One year after the pronouncement of zero tariff regime on importation of medical equipment by the Federal Government, the policy is awaiting implementation as it poses barriers to investors and continues to impact negatively on Nigerians who will pay to access diagnostic care, BusinessDay investigations reveal.
Analysts say that the development is capable of derailing the determination of the federal government to make the products available and affordable to Nigerians through private-public sector collaboration as import duty rates for importing medical equipment into United Kingdom, Germany, France, Canada, United States of America, and so on, are 0 percent.
Presently, Nigerians pay between N50,000 to N200,000 for diagnostic services such as Magnetic Resonance Imaging (MRI), Computed Tomography scan (CT), Digital X-Ray, Ultrasound, Mammography, and so on, depending on the health institution (whether public- or privately-owned)
Clare Omatseye, managing director, JNC International Limited, told BusinessDay that the retention of the tariff is capable of eroding modest achievements recorded so far in the health sector.
Omatseye argued that while the government has shown active will to participate with the private health sector to improve health outcomes, the current tariff on medical equipment constitutes a barrier to investors.
Omatseye, who is also president, Healthcare Federation of Nigeria (HFN), disclosed that the government has mentioned severally over the last six months that there is now a health intervention; however it is not fully established at the Ministry of Finance.
According to Omatseye, “The ministry of finance and the minister of health have mentioned several times that there are duty exemptions for companies/foreign investors that wish to invest in healthcare in Nigeria. We have engaged some of the desk officers at both ministries and unfortunately, its one thing to say something and it is another thing to implement it. Our role is to ensure that the pronouncement of government comes to fruition. “I am in one of the ministerial committees and a survey that we did for those expressing intentions to come and invest in the healthcare sector. We received over 80 respondents and most of them expressed incentives both physical and non-physical.
“Some of them wanted tax and duty incentives for a while. The 20 to 25 percent duty on medical equipment in my mind is still in place, 5 to 10 percent on imported pharmaceuticals and 5 percent on pharmaceutical manufacturing equipment and packaging materials. It is high and a barrier to entry for investors.”
Bemoaning the state of Nigeria’s health sector, stakeholders in the health sector are calling on the Federal Government for an immediate intervention/infrastructural development fund to address possible collapse and effect of poor financial capability on the health of Nigerians.
With the intervention fund in the health sector, stakeholders say, there will be reduction in loan facilities to health providers, spaced out repayment plan and coming of more investors into the sector.
Sunny Kuku, chairman, EkoCorp Hospital and Ecobank Transnational Incorporation, Nigeria, disclosed that such fund will help improve capacity and support infrastructure. Kuku stated that interest rate by banks to access loans is between 16 to 26 percent which is high and inimical to ensure a return on investment. Kuku pointed out that with such loan facility spread over a short period of time, it is difficult to repay such a loan facility with high interest rate as investment in health is often a long-term investment globally.
He noted that though the government has been proactive in meeting the needs of sectors like agriculture and aviation with intervention funds, it has not extended same gesture to the health sector.
“If government can intervene in agriculture and aviation sectors, there must be intervention in health because health is wealth. In most developed countries, they give priority to health because an individual can work to generate wealth.
“The dearth of facilities had been a major problem in the sector. Some of the equipment cost between $1 million to $5 million for acquisition, excluding installation and maintenance. Knowing that our country is a developing country, how much will the patient pay?
“Bear in mind that the health insurance scheme is not mandatory; a situation whereby only about 4 to 6 percent of Nigerians in both public and private sector are covered by the scheme. Services in Nigeria are fee-for-service, even in the public hospitals. This is why government must come with intervention fund to make these facilities available and at affordable service charge,” he said.
A recent analysis by the International Finance Corporation (IFC) in its report titled ‘Health in Africa Initiative; Private Health Market Studies in Nigeria’ found a total financing need for the 151 sample Primary Healthcare (PHC) facilities to be $97.5 million. Based on this, the estimated bankable need at the national level is about $3 billion. It appears that pharmacies, pharmaceutical manufacturers, health maintenance organisations (HMOs), and medical equipment suppliers are better positioned to access finance from various sources with relatively minimal development finance institutions.
The report however advised that priority should be on priorities support to the other sub-sectors to access financing, i.e. hospitals, clinics, laboratories and nursing homes. For these categories of PHIs only, the bankable financing need is estimated at $1.5 billion, the report concluded.
Alexander Chiejina
