Private and public health capital expenditures in Nigeria: An empirical test of the relationship

Abstract

This paper performed an empirical test of the relationship between private and public health expenditures in Nigeria. Our results reveal complementarity of inputs between public and private health expenditures in Nigeria. The result is thus an indication that government health investment plans crowd in private health investment spending. The crowding in effect could be induced by government tax incentives and government regulation (policy intervention). By economic intiution, the efficiency of private health spendings is also a function of the weight of government health expenditure in the country. Implicationally therefore, the more balanced the composition of government health spending, the greater the increase in the level of effective private health care services in Nigeria. We therefore recommend that unless appropriate regulatory measures are implemented by the government, it may lead to inefficiencies that have an unplanned effect on the rest of the economy (private sector inclusive), which could engender misallocation of health care resources. Further, a provision of basic infrastructure projects to the private sector of the economy could help create the appropriate economic and hence regulatory environment that prompts private investment expenditure on health in Nigeria.