Africa’s health sector is not confined to health issues – it has direct and indirect influence on how economies perform. Africa’s health financing challenge is therefore not only a health problem, it is an economic one. This is the crux of the argument put forward by Yemi Osinbajo and Claver Gatete .
African Finance Ministers spend much of their working lives measuring constraints. They know what the latest Eurobond cost, how much debt service falls due next quarter, how many months of imports the foreign reserves will cover and what another percentage point of inflation will do to the budget.
Ask a different question: how much did preventable illness cost the economy last year? – and the answer is usually much less precise.
That gap matters. For too long, health financing has been treated chiefly as a health-sector concern, discussed in Ministries of Health, at donor conferences and among global health institutions. Yet a country’s ability to finance the health of its people depends just as much on what happens in its treasury: growth, taxation, debt, exchange rates, public spending and the capacity to withstand shocks.
Africa’s health-financing challenge is therefore not merely a health problem. It is an economic one.
There is growing agreement that the financing model must change. African countries need greater ownership, stronger domestic financing and partnerships organised around national priorities. But a new paradigm is not yet a plan. Someone must still make the numbers add up within a credible economic framework.
That means bringing health into the machinery of economic policy: medium-term expenditure frameworks, revenue strategies, debt management, procurement systems, public financial management and national development plans.
The need is becoming more urgent. Development assistance for health has fallen sharply from its pandemic-era peak. At the same time, many African governments spend more servicing debt than they do on health.
Between 2021 and 2023, the averages were roughly $70 per person on interest payments and $44 on health. Currencies create another vulnerability. Africa imports more than 70% of the medicines it consumes and almost all its vaccines.
When a currency depreciates, a Health Ministry may receive every unit of currency appropriated by parliament and still be able to buy fewer medicines, diagnostic kits and pieces of equipment. The nominal budget has not been cut; the real health budget has.
These tensions are familiar to anyone who has worked in a Finance Ministry or sat around a cabinet table. A Health Ministry understandably begins with need: how many clinics, health workers and medicines are required? A treasury starts somewhere else: how much revenue is available, what must be paid to creditors, what is the deficit ceiling, how costly will borrowing be and which obligations are already on the books? Both sets of questions are legitimate. The problem is that they are too often answered separately.
Nigeria’s experience during Covid-19 made the consequences plain. The pandemic created an immense and unexpected demand for public money just as lower oil production and revenues, foreign-exchange pressures and a wider fiscal crisis were shrinking the government’s room for manoeuvre.
Nigeria mounted an effective public health response in several respects, particularly in national coordination and containment. But shortages of hospital capacity, equipment, diagnostics, isolation facilities and other essential supplies imposed hard limits.
One choice captured the dilemma. Nigeria needed to buy vaccines from abroad to meet an immediate emergency. It also needed to invest in domestic vaccine production to reduce its vulnerability to the next one.
With inadequate resources to do both at the required scale, the government faced a choice between saving lives now and building resilience for the future. This was not a dispute between officials who cared about health and those who did not. It was a collision between urgent needs, scarce resources and different time horizons.
Beyond the Abuja target
For decades, the usual response to inadequate health spending has been to urge African governments to allocate more. The Abuja Declaration’s target of devoting 15% of public expenditure to health expressed an important political ambition. But the persistent failure to meet it, a quarter of a century later, also reveals the limits of targets insufficiently connected to fiscal reality.
The useful question is no longer simply how much governments ought to spend. It is how economies can create, protect and use the fiscal space needed to finance health sustainably.
Nigeria’s efforts to reform its health system offer another lesson. When one of us served as the country’s Vice-President (Professor Yemi Osinbajo), Nigeria’s disease burden, rapidly growing population and persistent weaknesses in healthcare made the need for reform increasingly urgent.
Estimates suggested that Nigeria faced an annual financing gap of at least $4bn if it was to make credible progress towards universal health coverage. The Presidential Health Reform Committee and other initiatives examined how the finance and health authorities could reduce waste, improve the use of existing funds and release money for priority services.
