ECA Calls for New Fiscal Compact to Transform Africa’s Health Financing

By Kudakwashe Ruzive

ADDIS ABABA, Ethiopia, The United Nations Economic Commission for Africa (ECA) has called for a new fiscal compact between African ministries of finance and health to address the continent’s growing health-financing crisis on August 24.

Speaking at a ministerial dialogue held on the sidelines of the 76th WHO Regional Committee for Africa (RC76), ECA Chief of Staff and Sustainable Financing Initiative project lead Aboubakri Diaw said Africa does not lack health reforms, but rather the financing needed to implement them.

“We have a fundamental fiscal problem that is tied to the health-sector problem,” Diaw told ministers and senior officials.

He warned that many African countries now spend more on debt servicing than on public health.Diaw said governments finance less than 41 percent of total health expenditure on average, while declining donor support and rising out-of-pocket costs are placing additional pressure on households.

More than 150 million people are pushed into poverty each year because of health-related expenses.

He said rising debt distress, declining concessional financing and Africa’s growing population are further shrinking the fiscal space available for health investment.

A Financing Gap, Not a Reform GapDiaw described Africa’s challenge as a “sustainable financed-reform deficit”, noting that many health strategies exist but are not adequately funded.

“Health financing strategies sit on shelves. Insurance schemes are legislated but struggling to be capitalised. Benefit packages are defined but not costed into medium-term expenditure frameworks,” he said.

He argued that reforms without dedicated and sustainable budget allocations cannot deliver meaningful results.

New Finance-Health Compact ProposedECA is advocating for a multi-year fiscal compact between ministries of finance and health.

The proposed approach would replace annual budget battles with predictable funding arrangements tied to measurable health outcomes and efficiency improvements.

Under the model, finance ministries would commit to predictable and protected health allocations, while health ministries would demonstrate measurable results, efficiency and accountability.

Diaw also called for stronger health and budget data systems, including what he described as a “digital twin of the health budget” to allow governments to track spending and verify results in real time.

Tackling InefficiencyThe ECA official warned that inefficiency is consuming a significant share of Africa’s already limited health resources.“We estimate that thirty to forty per cent of health spending is lost to inefficiency,” he said, stressing that governments cannot sustainably increase health budgets if existing resources are being wasted.

“Efficiency is the currency that buys fiscal space. No minister of finance can expand an envelope that leaks,” Diaw added.ECA is supporting member states through financing-gap assessments, fiscal-space analysis and public-expenditure diagnostics, while exploring innovative financing instruments including health taxes, debt conversions and blended-finance mechanisms.

Diaw said universal health coverage must ultimately be supported by broader fiscal reforms and credible investment plans. He urged health ministries to present finance ministers with clear evidence showing the size of financing gaps, expected economic returns, efficiency gains and financing instruments suited to each country’s debt and fiscal position.

“When we put an investment-grade proposition on the table, ministers of finance move,” Diaw said, stressing that Africa’s priority should now be to turn health strategies into fully financed and sustainable programmes.