Public Social Spending in Africa: Do the Poor Benefit?

Abstract

Education and health care are basic services essential in any effort to combat poverty and are often subsidized with public funds to help achieve that purpose. This paper examines the effectiveness of public social spending on education and health care in several African countries and finds that these programs favor not the poor, but those who are better-off. It concludes that this targeting problem cannot be solved simply by adjusting the subsidy program. The constraints that prevent the poor from taking advantage of these services must also be addressed if the public subsidies are to be effective. Public subsidies for social services such as education and health care rest on two basic policy objectives-efficiency and equity. Efficiency gains can be achieved when the subsidies produce external benefits or correct for a market failure. Equity is also an important objective of public spending. Education and health care, in particular, are understood to be basic services that are essential in any fight against poverty. The World Bank's strategy for poverty reduction, for example, combines broad-based growth with human capital development (World Bank 1990). And for that, public subsidies on investments that enhance human capital must benefit the poor. To what extent has public social spending in Africa been effective in reaching the poor? To answer this question, this article reviews the benefit incidence of government spending. It finds that government subsidies in education and health care are poorly targeted to the poor and indeed favor those who are better-off. Improving targeting to the poor involves not simply rearranging the public subsidies but also addressing the constraints that prevent the poor from accessing these services. The article examines these issues by reviewing the evidence on the benefit incidence of health spending in seven African countries and education funding in nine countries in the region.

The Distribution of Education and Health Services in Madagascar over the 1990s: Increasing Progressivity in an Era of Low Growth

“…Statistically, this is confirmed by the extended Gini tests but not the dominance tests. This result, which is in agreement with findings from other countries in the region (Sahn and Younger, 2000;Castro-Leal et al, 1999) reflects to a large extent the urban location of hospitals. Still, both hospital care and basic care, as well as combined public care, generally dominate the Lorenz curve, i.e., both sources of outpatient care are expenditure progressive.…”

“…An appealing aspect of this approach is that we are really examining, not the distribution of future incomes, which are in any case unknowable as well as endogenous to individual preferences, but of future capabilities in the sense of Sen (1985), which are a function of education and health. 9 A different path that also leads to the per child focus is to frame the issue in terms of 'needs' (see Castro-Leal et al, 1999). From this perspective, the allocation of benefits across the income distribution should be compared with the distribution of the need for the service.…”

Making the case for cervical cancer prevention: what about equity?

“…29 Poor households spend less on health care and are more likely to forego treatment or self-treat rather than seek care in a modern public or private facility. 30 Both out-of-pocket payments for health care and indirect costs of lost hours of productive work associated with illness impose a greater burden on the poor than on wealthier households. 31 In remote rural settings people have to travel long distances for services, consuming scarce personal resources of time and money.…”

Are cost differences between specialist and general hospitals compensated by the prospective payment system?

“…11 Of these observations, 14,181 refer to day case treatment, 18,170 to elective care, 19,532 are short-stay non-elective care, and 27,186 are long-stay non-elective care. The sample for the analysis of per diem unit costs comprises 16,098 observations, of which 4087 are elective and 12,011 are non-elective.…”

“…Footnote 10 (continued) do not have an overnight stay in hospital, while elective and long nonelective patients have at least one overnight stay. 11 10 T&O departments in general hospitals did not report data on PROMs for hip or knee replacement and they are, therefore, dropped from the sample. 12 We count specialised services following the rules defined in the Prescribed Specialised Services, and not the criteria specified in the Specialised Services National Definition Sets.…”