Health Sector Public Expenditure Review, 2009/10

Transcription

1 THE UNITED REPUBLIC OF TANZANIA MINISTRY OF HEALTH AND SOCIAL WELFARE Health Sector Public Expenditure Review, 2009/10 May,

2 TABLE OF CONTENTS LIST OF TABLES... 3 LIST OF FIGURES... 4 LIST OF ABBREVIATIONS... 5 EXECUTIVE SUMMARY INTRODUCTION REVIEW OF PER FY09 RECOMMENDATIONS AND ACTIONS TAKEN HEALTH BUDGET AND EXPENDITURE ANALYSIS INTRODUCTION TOTAL PUBLIC HEALTH SPENDING SOURCES OF FUNDS FOR THE PUBLIC HEALTH EXPENDITURE TRENDS IN RECURRENT AND DEVELOPMENT EXPENDITURES PERFORMANCE OF THE HEALTH SECTOR BUDGET Budget Performance: Government Vs Foreign Funds Budget Performance: Recurrent Vs Development Budget Performance: MoHSW Departments Expenditures by Key Intervention Areas Spending by MKUKUTA Objectives HEALTH EXPENDITURES AMONG LAYERS OF GOVERNMENT SUMMARY OF HEALTH SECTOR FINANCING INDICATORS COMPLEMENTARY HEALTH FINANCING HEALTH SERVICES FUND THE NATIONAL HEALTH INSURANCE FUND THE COMMUNITY HEALTH FUND THE LOCAL GOVERNMENT HEALTH SECTOR SPENDING SOURCES OF FUNDS TO FINANCE HEALTH SERVICES IN LGAS BUDGET PERFORMANCE IN LGAS HEALTH SPENDING AT LGAS LEVEL BY SUB-VOTES TIMING OF OTHER CHARGES RELEASES EQUITY IN ALLOCATION OF HEALTH RESOURCES CONCLUSIONS AND RECOMMENDATIONS HIGHLIGHTS OF PER 10 FINDINGS RECOMMENDATIONS ANNEX A: AGGREGATE DATA USED FOR ANALYSIS (TZS, MN) ANNEX B: HEALTH EXPENDITURES BY CATEGORIES OF SPENDING UNITS (MILLION TZS) ANNEX C: SUMMARY OF PE FOR PARASTATALS, 2009/

3 LIST OF TABLES TABLE 1: IMPLEMENTATION STATUS OF THE FY 2008 AND FY2009 PER RECOMMENDATIONS TABLE 2: TREND OF TOTAL PUBLIC SPENDING ON HEALTH (BILLION TZS) TABLE 3: TRENDS OF NOMINAL AND REAL PER CAPITAL EXPENDITURE IN HEALTH 2005/ / TABLE 4: SOURCE OF FUNDS FOR THE PUBLIC HEALTH SECTOR (TZS MN) TABLE 5: EXPENDITURE TRENDS: DEVELOPMENT VS RECURRENT TABLE 6: BUDGET PERFORMANCE: GOVERNMENT VS FOREIGN FUND TABLE 7: BUDGET PERFORMANCE, RECURRENT VS DEVELOPMENT TABLE 8: MOHSW BUDGET PERFORMANCE BY DEPARTMENTS, FY2009/ TABLE 9: MoHSW EXPENDITURES BY KEY INTERVENTION AREAS, 2009/ TABLE 10: MKUKUTA RELATED EXPENDITURES TABLE 11: HEALTH EXPENDITURES AMONG LAYERS OF GOVERNMENT TABLE 12: PERFORMANCE OF SELECTED HEALTH SECTOR FINANCING INDICATORS TABLE 13: SELECTED HEALTH SECTOR FINANCING INDICATORS IN USD TABLE 14: HEALTH SERVICES FUND (MILLION TZS) TABLE 15: NHIF INCOME AND REIMBURSEMENTS 2005/ /10 (MILLION TZS) TABLE 16: NHIF EXPENDITURES BY COMPONENTS IN 2009/10 (MILLION TZS) TABLE 17: MATCHING FUND PAID, FY2009/ TABLE 18: MEMBERSHIP TO CHF/TIKA TABLE 19: SOURCES OF FUNDS AND TOTAL AMOUNT FOR 120 LGAS TABLE 20: PERCENT SHARE OF SOURCES OF FUNDS FOR HEALTH EXPENDITURES TABLE 21: LOCAL GOVERNMENT HEALTH SPENDING TABLE 22: BUDGET PERFORMANCE IN 120 LGAS, 2009/ TABLE 23: BUDGET PERFORMANCE OF THE SAMPLED 11 LGAS, 2009/ TABLE 24: HEALTH SPENDING AT LGAS LEVEL BY SUB- VOTES (MILLIONS TZS) TABLE 25: AVERAGE SHARES OF TOTAL EXPENDITURE PER SUB-VOTE FOR 120 LGAS TABLE 26: RECURRENT BLOCK GRANT ALLOCATION PER SUB-VOTE, FY2009/ TABLE 27: TIMING OF OC RELEASES IN SELECTED COUNCILS, FY2009/ TABLE 28: FORMULA FOR ALLOCATING BLOCK GRANTS TABLE 29: CORRELATION MATRIX: BASKET AND RECURRENT EXPENDITURES ON RESOURCE ALLOCATION FORMULA VARIABLES TABLE 30: RECURRENT AND BASKET EXPENDITURES PER CAPITA ALLOCATION

4 LIST OF FIGURES FIGURE 1: SHARE OF HEALTH BUDGET AND EXPENDITURE IN TOTAL GOVERNMENT BUDGET AND EXPENDITURE (2005/ /10/11) FIGURE 2: TREND OF NOMINAL AND REAL PER CAPITAL EXPENDITURE IN HEALTH 2005/ /10/ FIGURE 3: GOVERNMENT AND FOREIGN CONTRIBUTION TO HEALTH EXPENDITURES FIGURE 4: TREND OF RECURRENT AND DEVELOPMENT EXPENDITURE, 2005/ /10/ FIGURE 5: TIMING OF OC RELEASES IN SELECTED COUNCILS, FY2009/ FIGURE 6: OC RELEASES, RUANGWA DC FIGURE 7: OC RELEASES, KYELA DC FIGURE 8: OC RELEASES, BIHARAMULO DC FIGURE 9: OC RELEASES, MWANZA CC FIGURE 10: BASKET AND RECURRENT EXPENDITURES PER CAPITA

5 LIST OF ABBREVIATIONS CC CCHP CFS CHF CHMT CHSB DC DDH DED DMO GoT HMIS HSF HSSP III LGA MC MDGs MoFEA MoHSW NHIF OC PE PHCDP PMO-RALG SWAp TC TFIR TGE THE TZS City Council Comprehensive Council Health Plans Consolidated Fund Services Community Health Fund Council Health Management Teams Council Health Services Boards District Council District Designated Hospitals District Executive Director District Medical Officer Government of Tanzania Health Management Information System Health Services Fund Health Sector Strategic Plan III Local Government Authority Municipal Council Millennium Development Goals Ministry of Finance and Economic Affairs Ministry of Health and Social Welfare National Health Insurance Fund Other Charges Personal Emoluments Primary Health Care Development Program Prime Minister s Officer-Regional Administration and Local Government Sector Wide Approach Town Council Technical and Financial Implementation Report Total Government Expenditure Total Health Expenditure Tanzanian Shilling 5

6 EXECUTIVE SUMMARY The year 2009/10 marks the 10 th anniversary since the signing of the Abuja Declaration in which African heads of State and Government agreed to allocate 15% of their budgets to health. In line with improving the health status of the population, the Government also committed to achieving the Millennium Development Goal (MDG) health indicators by The 2009/10 Public Expenditure Review (PER) reviewed the expenditures in Tanzania from 2005/06 to 2009/10 to provide an assessment of public resources flowing to the health sector and to examine whether public health spending is aligned with health sector objectives as outlined in the Tanzania s Health Sector Strategic Plan III ( ). 2009/10 PER HIGHLIGHTS The share of public expenditures in health has increased slightly but remains below 15% recommended the target set by the Abuja Declaration. The share of public spending on health to total government expenditure (excluding Consolidated Fund Services) increased from 12.1% in 2008/09 to 12.9% in 2009/10. However, these levels of expenditure are below the Abuja target. Public health expenditures accounted for about 3% of the Gross Domestic Product in 2009/10 and estimated 3.9% in 2009/10/11. The government was the major financier of public health expenditures at 64% in 2009/10 with the balance being provided by development partners through basket and non-basket funds. The expenditures from the main sources of public spending: the government, development partners, and user fees have increased over the years, and despite the government remaining the largest source of public spending, external resources by bilateral and multilateral agencies have become significant, accounting for up to 36% of the total expenditures in 2009/10. User fee revenues have also increased reaching well over TZS 7.8bn or 0.1% of the public health expenditures in 2009/10. Despite being small compared with government and donor contributions, user fees constitute an important source of expenditures in the facilities where it is collected and are spent largely for operations and maintenance. 6

