Government Health Expenditure, Exchange Rate Instability and Neonatal Mortality in Nigeria: A 25-Year Time-Series Analysis

Abstract Background: Neonatal mortality remains a significant public health concern in Nigeria, with persistent rates despite various health interventions. While medical causes are well documented, the role of macroeconomic factors, particularly government health expenditure and exchange rate instability, requires deeper investigation. This study examined the association between government health expenditure, exchange rate fluctuations, inflation, out-of-pocket health spending, and neonatal mortality in Nigeria over a 25-year period, with a view to informing fiscal and healthcare policy reforms. Methods: A retrospective quantitative time-series study design was adopted using annual secondary data from the World Development Indicators for the period 2000–2024. Variables analysed included neonatal mortality rate, government health expenditure as a percentage of gross domestic product, exchange rate, inflation measured by the Consumer Price Index, out-of-pocket health expenditure as a percentage of current health expenditure, and adjusted GDP per capita growth. Statistical methods included descriptive analysis, Pearson and Spearman correlation analyses, t-tests, analysis of variance, multiple linear regression, polynomial regression, and multicollinearity diagnostics using variance inflation factors. Additional time-series diagnostic and sensitivity analyses included Augmented Dickey-Fuller stationarity testing, autocorrelation assessment, and a time-adjusted regression model. Results: Neonatal mortality declined over the study period, while exchange rate depreciation and out-of-pocket health expenditure increased. In the primary multiple linear regression model, exchange rate and out-of-pocket expenditure were significantly associated with neonatal mortality, while government health expenditure and inflation were not statistically significant predictors. Correlation analysis showed strong inverse associations between neonatal mortality and both exchange rate and out-of-pocket expenditure, reflecting the opposing secular trends between declining neonatal mortality and rising macroeconomic pressures. Multicollinearity diagnostics for the primary model showed acceptable variance inflation factor values below the conventional threshold of 5. Time-series diagnostics showed that several variables were non-stationary at level, suggesting that some observed associations may be influenced by underlying time trends. In the time-adjusted sensitivity model, exchange rate became positively associated with neonatal mortality, although this finding was interpreted cautiously because collinearity increased due to the strong relationship between year and exchange rate. Conclusion: This study suggests that neonatal mortality trends in Nigeria are associated with broader macroeconomic conditions, particularly exchange rate instability and high reliance on out-of-pocket health financing. However, the findings should be interpreted as ecological associations rather than direct causal effects because several variables showed strong time trends. Government health expenditure remains essential, but its potential impact depends on efficient allocation, timely disbursement, and effective implementation. Policies aimed at exchange rate stability, improved public health financing, reduced household health spending, local production of essential neonatal commodities, and expansion of Universal Health Coverage are needed to support progress toward Sustainable Development Goal 3.2.