HEALTH SECTOR EXPENDITURE

INDICATORS & BENCHMARKS

KENYA

Bernadette Wanjala Kenya Institute for Public Policy Research and Analysis (KIPPRA)

10TH DECEMBER 2014

MONTREUX, SWITZERLAND

MACROECONOMIC CONTEXT

Economy growing at 5.7% after rebasing (up from 4.7%

before rebasing)

After rebasing, country moved to lower middle income

country GDP per capita of US$ 1,246 (up from US$ 994

before rebasing)

Mounting expenditure pressures against revenue

shortfalls (only income tax meeting the targets)

In 2013: tax to GDP = 19.3% (24% before rebasing);

expenditure to GDP was 29.5% (37% before rebasing)

Debt to GDP in 2013 = 36% (45% before rebasing)

Health spending in total expenditure at national level –

6% in 2012/13 and 2% in 2013/14 (after devolution) –

Far from the Abuja declaration benchmark.

WHY FISCAL SPACE FOR HEALTH

Considerable achievements – under five mortality,

immunization. Big challenge of high disease burden (esp NCD) & deterioration of maternal mortality ratio - 414 in 2003 to 488 deaths per 100,000 live births in 2008-09

Low access to health services - 52 percent based on the 5km radius norm. Also wide regional disparities.

Low public per capita funding - public per capita spending at $19.2; per capita health spending still remains low at $42 compared to the WHO recommendation of $54 per capita.

Substantial funding by donors esp for HIV AIDS, malaria and TB e.g. 90% of funding for ARVs. Some largely off-budget

Empirical evidence shows higher levels of health expenditure associated with better performance on the health-related MDG indicators

Devolution of health – some health functions transferred to county governments e.g. primary health care and county health facilities and pharmacies

EMPIRICAL EVIDENCE SHOWS HIGHER LEVELS OF HEALTH

EXPENDITURE ARE ASSOCIATED WITH BETTER

PERFORMANCE ON THE HEALTH-RELATED MDG INDICATORS

HEALTH SECTOR FINANCING

Source (KShs Mn) 2001/02 2005/06 2009/10

Public 24,341 29,879 35,382

Private 44,405 40,077 45,087

Donors 13,486 31,613 42,384

Others 82 408 0

Total 82,314 101,978 122,854

Percentage contributions

Public 29.6 29.3 28.8

Private 53.9 39.3 36.7

Donors 16.4 31 34.5

Others 0.1 0.4 0

Total 100 100 100

WHO PAYS FOR HEALTH? NEED TO INCREASE

PUBLIC SPENDING ON HEALTH

0%

10%

20%

30%

40%

50%

60%

70%

80%

Kenya Liberia Sierra Leone Tanzania Uganda

37%

18%

75%

32%

48%

29% 32%

18%

40%

26%

34%

50%

7%

28% 26%

Sh

are i

n t

ota

l sp

en

din

g

Private Government Other

HEALTH SECTOR FINANCING UNDER DEVOLUTION IN

KENYA

Total transfers to counties in 2013/14 – 210 billion

(KShs. 190b equitable share & 20b conditional

transfers)

20% of total revenue

13 % of government expenditure

In addition to equitable transfers, county govts can

raise additional revenue thro licenses and fees,

property taxes.

Implication of devolution on health service delivery?

At national level, risk of having sent too much to the

counties; for health in 2013/14, 51%

Over-reliance on donor funding for some line items –

HIV, TB & malaria – no established coordination

framework for counties

COST OF DEVOLVED FUNCTIONS

Health spending accounted for 25 - 30% of total cost of

devolved functions

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Actual Actual Budget Ceiling Projection Projection

Agriculture & Rural development 10.5 11.2 9.8 14.9 15.7 16.5

Education 0.4 0.4 1.6 1 1.1 1.1

Energy, Infrastructure and ICT 45.7 53.5 67.6 77 80.9 84.8

Environment, Water &

Sanitation 8 8.8 5.8 10.9 11.4 12

General Economic, Commercial,

Labour Affairs 8.7 6 4.9 9.7 10.2 10.7

Governance, Justice, Law &

Order 0.3 0.3 0.5 0.5 0.6 0.6

Health 21.8 31.4 53.9 47.7 50.2 52.5

Public Administration &

International relations 14.9 17.6 22.3 25.3 26.6 27.8

Social Protection, Culture &

Recreation 6.2 10.1 7.7 11.2 11.8 12.4

Total 116.5 139.3 174.1 198.2 208.5 218.4

HEALTH SECTOR FINANCING UNDER DEVOLUTION

Health budget lumped together for equitable sharing

by counties - Budgetary priorities set by county govts

2012/13 2013/14 2014/15 2015/16

2013

MTEF

Budget Medium Term estimates Total

National 33.1 45.5 47.1 46.7 139.2

Of which transfer to

public entities 15.7 17.3 18.7 19.2 55.1

Counties 53.9 47.7 50.2 52.5 150.4

Total 87.0 93.2 97.3 99.2 289.6

COUNTY ALLOCATIONS TO HEALTH 2013/14 (KSHS.