7 The share of development health spending has increased throughout the review period, reaching 41% in 2009/10 The share of recurrent expenditures as a percent of total public health expenditures has declined from 71% in 2005/6 to 59% in 2009/10. This means that a lot of funds have been progressively allocated to development expenditures. In 2009/10/11, development budget will be receiving more allocation than the recurrent budget. This is a result of new funding mechanisms such as the Global Fund. Per capita health spending is still low, but it is in line with the Health Sector Strategic Plan III projections of US$ per capita spending by 2009/10. In per capita terms, public health expenditure was TZS 11,298 (US$ 9.5) in 2005/6 and has increased to TZS 21,327 (US$ 14.7) in 2009/10 which is in line with the HSSP III projections. However, in real terms, the per capita expenditure is only US$9.3 in 2009/10. There has been a remarkable improvement in the utilization of funds allocated to the health sector Overall the budget performance has improved with all the resources allocated to the recurrent budget (including supplementary) expended. However, low absorption continues to persist in funds allocated from external resources especially those for non-basket funds (79% in 2009/10). Overall expenditures on development budget have been declining from 100% in 2005/6 to 88% in 2009/10. A review of budget performance by departments shows varying trends with most departments spending all their allocations (and hopefully meeting their MTEF targets) except policy and planning and internal unit. A significant amount of expenditures were on key priority areas including malaria, TB, HIV and AIDS, reproductive and child health and pharmaceuticals. Approximately 51% of the MoHSW expenditures in 2009/10 were on key priority areas namely malaria, TB, HIV & AIDS, reproductive health and child health and pharmaceuticals. HIV accounted for 42% of expenditure associated with the key priority areas expenditures. Shares of resources managed centrally by the Ministry of Health and Social Welfare (MoHSW) and locally by Local Government Authorities (LGAs) have changed just modestly, indicating a slow pace in decentralization of health sector financing A review of expenditures between central and decentralized units showed that health expenditures continue to be concentrated at the central level (approximately 60%) which mainly to supports personnel emoluments and the procurement of pharmaceuticals. 7

8 Nevertheless, the share of health resources spent at LGAs has been increasing from specifically 24% in 2005/6 to 38% in 2009/10. This is expected to increase to 33% in 2010/11. Complementary health financing is becoming increasingly important in health sector financing, but there is significant amount of unused funds within both at the National Health Insurance Fund (NHIF) and the Health Services Fund (HSF). This PER looked at the role of complimentary funds in financing health, namely the Health Services Fund (HSF), National Hospital Insurance Fund (NHIF) and the Community Health Fund (CHF). The Health Services Fund receipts accounted for 3% of the health expenditures by the Local Government Authorities (LGAs) in 2009/10. Between 2006/07 and 2009/10, receipts from the HSF have more than doubled. However, the HSF expenditure performance is low and the Fund continues to accumulate surplus which were equivalent to 26% of the receipts. A review of NHIF expenditures in 2009/10 indicates that over 63% of expenditures were spent on claims reimbursements while 30% went to administrative expenses. The NHIF continues to accumulate huge surpluses accounting to over 50% of the annual total income. CHF is poorly performing and only a total of TZS 3,09m were spent from this source in 2009/10. On average, central government block grants are the major source of funding for health at the level of LGAs. However, further disaggregation of data shows huge variation that is masked by the averages. Block grants from the central government constitute the largest source for realized health spending by LGAs, (50.2% of total LGA health expenditure), followed by donor basket funds (21.3% of total LGA health expenditure). The average of other sources of fund (not specified) increased to 7% in 2009/10 and it is expected to reach 10% based on the 2010/2011 budget estimates. This is huge off budget that is not predictable. Further, average actual expenditure from councils own resources was only 2% in 2009/10 and it remains constant for the 2010/11 estimates. This is a threat to sustainability of health interventions should there be a shock on the funds from the central level (government and development partners). There are significant variations in the composition of funds from the identified sources across LGAs. Budget allocations from the central government in the form of block grants range from 76% in Pangani District Council (DC) to 38% in Kibondo DC. Basket funding ranges from the lowest of 10% of the total public health sector funds in 2009/10 in Pangani DC to the highest of 33% in Ruangwa DC. 8

9 Spending at the Local Government level is highly inequitable despite having resource allocation formula in place. There is high inequality in allocation of the funds from recurrent and basket funds as the ten districts with highest per capital allocation are not necessary the ones with the big population given that population size guarantee getting the large share of the cake according to the resource allocation formula. The range between the Council with the highest per capita recurrent expenditure and the Council with the lowest per capita expenditure is very huge amounting to TZS 20, INTRODUCTION The purpose of Public Expenditure Review (PER) 2009/10 like previous PERs in the health sector has not changed: providing the Ministry of Health and Social Welfare (MoHSW), Ministry of Finance and Economic Affairs (MoFEA), Prime Minister's Office Regional Administration and Local Government (PMO-RALG), Development Partners and other key stakeholders in the sector with an overview of the budgetary allocations and expenditures for the past five financial years. In 2009/10 the health sector marked the 10 year commemoration of number of initiatives namely Sector Wide Approach (SWAp) and Abuja Declaration. In addition, 2009/10 was also the first year of the implementation of the Health Sector Strategic Plan III HSSP III ( ), whose focus is to fast track the achievements of the Millennium Development Goals (MDGs) and the National Strategy for Growth and Reduction of Poverty (MKUKUTA in Kiswahili acronym). The HSSP III was formulated along the key health system pillars and it aims at improving the performance of the health sector by focusing on priorities related to: infrastructure expansion and improvement; strengthening referral services; increasing the number and quality of human resources; improving management capacity at Council level, and increasing and broadening mechanisms of health financing. These interventions are expected to improve further the current health indicators, contribute towards poverty reduction and attainment of growth objectives of the country and the realization of the MDGs. Thus, they provide the framework for planning, budgeting and allocation of resources in the health sector. The HSSP III has eleven key components, with health financing being one of them. Implementation of all other components depends highly on the financing from all sources in the 9

10 country, which are tracked through the National Health Accounts. The need to achieve country specific targets as stipulated in the HSSP III and international agreements such as Abuja declaration and MDGs has created pressure to generate more resources and to ensure efficient use of scarce national resources. In the health sector, the range of financing mechanisms have increased and alternative systems including Community Health Fund (CHF), National Health Insurance Fund (NHIF) and cost sharing arrangements have been established. All these aim to provide additional discretionary funding at local levels to facilitate quality service delivery. In addition, the government in partnership with donors has improved the coordination of external resource flows to enhance the predictability and utilization of these resources. The PER 2009/10 has considered all the above developments and gives an overview of the budget performance at all levels in the public sector. The information presented in this PER is not only vital for gauging the status of HSSP III financing but also provides data for use in the preparation of the Health Sector Financing Strategy. The central data were supplemented by tracking expenditure in a sample of 12 districts and expenditure records for 120 districts. The information was collected from the Comprehensive Council Health Plans (CCHPs) and Technical and Financial Implementation Reports (TFIRs) in order to provide a more representative picture on budgetary allocation and expenditure, equity in health spending and off-budget at the Local Government Authority (LGA) level. Thus, the objectives of the PER 2009/10 include; Review of the Health PER 2009 findings and actions taken by the Sector (if any) in response to those findings, indicating unaccomplished/pending actions and reasons as well as implications and the way forward. Analyze all financing sources available in the sector and provide a trend of resource availability overtime. This include analysis of; Budget allocations and expenditure at central, region and LGAs level Recurrent and development budget performance for the past three-years Deviations in overall budget performance (budgeted, release versus actual expenditure) indicating whether there are clear justifications for such deviations and factors constraining the allocations of resources Analyze expenditures which appear in the Ministry of Health and Social Welfare budget but its final consumption is at the lower levels (in particular commodities/equipments, pharmaceuticals and supplies Establish trends of government allocation and expenditures to the health sector at sectoral and sub-sectoral level, including the central-local government split and specific 10

