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Effects of Global Financial Crisis on Funding for Health Development In Kirigia et al. BMC International Health and Human Rights 2011, 11:4 http://www.biomedcentral.com/1472-698X/11/4 RESEARCHARTICLE Open Access Effects of global financial crisis on funding for health development in nineteen countries of the WHO African Region Joses M Kirigia*, Benjamin M Nganda, Chris N Mwikisa and Bernardino Cardoso Abstract Background: There is ample evidence in Asia and Latin America showing that past economic crises resulted in cuts in expenditures on health, lower utilization of health services, and deterioration of child and maternal nutrition and health outcomes. Evidence on the impact of past economic crises on health sector in Africa is lacking. The objectives of this article are to present the findings of a quick survey conducted among countries of the WHO African Region to monitor the effects of global financial crisis on funding for health development; and to discuss the way forward. Methods: This is a descriptive study. A questionnaire was prepared and sent by email to all the 46 Member States in the WHO African Region through the WHO Country Office for facilitation and follow up. The questionnaires were completed by directors of policy and planning in ministries of health. The data were entered and analyzed in Excel spreadsheet. The main limitations of this study were that authors did not ask whether other relevant sectors were consulted in the process of completing the survey questionnaire; and that the overall response rate was low. Results: The main findings were as follows: the response rate was 41.3% (19/46 countries); 36.8% (7/19) indicated they had been notified by the Ministry of Finance that the budget for health would be cut; 15.8% (3/19) had been notified by partners of their intention to cut health funding; 61.1% (11/18) indicated that the prices of medicines had increased recently; 83.3% (15/18) indicated that the prices of basic food stuffs had increased recently; 38.8% (7/18) indicated that their local currency had been devalued against the US dollar; 47.1% (8/17) affirmed that the levels of unemployment had increased since the onset of global financial crisis; and 64.7% (11/17) indicated that the ministry of health had taken some measures already, either in reaction to the global financing crisis, or in anticipation. Conclusion: A rapid assessment, like the one reported in this article, of the effects of the global financial crisis on a few variables, is important to alert the Ministry of Health on the looming danger of cuts in health funding from domestic and external sources. However, it is even more important for national governments to monitor the effects of the economic crisis and the policy responses on the social determinants of health, health inputs, health system outputs and health system outcomes, e.g. health. Background According to the International Monetary Fund (IMF), Overview of macroeconomic effects world output was expected to contract by 1.4% in 2009 Since 2008, the severe reduction in global demand for and to gradually pick up in 2010 to reach a growth rate commodities, goods and services as a result of the of 2.5% [1]. Although Africa registered a real average liquidity crisis and the loss of trust in the financial sec- gross domestic product (GDP) growth rate of above 5% tor in the United States of America and Europe has between 2000 and 2008 [2], the growth rate declined to considerably slowed down the global economy. 2.8% in 2009 [3]. The total nominal GDP (i.e. unadjusted for inflation or deflation, and measured in current year dollars) in * Correspondence: [email protected] the African Region shrunk by US$ 94.48 billion (8.6%) World Health Organization, Regional Office for Africa, B.P. 06, Brazzaville, Congo between 2008 and 2009; 27 countries recorded a © 2011 Kirigia et al; licensee BioMed Central Ltd. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/2.