The author argues that the key to sustainable, adequate and predictable financing of Africa’s development no longer lies in the delivery of aid from traditional donors but largely in unlocking the domestic resource potential, so that the continent can harness more of its own revenue for development. Africa’s much celebrated growth over the last two decades has benefited in large part from public revenues derived from the sale of natural resources. While the tax base remains narrow, and tax compliance levels low on the continent, revenues from tax collection continue to increase, rising from USD 259.3 billion in 2005 to USD 527.3 billion in 2012. A 2013 study by NEPAD and UNECA shows that the fundamentals and resource potential exist for the continent to raise more financial resources domestically to implement its development programmes and finance its own institutions. At the same time, South-South Cooperation in Africa is increasing, with more public finances being channelled from emerging economies to Africa via various bilateral and multi-lateral arrangements. In contrast, there is clear evidence that Official Development Assistance (ODA) from traditional donors is dwindling – falling from 38% as a proportion of all external financial flows to Africa in 2000 to 27% in 2014. Africa’s reliance on aid and the sale of natural resources, as opposed to broad-based tax collection, for example, is argued to have distorted accountability over public expenditure, with governments incentivised to meet the needs of the extractive and commodity private sector corporations and the priorities of external funders, as opposed to those of their citizens. The author suggests that aid will achieve its best outcomes when it is used in ways that complement and bolster domestic financing, support other financing mechanisms and help African countries to better manage revenues for their citizens’ development.
Resource allocation and health financing
Governments are being overwhelmed by the rapid growth of Africa’s cities. Strategic planning has been insufficient and the provision of basic services is worsening. Since the 1990s, widespread devolution has substantially shifted responsibility for coping with urbanisation to local authorities, yet municipal governments across Africa receive a paltry share of national income with which to discharge their responsibilities. Responsible city authorities are examining how to improve revenue generation and diversify their sources of finance. Following the creation of a sustainable development goal for cities (SDG 11), and ahead of the Habitat III summit in October 2016, this Africa Research Institute event examined some of the financing options and the urgent need for a proactive approach on the part of national and municipal governments. The speakers in the podcast include, Professor Susan Parnell Department of Environmental and Geographical Sciences, Jeremy Gorelick, Lead technical adviser, Dakar Municipal Finance Program and Dr Beacon Mbiba, Senior Lecturer, Urban Policy and International Development.
This research project investigates how governments can generate more of their own national resources for health and reduce their dependence on donor funding, which can be both unstable and unsustainable. Case studies in Nigeria, South Africa and Kenya, document country experiences of increasing the effectiveness of their tax collection services and investigate how this has contributed to increased health sector spending. Governments in Kenya, Lagos State (Nigeria) and South Africa have increased domestic tax revenue by expanding the tax base and improving the efficiency of tax collection systems. Specific efforts have been made to reach the informal sector by taxing businesses (in Kenya) and reaching informal trade associations (in Nigeria). Political support to tax policy reforms and the tax collection agencies led to additional funding for their operations and strengthened human resource capacity. Despite achievements in raising tax revenue, the share of government spending allocated to the health sector has not increased. A critical challenge for Ministries of Health is to make a better case for health during budget negotiations, and to demonstrate the social and economic benefits of health investments.
This paper argues that there are useful lessons for South Africa (and other countries in putting into place the legal and institutional frameworks system and systems for implementation of universal health coverage (UHC). Thailand has received widespread international recognition as one of several middle-income countries that have made enormous progress in building a UHC system and in achieving ‘good health at low cost. Thailand has a strong national fund called the Universal Coverage (UC) Fund, which covers 75% of its population, the rest being covered by social health insurance and the Civil Servant Medical Benefit Scheme. Thailand has a well-developed purchaser-provider split, with the independent UC Fund established by legislation, with a multi-stakeholder governing body including private and civil society representatives. Its internal structure, operating systems, procedures and information technology are firmly established, accessible and affordable in the middle-income country context. It uses capitation purchasing, with a focus on primary care systems. The National Health Security Office (NHSO), which manages the UC Fund, concentrates on pooling and strategic purchasing; it has no revenue collection function, as the scheme is financed through an annual budget. The NHSO manages the disease prevention and health promotion budget for all Thai citizens, thus assisting the other schemes and providing a strong focus on prevention and promotion. The article discusses these and other positive features and the challenges as learning for South Africa and other countries financing UHC.
The author observes that insufficient, ineffective and inequitable public spending on child-focused sectors and programmes stands as the biggest barrier to enjoyment of rights by all children. To date, only 7 countries in Africa have at some point in time met the Abuja target for African governments to allocate at least 15% of their budgets to health. Furthermore, no African country has so far met the Dakar Commitment on Education for All to allocate at least 7% of its GDP to education, which should have increased to 9% in 2010. In 2014, with the exception of Malawi, Niger and South Africa, who have come close by spending between 5.5-7%, the rest of African states are spending below 5% of their GDP on education, well below the Dakar Commitment. The author asks: What then are some of the concrete actions that African states should undertake to ensure sufficient, equitable, sustainable and effective public investments in children? Domestic revenue from effective and progressive taxation will continue to be the most significant and sustainable source of revenue for states to finance investments in children. He argues that, in line with the overarching SDG focus on ‘leaving no one behind’, African governments should develop and implement fiscal policies and budgets that promote equity. In line with the spirit of SDGs and of the African Charter on the Rights and Welfare of the Child, African states should create formal platforms and opportunities for children and their representatives to meaningfully participate in planning and public budgeting, including to hold duty bearers to account for their commitments to children.