11 health care interventions, MKUKUTA and HSSP III. Conduct a desk review of CCHPs and TFIRs to show the budget allocation, expenditure, equity in spending and off-budget at LGA level. Undertake a detailed analysis of income and expenditure at the district level, through district tracking studies in 12 districts. The PER 2009/10 is organized in seven Chapters. Chapter 1 is on introduction while chapter 2 presents a review of PER FY08 and PER FY09 recommendations and follow up actions. Chapter 3 summarises trends in overall public health spending (trends in the total public health budget and expenditures) and various sub-sectoral trends with a more detailed analysis of particular recurrent expenditure items and the development budget. Expenditure by MKUKUTA clusters (functional classification) and HSSP III is also presented in this chapter. Analysis of the contribution of complementary financing in health care financing is presented in Chapter 4. Chapter 5 gives an overview of budgets and expenditures in 120 districts and a detailed assessment of the financial flows in twelve tracked Councils. Chapter 6 discusses the results and provides recommendations for the way forward. 11

12 2.0 REVIEW OF PER FY09 RECOMMENDATIONS AND ACTIONS TAKEN The main recommendations of the PER FY09, together with actions planned and/or taken during FY10, are presented in Table 1 below. The PER FY09 also recommended for the Ministry of Health and Social Welfare (MoHSW) to continue implementing the pending recommendations from PER FY08. Table 1: Implementation Status of the FY 2008 and FY2009 PER Recommendations Recommendation from the 2008 and 2009 PER Reports 1. Breakdown of income and expenditure of all health facilities should be regularly provided to each health facility by the District Medical Officer (DMO) in order to enable them to make facility level plans and to utilize their funds. This is especially important for funds being kept at district level on behalf of health facilities (NHIF reimbursement, CHF funds, and user fees). Appropriate adoption of procedures and accounting software should be worked out. 2. Decentralization should be expedited to allow the LGAs use the resources effectively. With the current procedures, even if more resources were to be sent to the LGAs, there would still be left-overs because cumbersome procurement procedures. 3. Initiate/intensify measures for expanding and improving local sources of revenue for the health sector to reduce dependency. Actions Taken The MoHSW has introduced a planning template for health centres as a means to strengthen planning, allocation and reporting of resources and expenditures at facility level. In the future, this will lead to appropriate breakdown of income and expenditure reports per facility. At a later stage, this will be rolled out to dispensaries. This has not been addressed. However, efforts are underway to strengthen the procurement unit at the MoHSW level. These include additional staff for the procurement unit and providing them with the requisite trainings. Consideration should be made to introduce Medium Term and Annual Procurement plans at all levels The range of complementary financing mechanisms have increased e.g. CHF, NHIF, and cost sharing. As the analysis in chapter three below shows, the complimentary funding is increasing overtime which means private funds are increasingly been used to finance health care. However, the increase of Hospital Services Fund (HSF) from 2,964m in 2006/07 to 7,870m in 2009/10 means that people are increasingly paying from their pockets at the point of service delivery (not prepayment). Care should be taken to ensure that these payments do not compromise the ability of households to purchase other basic needs. 12

13 Recommendation from the 2008 and 2009 PER Reports 4. Improve LGAs capacity utilization of funds and financial integrity; purposeful measures including training and sensitization must be put/undertaken in place to ensure that LGAs are more efficient in that regard. 5. The MoHSW should seek/negotiate measures to improve performance of the development budget 6. The contribution by the Health Services Fund is increasing but more effort is needed without compromising universal access to health services 7. Take measures to improve the contribution of the NHIF; a. The main challenge of the NHIF is making the health sector benefit more from the fund. The claims are too low compared to the income of the fund. A mechanism must be designed to allow more funds to flow to the health sector particularly the providers at various levels. b. Advocacy to users/members is needed so that they use the services when in need. Training on better claiming from health facilities is also imperative. c. A study to cost the services in order to rationalize the size of the claims, are necessary to improve the contribution of the NHIF. 8. Address the repeatedly practical difficulties in accessing and compiling routine expenditure data and information in LGAs. There has to be a data archiving format that should be approved by the respective Actions Taken Capacity building of LGA officials on financial management has been a routine feature under the decentralization process. The observed under performance is strongly associated with the cumbersome procurement procedures. In responding to this challenge, the MoHSW has strengthened the procurement unit by deploying more human resources and organizing training to different sections of the Ministry on procurement procedures. The MoHSW is striving to improve the prepayment schemes; for instance NHIF is now managing the CHF funds; this is expected to improve efficiency in service delivery timely disbursement of the matching funds, increasing CHF and NHIF coverage etc. (a) Prices have been revised upward. Efforts to streamline the claims procedures have resulted in the percent of claims relative to income increasing from 12.5% in 2005/6 to 23% in 2009/10. (b) This is routinely done; NHIF regularly conduct training to the users as well as the providers as need arises. (c) NHIF in collaboration with MoHSW and other partners is organizing a comprehensive study on costing health services. Once this study is done it will provide costs hence indicative prices per service. PlanRep is been revised in order to capture estimates and actual expenditures which will make reporting easy. 13

14 Recommendation from the 2008 and 2009 PER Reports councils meetings for official publication and use. The Prime Minister s Officer- Regional Administration and Local Government (PMO-RALG) should work to ensure that councils have the capacity to compile and archive financial data. 9. Put in place a financial data management system at the MoHSW for accessing reliable and up-to-date financial information in the health sector. Fragments of financial/budget data are scattered over more than one ministry (MoHSW, MoFEA and PMO-RALG, etc) and it is very difficult to get reliable and consistent data. Apparently, MoHSW keeps and is knowledgeable of only the data of its budget. This data management arrangement is not conducive for effective policy implementation, monitoring and evaluation. Actions Taken Initiatives are underway to strengthen Health Management Information System (HMIS) to reduce paper work and increase electronic transmission of data. However, HMIS continues collecting and reporting on conventional indicators on service delivery. There is no central financial data management system. 14

15 3.0 HEALTH BUDGET AND EXPENDITURE ANALYSIS 3.1 Introduction This chapter provides an assessment of the financing of the publicly provided health care services, as well as detailed discussion of the trends in allocations, revised and actual expenditures during the 2005/ /10 financial years. The chapter also evaluates the Ministry s budgetary absorptive capacity among other issues and resource allocation to key priority areas to support the Health Sector Strategic Plan III and MKUKUTA. The focus of this chapter is on public health sector outlays that are financed by Government of Tanzania (GoT) and by development partners through health basket and non-basket mechanisms, households through official user fees paid at public facilities, and insurance contributions. Annex A shows the data that have been used for the analysis presented in this chapter. 3.2 Total Public Health Spending The share of public spending on health to total government expenditure as a percent of Total Government Expenditure (TGE) including Consolidated Fund Services CFS) oscillated between 12% and 10% between 2005/6 and 2009/10. However the share of public spending on health to total government expenditure (excluding Consolidated Fund Services) increased marginally from 12.1% in 2008/09 to 12.9% in 2009/10. The level of public spending would be relatively low if the donor funds which accounts for about 34% of public health spending are netted out. Although the Government committed itself to increasing health allocation budget to 15% of total government allocation in line with the Abuja declaration, expenditure figures for the last five financial years indicate that this is far from being realized (Table 2). In absolute terms, expenditures by public sector on health have more than doubled from TZS 426 billion in 2005/06 to TZS 908 billion in 2009/10. The public health expenditures as a percent of GDP increased from 2.7% in 2005/06 to 3.2% in 2009/10 (Table 2). Figure 1 shows the trends in share of health budget and expenditure in total government budget and expenditure (2005/ /10/11). 15

