How to (or not to) . . . measure performance against the Abuja target for public health expenditure

Abstract

In 2001, African heads of state committed 'to set a target of allocating at least 15% of our annual budget to the improvement of the health sector'. This target has since been used as a benchmark to hold governments accountable. However, it was never followed by a set of guidelines as to how it should be measured in practice. This article sets out some of the areas of ambiguity and argues for an interpretation which focuses on actual expenditure, rather than budgets (which are theoretical), and which captures areas of spending that are subject to government discretion. These are largely domestic sources, but include budget support, which is externally derived but subject to Ministry of Finance sectoral allocation. Theoretical and practical arguments in favour of this recommendation are recommended using a case study from Sierra Leone. It is recommended that all discretionary spending by government is included in the numerator and denominator when calculating performance against the target, including spending by all ministries on health, social health insurance payments, debt relief funds and budget support. Conversely, all forms of private payment and earmarked aid should be excluded. The authors argue that the target, while an important vehicle for tracking political commitment to the sector, should be assessed intelligently by governments, which have legitimate wider public finance objectives of maximizing overall social returns, and should be complemented by a wider range of indicators, to avoid distortions.