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. Kirigia et al. BMC International Health and Human Rights 2011, 11:4 Page 2 of 10 http://www.biomedcentral.com/1472-698X/11/4 decrease in GDP, varying widely from US$ 0.007 billion Table 1 Changes in gross domestic product in the African to US$ 15 billion (Table 1). Similarly, GDP per capita Region (US$ billions, current prices) decreased by between US$ 6 and US$ 6183 in 31 coun- GDP tries [4] (Table 2). Table 2 shows that the decrease in Country Year 2008 Year 2009 Change GDP per capita was largest among oil producing coun- Algeria 159.669 134.797 -24.872 tries such as Algeria, Angola, Equatorial Guinea, Gabon Angola 84.945 69.708 -15.237 and Nigeria. Per capita GDP in Botswana, whose major Benin 6.712 6.401 -0.311 source of foreign exchange is diamonds, declined by US Botswana 13.461 10.808 -2.653 $1,559. Seychelles, a tourism dependent economy, lost Burkina Faso 8.116 7.780 -0.336 US$1,957 per capita. Burundi 1.097 1.410 0.313 The contraction of GDP has been attributed to Cameroon 23.732 21.820 -1.912 declines in private household expenditures, business Cape Verde 1.744 1.755 0.011 enterprise purchases, government revenues, and exports Central African Republic 1.997 1.983 -0.014 of goods (e.g. crude oil, minerals, agricultural products) Chad 8.400 6.974 -1.426 and services (e.g. tourism) [3,5]. Other impacts of the Comoros 0.532 0.525 -0.007 crisis include falls in foreign exchange rates [3], reduced Democratic Republic of Congo 11.629 11.104 -0.525 foreign direct investment, decreased official development Congo, Republic of 10.774 8.632 -2.142 assistance (ODA) and other donor support, increased Côte d’Ivoire 23.508 22.909 -0.599 interest rates and risk premiums, and reduced remit- Equatorial Guinea 18.525 11.175 -7.35 tances from abroad [6]. Eritrea 1.479 1.694 0.215 Ethiopia 26.393 33.920 7.527 Expected effects on health sector funding Gabon 14.535 10.936 -3.599 There is ample evidence from Asia [7,8] and Latin Gambia, The 0.810 0.726 -0.084 America [9] showing that economic and financial crises Ghana 16.654 14.761 -1.893 resulted in cuts in expenditures on health, lower utiliza- Guinea 4.517 4.436 -0.081 tion of health services, and deterioration of child and Guinea-Bissau 0.461 0.438 -0.023 maternal nutrition and health outcomes. Kenya 29.564 30.212 0.648 Owing to reductions in the size and growth of GDP, Lesotho 1.618 1.624 0.006 unless protected, the per capita spending on health Liberia 0.850 0.868 0.018 and other social sectors is likely to decrease. Evidence Madagascar 9.463 8.974 -0.489 from previous Latin America economic crises shows Malawi 4.268 4.909 0.641 that governments tend to decrease social expenditures Mali 8.774 8.757 -0.017 during times of economic recession [8,9]. Indonesian Mauritania 3.161 3.241 0.08 experience indicates that the health budget tends to be Mauritius 8.738 9.156 0.418 especially vulnerable to reductions during times of Mozambique 9.897 9.654 -0.243 financial and economic crisis [7]. The proportion of Namibia 8.835 9.039 0.204 government health ministry budgets going to salaries Niger 5.382 5.323 -0.059 (already high in many countries) tends to increase as Nigeria 207.116 165.437 -41.679 capital spending and other operating expenditures Rwanda 4.459 5.011 0.552 declines. Reductions in maintenance, medicines or Sao Tome and Principe 0.175 0.189 0.014 other operating expenditures related to disease surveil- Senegal 13.350 12.610 -0.74 lance or supervision are likely to have a more dama- Seychelles 0.822 0.656 -0.166 ging and immediate effect on quality and quantity of Sierra Leone 1.953 2.064 0.111 health service delivery [7]. South Africa 276.764 277.379 0.615 Decreased real per capita household spending on health, Swaziland 2.840 2.929 0.089 coupled with increased costs of treatment and low cover- Tanzania 20.668 22.159 1.491 age of prepaid health schemes will lower household Togo 2.890 2.771 -0.119 demand for private sector health services, with demand Uganda 14.565 15.658 1.093 switching to the public sector [6]. Because the public sec- Zambia 14.654 12.293 -2.361 tor is already facing reduced funding, it may not be ade- Zimbabwe 3.145 3.556 0.411 quately equipped to absorb any surges in demand, and the TOTAL 1093.641 999.161 -94.480 result may be a worsening in quality of care. In most Source: IMF [4]. Kirigia et al. BMC International Health and Human Rights 2011, 11:4 Page 3 of 10 http://www.biomedcentral.com/1472-698X/11/4 Table 2 Gross domestic product per capita in Member countries of the African Region, publicly-funded health States of the WHO African Region (US$, current prices) services were already overstretched long before the onset Country Per capita GDP Per capita GDP Change of the crisis. in 2008 in 2009 During periods of economic crisis, poorer households Algeria 4,588 3,816 -772 are likely to suffer the most as they are unable to Angola 5,054 4,027 -1,027 re-adjust and cushion their expenditures, often forcing a Benin 828 765 -63 decline in demand for health services [6,10].
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