Fiscal Space for Health in Sub-Saharan African Countries: An Efficiency Approach

Abstract

The study argues that potential savings from efficiency could be effective alternative to increasing health system financing in SSA. Health system efficiency estimates were derived from the Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA) and used to compute potential gains from efficiency. Data was sourced from the World Bank's world development indicators for 45 SSA countries in 2011. The results reveal that average potential saving in health expenditure from improved efficiency was 8.09% and 2.24% of GDP per capita in the DEA and SFA models, respectively. Countries with relatively higher potential gains from efficiency include Sierra Leone, Liberia, Lesotho and Swaziland. On the other hand, Cape Verde, Eritrea, Madagascar and Mauritius recorded low potential gains from efficiency. The results imply that in the face of significant economic challenges and burden on government budget, improving health expenditure efficiency to create some fiscal space will be an important step.