16 Table 2: DESCRIPTION Total Public Spending Excluding CFS Total Public Spending Including CFS Total public Health Spending Health As % of Total Expenditure excluding CFS Health As % of Total Expenditure including CFS GDP (current Price) Total public Health Exp as Percentage of GDP Trend of Total Public Spending on Health (Billion TZS) 2009/10/ 2005/ / / / /10 11 Exp Exp Exp Exp Exp 3,018 4,496 3,862 5,452 4,685 6,631 5,847 7,994 7,029 9,891 3,578 4,972 4,338 5,998 5,209 7,320 6,536 9,517 9,239 11, , ,966 17,951 20,948 24,782 28,213 30, Figure 1: Share of Health Budget and Expenditure in Total Government Budget and Expenditure (2005/ /10/11) Expenditures 14.0% 16.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 11.6% 11.3% 11.6% 11.1% 10.5% 10.3% 10.0% 9.7% 12.1% 10.3% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 14.1% 13.3% 11.9% 11.8% 12.2% 12.1% 11.0% 10.8% 12.9% 9.8% 0.0% 2006/ / / / /10/11 0.0% 2005/ / / / /10 EXCLUDING CFS INCLUDING CFS EXCLUDING CFS INCLUDING CFS Table 3 and Figure 2 below show the nominal and real per capita expenditure. Per capita expenditures on health increased from TZS 11,298 (US$ 9.5) in 2005/06 to estimated TZS 21,327 (US$ 14.7) in 2009/10. 16

17 Table 3: Trends of Nominal and Real Per Capital Expenditure in Health 2005/ /10 NOMINAL (TZS) 2005/ / / / /10 Exp Exp 11,298 13,379 13,224 15,374 Exp 14,251 estimates 17,771 Exp 17,118 Exp 2009/10/1 1 21,726 21,327 27,254 REAL (TZS) 8,308 9,163 9,058 10,115 9,376 11,392 10,973 13,009 12,770 13,695 NOMINAL USD REAL USD Deflator Exchange Rate 1,192 1,249 1,249 1,262 1,262 1,320 1,320 1,327 1,327 1,468 Population 37,704,872 38,867,802 38,867,802 40,066,599 40,066,599 41,302,370 41,302,370 42,576,226 42,576,226 43,773,995 Figure 2: Trend of Nominal and Real Per Capital Expenditure in Health 2005/ /10/ Sources of Funds for the Public Health Expenditure The public health continues to be financed primarily from two sources namely the Government and the Development partners. Expenditures from government funds increased by almost twofold from TZS 296,819 million in 2005/06 to TZS 578,682 million in 2009/10. Foreign funds increased by 54% from TZS 129,555 million in 2005/06 to TZS 200,049 in 2009/10. Government remained the main source of health financing contributing over two-thirds of all expenditures between 2005/6 to 2009/10 (Table 4). However as seen in Figure 3, the share of government funding is expected to drop to 53% in 20010/11 from 64% in 2009/10 while the share of foreign 17

18 funding is will increase from 36% to 46% in the same period. This raises the issue of sustainability of key health interventions in the event the development partners reduce or pull out their funding. Table 4: Source of Funds for the Public Health Sector (TZS Mn) 2005/ / / / / /10/1 1 DESCRIPTION Exp estimates Exp estimates Exp estimates Exp estimates Exp Government Funds 296, , , , , , , , , ,011 Foreign 129, , , , , , , , , ,712 Basket 68,299 99, ,204 80,956 80,956 99,730 85, , , ,804 Non Basket ,969 61, , , , , , , ,908 Off-Budget 3,363-2,964-5,696-5,858-10,784 Total 429, , , , , , , , ,311 1,192,723 - Figure 3: 120% Government and Foreign Contribution to Health Expenditures 100% 80% 30% 29% 32% 33% 34% 40% 34% 41% 36% 46% 60% 40% 20% 70% 71% 68% 67% 66% 60% 66% 59% 64% 54% 0% E xpenditure es timates expenditure es timates expenditure E s timates E xpenditure E s timates E xpenditure E s timates 2005/ / / / / /11 G overnment F unds F oreign 18

19 3.4 Trends in Recurrent and Development Expenditures The recurrent actual expenditures has increased from TZS 308,045 million in 2005/06 to TZS 532,742 million in 2009/10, while development expenditures increased from TZS 118,329 million to TZS 374,785 million during the same period (Table 5 and Figure 4). The share of development budget to the total continues to improve from 28% in 2005/6 to 41% in 2009/10. It is worth noting that in 2009/10/11, development budget is receiving more allocation than the recurrent budget. This is a result of new funding mechanisms such as the Global Fund which are are budgeted under the development vote. Table 5: Expenditure Trends: Development Vs Recurrent 2005/ / / / / /10/1 1 Exp Exp Exp Exp Exp Total recurrent 308, , , , , , , , , ,612 Total development 118, , , , , , , , , ,111 Total on Budget 426, , , , , , , , ,527 1,192,723 Rec as a % of Total 72% 76% 76% 64% 63% 55% 61% 54% 59% 49% Dev as a % of Total 28% 24% 24% 36% 37% 45% 39% 46% 41% 51% 19

20 Expenditure Expenditure Expenditure Expenditure Expenditure Figure 4: Trend of Recurrent and Development Expenditure, 2005/ /10/11 80% 70% 60% 50% 40% 30% 20% 72% 28% 76% 24% 76% 24% 64% 36% 63% 37% 53% 47% 61% 39% 54% 46% 59% 41% 49% 51% 10% 0% 2005/ / / / / /11 Total recurrent Total development 3.5 Performance of the Health Sector Budget Budget Performance: Government Vs Foreign Funds The overall execution of the budget has improved especially for the Government funds. However absorption of foreign funds especially non-basket funds has declined from 126% in 2006/7 to 79% in 2009/10 (Table 6). Table 6: Budget Performance: Government Vs Foreign Fund 2006/ / / /10 Government Funds 94% 91% 100% 105% Foreign 111% 95% 87% 87% Basket 103% 100% 87% 106% Non Basket 126% 92% 87% 79% Budget Performance: Recurrent Vs Development Overall the budget performance has improved with all the resources allocated to the recurrent budget (including supplementary) expended. In relation to the development vote the expenditures are still low at 88% in 2009/10 and hence the need to identify the barriers 20

21 hindering full absorption of resources which may include lack of release of funds and delay in procurement processes (Table 7). Table 7: Budget Performance, Recurrent Vs Development 2006/ / / /10 Total recurrent 99% 91% 107% 107% Total development 100% 95% 82% 88% Budget Performance: MoHSW Departments For consistency, the performance of activities by different departments is categorized in four levels as follows: Level 1: Departments with funds utilization rate above 80% are considered to have fully implemented the activities as stipulated in the MTEF (excellent performance) Level 2: Departments with funds utilization rate between 61%-80% are considered to have partially implemented the activities as stipulated in the MTEF (very good performance) Level 3: Departments with funds utilization rate between 41% -60% are considered to have partially implemented the activities as stipulated in the MTEF (average performance) Level 4: Departments with funds utilization rate between 0% - 40% are considered as poor performers. Except for the internal audit department which can be considered to have partially implemented the activities as stipulated in the MTEF (average performance), all other departments showed excellent and very good performance (Table 8). There is very huge deviation between the approved estimates and actual expenditure of the recurrent budget (TZS 135,994m versus TZS 221,602m respectively). Whereas the approved estimate for PE is very close to the actual expenditure (TZS 22,433m versus TZS 23,448 respectively), the OC showed very high deviation (TZS 113,561m versus TZS 198,154). The deviation is mainly from the hospital services (TZS 67,405m versus TZS 146,587) whereby actual expenditure is more than 100% of the approved estimate. The deviation on hospital services funds can be explained by the salaries paid to hospitals like Muhimbili National Hospital, Bugando and KCMC which are included in the OC. 21