In June 2016, South African Minister of Health Dr Aaron Motsoaledi addressed the media to respond to criticism over the high cost associated with rolling out universal health care in South Africa. “The National Health Insurance (NHI) scheme is the only way to ensure that everyone is not excluded to quality health because of their socio-economic status, ” said Motsoaledi. The NHI White Paper was released last year and plans to reform both public and private health sectors by combining all South Africans into one purchasing pool. The cost of NHI has been estimated to be R256-billion by 2025, which is higher than the current national budget allocation toward healthcare. But according to Motsoaledi, the figure is a projection and could change with the process. Arguing the benefit of pooling resources, he stated that in 2002, the department of health combined all South Africans into one purchasing pool and were able to lower the costs of antiretroviral treatment.
This scorecard can help one see at a glance how a country is doing on the areas of budget transparency and participation most relevant for the health sector. All the information in the scorecard comes from the Open Budget Survey 2015. The information collected by the Open Budget Survey is not health specific, but the authors have selected the indicators most relevant to the health sector. Budget documents in different countries display how much will be spent on what priorities in different ways, with more or less detail. For citizens and civil society to understand what is being spent on their health, a high level of detail is required: one doesn’t just need to see the amount as classified by Ministry (e.g. what is allocated to the Ministry of Health) but also by function (e.g. primary healthcare), by economic classification (e.g. how much is spent on health workers’ salaries) or by programme (e.g. how much is spent on free healthcare for pregnant women). There is also an indicator which measures whether budget documents explicitly make the link between money spent, intended health outcomes, and actual results. Information is not enough for accountability. Civil society and citizens also need entry points to influence decisions during the budget process: this is what participation in budgeting provides. There are many ways to facilitate this, from releasing the budget timetable so that Civil Society organisations can get ready for important meetings or information release, to holding formal hearings at different stages in the budget process for the public to feed in their priorities. The scorecard is available in English and French.
Most low- and middle-income countries face financing pressures if they are to adequately address the recommendations of the Global Strategy for Women’s, Children’s and Adolescent’s Health. Negotiations between government ministries of health and finance are a key determinant of the level and effectiveness of public expenditure in the health sector. Yet ministries of health in low- and middle-income countries do not always have a good record in obtaining additional resources from key decision-making institutions. This is despite the strong evidence about the affordability and cost–effectiveness of many public health interventions and of the economic returns of investing in health. This article sets out 10 attributes of effective budget requests that can address the analytical needs and perspectives of ministries of finance and other financial decision-makers. The authors developed the list based on accepted economic principles, a literature review and a workshop in June 2015 involving government officials and other key stakeholders from low- and middle-income countries. The aim is to support ministries of health to present a more strategic and compelling plan for investments in the health of women, children and adolescents.
This article argues that an assessment of progressivity over time can provide an indication of progress towards a ‘more’ progressive or a ‘less’ regressive health financing system and can be useful to policymakers. It introduces a framework to characterize ‘shifts’ in progressivity in health financing between two time periods using the popularly known Kakwani index of progressivity and other associated indices. It also decomposes the ‘shifts’ in progressivity into the relative contributions of the changes in income distribution and the changes in the distribution of health payments. Further, it proposes graphics that statistically analyses how the ‘shifts’ in progressivity vary along the distribution of income. A pro-poor (pro-rich) shift implies that the health financing mechanism is becoming more (less) progressive or less (more) regressive between two time periods. A proportional shift means that progressivity is constant between the two periods. This framework is applied to nationally representative household data from South Africa. It emerged that such characterization is a very useful tool for policy in assessing progress towards equitable health financing.
Health financing reforms in low- and middle- income countries (LMICs) over the past decades have focused on achieving equity in financing of health care delivery through universal health coverage. This systematic review assesses progress towards equity in health care financing in LMICs through the use of benefit incidence analysis (BIA) and financing incidence analysis (FIA). A total of 512 records were obtained and 24 were judged appropriate for inclusion. Twelve of the 24 studies originated from sub-Saharan Africa. The evidence points to a pro-rich distribution of total health care benefits and progressive financing in sub-Saharan Africa. In the majority of cases, the distribution of benefits at the primary health care level favoured the poor while hospital level services benefit the better-off. Studies evaluated in this systematic review indicate that health care financing in LMICs benefits the rich more than the poor but the burden of financing also falls more on the rich. There is some evidence that primary health care is pro-poor suggesting a greater investment in such services and removal of barriers to care can enhance equity. The results overall suggest that there are impediments to making health care more accessible to the poor and this must be addressed if universal health coverage is to be a reality.