By Iyadunni Olubode

Nigeria’s health care sector is not just a public service; it is fast becoming a lucrative business opportunity waiting to be harnessed. With over 229 million people and its growing middle class, the private health care sector in Nigeria presents a substantial opportunity for investment and growth. Taking advantage of new financing models, innovations in health care information and communication technology, and strategic public-private partnerships, Nigeria has within its grasp the key to unlocking its private health care sector into a long-term growth driver. A 2024 McKinsey Report¹ shows that investments addressing the women’s health gap could potentially boost the global economy by $1 trillion annually by 2040. Hence, a need for investors to position themselves strategically.

Despite the challenges prevalent in the public sector, such as underfunding, the private health care market in Nigeria has recorded impressive development. As of 2021, the private health care market was projected to be approximately 4.28 trillion Naira, compared to the federal government’s spending on health, which was approximately 1.48 trillion Naira. Nigeria’s private health care sector has been mainly financed by out-of-pocket payments made by patients to health care providers, which make up to 70 percent of health expenditure, even though it has other means of financing through tax revenues, donor funding, and health insurance. These other means have not been able to ease the burden placed on Nigerians to fund their health care. For instance, the health insurance in Nigeria, the National Insurance Health Scheme (NIHS), has not been able to cover the entire country since its implementation in 2005. The NHIS has only been able to reach 5 percent of the Nigerian population, which makes it hard for the government to achieve the target of the United Nations’ Sustainable Development Goal of universal health coverage (UHC), where “all people have access to the full range of quality health services they need, when and where they need them, without financial hardship. It covers the full continuum of essential health services, from health promotion to prevention, treatment, rehabilitation and palliative care across the life course.”

To ease the financial hardship incurred through health care by patients, there is a need to shift the perspective on health: it should be viewed as a more valuable investment opportunity. Instead of focusing on gaps or emergencies, stakeholders must consider how different financing models can enhance service delivery, increase access to quality care, and generate positive economic returns. With proper health financing, patients may be protected from the financial consequences of paying for health services out of their own pockets, which usually pushes them to the brink of poverty after they sell their valuable assets to offset medical bills. This phenomenon is often referred to as catastrophic health spending, which is an expenditure incurred when a household spends 10% or more of its total expenditure on health care.

MSD, through its global maternal health initiative, MSD for Mothers, has taken on the challenge of exploring the prospects of health financing in Nigeria. Launched in 2021 as a groundbreaking multisector partnership, MSD for Mothers committed $25 million globally through its Strengthening Systems for Safer Childbirth  effort to enable locally led maternal health partnerships in countries like Nigeria, Kenya, and India. In Nigeria, the Financing and Operational Revitalization for Maternal Care [FOR M(om)] program—a part of the greater systems-strengthening agenda—has been in operation in Delta, Kano, and Lagos states since 2022 to improve the quality of maternal care, reduce maternal mortality, and strengthen systemic capabilities for safer childbirth.

In collaboration with MSD for Mothers, a consortium including Helium Health, SCIDaR (Solina Centre for International Development and Research), and AFRIDA have rolled out this program to cover 150 health facilities through the FOR M(om) program. Its four-pronged strategy consists of: financing operations through facility financing under HeliumCredit loan facility; introduction of electronic health records system using HeliumOS; capacity building of clinical and administrative staff; and recourse to community linkages to boost demand for maternal care. With a blend of systems-level investing, financial investment, digital innovation, workforce, and community into a single model for safer childbirth, these investments demonstrate how philanthropy can spur scalable, socially focused models of health financing that improve infrastructure and offer strong prospects for private sector investment. FOR M(om) has currently distributed approximately $731,000 USD to 19 maternal health care centers, reached over 124,000 women and trained over 2,500 healthcare workers.

