Kenya’s health system is facing an imminent risk as indications from both donors and government suggest that the decline in donor assistance for Health is likely to continue over the medium to long term.
- Two key donors, PEPFAR and Gavi have announced transition in a far-reaching decision that is likely to affect the country’s health human resource.
- It is estimated that for every dollar spent by the government, donors spend more than three times as much on immunization.
- The health budget findings contained in the fifth edition of the Institute of Public Finance Kenya’s Macro Fiscal Analytic Snapshot (MFAS) are some of the pivotal subjects for scrutiny in 2024.
Other than the donor transition, the Institute of Public Finance (IPF) on Monday also warned that the sector faces disease and demographic transition as challenges likely to add additional cost to Kenya’s health budget. Other matters covered in the MFAS are the planned fiscal consolidation, anticipated revenue growth, and concerns about debt distress.
PEPFAR, a major donor for HIV/AIDS, plans to work with the government on a transition plan for HIV financing, including moving PEPFAR-supported Human Resources for Health (HRH) to the government payroll at both national and county level.
PEPFAR has already phased out some of its support towards counties for different projects. In 2020/21, 14 of 39 counties were transitioned from its Orphans and Vulnerable Children (OVC) program.
The Ministry of Health, in the Medium-Term Expenditure Framework (MTEF) for the period 2023/24 – 2025/26, has also called for a scale up of domestic resource mobilization, mainly for HIV, TB, Malaria, Vaccines, Nutrition, Reproductive, Maternal Neonatal, Child and Adolescent Health and Blood Transfusion Services, to bridge the gap due to shrinking donor funding.
Kenya is also expected to transition out of Gavi support for the immunization program by 2030.
Over the years, the Kenyan government’s contribution to the expenditures incurred in the program declined from 0.15 per cent in 2012 to 0.07 per cent in 2017.
- This level of donor dependency poses a significant risk for the sustainability and effectiveness of the program, which will require a resource allocation of approximately 4 per cent of the total government’s expenditure for health.
- IPF noted that without adequate funding, the program may lose the gains it has made as was the case in 2013/14.
- At the time, the government failed to allocate funds for vaccines, resulting in a 7% decrease in vaccine coverage in Kenya from 94 per cent in 2012 to 87 per cent in 201322.
“Kenya’s commitment to Universal Health Care (UHC) is exemplified by the Bottom-up Economic Transformation Agenda, the Kenya Health Financing Strategy (2020-2023) and the recent signing of four UHC-focused laws. However, this is not borne out in practice,” noted Gladys Wachira, Research Analyst, Institute of Public Finance (IPF), “For instance, the initial budget allocation in 2022/23 was KES 123 billion, reduced to KES 119 billion in the first “supplementary” budget and further down to KES 116 billion in the second revision.”
“This downward trend continues, with the first revision of the 2023/24 budget revealing a cut of 2.5 per cent mostly on the development side of the budget.”
The report underscores ambitious targets for revenue and fiscal deficits, while exploring prospects for sustained growth and poverty reduction.
Key Issues
According to the report key issues in 2024 include:
- Settlement of the Eurobond: Kenya must settle its $2 billion Eurobond, a decision that will shape its fiscal future. It is necessary to observe the approach to be adopted by the government to achieve this, and its fiscal implications.
- Fiscal Deficit Management: Kenya’s ability to keep the fiscal deficit in line with the planned levels remains uncertain. The question remains whether there will be an increase in public investment, and what the subsequent impacts on future expenditure and borrowing will be. • Privatization of State-Owned Enterprises poses potential risks of inefficiency and corruption.
- Implementation of the Medium Term-Revenue Strategy: The government has unveiled a draft Medium Term-Revenue Strategy, which warrants monitoring of the actual implementation of proposed tax measures and their effectiveness in yielding tangible revenue gains.
Another key issue is the Implementation of the UHC laws: recent UHC laws signed into law will significantly impact public spending on health. It will be important to monitor the implementation of these reforms, particularly the repeal of the National Social Insurance Fund (NHIF) and the creation of the Social Health Insurance Authority.
Kenya faces looming Debt Crisis as its first Eurobond Matures in 2024 (kenyanwallstreet.com)
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