Does increasing fiscal space effect government funding for health?

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Does Increase in Fiscal Space have Effect on
Government funding for Health? A Study of
Lagos State, Nigeria
Chijioke Okoli, Hyacinth Ichoku , Nkoli Ezumah, Jane
Umeano-Enemuo and Obinna Onwujekwe
Health Policy Research Group, University of Nigeria
Bolton White Hotel, Abuja, Nigeria
March 22-23, 2018
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Background
• One of the greatest challenges facing SSA countries is how to
increase fiscal space for the financing of health sector.
• In Nigeria, majority of State governments are not generating
enough funds to finance their own budgets, but this is not the
case with Lagos.
• The State is the least dependent on federally allocated funds
with over 70% of its revenue being internally generated
(Economic Confidential Viability Index 2016; NBS 2017) .

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Aim
• To examine how Lagos state, Nigeria succeeded in
increasing her tax revenue and effect the increment
had on government fiscal space for healthcare in the
State.

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Method
• Study setting: Lagos state
• Study design: mixed methods approach.
• Data collection & analysis:
Ø Audited annual account reports and budget documents
(2000-2011) were reviewed with a data abstraction template.
Ø Nine (9) in-depth interviews (IDIs) were undertaken with
purposively selected key informants and analyzed using
Capacity and Policy framework.
Ø Trend analysis of government revenue and expenditure were
conducted.

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Results: Fig 1: Major sources of revenue
in Lagos state (in nominal billions Naira)
0
10
20
30
40
50
60
70
80
90
100
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Billions
Source: Lagos state Audited Financial Reports
IGR
FAAC
VAT

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Fig 2: THE versus TGE (2000 – 2011)
0.00
50,000,000,000.00
100,000,000,000.00
150,000,000,000.00
200,000,000,000.00
250,000,000,000.00
300,000,000,000.00
350,000,000,000.00
400,000,000,000.00
450,000,000,000.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
THE (actual) TGE(actual)

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Fig 4: THE as % of TGE - Lagos State
(2000 – 2011)
1.7
2.9
1.5
1.7
2.6
4.8
2.6
3.9
7.9
3.2
2.9 3.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Lagos state Audited Financial Reports

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Qualitative results
• Governor’s political will to deliver campaign promises led
to reform of Board of Internal Revenue (autonomous):
“The governor had made campaign promises but by the
time he assumed power in 1999, he realized that he did not
have adequate funds to meet the promises. What was being
generated then which was like 600 million naira a month
was very poor. Considering the business profile of Lagos
state, the population and the amount of revenue that will
be generated he decided to reform the Board of Internal
Revenue” (IDI07).

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Withholding of Federal Allocation empowered
the Governor’s resolve to increase IGR
• “Although withholding of federation allocation by
Obasanjo led administration (AC and PDP conflict) was
illegal but it also made the then governor, his
Excellency Ahmed Tinubu realize that he cannot
depend on federal allocation………, so withholding of
those funds empowered his determination to make
sure that he looks internally to grow his revenue”
(IDI09).

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Low absorptive capacity of MoH constrains
allocation to health sector
“…. in fairness to government, I believe, we can only ask for more
if we are able to finish what we are given. Because, since I came
here, [frowns his face] ....I was wondering, why are we given so
much and at the end of the year, we will return it back…. So until
we are able to finish what we are given within a year, then we
can now start arguing for more. ……….. Like last year, so many
billions have been taken from us, when they saw that our budget
was not performing well. They have to adjust the budget… so
much money taken from us has been given to some ministry to
offset their own budget” (IDI03).

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Conclusion
• Lagos state succeeded in raising its IGR from ₦500 million a
month in 1999 to ₦20 billion a month in 2011 and does not
depend on its expected share from the Federal allocation.
• This is attributable to the introduction of e-payment
initiative, tax compliance by the populace and aggressive tax
drive by the state government through Board of Internal
Revenue.
• However, the State government’s increased revenue did not
translate to increased funding to health sector (still far
below the 15% Abuja Declaration).

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RESYST is funded by UK aid from the UK
Department for International
Development (DFID). However, the views
expressed do not necessarily reflect the
Department’s official policies.
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Does increasing fiscal space effect government funding for health?

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Does increasing fiscal space effect government funding for health?