22 Table 8: MoHSW Budget Performance by Departments, FY2009/10 Department Expenditure % Expenditure Administration & Personnel 3,609,801,300 3,669,771, % Finance & Accounts 1,233,920,400 1,150,476,735 93% Policy & Planning 1,683,119,500 1,252,793,857 74% Internal Audit 334,997, ,057,756 47% Information, education, & communication 342,776, ,381,943 91% Procurement unit 405,062, ,724,189 96% Legal unit 212,028, ,211,738 88% Hospital Services 78,317,371, ,558,671, % Chief Medical Officer 3,659,814,900 4,788,662, % Preventive Services 26,001,300,400 29,766,282, % Social Welfare 4,315,786,300 4,077,977,042 94% Human Resource Development 15,878,068,200 17,292,243, % Total Recurrent 135,994,047, ,602,255, % Expenditures by Key Intervention Areas The MoHSW spent 51% or TZS 245 billion in 2009/10 on key health sector priority areas namely Malaria, TB, HIV &AIDS, Reproductive Health and Child Health and Pharmaceuticals. The largest spenders of program funding were HIV & AIDS and Malaria at 42% and 14% respectively (Table 9). Pharmaceuticals took 18% of all program funding. Of the funds spent on Reproductive and Child Health, 51% went to support family planning services. These expenditures are in line with priority areas identified in the HSSP III. It is important to note the MoHSW transfers funds to institutions/parastatals and this accounted for 21% of the total MoHSW expenditure in 2009/10. Table 9: MoHSW Expenditures by Key Intervention Areas, 2009/10 Program Recurrent Development Expenditures Expenditures Total % of Total Malaria 1,027,449,458 34,201,807,500 35,229,256,958 14% TB/Leprosy 617,900,000 34,191,421,256 34,809,321,256 14% HIV & AIDS 4,940,913,771 97,505,168, ,446,082,461 42% Reproductive and child health 6,907,297,608 21,156,873,072 28,064,170,680 11% Family Planning 14,372,476,195 14,372,476,195 - Vaccines 3,243,674,582 3,126,000,000 6,369,674,582 - Others 3,663,623,026 3,658,396,877 7,322,019,903-22

23 Program Recurrent Development Expenditures Expenditures Total % of Total Pharmaceuticals 24,959,099,828 19,477,855,032 44,436,954,860 18% Total 38,452,660, ,533,125, ,985,786, % Note: Family planning, vaccines and others are sub-sets of reproductive and child health Spending by MKUKUTA Objectives Table 10 presents figures on spending by MKUKUTA objectives. Except expenditures by Internal Audit which were at 54%, all other departments spent over 80% of allocated funds. Table 10: MKUKUTA Related Expenditures, 2009/10 Sub Vote 1,001 1,002 Department MKUKUTA Related Budget (Million TZS) MKUKUTA Cumulative Exp (Million TZS) Exp as a % of budget Administration & Personnel 2,992,120,021 2,823,308,157 94% Finance & Accounts 816,501, ,340,030 95% 1,003 Policy & Planning 1,305,530,500 1,014,005,078 78% 1,004 Internal Audit 290,541, ,057,757 54% 1,005 Information, Education, & Communication 322,776, ,381,943 96% 1,006 Procurement Unit 425,377, ,724,189 92% 1,007 Legal Unit 198,596, ,211,738 94% 2,001 Hospital Services 148,973,573, ,644,877,619 98% 2,003 Chief Medical Officer 5,333,979,900 4,788,662,965 90% 3,001 Preventive Services 32,936,606,008 27,652,578,678 84% 4,002 Social Welfare 2,042,834,700 1,900,430,087 93% 5,001 Human Resource Development 10,654,982,107 9,706,000,121 91% Total recurrent 195,638,437, ,351,578, % 23

24 3.6 Health Expenditures among Layers of Government Health expenditures continue to be concentrated at the central level (approximately 60%) mainly to support personnel emoluments and procurement of pharmaceuticals. The share of health resources spent at LGAs has been increasing from 24% in 2005/6 to 38% in 2009/10, which is in line with the decentralization framework (Table 11 and Figure 4). Annex B provides detailed data used in the analysis presented in Table 11. It was noted that in 2009/10 about 2% of the funds at central level was used for procurement of pharmaceuticals which are used at the LGA level. Table 11: Health Expenditures among Layers of Government 2005/ / / / / /10/1 1 Central 72% 66% 62% 60% 59% 61% 58% 54% 55% 60% Regions 4% 5% 5% 7% 7% 7% 8% 6% 7% 6% LGAs 24% 29% 33% 33% 35% 32% 34% 39% 38% 33% Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 3.7 Summary of Health Sector Financing Indicators. Table 12: Performance of Selected Health Sector Financing Indicators Indicator 1(a) Proportion of national budget on health (including CFS) 1(b) Proportion of national budget on health (excluding CFS) 2(a) Total GOT public allocation to health per capita (Central, Regional and District) [TZS] GOT and Donor 2(b) allocation to health per capita (TZS) Per Capita GoT recurrent 2(c) Expenditure at District level (TZS) Level Baseline (2006/07) 24 FY08 FYO9 FY10 FY 11 Budget Budget Budget Budget National 11.8% 10.3% 11.0% 10.0% 10.8% 9.7% 9.8% 10.3% National 13.3% 11.3% 12.2% 11.1% 12.1% 11.6% 12.9% 12.1% Central 4,781 4,951 4,326 5,070 5,310 5,535 5,424 5,479 Regional ,026 1,206 1,169 1,351 District 3,024 3,750 3,598 3,775 4,007 5,275 6,064 6,403 National Average 13,224 15,374 14,251 17, ,726 21,327 27,254 District 2,969 3,431 3,431 3,508 3,741 4,732 5,524 5,528

25 Table 13: Selected Health Sector Financing Indicators in USD Indicator 2(a) Total GOT public allocation to health per capita (Central, Regional and District) 2(b) GOT and Donor allocation to health per capita Per Capita GoT recurrent 2(c) Expenditure at District level Level Baseline (2006/07) FY08 FYO9 FY10 FY 11 Budget Budget Actu al Budge t Budge Central Regional District National Average District t 25

26 4.0 COMPLEMENTARY HEALTH FINANCING 4.1 Health Services Fund The Health Services Fund (HSF) continues to be a significant source of funds for health facilities especially for operations and maintenance. The Health Services Fund receipts accounted for 3% of the health expenditures by the Local Government Authorities (LGAs) in 2009/10. Between 2006/07 and 2009/10, receipts from the HSF have more than doubled. However the HSF expenditure performance is low and the Fund continues to accumulate surplus and in 2009/10 the surpluses were equivalent to 26% of the receipts. Table 14 provides a summary of the HSF receipts and payments. Since user fees are known to limit access to care especially to the poor, it is important to ensure that all funds collected are utilized to improve service delivery and as a corollary stimulate the demand for health services. Table 14: Health Services Fund (Million TZS) Balance B/F Receipts Payments Surplus Surplus as a % of receipts 2006/07 1,614 2,964 2,826 1,752 59% 2007/08 3,016 5,696 5,089 3,615 63% 2008/09 1,614 5,858 5,280 2,192 37% 2009/10 3,905 7,870 9,767 2,008 26% 4.2 The National Health Insurance Fund The National Health Insurance Fund (NHIF) mobilizes funds from employees and employers to finance health care services to its members. The contribution rate is provided in the Act establishing the Fund as 6% of the monthly employee s gross salary (met equally by both employer and employee). The premium contribution to NHIF continues to increase and in 2009/10 they were more than the development partners contributions to the Health Basket Fund. This emphasizes the importance of NHIF in financing health services. However due to some logistical challenges including reluctance of some pharmacies to register and low rate of submission of properly filled NHIF membership forms, expenditures by NHIF remains low at 23% in 2009/10. The NHIF continues to accumulate huge surpluses accounting to over 50% of the annual total income (Table 15). In light of these there is need to review the NHIF 26

27 reimbursement procedures and levels, the benefit package and sensitize both the members and providers on how to fully utilize the opportunities provides by NHIF in financing care. Table 15: NHIF Income and Reimbursements 2005/ /10 (Million TZS) 2005/ / / / /10 Contributions 31,733 45,516 55,472 73,282 90,084 Total income (incl. Income from investments and others) Percentage of funds paid out to health services against total income of NHIF 39,142 56,884 72,168 76, , % 14.4% 14.1% 18.4% 23% spending including administration 20,457 23,950 26,719 34,325 39,782 Surpluses as a percent of total income 48% 61% 63% 55% 63% Table 16: NHIF Expenditures by Components in 2009/10 (Million TZS) Components Amount % Expenditure Administrative expenses 12, % Benefits payment (Reimbursement) 25, % Members services 2, % Finance charges % Total Expenditure for the NHIF 39, % 4.3 The Community Health Fund Community Health Fund (CHF) scheme started in 1997/98 after the Igunga DC pilot in By the end of 2009, CHF had been introduced in 99 district Councils. However, 43 of the 99 councils (about 43%) have established CHF but they are not active. A total of 9 districts have not been sensitized for CHF and these include new and old districts (Siha DC, Longido DC, Mkinga DC, Kilindi DC, Kilolo DC, Mvomero DC, Nanyumbu DC, Chato DC and Rorya DC). As a result of non-performance of a significant number of districts, contributions from CHF in the majority of districts have not picked the expected pace. This is evidenced by the trend in contributions which in some districts is a reversal to what was observed in the initial stages of implementation. Information from the 120 districts reviewed in this PER shows that in 2009/10, the budget for CHF/TIKA was TZS 5.69bn. However, just about half of this was spent in the same year (TZS 2.64bn). 27

