Crowding-out effect of out-of-pocket expenditure on non-communicable diseases in sub-Saharan Africa: a Nigerian case study

Abstract

BACKGROUND: This study investigates the crowding-out effect of out-of-pocket (OOP) health expenditures for non-communicable diseases (NCDs) on household consumption in Nigeria, a critical issue in sub-Saharan Africa (SSA) given the escalating prevalence of NCDs and associated high care costs. METHODS: Using data from the 2018/2019 Nigerian Living Standard Survey, we employ a Generalised Method of Moments estimator and conditional Engel curve equations derived from the Quadratic Almost Ideal Demand System to analyse the impact of NCD and non-NCD OOP expenditures on 13 household consumption categories. RESULTS: Despite representing <2% of household budgets, NCD OOP expenditures significantly crowded out essential spending, particularly on healthier food options (fruits, vegetables, protein) and cooking energy sources, disproportionately affecting lower-income households. Intriguingly, discretionary spending on sugar, alcoholic/sugary beverages, entertainment (including tobacco) and meals outside the home remained unaffected, possibly indicating reliance on these fast meal alternatives due to limited cooking fuel access. Middle-income households also experienced crowding out of staples and education expenditures. CONCLUSIONS: These findings highlight the urgent need for universal health coverage to reduce OOP burdens, alongside targeted interventions addressing NCD burden, dietary quality, the energy crisis and health inequities in Nigeria and, by extension, SSA.