Africa’s Healthcare Financing Gap

Merging the twin concepts of healthcare and investment was almost unthinkable many years ago. To many people, they had nothing in common. This thinking changed in 1993 with the publication of the World Bank’s World Development Report aptly titled “Investing in Health”. The report made a copious argument for the now-acceptable position that evidence-based health expenditures have a ripple effect on the economy. 

In 2001, the heads of African governments pledged to allocate a minimum of 15% of their annual budgetary expenditures on health. By 2011, WHO stated that 27 countries had increased the proportion of their health expenditure while 7 reduced it. Only Rwanda and South Africa reached that target. By 2016, 19 countries were gradually decreasing the budget expenditure on health.

Given the foregoing, it comes as no surprise that Africa’s healthcare financing deficit stands at $66 billion. The implication of this is that the rest of the world may leave her behind in attaining the Sustainable Development Goals, as it did with the Millennium Goals which foreshadowed the SDGs. Many countries in Africa continuously spend less per capita on healthcare services even with the plethora of policy statements to the contrary.

healthcare financing gap

 

Of all African countries underspending on health, Nigeria is a major culprit – it accounts for 32% of the healthcare financing deficit in Africa. What this implies for many households is that healthcare is heavily funded by out-of-pocket payments. It contributes to nearly 77.2% of the total private healthcare spending, thereby, placing a significant burden on end-users. Also, about 60% of all these spendings are financed by people with no insurance cover.

While out-of-pocket payments remain the predominant type of healthcare financing in Nigeria, there are other methods like tax revenue, donor funding, and health insurance. Yet, these don’t suffice to cover the huge funding gap required when considering that the country has the highest number of people living in extreme poverty.

What is the Way Forward?

Governments need to devise innovative ways to fund the huge investments that the health sector requires to contribute to the larger economy. The PPP model has helped many African countries reduce their infrastructural gap over the past years. However, the same success is yet to be replicated in the healthcare industry. While policymakers talk about the ease of doing business, it is difficult to run healthcare-related businesses due to infrastructural paucity and other policy and regulatory bottlenecks. A proper restructuring of policies and regulations for healthcare-related businesses needs to be reviewed for significant growth to be feasible.

Apart from creating a supportive environment for private investment to flourish, all relevant stakeholders must act to prevent leakages and inefficiencies in the system. The 2010 World Health Report states that 20 to 40 percent of healthcare resources are lost to inefficiencies in the system. These problems span across the different aspects of the healthcare system: medicine and health technologies, human resources for health, fraud and corruption, etc. Obviously, the private sector will only be incentivised to invest if these leakages are addressed and effectively plugged. 

The world is only a decade away from the expiration of the Sustainable Development Goals (SDGs). To attain the health-related aspects of the goals, we must act in concert by devoting efforts to creating long-lasting synergies while creating opportunities for efficiency.

1 thought on “Africa’s Healthcare Financing Gap”

  1. We must continue to have open conversations with the governments in Africa for a paradigm shift in their approach to health and related matters. Until governments of African countries begin to prioritise the health and well-being of the citizens they claim to serve, stakeholders in the health sector passionate about making a difference may continue to face the same pivotal hurdles.

    Identifying influential persons in these various countries/governments to act as influencers for policy changes and enforcement may also be a viable strategy to pursue in addition to what is obtainable. We must continue to innovate on ways to convince our governments to pay the much-needed attention to a crucial matter as health. Great Job team Flying Doctors.

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