost Projections (2022-2025)
Data Source: National FP Blueprint 2020-2024; MTEF/FSP 2021-2023
- Generate more political support for FP and mainstream FP as an essential component of National Development: The influence and interest of key actors and institutions play a crucial role towards a shift in policy, priority and social norms in favour of improving financing for FP commodities. Health sector stakeholders have a key role to play in targeted messaging and advocacy to the Nigerian Government towards ensuring that FP financing is reprioritized as very crucial to the nation’s, economic growth and productivity, human capital development and achieving demographic dividend.
- Intra-sectoral reprioritization of FP funding: As shown in Fig 1, LMICs spend an average of 1.33% of their GGHE on FP. Therefore, the health sector should reprioritize the amount that is spent on FP to at least 1% of the overall health budget. Also, FP financing should be reprioritized within the National and State Health Insurance Schemes as well as the BHCPF.
- Strategic engagement of the private sector: The private sector could contribute significantly toward expanding the fiscal space for FP (Figure 2). However, a strong coordination and collaboration platform is needed to harness the private sector potential by strengthening the interface between government, donors, CSOs and the private sector actors on the other hand.
- Strategic and catalytic FP investment by Donors: As there is a huge potential to increase domestic financing on FP especially from reprioritization, utilizing external funding in boosting domestic financing will significantly increase the fiscal space. More external funding should be channelled towards budget advocacy for FP commodity financing across all tiers of government and technical support towards harnessing private sector potential and technical support towards integrating FP into the BHCPF and the National and State Social Health Insurance Schemes.
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