Guest Blog Post: Domestic resource mobilization for sustainable health financing in Africa: Meeting UHC targets

Guest Blog Post by WAIC Health

Achieving Universal Health Coverage (UHC) and indeed the Sustainable Development Goals (SDGs) are goals that many countries in the African Region have adopted. While healthcare is a basic human right, likely to be accessible and affordable in developed nations, healthcare access remains beyond the reach of many individuals including women and children living in developing countries. UHC ensures that everyone, anywhere receives quality curative, promotive, preventive and rehabilitative health services they need without experiencing financial hardship.

A recent modelling exercise conducted by the WHO found that in order to achieve SDG 3 targets, a significant increase in funding would be needed. Using the Chatham house recommendations of government health expenditure per capita of at least $86 as a base, the amount per capita required to make progress towards SDG 3 is estimated at $127 per capita and $144 to reach the target. In Africa, health expenditure has increased significantly over the past two decades with out-of-pocket expenditure and external assistance being the main drivers. Out-of-pocket expenditure continues to push people into poverty. The high cost of health is a barrier to access health services and a hindrance to economic development for the poorest members of society. Evidence shows that out-of-pocket expenditure has increased from $15 per capita in 1995 to $38 in 2014 leaving 11 million patients or families of patients in low-income countries (LIC) and low-middle income countries (LMIC) to fall into poverty every year due to catastrophic payments.

To remove these barriers, it is recommended that governments commit out-of-pocket expenditure represent at least less than 20% of the total health expenditure and there are none for priority health services or for the poorest families – sadly LICs and LMICs are only halfway towards this target. Reducing catastrophic spending on health and impoverishment due to utilization of health services is one of the goals of UHC!

While external Aid can help bring us closer to UHC, over-reliance on it is extremely risky. In recent years we have witnessed how donor Aid country priorities have shifted at a global level; health is now just one of the many competing issues along with security, climate change, humanitarian crises and refugees. Also in many LICs, as economies grow, governments will increasingly face ‘transition’ which loosely refers to self-financing by national government of health programs previously supported by donor funds. This trend takes place within a context of greater competition for aid funding, and declining interest by some countries in foreign official development assistance (ODA).

Most LICs and LMICs have considerable scope to raise revenue by increasing tax collection efforts including more efficient tax administration and broadening the tax base. This is challenging and timeous but is doable. Reforming tax policies, for instance indirectly through value-added tax (VAT) serves as an opportunity government could mobilize resources. Another potential revenue source is tax innovation such as sin tax, telecom tax, additional corporate and social responsible tax – these taxes are often earmarked to specific expenditures like health care or education, however, earmarking can introduce rigidity and counter-productivity. Tackling tax avoidance and evasion and tax incentives for companies especially those trading in natural resources can raise additional revenues in countries. Governments could also greatly benefit from plugging leakages in revenues resulting from corruption and the illicit flow of funds. In Africa alone, as much as US$ 50 billion in illicit funds is being illegally diverted per year that is double the amount of overseas development aid that was received in 2014.

Governments, civil society and communities alike must pay attention to the nature of revenue sources being exploited to finance achievements of UHC so that they are equitable and sustainable. Good governance, robust transparency and sound accountability must be incorporated too.

Originally published by WAIC Health