The Scale and Composition of Nigeria’s Primary Healthcare Funding Gap

Nigeria’s primary healthcare funding gap has multiple dimensions that policy must address simultaneously. The aggregate funding shortfall — the difference between what is currently allocated to primary health care and what the World Health Organization and Nigeria’s own National Health Policy specify as the minimum adequate investment — is estimated at several hundred billion naira annually across federal and state government budgets.

But the aggregate shortfall understates the problem because existing primary health care funding is severely misallocated. A disproportionate share of government health spending flows to tertiary hospitals that serve a small and predominantly wealthy fraction of the population, while the community health services that reach the majority of Nigerians — and that evidence consistently shows provide the greatest population health returns per naira invested — receive the smallest allocations. Correcting this intra-sector misallocation, alongside increasing aggregate health funding, is therefore essential for primary health care financing reform.

The Basic Health Care Provision Fund as a Policy Instrument for PHC Financing Reform

The Basic Health Care Provision Fund, established by Section 11 of the National Health Act 2014, represents the most important legislative instrument available for transforming primary health care financing in Nigeria. The Act mandates that one percent of the Consolidated Revenue Fund — supplemented by contributions from the National Health Insurance Fund and donor resources — be allocated annually to the BHCPF and distributed to primary health care facilities through a formula that prioritises need and rewards performance.

When fully capitalised and properly governed, the BHCPF has the potential to provide every Nigerian primary health centre with a reliable, performance-linked funding stream that enables consistent service delivery. The challenge is that BHCPF capitalisation has been significantly below the statutory mandate in most years since the Act’s passage, and the distribution mechanism — operating through the National Primary Health Care Development Agency and state primary health care boards — has not yet achieved the efficiency and accountability that effective funding disbursement requires.

State Government Responsibilities for Primary Healthcare Funding in Nigeria

The Nigerian federal system places primary health care financing responsibility primarily at the state and local government levels — a constitutional allocation that creates enormous state-to-state variation in primary health care funding adequacy and therefore in health outcomes. States that prioritise health in their budget allocations, maintain their counterpart funding obligations for federal health programmes, and invest in primary health care infrastructure and workforce consistently achieve better health outcomes than those that do not.

Policy levers available to state governments for improving primary health care financing include: increasing the proportion of the state budget allocated to health; ensuring the regular disbursement of Local Government Area health contributions that constitute the primary funding source for many primary health centres; developing and enforcing state primary health care minimum standards that create legally enforceable funding floors; and establishing state health trust funds that provide insulation from the political budget pressures that cause health funding fluctuations.

Domestic Revenue Mobilisation for Primary Healthcare Funding in Nigeria

Sustainable primary healthcare funding in Nigeria requires a domestic revenue mobilisation strategy that reduces dependence on oil revenue and donor funding — both of which are volatile, conditional, and insufficient to sustain the consistent health investment that long-term population health improvement requires. Health taxes — levies on tobacco products, alcohol, and sugar-sweetened beverages that simultaneously generate health-dedicated revenue and reduce consumption of health-damaging products — are among the most important and most underutilised domestic revenue instruments available for health financing in Nigeria.

The introduction of effective sin taxes in Nigeria — at rates comparable to WHO recommendations and with revenue hypothecated to the Basic Health Care Provision Fund — could generate substantial annual revenue for primary health care while simultaneously reducing the tobacco, alcohol, and obesity-related disease burden that consumes a significant share of health system resources. The political economy of sin tax reform is challenging but manageable — the evidence on health benefits and revenue generation is strong, and the population health advocates, treasury officials, and development partners who support it are increasingly aligned.

Performance-Based Financing as a Primary Healthcare Reform Strategy in Nigeria

Performance-based financing — the allocation of health facility and community health worker funding based on the volume and quality of specific health services delivered, verified through independent validation — has demonstrated in Nigerian and African pilot programmes that it can improve service delivery and accountability alongside aggregate funding levels.

The World Bank-supported Performance-Based Financing programmes implemented in several Nigerian states — including Adamawa, Nasarawa, and Cross River — have produced documented improvements in maternal and child health service coverage relative to comparison groups. Scaling performance-based financing alongside BHCPF disbursement reform would create a primary health care financing system that combines adequate aggregate resources with efficiency-oriented allocation mechanisms — producing better health outcomes than either element alone could achieve.