By Elijah Olusegun and Abiodun Folarin
WorldStage Nigeria’s Macroeconomic Outlook 2026– Demand and Trade Dynamics: Nigeria has earmarked N2.5 trillion, 4.2 percent of the N58.18 trillion for 2026 budget to consolidate series of health reforms that began at the inception of the current administration. How much that can catalyse activities in the sector is not in doubt.
But trade dynamics in the health care market will emerge from a number of sources this year. One is the increasing demand for specialized healthcare services, such as oncology, cardiology, and fertility treatments. Others include growing adoption of digital health solutions, including telemedicine and electronic health records, and government initiatives to improve healthcare infrastructure. Also spurring the growth are increased health budget allocations, enhanced local pharmaceutical manufacturing, and rising focus on preventive care and health insurance coverage.
The market will rely on population, increasing awareness of healthcare, and rising demand for quality services. The growing focus on AI and machine learning will also drive the digital health care market. Analysts foresee the market size hitting the $1.5 billion mark in 2026.
Investment and Funding
The major inflow into the health sector in 2026 is the budget allocation, though it falls short of the 15 percent Abuja Declaration. This allocation targets improving healthcare services, disease prevention, and medical supplies, with a focus on vulnerable populations.
Some key areas of investment include ₦42.18 billion to provide basic healthcare services for 10 million vulnerable Nigerians; and ₦25 billion investment in eye care, part of a 10-year initiative to reduce avoidable blindness and visual impairment.
There is also increased budgetary allocations in nine states, including Ogun, Nasarawa, and Oyo which will advance the Abuja Declaration goals.
Nigeria has huge gaps in its health care service investment. About 70 percent of its health spending is out-of-pocket. These gaps won’t disappear in 2026 with the current allocation.
The widest of them is insurance. Analysts say it will remain at its current 3-percent penetration in 2026. So the reforms will have to go far afield to close the gap for the over 90 percent uninsured over the short term.
Government Reforms
The government has introduced a number of reforms in the sector. Among them are the increased uniform allowance for nurses from ₦20,000 to ₦80,000 per annum from January 2026; agreement to prioritize outstanding issues on the Consolidated Health Salary Structure (CONHESS) and the withdrawal of the “No Work, No Pay” directive against health workers.
The government is also promoting local pharmaceutical production under the Local Production and Health Care Value Chain.
The initiative comprises the Presidential Initiative for Unlocking Health Care Value Chain (PVAC), and an Executive Order 2024 waiving tariffs, excise duties, and VAT on raw materials and equipment which pharmaceutical manufacturers import. The value chain also includes creation of manufacturing hubs, pharmaceutical training institutes, and localization of manufacturing plants. They aim to achieve 70 percent local drug production by 2030.
It has also reaffirmed its commitment to accelerating Universal Health Coverage (UHC) and strengthening Nigeria’s health system.
Of the reforms aiming to address health care delivery challenges, the Primary Health Care Revitalization Initiative enjoys pride of place.
Among other things, it’s targeting expansion to 17600 functional PHCs by 2027 from 8000 PHCs. It’s also boosting funding through the Basic Health Care Provision Fund (BHCPF) for grassroots service. And the initiative is also facilitating direct funding of health facilities.
Following that is the Nigerian Health Sector Renewal Investment Initiative. Its Sector-Wide Approach (SWAP) will be aligning the federal, states, and development partners resources. It will also mobilize funding ($2.2 billion so far).
The whole idea is to achieve universal health coverage (UCH) through better governance, taking up the slack in financing, improved workforce, and others.
To reinforce the efforts going into the basic health care reform, the government has also floated the Health Insurance and Vulnerable Care Initiative. It targets insurance expansion, and the creation of the Vulnerable Group Fund (VGF).The VGF insures vulnerable citizens, and provides free maternal care, and kidney and cancer subsidies.
The Human Resources and Workforce Development Programme is another key reform. It seeks to train 120,000 workers, create 126,000 jobs, and retain talent and professionals through the National Health Workforce Policy. It will also provide hazard allowances and payment through the Medical Residency Training Funds.
The Digital Health and Infrastructure reform on its own will focus on integration through the Nigeria Digital Health Initiative and the Electronic Medical Record. It will also seek infrastructure upgrades, especially of PHC and cancer diagnostics. The latter boasts of five private centres and three government centres, mainly teaching hospitals.
Challenges
Years of poor investments in the health sector have been taking their toll.
There is a shortage of healthcare professionals- the sector boasts of approximately 3.8 doctors per 10,000 population, according to 2023 data, as against the global average of around 17.1 doctors per 10,000 population. There is also heavy reliance on imported pharmaceutical products, exposing the country to supply chain shocks. Healthcare infrastructure, including modern medical facilities and equipment is in decline too. All these and their effects will take some time to disappear.
Among the hurdles standing in the way of the consolidation include: Budget Deficit- The difference between the pledged 15 percent health funding and the 4.2 percent of the 2026 budget is nothing new. It’s always been like that. To make things worse, the fund release rates are low. In the interim, Nigerians may have to continue relying on out-of-pocket spending (70 percent) and donor funding to meet their health care service needs.
Infrastructure Decay- Only 20 percent of medical imaging equipment in Nigeria is functional owing to age. That is, in urban areas that have secondary and tertiary health care services.
The problem, however, extends to rural areas, and further piles up pressure on the secondary health care level. As it is now, the lack of PHC infrastructure has forced rural dwellers to depend on urban secondary health care facilities for basic health services.
To cap it all, public health facilities also lack enough access to basic utilities like power, water, and HVAC. This makes the health facilities operate at sub-optimal levels.
Human Resource Challenges- More than 43,000 health professionals, 200 percent surge, migrated from Nigeria between 2023 and 2024, according to Nigeria Health Statistics. Sixty percent of them were nurses, and about 10 percent medical doctors. They mostly headed to the UK, Canada, the US, Saudi Arabia, and Australia.
With policies now in place to retain talents, the vacuum that the migrated professionals left remains largely unfilled.
This is obvious in many states where the staff-to-patient ratio stands at 1:5000 as against 1:600 recommended by the World Health Organisation.
Quality of Health and Health Indices- These are apparent in high mortality rates (11.6 per 1000, according to the UN), and high incidence of communicable and non-communicable diseases in Nigeria.
The world body also put Nigeria’s life expectancy rate at 54.6 years to 56.4 years in 2025. A combination of poor infrastructure and depleted talent pool may keep instances of medical errors and unprofessional conduct on the rise. All these will draw back the consolidation progress in 2026.
Social-political Challenges- Insecurity in the North-East and the North-West comes with health implications for individual victims and the masses of internally displaced.
After malaria which affects 85 percent of kids in IDP camps, malnutrition follows at 52 percent while post-traumatic stress disorder (PTSD) affects about 54 percent.
The health care burden from these populations remains as long as it takes the insecurity to end.
Poor implementation of data gathering policies also poses a problem. The federal government data-gathering is not serving much state interest, especially where disaggregation based on demographics and their intersections matters. Most states have no specific health database for planning health policies.
This will limit the on-going consolidation.
Key Takeaway
Far below expectation, even with donor supports and grants, the 2026 health vote takes on consolidation tasks to provide basic health care service for most Nigerians. So much for so little.Investors may want to duly consider government policies relating to the consolidation goal. The gaps between the ambition and reality become clearer. And those who dare can seize the opportunities to fill the gaps.
*Extract from WorldStage Nigeria’s Macroeconomic Outlook 2026.