By 2022, however, the maximum identifiable savings or additional resources from these efficiency efforts were estimated at ₦800m (less than $2m at the time). Against an annual gap of at least $4bn, the contrast was stark.
Efficiency matters. Not every dollar spent on health is an investment merely because it carries a health label. Money lost through poor procurement, fragmented programmes or inefficient purchasing does not become productive expenditure.
Systems that fail to detect ghost clinics, inflated insurance claims or payment for services never delivered cannot be financed sustainably.
But efficiency is not alchemy. Better procurement and administration cannot, by themselves, close a structural financing gap of such magnitude. African health systems require both better spending and substantially more money.
This changes the economic conversation. A disease outbreak may begin as a public-health emergency, but it rarely remains one. Workers stay at home. Trade slows. Tax revenues fall. Governments are forced to spend more just as their fiscal position deteriorates. In countries dependent on imported medical products, disrupted supply chains and foreign-exchange shortages magnify the shock.
Health is therefore part of economic resilience and national security.
The case for greater health financing must therefore combine three things: stronger fiscal capacity, transparent institutions and much closer attention to how existing resources are used.
One strategy, not two
What would this mean in practice? Every government should be able to answer a simple question: what would the national health-financing strategy look like if the Finance and Health Ministers had to write it together? There should not be one document describing epidemiological needs and another setting out the macroeconomic framework. There should be a single strategy that reconciles the two.
We propose a National Health Financing Compact, jointly owned by the finance and health authorities and anchored in the government’s broader economic programme. It would connect demographic trends and health needs to the fiscal outlook, debt trajectory, domestic-revenue potential, expenditure reforms and objectives for protecting households from medical costs.
It would also state clearly how much external financing is needed, what it will finance and for how long. This must not become another planning document written mainly for development partners. The direction of accountability should be reversed. National institutions should determine the financing strategy; international partners should organise their support around it.
External finance will remain important. Africa’s progress against HIV, improvements in immunisation and other public-health achievements show what international solidarity can accomplish. But as concessional finance becomes scarcer, it must be used more strategically: to build institutions, reduce risk, finance regional and global public goods, and support transitions that domestic resources and private markets cannot yet fund.
African governments must also avoid replacing one form of dependency with another. Innovative financing can be useful, but a bond does not create fiscal space simply because it has an inventive name. Nor does blended finance make an obligation disappear.
Before adopting a new instrument, governments should ask three questions. Who ultimately pays? Who carries the risk? And does the instrument strengthen the country’s long-term capacity to finance healthcare, or merely push the bill into the future?
From health expenditure to economic investment
The debate is beginning to change. When African Ministers of Finance, Planning and Economic Development met in Tangier in 2026, health financing was no longer treated merely as a demand from another spending ministry.
The discussion increasingly turned to debt, taxation, productivity, investment and domestic resource mobilisation. Finance Ministers were beginning to treat health as part of their own mandate. That change in ownership may prove more consequential than any new financial instrument.
A national budget is ultimately a record of choices. For too long, health has appeared in that record as something to be funded after the supposedly serious economic priorities have been settled.
In reality, it is part of the foundation on which those priorities depend. Healthy children learn more effectively. Healthy adults work more productively. Families protected against catastrophic medical expenses can save, invest and consume. Economies with resilient health systems withstand epidemics and other shocks at a lower fiscal cost.
The objective is not for African countries to finance everything alone. Pandemics, medical research and other global public goods will always require international co-operation. Nor is the purpose to diminish the role of health ministries or development partners. It is to change the starting point.
Africa’s health-financing future must be built around the economic capacity, public institutions and political choices of African states: sovereignty without isolation, and partnership without dependency. Health is not what governments finance after economic policy has been decided. It is economic policy.
The post Macroeconomics of staying alive – health financing as an economic policy appeared first on New African Magazine .
Macroeconomics of staying alive – health financing as an economic policy
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