High rates hurt public healthcare

May’s 78th World Health Assembly (WHA) — the annual meeting of the World Health Organization's member states — ended on a self-congratulatory note. From an agreement on pandemic preparedness to increases in assessed contributions to the WHO, there were plenty of achievements to tout. But there was an elephant in the room, hiding behind a banner reading “One World for Health”: the high borrowing costs faced by African countries.

- SERAH MAKKA ROSEMARY MBURU

Despite being the world’s youngest continent, Africa bears 24% of the global disease burden. Yet it accounts for less than 1% of global health spending. In 2001, African countries decided to take matters into their own hands, pledging to devote at least 15% of national budgets to health. Yet more than two decades later, only two countries have reached that target. On average, governments on the continent allocate a mere 1.48% of their GDP to health, while 37% of health spending comes directly out of citizens’ pockets.

Borrowing costs are a major reason why. Whereas high-income countries borrow at an interest rate of 2-3%, their African counterparts can face rates above 10%. This discrepancy — which reflects investors' perception of heightened risk in African economies — means that governments on the continent often must choose between making debt payments or buying medicines, hiring doctors and building health clinics. The cost of capital costs lives.

Consider Kenya's ill-fated Managed Equipment Services (MES) programme, a public-private partnership aimed at enhancing service availability at hospitals through the provision of modern equipment. The programme did provide high-tech equipment to many hospitals. But, given the cost of capital for investment, Kenya could not deliver the infrastructure or personnel to use it.