Who pays for progress? The role of domestic resource mobilisation and development assistance in financing health. A case study from Kenya.

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Kenya has one of the most vibrant economies in Sub-Saharan Africa. Economic growth is strong, and in 2014 it was announced that Kenya had crossed the threshold from a ‘low-Income country’ to a ‘lower-middle-Income country’ (LMIC). Yet, 43% of the people live on less than $1.25 a day and in some parts of Kenya only 28% of infants are fully immunised. Lack of finance is the main, though not only, cause of these poor health indices. This report examines what can be done in Kenya to bring additional finance into the health sector.

The report outlines the concerns in Kenya that the country will lose access to overseas development aid (ODA) given its new LMIC status. It looks at the major health donors and what their likely response will be to the change in Kenya’s income status in order to assess if they are likely to decrease their support to Kenya in the near future.

Four possible ways of increasing tax income that could be used for healthcare are identified:

  • Increase the prioritisation given to health in the national budget. At present Kenya only spends around 5.6% of it’s budget on health, much lower than its commitment made in Abuja to allocate at least 15%.
  • Increase the overall efficiency of the tax system. For example, it is believed that more tax could be collected both from high net worth individuals and from multinational companies. Donor nations can support improvements in efficiency of the revenue service, which gives excellent return-on-investment.
  • Reduce illicit financial flows out of the country according to research, Kenya lost $4.9 billion in capital flight in 2010 alone: this is approximately $120 per person.
  • Strengthen pooled social health insurance but cover, through tax revenue, the contributions of the poorest members of society.

The report makes recommendations both for the government of Kenya and for donors. Donor institutions are advised not to withdraw from LMICS ‘too fast, too soon’.

 

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