Dynamic Effects of Healthcare Financing on Poverty Reduction in Nigeria

Abstract

This research examined how healthcare financing has influenced poverty alleviation in Nigeria between 1986 and 2023. The analysis draws on data obtained from the World Development Index (2024) and applies a range of econometric methods, including the Augmented Dickey–Fuller (ADF) unit root test, the Autoregressive Distributed Lag (ARDL) bounds testing approach, and an error correction model (ECM). In addition, descriptive statistical procedures such as unit root and bounds co-integration tests are utilised to evaluate the behaviour and distributional patterns of the variables. The study investigates both short-term and long-term relationships between major healthcare financing mechanisms namely social health insurance (SHI), donor health financing (DHF), and public health financing (PHF) and poverty levels. Empirical results indicate that SHI and PHF do not produce immediate effects; however, their lagged short-run impacts are statistically significant, suggesting delayed yet substantial contributions to poverty reduction. In contrast, DHF demonstrates a significant short-run poverty-reducing effect, though this impact does not persist over time. Overall, the findings highlight that enduring poverty reduction depends on strengthening public healthcare systems alongside expanding the reach of social health insurance. The study therefore recommends policies aimed at widening SHI coverage, improving the efficiency of public health expenditure, diversifying healthcare funding sources, and fostering sustained economic growth.