Strategies for financing Africa’s health sector
By Vera Songwe
By no means earlier than within the final half century has Africa’s well being care panorama seen so many modifications and attracted a lot curiosity. The truth is, Africa’s well being care sector could be price an estimated $259 billion by 2030. Whereas these traits reveal a profitable alternative for the personal sector, if not well-regulated, Africa’s well being care system may find yourself protecting extra Africans beneath the poverty line. Thus, African international locations have a possibility to construct on the well being financing success of 2021 to strengthen the resilience of this sector and Africa’s individuals.
Out-of-pocket (OOP) well being spending in Africa stays excessively excessive in comparison with different continents—only one weak point in Africa’s well being techniques that the COVID-19 pandemic has uncovered. Certainly, regardless of the havoc the virus has wreaked, it has additionally supplied the continent with alternatives to reshape its well being infrastructure in addition to its provide techniques, urging a shift from donor and externally manufactured merchandise to continental manufacturing techniques leveraging alternatives created by the African Continental Free Commerce Settlement.
COVID-19 has created not solely a well being disaster, however an financial contraction by no means skilled earlier than with such velocity. As well as, the COVID-induced improve in unemployment is inflicting personal sector spending on well being to lower on the similar time COVID is including to the price of well being care—in a area the place personal well being expenditure already exceeds 50 p.c of whole well being expenditure in over 15 international locations (Determine 2.6 beneath). The fast problem for a lot of governments is how you can provide reasonably priced and dependable well being care in a fiscally constrained atmosphere.
Previous to the COVID pandemic, quite a few ideas for rising public help for the well being sector had been proposed, primarily by home useful resource mobilization. Nonetheless, within the face of financial contraction, rising authorities income within the brief time period is now not possible.
Out-of-pocket (OOP) well being spending in Africa stays excessively excessive in comparison with different continents—only one weak point in Africa’s well being techniques that the COVID-19 pandemic has uncovered.
The fast focus of worldwide monetary establishments, due to this fact, has been to help African economies to lift further concessional sources. Over the course of the disaster, the G-20 supplied three phased choices for added liquidity: Debt service suspension, particular drawing rights, and an progressive financing method to vaccine acquisition. Multilateral monetary establishments additionally elevated disbursement of recent credit to international locations to help further well being spending.
The G-20–constructing on a proposal from the African finance ministers and the Financial Fee for Africa (UNECA)—adopted the African proposal for a debt service suspension initiative (DSSI) as the primary liquidity injection for low-income international locations. The DSSI allowed international locations to droop debt fee obligations to collectors in 2020 and 2021 in order that the governments may use the monetary sources to reply to the worldwide well being disaster. These newly accessible sources have been used to buy private protecting tools (PPE) and in addition help native manufacturing of PPE, which helped arise some a part of the financial system.
In early 2021, the G-20 additional permitted the issuance of Particular Drawing Rights (SDRs)—which had been referred to as for by African finance ministers early within the pandemic—to the magnitude of $650 billion, of which Africa obtained about 5 p.c (price round $33.6 billion). These further sources elevated liquidity to international locations to reply to each the well being and the financial crises.
Counting on African establishments to finance and battle the pandemic has served Africa properly all through the disaster. As such, Africa has put in place quite a few new establishments and progressive financing approaches to fund vaccine acquisition.
The primary such establishment is the African Medical Provides Platform (AMSP), whose energy lies in its skill to pool demand for medical provides in a clear method—thereby commanding decrease market costs. One other essential innovation was the creation of the African Vaccines Acquisition Belief (AVAT) by pooling SDRs from international locations like Egypt, Nigeria, and Zimbabwe. It supplied early sources for the African Export-Import Financial institution (Afreximbank) to arrange a facility for vaccine procurement. Beneath the management of African Union Particular Envoy Attempt Masiwiya, and in collaboration with the African CDC led by Dr. John Nkengasong and UNECA, AVAT has been capable of procure over 40 p.c of Africa’s COVID vaccine wants (together with a 70 million Moderna buy from the U.S.). With the help of a $500 million donation from the Mastercard Basis, the prices of vaccines underneath the AVAT mechanism are on par with these procured through COVAX. Certainly, in 2022, a significant focus for leaders should be to manage procured vaccines: As of the tip of 2021, lower than 10 p.c of Africa is totally vaccinated. (For extra on vaccine fairness, see Michel Sidibé’s viewpoint.)
Afreximbank additionally developed the AVAT No-Fault Compensation Program for Taking part Member States. This program, the primary of its type on the continent, gives no-fault lump-sum compensation in full and remaining settlement of any claims to people who’ve suffered a “severe antagonistic occasion” leading to everlasting impairment or loss of life related to a COVID-19 vaccine procured or distributed underneath the AVAT Framework inside any of the taking part member states.
The COVID-induced improve in unemployment is inflicting personal sector spending on well being to lower on the similar time COVID is including to the price of well being care.
The event of those progressive mechanisms means Africa can now go to the market to obtain its personal well being commodities, empowering Africa to maneuver from importing over 90 p.c of its well being must producing tools and prescribed drugs on the continent. This dynamic has already begun with international locations like South Africa, Senegal, and Algeria rising capability and Rwanda, Kenya, Nigeria, and Morocco organising new capability for well being sector commodity manufacturing.
With the COVID-19 pandemic, the necessity for nearer collaboration between well being and finance ministers turned much more essential. Certainly, inclusive, environment friendly, and efficient well being care financing wants each working collectively. There may be now a name to create a World Well being and Finance Board to deal with elementary issues of worldwide governance for well being, a few of which have been so clearly uncovered by the (mis)administration of the pandemic.
Africa is forward of the sport on this effort: Beneath the management of the African Union heads of state, Africa CDC, and UNECA, related ministers have held bi-monthly coordination conferences to align sources and supply. This new mechanism may be used post-pandemic to construct and construction financing for extra reasonably priced and improved well being care on the continent. The World Financial institution, the Mastercard Basis, UNICEF, GAVI and others are already working by this mechanism to assist handle the most important well being problem for Africa in 2022: vaccinations.
