Improving health financing in Africa

Despite the commitment made by African governments to increase health budgets to at least 15 per cent under the Abuja declaration, the health sector in Africa still remains largely underfunded. This lack of adequate funding poses a significant challenge to achieving universal health coverage. Nathaniel Otoo, the Executive Director of Strategic Purchasing Africa Resource Centre, sheds light on the barriers faced by African countries in meeting the health spending target and discusses the necessity of improving financing mechanisms for healthcare. The commitment to allocate 15% of national budgets to health, known as the Abuja declaration, has only been met by a few countries, with Rwanda being a notable exception. This commitment was made to expand the availability, quality, and access to healthcare services. However, the majority of African countries have not been able to reach this target due to various factors. One of the key reasons for the reluctance to increase health spending is the presence of competing demands for limited resources. Education, security, and agriculture are also pressing needs that require significant budget allocations. In countries where resource envelopes are constrained, prioritizing health expenditure becomes a complex decision. The growth of resource envelopes is closely linked to economic growth. While some African countries have shown promising economic developments, the ability to raise taxation plays a crucial role in addressing funding challenges. The informal nature of the economy in many African countries, with a large percentage of the population engaged in informal employment, complicates the process of raising funds for healthcare. Tax funding emerges as a primary source of revenue for health financing in such contexts. Efficient utilization of healthcare funds is equally important as ensuring an adequate financing mechanism. Otoo emphasizes the need to optimize the use of resources, citing his experience in Ghana's health insurance system, where a small number of facilities consumed a significant portion of the funds. Despite having thousands of accredited facilities, the majority of healthcare services were concentrated at higher levels of care, neglecting the primary healthcare needs of the population. Otoo's initiative, the Strategic Purchasing in Africa Resource Center (SPAC), aims to address these challenges by building capacity in African countries to judiciously manage healthcare resources. SPAC focuses on defining benefits packages that cater to primary healthcare needs, redesigning payment systems to incentivize efficiency and quality in service delivery, and promoting strategic purchasing practices. By shifting the focus towards primary care and implementing innovative payment models that reward efficiency, SPAC seeks to enhance the effectiveness and equity of healthcare financing in Africa. The launch of SPAC marks a significant step towards achieving universal health coverage by fostering a culture of accountability and resource optimization in the continent's healthcare systems.