Experts suggest ways to leverage opportunities in capital market to improve Nigeria’s health sector

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Experts in the capital market, the legal profession and the health sector, have said opportunities in the capital market can be leveraged to help improve Nigeria’s health sector.

These insights are coming at a time when COVID-19 has exposed Nigeria’s weak and underfunded healthcare sector.

Experts also suggested that the capital market is one of the best instruments to help fund the health sector in Nigeria.

Speaking at the 2020 Capital Market Solicitors Association (CMSA) virtual annual business luncheon, Lamido Yuguda, Director General, Securities and Exchange Commission said the health sector has been grossly underfunded and COVID-19 has exposed this.

Yuguda said the healthcare sector is in need of infrastructure and manpower, adding that the sector needs investment from the public and private sectors.

He further explained that infrastructure financing of the health care sector requires long term financing and the capital market will be able to fund Nigeria’s healthcare.

During his Keynote Address, Olabode Agusto, Chairman, Advisory Board of First Cardiology Consultants said the biggest risk that the pool of savings will face is inflation risk and this is because the long-term rate of inflation on the Nigerian Naira is about 12 percent per annum.

Agusto said this means that savings held in Naira and debts that will be repaid in fixed Naira terms will lose purchasing power at about 12 percent per annum, adding that it also means that the returns earned from investing the pool of savings (net of costs) must be at least 12 percent per annum to protect the buying power of the savings.

“Finally, premiums must also be adjusted at least annually to reflect the purchasing power of the naira. The bulk of the monies saved to pay for healthcare will be invested temporarily in fixed income instruments (i.e. lent to the federal government, state governments, banks and credit worthy companies in the real sector).

“Capital market regulators would need to help set rules that will help ensure that those who borrow money from these pools of savings pay back as and when due. This is usually done by setting risk tolerance limits and monitoring compliance with these limits,” he explained.

Agusto explained that the role of the capital markets can be summarized as protecting the purchasing power of the country’s savings and providing credit to investors in the healthcare industry.

He further explained that the role of the lawyers will be to help to draft the relevant laws and regulations that will guide the operations of the industry.

He said, however, that it is important that the reforms embarked upon in this industry follow several steps to include to study and understand the operating models used in select countries where the impact of the healthcare system on the citizens is strong; determine how we should tweak these models to reflect the realities of our environment; come up with a draft healthcare model for Nigeria and encourage debate among the key stakeholders on this model.

He suggested that the capital markets can help improve the healthcare sector by using contributions from these debates to come up with the final healthcare model for Nigeria, draft the relevant bills and regulations, and get them passed.

Speaking earlier at the event, Benjamin Obidegwu, the Chairman, Capital Market Solicitors Association, (CMSA) said this year, the COVID-19 pandemic exposed, to a very large extent, the huge infrastructure deficit the country has in its health sector, primarily because of lack of funds, the greater part of which comes from the government.

Obidegwu said that as capital market operators, they have resolved to use the platform of its business luncheon to draw the attention of the public to an alternative source of funding for the country’s health sector and that is the capital market.

He said this year’s conference therefore is aimed at broadening the perspectives of the Nigerian healthcare sector through discussions on access to the financial opportunities in the capital market.

“To ensure that we have an engaging and robust discussion, we assembled a team of highly experienced industry practitioners in the health sector and capital market operators to share their experience with us,” he said.

During her welcome address, Efeomo Olotu, Chair, annual business luncheon and partner, George Etomi & Partners said this year, they decided that discussions will focus on the current climate in the Nigerian health sector following the COVID-19 pandemic and the role expected of the capital market in creating pathways in strengthening the stunted health sector through easy access to capital in resolving the prevalent challenges against affordability, accessibility, liquidity and funding.

Olotu said the opportunity afforded by digital technology in reaching a wider audience who hold a similar interest in capital market operations, adding that 1,200 attendees registered for the event as against 400-500 participants at past annual events.

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