28 Table 17 shows the total matching fund paid in FY2009/10. Only TZS 1.49bn were paid as matching fund which means that about half of the districts have not applied for the matching fund. The percentage is even lower given the fact that the money paid in 2009/10 includes also applications for previous years. For example, a total of TZS 22.96m were paid to Ulanga district in February 2009 but this matching fund covered the period from October 2004 to December Another example is the money paid to Sumbawanga district (TZS 25.15m) which covered the period from October 2004 to January 2009/10. Table 17: Matching Fund Paid, FY2009/10 Time of payment Total amount paid (TZS) Matching fund paid for the period ending December ,445,950 Matching fund paid for the period ending March 2009/10 153,446,500 Matching fund paid for the period ending June 2009/10 129,414,770 Matching fund paid for the period ending September 2009/10 577,710,000 Matching fund paid for the period ending October 2009/10 398,700,000 Total 1,484,717,220 A total of 18 Municipal and Town Councils have been sensitized to establish TIKA (Dodoma MC, Moshi MC, Shinyanga MC, Songea MC, Lindi TC, Mbeya MC, Arusha MC, Tanga CC, Singida MC, Iringa MC, Morogoro MC, Sumbawanga MC, Mtwara MC, Bukoba MC, Musoma MC, Mwanza CC, Tabora MC, and Kigoma Ujiji MC). Those that have not been sensitized include Kibaha TC, Babati TC, Kinondoni MC, Ilala MC, Temeke MC, Korogwe TC, Njombe TC and Mpanda TC. Note that all the three MCs in Dar es Salaam have not been sensitized and this is a concern. However, despite the sensitization, TIKA has been rolled out in three Councils only (Tanga CC), Dodoma MC, and Moshi MC). It has however been noted that these cities did not follow the proposed TIKA modality. What has been introduced in these Councils follows the CHF principles. It is imperative to roll out TIKA in Dar es Salaam as a model city due to its complexities and other cities can adapt the model based on the lessons learnt from Dar es Salaam As a result of slow pace in implementing CHF, the optimal number of enrolled households and beneficiaries has not been reached. Table 18 shows the estimated number of households and beneficiaries for CHF and TIKA. In order to increase the enrolment, the following strategies are underway; 28

29 1. CHF is envisaging increasing membership from 400,000 households as of December 2009/10 to 600,000 by June 2011 and 1,000,000 by This will be enhanced by applying the following strategies; Extending group enrolment. Activating and extending TIKA to all urban districts. Continue with community sensitization campaigns. Activating dormant Council Health Services Boards (CHSB). Maintaining discipline in spending of CHF funds (making sure that the funds are used for interventions that contribute to improvement of delivery of health services and requests for spending money are honoured on time). Paying matching fund on time. 2. Review services available to CHF members to carter for current economic situation. This includes reviewing and harmonizing the premiums and service package to reflect the current economic situation and the needs of community members. 3. Establish a reliable CHF membership database; collecting all required information regarding membership and benefits and put it under one roof. 4. Develop CHF financial management system. 5. Design and implement public education and awareness program on CHF/TIKA. Table 18: Membership to CHF/TIKA Membership (CHF/TIKA) 2009/10 () 2009/10/11 (estimated) Membership to CHF (households) 273,600 (400,000 by Dec 2009/10) 600,000 Number of CHF beneficiaries 1,641,600 3,360,000 Membership to TIKA (households) Number of TIKA beneficiaries 24,456-29

30 5.0 THE LOCAL GOVERNMENT HEALTH SECTOR SPENDING This chapter discusses the findings from the data compiled from the Comprehensive Council Health Plans (CCHPs) and Technical and Financial Implementation Reports (TFIRs) of 120 out of the 133 Local Government Authorities (LGAs) and the data from the twelve tracked districts. While the data from the 120 LGAs were meant to shed light on the sources of health financing, allocations to different sub-votes and programs, the data from the tracked districts go further by providing details on the financial flows and the challenges therein and unveil district differences on the variables of interest. Whenever data allows, comparisons are made with the data collected at the central level. 5.1 Sources of Funds to Finance Health Services in LGAs The sources of fund to finance the health sector are in four major categories; the budgetary allocations from the government (block grant), donor basket and non-basket funds, funds from council own sources, fees and subscriptions from various schemes, and other sources that are unclassified. Table 19 below shows the sources of fund and the amount for the period 2009/2009/10 plus the estimate for the period 2009/10/2011. Block grant from the government constitute large share (50.2% of actual expenditure) followed by donor basket fund (21.3% of the actual expenditure). Only few districts indicated the Primary Health Care Development Program in Swahili acronym MMAM as a source of funds and its accounted for only 0.6% of the total actual expenditures of the surveyed LGAs. These funds are from the government sources and are earmarked for MMAM activities. Table 19: Sources of Funds and Total Amount for 120 LGAs 2009/ /10/2011 Budget Expenditure Block grants 176,926,477, ,264,495, ,489,799,466 Basket 73,209,198,332 65,766,480,253 65,057,698,890 Own Source 9,067,870,147 7,523,670,538 7,463,253,381 Cost Sharing 9,682,915,432 8,237,175,350 9,401,687,837 Receipt in-kind 33,603,204,734 28,656,209,358 43,721,251,928 Non basket (Global Fund, UNICEF & Others) 22,737,823,670 15,767,331,442 44,390,499,482 30

31 2009/ /10/2011 Budget Expenditure Others (not specified) 26,619,215,379 21,927,320,512 46,646,879,076 MMAM (Special Fund) 2,101,551,748 1,962,866,043 1,778,216,117 NHIF 1,143,695,368 1,340,501,175 2,820,938,037 CHF 6,186,580,637 3,090,913,642 5,619,089,137 TOTAL 361,278,532, ,536,963, ,389,313,352 The average for other sources of fund (not specified) increased from 7% in 2009/10 and it is expected to reach 10% based on the 2009/10/2011 budget estimates. This huge off budget that is not predictable and it poses challenges in LGAs planning process. Further, average actual expenditure from councils own resources was only 2% in 2009/10 and it remains constant for the 2009/10/11 estimates. This is a threat to sustainability of health interventions should there be a shock on the funds from the central level (government and development partners). It is important to note that there are huge variations in sources of funds per council which are masked by the averages. Table 20 shows the sources of funds in the 11 LGAs tracked for the year 2009/10. Noticeably, there are significant variations in the composition of funds from the identified sources across LGAs. Budget allocations from the central government in form of block grant range from 76% in Pangani District Council (DC) to 38% in Kibondo DC. Comparing to the 2008/09 figures as reported in the Health PER 2009, Mafia DC had the highest allocation and Temeke Municipal Council (MC) the least allocation (56%). Basket funding ranges from the lowest of 10% of the total public health sector funds in 2009/10 in Pangani DC to the highest of 33% in Ruangwa DC. Table 20: Percent Share of Sources of Funds for Health Expenditures S/N. Name of Block Basket Complementary Council In-kind Other District Grant Fund Financing Own Fund Receipts Sources 1. Biharamulo DC 57% 15% 3% 0% 7% 19% 2. Kibondo DC 38% 26% 4% 0% 23% 9% 3. Kondoa DC 41% 30% 3% 0.4% 0% 27% 4. Kyela DC 65% 23% 10% 1% 0% 2% 5. Mafia DC 66% 12% 1% 0% 15% 6% 6. Mwanza CC 53% 24% 1% 10% 3% 9% 7. Pangani DC 76% 10% 6% 0.2% 2% 5% 31

