…What healthcare can learn from banking reform
A Nigerian can walk into a building marked “hospital” with no reliable idea of what lies behind the signboard. Is a doctor on duty at night? Is oxygen available? Can the facility stabilise an emergency? Can it afford medicines, maintenance, salaries and diesel?
This is not a branding problem. In healthcare, financial weakness becomes clinical risk: unmaintained equipment, unsafe staffing, and oxygen and drugs bought only after the emergency has arrived.
Nigeria should therefore consider a national, tiered minimum-capital framework for hospitals. This should not be one arbitrary figure for every facility. Requirements should be calibrated to licensed scope, clinical complexity, bed capacity and referral responsibility.
The banking lesson
In July 2004, the Central Bank of Nigeria required the 89 deposit money banks then operating to raise their minimum capital to N25 billion by the end of 2005. By January 2006, 25 banks had emerged. The exercise raised N406.4 billion from the capital market and attracted US$652 million in foreign direct investment.
Capital worked alongside stricter supervision, better reporting, governance standards and real sanctions. The global financial crisis later showed that size cannot cure weak risk management or insider abuse. Money without governance merely finances a larger failure.
Nigeria also formalised differentiated licences. The 2024 recapitalisation set floors of N50 billion for regional banks, N200 billion for national banks and N500 billion for international banks. The principle is simple: an institution making larger promises across a wider system must hold deeper capital and stronger controls.
Why it belongs in healthcare
Banks hold people’s money. Hospitals hold people’s lives. Yet an operator can satisfy premises, personnel and equipment requirements without showing the financial capacity to sustain them through currency depreciation, equipment failure, delayed HMO payments or surges in demand.
The National Health Act 2014 already provides for classifying health establishments, and state regulators such as Lagos’s HEFAMAA prescribe minimum standards. What is missing is explicit, measurable financial resilience that matches the clinical claims a facility is licensed to make.
The stakes are high. Nigeria has more than 40,000 facilities, recorded in a registry marred by duplication and misclassification. Out-of-pocket spending made up 74.7 per cent of health expenditure in 2020, the highest share in the WHO African Region. Households already bear enormous risk at the point of care. They should not also discover, mid-emergency, that a hospital’s advertised capacity is fiction.
What the framework should look like
Licences should be tiered by what a facility is permitted to do:
Community or outpatient clinics.
General hospitals with inpatient beds, 24-hour cover, oxygen, diagnostics and emergency stabilisation.
Specialist or regional referral hospitals offering intensive care, dialysis, oncology or complex surgery.
National or quaternary institutions with system-wide referral roles.
Each tier needs a published capital methodology, not a politically chosen headline figure. It should include:
A paid-up capital floor.
A risk charge for beds and complex services.
At least six months of operating costs.
Protected reserves for payroll, oxygen and consumables.
Adequate indemnity insurance.
A funded plan for replacing equipment.
All of these should be indexed to medical inflation and exchange rates.
Capital must be verified, not merely declared, with annual audited proof that it has not been stripped out. It must also sit within a unified scorecard covering clinical capability, governance and data accountability. No facility should use a title that exceeds its licence. Patients should be able to scan a code and see a facility’s tier, authorised services and last inspection date. This is about standardising the promise.
Getting it right
A blunt order would close legitimate community clinics, especially outside cities, and push up prices. The framework must cover public and private facilities alike. Public hospitals could meet it through ring-fenced reserves, and faith-based providers through blended finance.
Small providers need transition time, technical support and affordable finance. They should also have the option to downgrade, narrow their scope, join networks or merge. Regulators must guard against local monopolies. The Basic Health Care Provision Fund and state insurance should protect access where commercial returns fall short.
A five-year pathway would run in three stages:
1. A registry clean-up and a cost-of-safe-care study.
2. Provisional licences and supported remediation.
3. Full enforcement.
Backed by transition finance from banks, development finance institutions, insurers and impact investors, this would make capitalisation a platform for investment rather than a threat of closure.
The real question
The question is not whether every hospital should become a giant corporation, or whether money can replace competent clinicians. It cannot. The question is whether any institution should be allowed to make life-and-death promises it lacks the capacity to keep.
When a Nigerian sees the word “hospital”, the signboard should describe a verified capability, not an aspiration.
. Olajubu is executive director, Health Business Academy for Africa. He is a seasoned banking and financial services executive with extensive leadership experience spanning commercial and retail banking, digital banking, investment banking, financial technology and enterprise transformation.
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