Business
CBN intervention strengthens healthcare sector
BY EMEKA EJERE
Intervention of the Central Bank of Nigeria (CBN) in the nation’s healthcare system is developing the capacity of the sector to, among other things, meet potential increase in demand for healthcare products and services, impact assessment reports have shown.
In other words, the scheme is meeting the expectation of increasing private and public investment in the healthcare sector, facilitating improvement in healthcare delivery and reducing medical tourism to enhance foreign exchange conservation.
The CBN in response to Covid-19 pandemic, had in April 2020 taken measures to extend credit facilities of up to N100 billion to support intervention efforts geared towards the healthcare sector. It later, in October, increased the facility to N200 billion from the initial N100 billion due to demand.
The aim of the intervention is to stimulate economic activities locally within the healthcare sector, while making products and services readily available to service Nigerians, thereby building, diversifying and expanding the capacity of the Nigerian healthcare sector.
The CBN Credit support for the Healthcare sector is an on-lending intervention scheme for the Healthcare sector developed as part of the proactive measures to cushion the economic impact of the Covid-19 pandemic.
Assessment of the impact of the fund shows that the health sector has seen players access the fund to alleviate the harsh effects of the pandemic and in fact, set them on a real path of recovery.
Findings show that most local pharmaceutical industries with the aid of the fund have boosted their production capacities to manufacture facemasks, personal protective equipment (PPP), hand sanitisers, gloves, antiviral drugs, ventilators, medical supplies and vaccines.
Following the disbursement of the fund, the chemical and pharmaceutical products sub-sector of manufacturing, for instance, grew almost triple fold from 3.91 percent in the first quarter of 2021 to 9.24 percent in the second quarter of the same year, a gross domestic product (GDP) report released by the Nigeria Bureau of Statistics (NBS) showed.
According to the report, the human health and social services sector almost doubled from 1.89 percent in the second quarter of 2021 to 4.92 percent in the second quarter of 2022.
The suspended CBN governor, Godwin Emefiele, while hinting of plans to increase the healthcare intervention fund to N200 billion due to increased demand in October, 2021 said:
“When we started Covid-19, CBN set aside N100 billion to support the healthcare sector, but upon rise in demand, we have disbursed N107.7 billion, supporting 114 healthcare projects which include medical diagnostics, pharmaceuticals, dental services, eye clinics both private and public hospital just to mention a few.”
Emefiele, who spoke during official commissioning of the Dutchess International Hospital, the brainchild of the Reddington Hospital Group in Ikeja, Lagos, also said, “We had taken up N100 billion to support the sector but the Monetary Policy Committee has said we should move it further up to N200 billion. We would continue to do whatever can be done to support healthcare.
“I want to encourage our banks to lend to them and also members of our private sector community to invest, as you don’t have to be a doctor to own a medical facility,” The CBN has been collaborating with the banks to ensure that the funds are disbursed to the beneficiaries.
The apex bank in March 2020 issued operational guidelines for credit support to the healthcare sector for indigenous pharmaceutical companies and healthcare practitioners intending to build or expand their capacity.
In terms of working capital, the facility requires 20 percent of the average of three years of the company’s turnover subject to a maximum of N500 million per obligor. Where the enterprise is not up to three years in operation, 20 percent of the previous year’s turnover will suffice. The term loan is put at a maximum of N2 billion per obligor. The scheme is being funded from the Real Sector Support Facility – Differentiated Cash Reserves Requirement (RSSF-DCRR).
Research facility
Also, as part of its policy response to the Covid-19 pandemic, the CBN introduced the Healthcare Sector Research and Development Intervention Scheme (HSRDIS) to help strengthen the public healthcare system. The Scheme is aimed at achieving innovative financing of research and development (R&D) in new and improved drugs, vaccines and diagnostics of infectious diseases in Nigeria.
As contained in a circular released on the apex bank’s website and signed by Yusuf Yila, Director, Development Finance Department (DFD), the HSRDIS is designed to trigger intense national R&D activities in order to develop a Nigerian vaccine, drugs and herbal medicines against the Covid-19 and any other communicable or non-communicable diseases.
The grants are expected to be disbursed to biotechnological and pharmaceutical companies, research institutions for research and development of drugs, herbal medicines and vaccines for the control, prevention and treatment of infectious diseases.
It is also intended that the HSRDIS will boost domestic manufacturing of critical drugs and vaccines to ensure their sustainable domestic supply and reduce manufacturing costs of the drugs, herbal medicines and vaccines in Nigeria.
The scheme which is funded from the Developmental Component of the Micro, Small and Medium Enterprise Development Fund (MSMEDF) provides a grant limit for research activities to a maximum of N50 million while development/manufacturing activities will receive up to N500 million. Disbursements will be made to beneficiaries in tranches subject to approved milestones achieved, the CBN said in its update.
The objectives of the scheme will among other things include; providing grants for R&D in new or revalidation of drug molecule, phytomedicines and vaccines for the control, prevention and treatment of infectious diseases in Nigeria; boosting domestic manufacturing of validated drugs (Active Pharmaceutical Ingredients or APIs), herbal medicines and vaccines for the control, prevention and treatment of infectious diseases in Nigeria, thus reducing the nation’s dependence on other countries for these drugs and vaccines amongst others. Also contained in the guidelines are information on eligible research and development activities, research and development timeframe and modalities.
According to the CBN, medical tourism put a huge strain on the country’s foreign reserves and more importantly, for every $1 billion allocated to medical treatment abroad, there is less than $1 billion that could be available to other critical sectors of the economy.
Impact acknowledgement
Stakeholders in the health sector are in agreement that the intervention facility is making considerable impact in very critical sector.
Chairman, Pharmaceutical Manufacturers Group of Manufacturers Association of Nigeria (PMG-MAN), Dr. Fidelis Ayebae, said: “Every company that met the loan requirement got it. We are happy with the CBN for the initiative and the way it was implemented.
“Members that are yet to access it are working with the commercial banks with whom they have a relationship to close up documentation gaps before moving on to CBN. Overall it is success in intervention. Some of the impact can already be seen in the financial performance of the early recipients of the loans.”
Similarly, President, Nigerian Association of Resident Doctors (NARD), Dr. Uyilawa Okhuaihesuyi, said: “Federal Government through the CBN had offered pharmaceutical companies and medical practitioners low interest rate loans up to N100 billion from March 2020 as intervention to improve local manufacturing and increase their capacities to combat the ravaging Covid-19 pandemic and other related health challenges. It is commendable.”
Also, a consultant pharmacist and medical director, Merit Healthcare, Dr. Lolu Ojo, said: “I know some big companies that got the money. Many companies have offers but funds were released late. Although there were challenges, the intervention fund has made huge impact.”