32 S/N. Name of Block Basket Complementary Council In-kind Other District Grant Fund Financing Own Fund Receipts Sources 8. Ruangwa DC 50% 33% 2% 0% 0% 15% 9. Songea MC 53% 21% 8% 2% 11% 5% 10. Tabora MC 58% 25% 2% 2% 6% 8% 11. Temeke MC 68% 17% 8% 0.4% 5% 2% Note: CC=City Council; DC=District Council; MC=Municipal Council. In-kind support and other sources are also significant sources of funds for health. Kibondo DC has the highest share of the in-kind support while Kondoa DC has highest share of funds from other sources (27%) followed by Biharamulo DC (19%). Mostly the funds from the other sources are off budget which is not reported at the central level. In 2008 health PER Biharamulo DC was reported to have the highest share from the other sources. Each council has expenditures from complementary financing and contribution from this source ranged from the lowest 1% in Mafia DC and Mwanza CC to the highest of 10% in Kondoa. Complementary financing is basically funds from the National Health Insurance Fund (NHIF) contributions, Community Health Fund schemes, and cost sharing in health facilities. Council own funds constitutes the least source of funds for most of the councils except Mwanza CC which allocated 10%. It is important to note that data collected at the central level underreported the expenditures at the LGAs level (Table 21). According to the information collected from MoFEA, LGAs spent a total of TZS 256 billion on health services in 2009/10 compared to TZS 309 billion reported at LGA level by the 120 LGAs. The difference is significant, and if all 133 LGAs were included, it could grow even bigger. This could be echoing the issue of timeliness of reporting to MoFEA by LGAs. In this case we would assume that some funds released towards the end of the last quarter aren t reported and what the LGAs report to MoFEA at the end of the year turns out to be less than what they report later. Other scenario could be LGAs do not fully report the financing from other sources. Out of this TZS 166 billion or 65% was spent on recurrent expenditures with 75% being utilized for personnel emoluments. The Government contributed 68% of funds spent at the LGAs level in 2009/10 (Table 21). The development expenditures were financed by Development Partners mainly through basket funds (59%). 32

33 Table 21: Local Government Health Spending RECURRENT 2009/ /10/11 Expenditure % of Total () PE 147,365,845, ,783,990,405 75% 177,942,095,886 Government Fund OC 54,302,436,606 41,351,987,182 25% 39,905,098,603 Total Recurrent 201,668,281, ,135,977, % 217,847,194,489 DEVELOPMENT Government Fund 10,318,112,901 8,481,372,209 9% 11,948,713,335 Donor basket Fund 59,800,245,304 53,022,345,088 59% 53,610,202,818 UNICEF 1,029,740, ,457,726 1% 1,801,155,000 Global Fund 3,855,410,242 3,185,018,340 4% 6,815,244,752 Others 32,659,917,553 21,484,083,550 24% 61,944,237,643 Complementary Financing 4,263,911,319 2,361,378,669 3% 3,620,965,481 Total Development 111,927,338,014 89,439,655,582 35% 139,740,519,028 Total Budget 313,595,619, ,575,633, ,587,713, Budget Performance in LGAs Table 22 presents the figures on the budget performance by the 120 LGAs studied. According to the classifications stipulated in section 3.5.3, overall, councils have excellent budget performance (86%). CHF was the least performer (average performance). For the CHF, the councils collected only half of what was estimated. The 12 districts that were tracked in this study showed an impressive budget performance except Kibondo DC (Table 23). Table 22: Budget Performance in 120 LGAs, 2009/ / /10/2011 Budget Expenditure % Exp Block grants 176,926,477, ,264,495,145 88% 218,489,799,466 Basket 73,209,198,332 65,766,480,253 90% 65,057,698,890 Own Source 9,067,870,147 7,523,670,538 83% 7,463,253,381 Cost Sharing 9,682,915,432 8,237,175,350 85% 9,401,687,837 Receipt in-kind 33,603,204,734 28,656,209,358 85% 43,721,251,928 Non basket (Global Fund, UNICEF & Others) 22,737,823,670 15,767,331,442 69% 44,390,499,482 Others (not specified) 26,619,215,379 21,927,320,512 82% 46,646,879,076 33

34 2009/ /10/2011 Budget Expenditure % Exp MMAM (Special Fund) 2,101,551,748 1,962,866,043 93% 1,778,216,117 NHIF 1,143,695,368 1,340,501, % 2,820,938,037 CHF 6,186,580,637 3,090,913,642 50% 5,619,089,137 TOTAL 361,278,532, ,536,963,458 86% 445,389,313,352 Table 23: Budget Performance of the Sampled 11 LGAs, 2009/10 S/N District Budget Expenditure % Expenditure 1. Biharamulo DC 2,136,672,483 2,018,246,044 94% 2. Kibondo DC 4,987,487,524 3,784,752,931 76% 3. Kondoa DC 3,453,299,066 3,364,975,727 97% 4. Kyela DC 2,564,332,802 2,139,620,134 83% 5. Mafia DC 1,374,830,584 1,235,578,951 90% 6. Mwanza CC 4,667,652,469 3,934,976,899 84% 7. Pangani DC 599,144,943 1,522,155,309 95% 8. Ruangwa DC 951,788,073 1,939,181,656 99% 9. Songea MC 2,672,208,877 2,624,207,413 98% 10. Tabora MC 1,501,282,581 1,440,904,211 96% 11. Temeke MC 7,754,439,819 7,253,453,992 94% Total 32,526,466,737 31,258,053,267 96% Qualitative information from the 12 districts can be used to tease out the reasons for the overall low performance of the non-basket funding; Misallocation of funds due to non description of funds deposited: This is more likely to happen with the non-basket funds. It is a common mistake for councils to misallocate funds to other activities other than the intended ones because of lack of information on the purpose of the funds. Sometimes when development funds are deposited in the District Executive Director s (DED) Account, the notification is sent to DMOs but if the notification is not sent on time, the funds can be reallocated to other priority activities of the council. Late notification to the DMOs can be a result of late notification from the Treasury to DED. 34

35 Non release of the funds from the Treasury: Sometimes Other Charges (OC) funds are not released from the Treasury and these funds are not even carried forward in the following monthly disbursements. Inability to access Council Own funds earmarked for health: All Council own funds are collected and deposited in a single account. Sometimes accessing budgeted council own funds for health is difficult and requires a lot of procedures. Use of CHF funds: It was common for the CHF funds to remain inaccessible to health facilities that were collecting them due to several reasons including low capacity of facilities on the application procedure and lack of Health Facility Governing Committee which could spearhead the application process. 5.3 Health Spending at LGAs Level by Sub-Votes Information on inter-governmental transfers for the sector (i.e. the recurrent block grant and any development grant), is disaggregated by four sub-votes in the LGA budget as per Government official estimates. The sub-votes are: 5010 Health Services [largely curative and includes any Council district hospital and District Designated Hospitals (DDHs), and allocations for Council Health Management Teams (CHMTs) and Council Health Services Boards (CHSB )] 5011 Preventive Services 5012 Health Centres, and 5013 Dispensaries. Table 24 shows the allocation of funds by these subvotes. It is important to note that in the 2009/10 and 2009/10/11 there is another category that has been introduced in the CCHPs (community initiatives). As it has been reported in the past PERs, at the LGAs level, it has always been assumed that the amount of fund approved is equal to the amount actually spent. Nevertheless, a different picture is noted in the 2009/2009/10 whereby the actual amount spent fall short of the amount approved. This is an excellent development in capturing budgets and actual expenditures at the LGA level. Table 24 shows further that local government health spending has almost doubled in the past three years. The actual expenditure in 2007/08 was TZS 137,463 million compared to TZS 232,499 million in 2009/10 35

