ANALYSIS OF THE FACTORS AFFECTING THE SIZE OF PUBLIC HEALTHCARE EXPENDITURE IN NIGERIA

Abstract

Despite the Abuja Declaration of 2001, where the African Union heads of state pledged to allocate at least 15% of annual budgeted expenditure to the health sector, none of these countries including Nigeria has been able to honor that pledge. This study examines the factors influencing public healthcare expenditure in Nigeria from 1985 to 2022. Nigeria, despite having one of the largest populations in Africa and significant healthcare needs, has seen public healthcare expenditure that is insufficient to meet growing demands. This is particularly concerning given Nigeria's low life expectancy, high maternal and child mortality rates, and poor ranking on the Human Development Index. Drawing on Wagner's theory of public expenditure, this research explores the impact of income growth, healthcare prices, public infrastructure development, and population healthiness (measured by life expectancy) on public healthcare expenditure. Using time series data sourced from various publications, the study employs Augmented Dickey-Fuller and Phillips-Perron tests to ensure stationarity, followed by Johansen’s co-integration test. An ordinary least squares (OLS)
regression model is applied to estimate the effects of these variables on public healthcare
expenditure. The findings show that public healthcare expenditure had a positive relationship to each of the explanatory variables, except life expectancy at birth, which showed a negative sign. The hypotheses tested also suggest that only price of healthcare impact on public healthcare expenditure is significant at 5% level. The study advocated for policies that would improve economic activities, reduce price of healthcare, improve infrastructural development, and increase life expectancy as measures that would ensure optimal size of public healthcare expenditure in Nigeria.