Furthermore, with the emergence of digital health innovations, Nigeria’s health care sector is transforming its investment environment. Beyond enhancing the patient experience, innovations such as telemedicine, electronic health records (EHRs), and mobile health applications also create new sources of revenue for investors. Examples include the digitization of more than 500 hospitals’ patient records by Helium Health, which provides investors with real-time performance reports and transparency. mDoc is a digital health social enterprise leveraging technology to enhance the self-care experience for over 150,000 members through its AI-enabled CompleteHealth™ platform. By providing personalized self-care support, mDoc empowers members to monitor their health, make informed decisions, and reduce the risk of future complications or health challenges, ultimately improving overall health outcomes. LifeBank is also leveraging cutting-edge technology, including AI-powered demand prediction and distribution and blockchain-enabled traceability, to strengthen last-mile delivery of essential supplies, including blood and critical maternal health commodities, which has greatly helped to reduce postpartum hemorrhage across communities in Africa. The efficiency gains from optimizing blood supply are significant and can minimize costs when scaled across the health system.

Consequently, with these new digital health solutions, banks are more willing to provide good lending terms when information is transparent, lowering perceived risk for health-related investments. New financial products—such as micro-health loans and risk-sharing agreements—are being developed to fund the scaling up of health solutions. One example is the Wema-SCIDaR Health Financing Facility, which was created to support community pharmacists and patent proprietary medicine vendors (PPMVs) to give them easy access to finances and eliminate financial barriers that hinder their service delivery. Additionally, capacity-building measures—such as training for health care entrepreneurs on financial management—can further reduce risks and enhance the bankability of health care projects.

Nevertheless, in spite of these gains, the Nigerian health care system’s soft underbelly continues to be the widespread lack of health insurance, which continues to curtail both investment and access. Without insurance, providers are highly dependent on out-of-pocket spending, and their revenues thus become volatile and uncertain. To investors, this volatility translates to greater financial risk since there is no assured, measurable income stream to support repayment or return. The issue isn’t that investors simply won’t fund schemes because patients are not covered; it is that a lack of prepaid, pooled capital makes it more difficult to construct sustainable business models for health care. Although the National Health Insurance Scheme (NHIS) is targeting vulnerable members of the population through the Basic Healthcare Provision Fund, there is not sufficient to cover all members of the population, particularly those within the informal economy.  More innovation in health insurance investments should be encouraged to fill this gap.

At the policy level, there are positive signs of reforms that contribute to the business case for health in Nigeria. The Minister of Health and Social Welfare, Prof. Mohammed Ali Pate, recently made announcements regarding steps to fill gaps in health care funding policies. Pate highlighted that bridging these gaps—through the adoption of global best practices and use of digital platforms—will increase funding efficiency and drive investment, including models that leverage U.S. funding models. It is through such policy actions that an investor-friendly, stable environment can be established.

Ultimately, the aim is to develop an environment that can sustain itself while health financing propels inclusive economic growth and quality service delivery. This happens through stakeholder engagement by multiple parties involved, including government institutions, private investors, digital innovators and philanthropic organizations. The stakeholders pool their interests to make a strong system that minimizes risk and gives optimum returns.

Therefore, Nigeria’s health care business is not just an emergency response issue; it is an issue of strategic new health care financing models that fuel sustainable economic growth. By leveraging innovative financing arrangements, digital health technology and public-private partnerships, especially in having a comprehensive health insurance coverage for the population, Nigeria can reposition its health sector as a powerful engine of prosperity. As international trends persist towards more consolidated, data-driven, and innovative health financing systems, Nigeria can be at the forefront of health investment in Africa. This transition not only promises better health outcomes for its citizens but also offers attractive investment opportunities for investors wishing to reap long-term, sustainable gains. With the right mix of technology, policy, and partnership, the Nigerian private health sector can propel national prosperity—offering quality, affordable health care for every Nigerian while generating economic growth.

Iyadunni Olubode is the Nigeria Director for MSD for Mothers, MSD’s global initiative to help create a world where no woman has to die while giving life. Applying MSD’s business and scientific resources, MSD for Mothers works with grantees and collaborators to improve the health and well-being of women during pregnancy, childbirth and the months after. MSD for Mothers is an initiative of Merck & Co., Inc., Rahway, NJ, U.S.A. For more information, visit www.MSDforMothers.com.