DOMESTIC RESOURCE MOBILISATION AND HEALTH OUTCOMES IN NIGERIA

ABSTRACT

The funding of healthcare in Nigeria has often been described as inadequate with budgetary allocation hardly exceeding 3 percent of the budget. Healthcare spending in Nigeria is segmented into private and public spending. While public expenditure in Nigeria account for 20-30% of total health expenditures, private expenditures accounts for 70-80% of total health expenditure. Most developing countries have been dependent on aid for development financing neglecting opportunities for domestic resource mobilisation. In the light of the lingering challenges with under-five child mortality, this study considered agriculture as a source of Domestic Resources Mobilisation. Agricultural value addition is conceived as a key revenue earner for government to increase healthcare funding. The variables were first tested for stationarity. The study adopts the Cointegration and Vector Error Correction technique to check for long run association and short run dynamics to ascertain the speed of adjustment when a shock occurs in the system. The result revealed that (i) there is a positive and long run relationship between tax revenue and under-five mortality, (ii) Agricultural productivity has an inverse relationship with under-five mortality rate, (iii) Gross capital formation and under-five mortality have a positive relationship, (iv) A positive relationship exists between female literacy rate and under-five mortality rate, (v) there exist a negative relationship between carbon dioxide emission and under-five mortality. Based on the findings, it is suggestive that revenue generation over the period has not been properly channelled. Agricultural Productivity and potential tax revenues will be useful to curb under-five mortality in the long run. Therefore, it is suggested that policy be made to enhance tax administration towards agricultural activities. Moreover, investments in agro-allied industries and infrastructural capacity are suggested to reduce the cost of distribution and waste of agricultural products. This study and its outcomes have significant relevance and implications for achieving Sustainable Development Goals in Nigeria.

Keywords: Agricultural productivity, Domestic Resource Mobilisation, Tax Revenue, Under-five Mortality.