36 Table 24: Health Spending at LGAs Level by Sub- Votes (Millions TZS) 2006/ / / /2009/ /10/2011 Exp. Exp. Exp. Exp (Health Services) 36,120 36,120 41,033 41,033 48,071 48,071 49,646 42,423 45, (Preventive Services) 18,133 18,133 16,710 16,710 17,293 17,293 72,023 60,496 78, (Health Centre 26,749 26,749 35,128 35,128 35,598 35,598 61,846 48,592 57, (Dispensaries) 34,391 34,391 44,592 44,592 43,940 43,940 78,920 63,200 71,683 Community Initiatives 35,872 17,788 16,859 TOTAL 115, , , , , , , , ,622 Table 25 shows the shares of expenditures by sub-votes. The shares were almost constant across the subvotes and consistently, health services and dispensaries received the highest share followed by health centres from 2006/07 to 2008/09. However, in 2009/10 we observed a sharp change whereby preventive services received a lion compared to health services but dispensaries maintained the high share. Again, these averages (average for 120 LGAs) mask the district variations as observed in the 12 tracked districts (Table 26). Table 25: Average Shares of Total Expenditure per Sub-vote for 120 LGAs % of Total Expenditure 2006/ / / / /10/11 () 5010 (Health Services) 31% 30% 33% 18% 17% 5011 (Preventive Services) 16% 12% 12% 26% 29% 5012 (Health Centre) 23% 26% 25% 21% 21% 5013 (Dispensaries) 30% 32% 30% 27% 27% Community Initiatives NA NA NA 8% 6% Table 26 shows the allocation of recurrent block grant funding by sub-votes in the selected Councils. There is no clear pattern on allocations to health services for the eleven Councils. Consistently, the spending for dispensaries (sub-vote 5013) is higher than spending for the health centres (sub-vote 5012) except for Kibondo DC. This is likely reflecting the higher number of dispensaries in the various Councils, although further exploration would be needed to confirm this. Except for Tabora MC and Mwanza CC, spending for health services is the lowest. There is a new sub-vote named community initiatives and this has commanded a large share of expenditures especially for Kibondo DC and Mafia DC (21% and 19% respectively). 36

37 There was no spending under the health centre sub-vote in FY2009/10 for Mafia DC, while the majority of spending (46%) was allocated to preventive services. As Table 26 clearly portrays, there are huge Council wise variations and the averages per subvote from the sampled councils do not match the overall average for the 120 LGAs. Table 26: Recurrent Block Grant Allocation per Sub-vote, FY2009/10 S/N. District/Sub-vote Community Initiatives 1. Biharamulo DC 13% 24% 20% 34% 9% 2. Kibondo DC 13% 21% 39% 6% 21% 3. Kondoa DC 15% 35% 18% 24% 8% 4. Kyela DC 6% 6% 31% 50% 7% 5. Mafia DC 5% 46% - 30% 19% 6. Mwanza CC 34% 12% 15% 37% 2% 7. Pangani DC 2% 50% 17% 28% 3% 8. Ruangwa DC 11% 23% 27% 37% 2% 9. Songea MC 11% 44% 14% 26% 6% 10. Tabora MC 31% 10% 4% 55% 1% 11. Temeke MC 11% 45% 15% 27% 2% Average 14% 29% 20% 32% 7% 5.4 Timing of Other Charges Releases Data on Other Charges (OC) releases during the course of the financial year were obtained from the visited Councils. Complete data were available for only 8 Councils. Table 27 presents cumulative percentages of the releases which are then plotted in Figure 6. The Figure shows a clear general pattern of the timing of releases of OC funds for the 8 Councils. Except for Pangani DC, Same DC and Biharamulo DC, 100% of OC funding has been released by June of the financial year in question. This is an improvement compared to previous PER findings which showed that on average 25% of the funds were released in the last quarter putting pressure to the Councils to absorb those funds. Comparison of budgeted OC versus released funds show that almost all the budgeted funds were released except for Pangani DC, Same DC and Biharamulo DC. Only Mafia DC received more than what was budgeted (Table 27). This might be reflecting poor 37

38 planning and budgeting in this council since the same results are reported in the PER 08 or it might be reflecting reallocations for disaster and emergency situations. Table 27: Timing of OC Releases in Selected Councils, FY2009/10 Mafia DC Mwanza CC Kyela DC Pangani DC Same MC Tabora MC Kibon do DC Biharam ulo DC July 0% 0% 0% 0% 0% 0% 0% 0% August 32% 17% 23% 25% 25% 20% 22% 17% Sept 32% 34% 34% 25% 25% 28% 22% 25% October 32% 34% 34% 25% 25% 28% 43% 25% November 43% 34% 46% 42% 33% 36% 43% 33% December 43% 34% 46% 42% 33% 36% 43% 33% January 73% 42% 57% 42% 57% 45% 82% 42% February 73% 54% 66% 57% 57% 51% 82% 48% March 73% 62% 78% 57% 57% 60% 82% 57% April 105% 62% 78% 57% 57% 60% 82% 57% May 105% 70% 78% 81% 81% 67% 100% 65% June 105% 86% 100% 81% 81% 82% 100% 81% % budgeted vs released 105% 86% 100% 81% 81% 82% 100% 81% Figure 5: Timing of OC Releases in Selected Councils, FY2009/10 The PER 08 showed inconsistency in the pattern of releases (some districts had more even releases (Temeke MC and Mafia DC) and others received funds only once per quarter (Mwanza 38

39 CC and Ruangwa DC). The releases to Ruangwa DC were very erratic in the sense that the first tranche was released at the end of September and the second one in March. These kinds of trends were not evident in the data collected in 2009/10 which is a great improvement. Funds have been released monthly and majority of the councils received an average of 10 tranches per year. Figures 6, 7, 8 and 9 show the pattern of releases in four districts. Receipt of two trances per month was not uncommon as noticed in Mwanza CC. Figure 6: OC Releases, Ruangwa DC Figure 7: OC Releases, Kyela DC 39

40 Figure 8: OC Releases, Biharamulo DC Figure 9: OC Releases, Mwanza CC 5.5 Equity in Allocation of Health Resources In trying to gauge equity in spending, we examined whether the health financials resources are allocated as per resource allocation formula. Table 28 shows the block grant resource allocation formula for different sectors. From the sampled 120 districts we collected data on actual recurrent expenditure, basket expenditure and population of the district. The Poverty and Human Development Report (PHDR) of 2005 provided the needed data for the other variables in the resource allocation formula for health; Total population Under-five mortality 40

41 District medical route; this measures the disparity of health facilities as this has impact on delivery of health services. We used the number of health facilities per square kilometre as a proxy for measuring geographical disparity. Number of poor residents was measured by the percent of households below the poverty line (headcount ratio). Table 28: Formula for Allocating Block Grants Sn. Sector Formulae/Variable Applicable 1. Primary Education Number of school-aged children 100% 2. Secondary Education Number of enrolled students (day and boarding) 100% 3. Health Services Total population: 70% Number of poor residents: 10% District medical vehicle route: 10% Under-five mortality: 10% 4. Agriculture Extension Number of villages: 80% Rural population: 10% Rainfall index: 10% 5. Water Services Number of un-served rural residents: 90% Equal shares: 10% 6. Local Roads Road Network length: 75% Land area (cropped): 15% Number of poor residents: 10% 7. General Purpose Grant Total Population: 50% Total Number of rural residents: 30% Fixed Lump Sum: 10% Total Number of Villages: 10% 8. Personal Emoluments Number of existing employees in the payroll Number of existing employees not in payroll Number of employees to be recruited. Source: United Republic of Tanzania, (2009/10), Guidelines for the Preparation of Medium Term Plan and Budget Framework for 2009/10/ /13, Dar es Salaam, Ministry of Finance and Economic Affairs Table 29 shows simple correlation matrix between basket fund and recurrent expenditures with the variables in the resource allocation formula respectively. The correlation between the basket and recurrent expenditures and district population is 57% and 54% respectively. The variable on geographical disparity shows a positive weak correlation especially for the basket expenditure. The correlation coefficients for underfive morality are ambiguous and no conclusive story can be drawn from these variables. 41

42 Table 29: Correlation Matrix: Basket and Recurrent Expenditures on Resource Allocation Formula Variables Basket Expenditure Recurrent Expenditure Population 57% 54% Under five mortality -7.2% -6.1% Disparity 3% 16% Poverty 14% -9% Figure 10 shows the basket and recurrent expenditures per capita. The figure shows high inequality in allocation of the funds from these two sources as the ten districts with highest per capital allocation are not necessary the ones with the big population given that population size guarantee getting the large share of the cake (Table 30). The range between the Council with the highest per capita recurrent expenditure (Pangani) and the Council with the lowest per capita (Sikonge) is very huge amounting to TZS 20,916. The Council with the largest population in the sample - Igunga DC has 14 times the population of Pangani DC, but per capita recurrent expenditure for Pangani is 12 times that of Igunga. Figure 10: Basket and Recurrent Expenditures per Capita 42