National- and district-level funding in the health sector

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Helpdesk Query:

Is there any research that compares district level donor funding to national level? Is there any documentation on the costs and benefits of district level funding and also district compared to national.

Summary:

Contact with health financing experts and a rapid literature search found no research that compares district level and national level donor funding. The literature suggests that effectiveness of funding at the national level is likely to depend on how well central funds are disbursed and on the capacity of local services receiving the funds.

In Tanzania funds from the central government are not disbursed on a timely basis. Research showed the late disbursement interrupted implementation of health activities in the district health system. The council health management team in Kongwa has adopted three strategies to cope with delays in financial disbursements.  A similar situation has been found in Ghana.

The UK Independent Commission for Aid Impact finds evidence that funds transferred from the national budget down through sub-national government to local service delivery units often suffer substantial losses, due to excessive layers of bureaucracy.

Decentralised financial resources for health services can better reflect local priorities, as has been found in Malawi. Benefits include: easing of the crisis in essential drug supply, and increased availability of maternal health services.

An OECD policy brief advocates for the use of public financial management systems to help strengthen national capacity and performance. It may seem more efficient to fund directly to district services but in the long-term it would be better to strengthen central administration to disburse the funds effectively themselves.

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