Resource allocation and health financing

According to AFRODAD, tax revenues are, on average, lower in developing countries than in rich countries; the average revenue in African countries was approximately 15% of GDP in 2008. Hence the argument that if developing countries were able to collect sufficient tax revenues, they might be able to increase their independence, the provision of social protection, infrastructure and basic services such as education and health care which are crucial for development. The two reports on Mozambique and Zimbabwe reveal that mobilising domestic resources as a means to financing development has become an important development issue, a shift from the past emphasis on financing development from aid and external borrowing. For a long time mobilising domestic revenue has been neglected, despite being a better long-term option, AFRODAD argues. The reasons for this included the inherent pessimism about raising revenue, a prevalent ‘small-state’ ideology and a preference for foreign aid-led solutions. AFRODAD proposes that progressive taxation should play an important role in shaping the distribution of benefits from higher-income citizens to those most in need in a country. The reports also examine the various complexities surrounding taxation as a development finance mechanism in the two country cases including the current tax framework, the amount and extent of tax evasion and more specifically tax incentives and governance in various sectors of the economy. They conclude with policy and institutional recommendations to the governments of Mozambique and Zimbabwe – and civil society – to refine their tax systems.

South Africa’s provincial health departments have dramatically improved their financial management, according to Treasury officials. The nine departments collectively under-spent by US$380 m. in 2010, reversing the trend which saw them run into the red to the tune of $350 m. in the fiscal year 2009-10. The provinces had a combined health budget of $14.7 bn in 2010. This reduction reduces pressure on the Treasury to bail out cash-strapped provinces, a measure it has been loathe to consider for fear of sending the wrong message to provinces that have failed to manage their resources. However, these improvements can mask overspending on some areas at the expense of under- spending on others. The Treasury’s figures show provincial health departments collectively overspent on personnel budgets, but under-spent on capital assets and goods and services in 2010. This created the risk that staff costs might be crowding out expenditure in other critical areas, says the Treasury. It is calling on the government to look carefully at the reasons for underspending in each province, and ensuring that departments are aiming for savings such as negotiating cheaper medicines or more competitively priced tenders.

Held in Istanbul, Turkey on 9-13 May 2011, a United Nations summit to assist least-developed countries (LDCs) ended with new pledges, but the results were disappointing, according to this article. The Istanbul Programme of Action, adopted by the Conference, merely states that those countries already providing more than 0.20% of their gross national product (GNP) as aid to LDCs will continue to do so; those which have met the 0.15% target will undertake to reach 0.20%; and others which have committed themselves to the 0.15% target will either achieve the target by 2015 or try their best to do so. This weak statement with its loopholes was rebuked by the civil society groups attending the Conference. The author of this article notes that the Programme of Action seems to contain more commitments by LDCs to take their own actions than commitments by rich countries to assist them, which is a reversal from previous LDC conferences.

Health insurance cover is gradually increasing among the Tanzanian population since its introduction over a decade ago, according to this policy brief. However, wealthier groups working in the formal sector are more likely to benefit from this development than poorer groups. The diversity of schemes, in terms of contribution rates and benefits offered, means that the effect of insurance is inconsistent, both in terms of the amount and nature of services received by members. What is clear is that insurance is generally increasing the intensity of outpatient care use and also influencing where people go for such care, diverting people from informal drug shops to formal care. CHF members are more likely to use public primary care, than their non‐insured rural counterparts, consistent with their benefit package. Despite equal contributions, NHIF members in urban areas use a much wider range of outpatient care than those in rural areas. SHIELD makes three recommendations for health policy: addressing the lack of publicly available data on use of health services, increasing the availability of affordable insurance options for poorer groups and ensuring greater consistency in benefits offered, and taking into account the inequity in service availability between urban and rural areas when setting premiums for schemes.