TABLE OF CONTENTS

Title Page

Table of Contents

List of Tables

List of Figures

List of Appendices

CHAPTER ONE: INTRODUCTION

1.1       Background of the Study

1.2       Statement of the Problem

1.3       Research question

1.4       Objectives of Study

1.5       Research Hypothesis

1.6       Significance of the Study

1.7       Scope of the Study

1.8       Methodology

1.9       Study Outline

1.10     Definition of terms

CHAPTER TWO: LITERATURE REVIEW

2.1       Preamble

2.2       Conceptual Issues

2.2.1 Domestic Resource Mobilisation

2.2.2    Under-five Mortality Rate

2.2.3    Importance of Domestic Resource Mobilisation

2.2.4    Issues associated with Domestic Resource Mobilisation

2.2.5    The Nigerian Health Sector

2.2.6    Domestic Resource Mobilisation and health Financing

2.2.6.1 The Costs of Health

2.2.6.2 Challenges to Healthcare Financing in Nigeria

2.2.6.3 Global Health Spending Gap

2.3       Theoretical Review

2.3.1    Grossman Theory of the Demand

2.3.2    Harrod- Domar Growth Model

2.3.3The Solow Neoclassical Growth Model

2.3.4    Life cycle Hypothesis

2.4       Empirical Review

2.5       Summary of Empirical Review

CHAPTER THREE: STYLIZED FACTS

3.0       Preamble

3.1       Domestic Resource Mobilisation and selected health outcomes

CHAPTER THREE: METHODOLOGY

4.1       Preamble

4.2       Theoretical Framework

4.3       Model Specification

4.4       variable definition and sources

4.5       Justification of Variables

4.6       Validation of Parameters

4.7       Estimation Techniques

4.7.1    Unit root test (Test for stationarity)

4.7.2    Co-integration

3.7.3    Vector Error Correction Model

CHAPTER FIVE: RESULT AND DISCUSSION

5.1       Preamble

5.2       Presentation of Result

5.3       Unit Root Test

5.4       Unrestricted Co-integration Rank Test Result

5.5       Vector error correction Model

5.6       Economic Implication

CHAPTER SIX: RECOMMECDATION AND CONCLUSION

6.1       Summary of work

6.2       Findings

6.3       Recommendation

6.4       Conclusion

6.4.1 Limitation of the Study

References

APPENDICES

CHAPTER ONE

INTRODUCTION

1.1         Background to the study

Expenditure on health is a part of human capital investment which accounts for the changes in resource-poor countries like South Korea,Taiwan and Singapore while resource-rich ones like Nigeria, Venezuela and Angola are trailing behind (Musango, Nabyong, Elovainio & Cheruiyot, 2013). As such, human capital is an essential key for a nation’s financial and political change (Efanga & Nwokomah, 2013). However, one of the challenges confronting developing economies like Nigeria regarding human capital development is insufficient investment in health and education. Public spending on social services, for example, education and medicinal services that are basic to human capital improvement is for the most part low in Nigeria (Riman & Akpan, 2012). Literature reveals that most nations developed or developing share same objective for their health systems (Roberts, Hsiao, Berman & Reich, 2004). These objectives include good health for all, financial risk protection for all, and the satisfaction of the general population, while at the same time striving to maintain an affordable health care system. Each of these three goals has two basic dimensions: level and distribution. These goals go past the typical worries of economic analyses, which tend to concentrate only on effectiveness, however stay quiet on value (Sassi, Le Gran & Archard, 2001).

However, public financing of the health sector in Nigeria was less than 10 percent from 1981 to 2014 which is grossly inadequate (Central Bank of Nigeria, 2014). Due to inadequate health funding, indices such as infant mortality, maternal mortality, number of patients per doctor, ratio of patients to hospital beds are relatively high in developing countries indicating poor health outcomes. Consequently, there have been efforts aimed at identifying the minimum level of health care expenditure required to attain a universally acceptable minimum level of health status. The World Health Organization (WHO) 2013 report on condition of health financing in the African district stipulate that the vast majority of the nations in the locale flop to achieve the Abuja declaration target (allotting 15% of the government spending plan (budget to health) without household expenditure use which is above 40% of health expenditure total. It was also revealed that developing countries need to spend an average of US$44 per capita keeping in mind the end goal to have completely effective human services framework with fundamental bundle of administrations (Musango, Nabyong, Elovainio & Cheruiyot, 2013).

In many low-middle countries, the low level of health expenditure has been a hindrance in attempts pointed towards universal coverage, whereby everyone would be opportune to use the required health care services. These services can be curative, preventive, promotional or rehabilitation. Also, the anticipated universal coverage should be such that no one undergoes excessive monetary hardship for paying for these services. The cash required for setting up a health financing system that would ensure universal coverage simply is a challenge to general health segment in low-middle income nations.

In the short to medium term, poor countries will need substantial assistance to finance their health sectors. Studies have suggested the need for richer countries to adhere to their aid responsibilities and channel more resources into the advancement of health systems in poorer countries (Thomas J Bossert, 2010). Nevertheless, such external aid has its breaking points. In spite of the fact that development assistance can fill in as an essential impetus for developing countries to finance universal coverage, domestic resources (fiscal, financial, human resources generated internally for example, savings and tax revenue) for health needs to increase to ensure more predictable and sustainable funding. A couple of nation are donor-dependent, but, on average external resources represent less than 25 percent of total health expenditure in low-income countries and the rest is from domestic sources (WHO, 2013). This implies it is basic that countries plan their long haul health financing needs on the premise of domestic resource accessibility. Additionally, this should be done in a way that lessens the monetary hindrances to medicinal services. for example the weight of out-of-pocket(OOP) health expenditure which constitute the greater part of aggregate part of total health spending in low pay nations and 40 percent in middle-pay nations (Musango, Nabyong, Elovainio & Cheruiyot, 2013). The commitment to pay specifically for services at the critical moment displays a boundary to individuals looking for medicinal services when they don’t have the monetary means within reach; this has an especially desperate effect on poor people. Moving away from undue dependence on OOPs will be urgent keeping in mind the end goal to evacuate probably the most vital obstructions for access to required healthcare services. Unarguable, in this way, new sources of financing health ought to expect to build the extent of prepaid contribution components over OOP health expenditure.

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