How COVID affected financing for essential health services in Kaduna state

Nigeria, like most countries, has grappled with the realities of COVID-19, since the index case was confirmed in Lagos State in late February 2020. The virus further spread to all of Nigeria’s 36 states with Kaduna state (located in the northwest region of Nigeria) recording its index case on March 28, 2020, after which the state implemented a total lockdown for 75 days, among other interventions backed by its Amended 2020 Quarantine Law.

Although Kaduna state is regarded as a progressive and reform-minded state, which has partnered with Results for Development (R4D) over the last three years (to design and implement demand-side financing reforms for achieving universal health coverage (UHC) in the state), there was no evidence on how the COVID pandemic had impacted its ability to continue with the ongoing reforms. To understand the effect of the pandemic on different health financing mechanisms in Kaduna state, R4D team collaborated with its local partner, Sydani Initiative to assess the impact of COVID on the health financing landscape and the resiliency of the health sector.

What we did and how

Using a mixed methods approach, we examined the effects of the pandemic on key health financing functions, particularly the state’s ability to mobilize revenue to fund the delivery of essential health services. We also explored how the pandemic may have impacted the demand-side financing reform, which was at its early stage of implementation. (R4D co-designed the Kaduna State Contributory Health Scheme with key stakeholders in the state.)

We conducted a fiscal space analysis, analyzed the 2020 state’s budget and reviewed expenditure patterns to understand the state’s approach to domestic resource mobilization and if resources for the delivery of essential services may have been impacted. This was to help us get a broad picture of the resilience and responsiveness of the health sector. Quantitative data were extracted from official government sources such as the annual state budget allocations and implementation reports from 2017-2020, service utilization data from the Kaduna State Primary Health Care Board (KSPHCB), as well as data from Kaduna State Government COVID-19 Fund, among others. We also interviewed key stakeholders from government, formal and informal private sector, service providers and civil society, and utilized the NVivo version 12 for analysis and coding of the qualitative data we had collected using a grounded framework approach.

How did Kaduna state mobilize resources for its COVID-19 response?

The Kaduna State Government, through the contributions of corporate and individual donors, domestically mobilized about NGN1.4 billion for its COVID-19 response, with the private sector led Coalition Against COVID-19 (CACOVID) playing a critical role by contributing about NGN608m (43%). We found out that government officials and civil servants contributed about 20-50% of their basic salary toward the response; altogether, the salary deductions from public servants amounted to NGN374m (26%) from civil servants and NGN52m (3.7%) from political appointees, respectively.

The state also received non-cash donations such as personal protective equipment (PPE), other infection prevention and control (IPC materials, food stuff and medical equipment for the isolation and treatment centres, as well as the humanitarian response

Further analysis showed that Kaduna state has made significant progress in allocating at least 15% of its total government budget to health over the last 3 years (2018-2020) — in line with the Abuja Declaration, although the releases were suboptimal. Despite the limited resources, we argue that matching the allocation with releases will go a long way toward adequately resourcing the health sector to become more resilient and responsive to public health emergencies and routine services.

Budget allocations to the health sector were impacted by COVID-19

Overall, we found out that, due to reduced revenue earnings, the state had to reduce its 2020 budget by 13.7%. Our analysis showed that although health is a priority of the state, there was a 7.1% reduction in its original budgetary allocation across all budget lines, except for Kaduna State Agency for the Control of AIDS (KADSACA) and Bureau of Substance Abuse Prevention’s (KADBUSA), whose allocations remained unchanged. While Kaduna State Ministry of Health (KSMoH) had 1.6% increase to cover increase in personnel cost resulting from the recent recruitment of health workers, there was a 14.6% reduction in its capital allocation. 

Funding essential health services was challenging due to COVID-19

On the supply-side, the Kaduna State Primary Health Care Board (KSPHCB) which coordinates the delivery of primary health care services experienced an 11.5% cut in its budget allocation; a situation that has implication for the effective delivery of essential services such as treatment of prevalent diseases, maternal and child health services, including vaccinations. Our analysis of utilization trends for essential services showed a marked reduction in service utilization in Q2 of 2020 due to COVID-19 lockdown restrictions and other factors. The services hugely impacted were deliveries by skilled birth attendants, antibiotic management of new cases of pneumonia among children under 5, treatment of diarrhea cases using zinc and ORS, and management of persons clinically diagnosed with malaria using artemisinin-​based combination therapies.

A look at the demand-side showed that Kaduna State Contributory Health Management Agency (KADCHMA)’s capital budget allocation which is largely for enrollment and prepaid provision of essential services to the poor and vulnerable populations in the state suffered a 24% reduction. This places a limit on the ability of the agency to fulfill its obligations, thus slowing the pace of the achievement of UHC in the state as the budget cuts will likely expose more people to catastrophic out-of-pocket health payments.

Despite suboptimal releases to the health sector, the Kaduna State Government has maintained budget releases for the SPHCB services at about one-third (31%) of total health budget releases over the last three years relative to other agencies; thus, showing some political commitment and prioritization of PHC services. Using a base case scenario that assumes 31% budget release to the SPHCB, our analysis however shows that the state government needs to release about ₦2.3bn, ₦3.3bn, ₦2.2bn in 2020, 2021 and 2022 respectively to sustain the delivery of essential health services at PHC level.

We could not access data on how cash and non-cash donations were disbursed for the COVID-19 health response. This information could be useful in understanding how additional funds were allocated and used by the health sector for systems strengthening and improving the resilience of the health sector against disruptions caused by the pandemic.

What we have learned

Although the pandemic has negatively impacted economies, threatening health systems around the world, Kaduna state was proactive in its efforts to raise domestic revenue to combat the pandemic and cut down its budget (mostly capital) to reflect new economic realities. Our analysis further sheds light on the macroeconomic challenges that COVID-19 left for policymakers in resource-constrained settings within LMICs, like Nigeria. Some key lessons stand out for us:

1. Prioritizing health funding should go beyond allocation of resources by demonstrating this commitment through progressive increase in budget releases and improving cash-backing for the delivery of essential health services that could lead to positive health outcomes.
2. Improving efficient use of limited resources can be done by establishing public financial management mechanisms to monitor funds disbursements and utilization across all levels of the health care system while instituting rewards and sanctions to enforce compliance. This will likely eliminate wastage and inefficiencies and foster accountability and transparency.
3. Identifying and leveraging innovative sources of revenue within and outside the health sector can expand the fiscal space for health. The Kaduna experience showed that strategic partnership with the private sector and donor agencies can be leveraged to mobilize needed resources for public health emergencies, which have implications for long-term financing of the health system.
4. Public funding is critical for expanding the coverage of the state’s contributory health scheme which is an important step toward strategic purchasing of essential health services and strengthening the resilience of the health system beyond the COVID pandemic era.