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On the efficiency of public health expenditure in Sub-Saharan Africa: Does corruption and quality of public institutions matter?

Novignon, Jacob (2015): On the efficiency of public health expenditure in Sub-Saharan Africa: Does corruption and quality of public institutions matter?

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Abstract

Health expenditure in Sub-Saharan Africa (SSA) has improved over the years with several recent efforts to improve resource commitments to the health sector. Health outcomes in the region have, however, seen little improvements over the years. Several reasons, including the efficiency of health expenditure, have been given to justify this mismatch. Studies on health expenditure efficiency have mainly focused on developed regions with little attention to SSA. The objective of the study was, therefore, to examine The effects of corruption and public institution quality on efficiency. The efficiency of health expenditure was also compared across selected SSA countries. Data for the study was sourced from the World Bank's World Development Indicators for 45 countries covering the period 2005 to 2011. The two-stage Data Envelopment Analysis (DEA) was employed for the analysis. The first stage computes efficiency scores while the second stage examines the determinants of efficiency using the Tobit model. Per capita health expenditure was used as input while infant, under-five mortality and crude death rates were used as outputs. The results show that health expenditure efficiency was low with average scores of approximately 0.5. This suggests that there exist significant potential for SSA countries to improve population health outcomes given the level of expenditure. There was significant variation across countries with Cape Verde, Eritrea and Mauritius among the efficient countries while Equatorial Guinea, Sierra Leone and Swaziland were relatively inefficient. High corruption and poor public sector institutions reduced health expenditure efficiency. The findings emphasize the fact that, while increased health spending is necessary, it is also important to ensure efficiency in resource use across SSA countries. This can be achieved by effective monitoring and evaluation programmes that ensure reduced corruption and improved public institutions.

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