BILLION) While health spending accounted for 25 -

30% of total cost of devolved functions,

how much is allocated by counties?

Level of

funding for

health

varied

across

counties –

no

guidelines

on minimum

allocations

because of

autonomy by

county

governments

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

Kir

inyaga

Bom

et

Kaji

ad

o

Isio

lo

Sia

ya

Mu

ran

g'a

Nyam

ira

Tait

a/T

aveta

Meru

Nan

di

Naro

k

Mars

abit

Waji

r

Elg

eyo/M

ara

kw

et

Mach

ak

os

Hom

a B

ay

Tra

ns

Nzoia

Kit

ui

Kil

ifi

Kw

ale

Kis

um

u

Kia

mbu

Nak

uru

Tu

rkan

a

ACTUAL TO BUDGETED HEALTH EXPENDITURE

RATIOS 2013/14

Actual spending on health quite low – only 3 counties over 100% ratio of actual/budgeted

16 counties below 50% ratio

Initial allocation of about 37% of total county expenditure

Low actual expenditure due to ambitious targets (both expenditure and revenue)

0%

50%

100%

150%

200%

250%

300%B

usia

Mu

ran

g'a

Tu

rkan

a

Bu

ngom

a

Kak

am

ega

Lam

u

Kir

inyaga

Gari

ssa

Keri

cho

Mach

ak

os

Elg

eyo/M

ara

kw

et

Nyam

ira

Kis

ii

Nak

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ifi

Waji

r

Vih

iga

Nan

di

Th

ara

ka -

Nit

hi

Uasi

n G

ish

u

Isio

lo

Bom

et

Nair

ob

i C

ity

Meru

PROPORTION OF ACTUAL HEALTH SPENDING IN TOTAL

EXPENDITURE BY COUNTY

Proportion of health in total costing of health devolved functions was about 25 – 30%; compared to an average actual of 23%

Only 8 counties have over 20%

22 counties have =< 10%

Cumulative national + county = 4% in 2013 compared to 6% pre-devolution

Likely underfunding of health

0%

5%

10%

15%

20%

25%

30%

Bu

sia

Em

bu

Man

dera

Kir

inyaga

Keri

cho

Sia

ya

Kis

ii

Kak

am

ega

Bom

et

Nyam

ira

Bu

ngom

a

Lam

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a

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ay

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ish

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Nak

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Tait

a/T

aveta

Th

ara

ka -

Nit

hi

Meru

Ba

rin

go

Avg Actual Health Exp to total

Exp = 23%

HEALTH NEEDS VIS A VIS HEALTH EXPENDITURE BY COUNTIES

Overall morbidity Full immunization

Health sector expenditure to total expenditure ratio

≤10% 11% - 20% 21% - 30%

Ove

rall

Mo

rbid

ity

10% - 20% 8 counties 7 counties 1 county

21% - 30% 6 counties 8 counties 2 counties

31% - 50% 7 counties 4 counties 3 counties

Health sector expenditure to total expenditure ratio

≤10% 11% - 20% 21% - 30%

Fully

imm

un

ized

po

pu

lati

on

30% - 50% 6 counties 1 county 2 counties

51% - 70% 7 counties 10 counties 4 counties

>70% 8 counties 8 counties none

CONCLUSION

Health sector likely to be under-funded at county level

given the varied levels of funding

National + county spending on health = 4%; lower than

pre-devolution level

At county level, need for in-depth review of county

budgets to determine level of funding for health vis-à-

vis health needs – will require creation of additional

fiscal space for health

Possibility of guidelines for budgetary allocations? Set

benchmarks for minimum allocations to key devolved

functions such as health.

Possibility of conditional grants for specific line items,

especially malaria, TB and HIV AIDS that were largely

donor financed.

THANK YOU

ASANTE