1.1 Introduction
The health care is relevant to individuals, national productivity and growth cannot be over–emphasized. This is evidenced by the numerous enquiries into the relationship between health and human welfare in the literature. Evidence of the importance of health in growing the economy of a country have shown that good health raises the level of human capital, promotes the productivity capability of individuals in the country and facilitates the rate of economic growth (Cooray, 2013; Nkpoyen, Bassey, & Uyang, 2014). It enhances labour productivity by limiting incapacitation and un-healthiness among workers as well as reduces absenteeism associated with sick leave.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Limitation of the study and Definition of technical terms.
1.2 Background of Study
The effect of health on worker‘s productivity suggests a relationship between health and aggregate output. Healthy workers lose less time from work due to ill health and are more productive when working. Health gains had the economic consequences of widespread economic growth and an escape of ill-health traps in poverty (World Health Organization, 1999). There has been a growing interest to extend the relationship between health and economic growth, catalyzed in considerable extent by a 1993 World Bank Report on Health (World Bank 1993).
Barro (1996) comments that health is a capital productive asset and an engine of economic growth, and fifty percent of economic growth differentials between developed and developing nations is attributable to ill-health and low life expectancy.
Health is one of the most important factors that determine the quality of human capital, a necessary factor for economic growth. In line with the above, a consensus of opinion have been formed among researchers recognizing health as a public good, the demand and supply of which cannot be left at the mercy of invisible hands or profit maximizing individual as well as on considerations of utility maximizing conduct alone . Hence, the need for the government to play a major role in delivering good and qualitative healthcare services that is accessible and affordable for the teeming population. The recognition of the importance of the above led the World Health Organisation (WHO) to propose at the 2010 World Health Assembly, issues that will address financing of health, which will ensure qualitative and affordable healthcare services (Ataguba and Akazili, 2010).
The pattern of health financing is therefore closely and indivisibly linked to the quality of health outcomes (health status), capable of achieving the long term goal of enhancing a nation’s economic development (Riman, 2012). Alluding to the above fact and as an evidence of its commitment towards the restructuring of the health sector in its fiscal operation, the Nigeria government has taken up the responsibility of providing good healthcare facilities for its citizens by improving on the amount of its expenditure on health. Available data indicated that on the average about 2.1% to 5.8% of total government expenditure were expended on health within 2000 and 2007 (Mordi, 2010). The belief is that this would improve the health of the citizenry that can translate into healthy human capital base with its multiplier effects on economic growth and development.
Despite this improvement in health spending, the country still lagged behind compared to other countries in the continent. Statistics have shown that the country’s public expenditure on health as a percentage of GDP is 4.1 percent against 4.6 percent African average and over 6.3 percent in developed countries. With these efforts, Nigeria overall health status or sector performance outcomes have not been so encouraging. According to Yaqub (2010), the country overall health performance was ranked 187th among the 191 member states by the World Health Organisation (WHO) in 2000.
Although infant mortality rate fell from 140 in the 1970s to 87.8 and 80.4 per 1000 birth in 2008 and 2011respectively as shown in table (1), the rate is still higher than the regional average (SSA) of 70.2 and 65.8 for the years under consideration and 57.3 in 2010 throughout developing countries. Life expectancy is only 49.8 years compared with 53.5 years for Sub Saharan Africa, 65.4 years for developing countries in 2007, while in 2011, the country only managed to achieved marginal improvement with value of 51.7 (World Bank 2013). An improvement in health status of the citizenry is an important prerequisite for achieving human capital development in every economy with its multiplier effect in skillful, efficient and productive investment in human capital that will translate into economic development.
A glance at the overall Human Development Index of the country portrays a disappointing picture of its quality of human capital. The country ranked 153rd position among 187 countries on the Human Development Index ranking in 2012 with Human Development Index value of 0.47. Although the country experienced an improvement on the Human Development Index ranking compared to its rank of 155th in 2011, still the country cannot make the first ten countries with the highest Human Development Index value in Africa falling behind Kenya Cameroon and Ghana (U N D P 2013). Increase in budgetary allocation spent on the provision of social services is highly advantageous in a developing country like Nigeria, this by itself is not sufficient to guarantee enhancement in service delivery.
Although Infant Mortality Rate (IMR), the probability of dying before age one and Under-five (child) mortality (U5MR), the probability of dying between birth and age five years expressed per 1000 live births which have been a common indicator for children’s wellbeing experienced a decline from 2001 till date, the trend remain unacceptable compared to exploding trend of health sector expenditure. The above scenario tends to call for re-examination of the extant relationship between healthcare expenditure and outcomes in Nigeria. It has however been confirmed that the differences in the level of development among countries of the world is not just due to differences in natural endowment and macroeconomic policies but to some extent depends on institutional environment prevailing in an economy.
Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Impact of Health Care Financing on Economic Growth.
1.3 Statement of the Problem
In the last decade, Nigerian economy has metamorphosed from the level of million naira to billion naira and postulating to trillion naira on the expenditure side of the budget. This will not be surprising if the economy is experiencing surplus or equilibrium on the records of balance of payment. Better still, if there are infrastructures to improve health within the system or life expectancy so that there will be enough work force. All these are not there, yet we always have a very high estimated expenditure on health. This indicates that something is definitely wrong either with the way government expands budget or with the ways and manners it has always been allocated to each sector of the economy.
Unfortunately, the rising government expenditure on health has not translated to very good rate of life expectancy, as Nigeria ranks among the nation with poor life expectancy rate and high death rate as compared to the fiscal cash been pumped into the health sector. Across the country, there are several cases of poor state of hospitals, some general hospital are well below standard or lack the needed facilities at one point in time to carry out her duty, it dilapidated infrastructure has led to the short life expectancy among Nigerians (WHO, 2005). It is on this note that the main thrust of this study is to evaluate the Impact of Health Care Financing on Economic Growth in Nigeria.
1.4 Aim and Objectives of the Study
The main aim of the study is to examine the Impact of Health Care Financing on Economic Growth in Nigeria. In achieving this aim, the following specific objectives were laid out as follows:
- To empirically investigate federal government health funding and its impact on economic growth in Nigeria.
- To evaluate the long-run relationship between federal government health funding and economic growth in Nigeria.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- Is there any long-run relationship between federal government health funding and economic growth in Nigeria?
- To what extent does federal government health funding impact on the economic growth in Nigeria?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: Federal government health funding does not have significant impact on economic growth in Nigeria.
- H1: Federal government health funding has significant impact on economic growth in Nigeria.
Hypothesis Two
- H0: Federal government health funding does not have significant long-run relationship with economic growth in Nigeria.
- H1: Federal government health funding has significant long-run relationship with economic growth in Nigeria.
1.7 Significance of Study
This study is relevant in the following ways;
- Scholars: Scholars will benefit from this study as it would provide a fore knowledge of happenings in the health sector in Nigeria and also serve as a basis for further research.
- Government: Lastly, it would serve as a wakeup call to government so that efficiency and effectiveness will be ensured in the disbursement of funds to the health sector.
This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.
1.8 Scope of Study
The economy is a large component with lots of diverse and sometimes complex parts. This study will only focus on the major growth components such as gross domestic product etc. Also the study will cover the entire facet that make up the health sector, but shall empirically investigate the impact of major ones.
1.9 Limitations of the Study
During the course of this study, there were some problems encountered which stood as limitations to the research work. Some of the limitations include:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
- Initial Cooperation Delay from Respondents: A particular limitation of this work came as a result of the respondent refusal to offer their cooperation at the initial time they were contacted. This contributed in making the success of this research study difficult.
