jane nalunga

Reflecting on Uganda’s fiscal space for health

Myria Koutsoumpa

This past summer, as an intern at Wemos and as part of my thesis for the Global Health master’s programme at Maastricht University, I took up the opportunity to interview Jane Nalunga, Country Director of SEATINI-Uganda, about the country’s economic and human resources for health  (HRH) situation. She has over 20 years of experience in policy research, analysis and advocacy on trade, tax and investment, and shares Wemos’ view of health as a public good.

Could you share some thoughts about the influence of International Financial Institutions on the Ugandan government’s budget allocation choices, particularly in the public health sector?

Uganda, like many other low-income countries, fully embraced the IMF’s and World Bank’s Structural Adjustment Programmes (SAPs) in the past. These institutions have had a great influence on Uganda’s macroeconomic policy framework. They have been one of the driving forces that encouraged the Ugandan government to embrace increased private investment in the health sector, including blended financing, which considerably reduced the role of the state in the sector’s development.

 

In fact, at one time in the past, ‘user fees’ were implemented, leading to patients having to pay to access health services. This blocked access to healthcare for many vulnerable people. Liberalization and deregulation of the health sector have also allowed key players to maximize profits over the health welfare of Ugandans. We need more research on the influence of the IMF and the World Bank on Uganda’s budget allocation but – interestingly – the IMF offices are located within the Central Bank of Uganda!

 

Did the conditionalities of past years also affect the recruitment and wages of health workers at the time?

The SAPs involved staff reduction and reviews of civil servants’ wages which led to lower wages for skilled health professionals and less health professionals per person. Low remuneration is one of the major factors influencing the shortage of HRH in Uganda. The contradiction is that we produce many and competent health workers, but the patient-to health worker ratio is still very low.

 

I’m curious about your thoughts on ways to mobilizing more revenue for public health. What do you think about higher prioritization of the social sector, and health in particular, within the government’s budget allocation decisions?

This is the most feasible option for mobilizing revenue for health. Budget allocation including grants would be directly channelled to the health sector if it had been prioritized as a social sector. This requires a shift in the mindset of Ugandan policymakers, activists and advocates, i.e. viewing the health sector as an investment. It is important to understand that a healthy population, both physically and mentally, is the biggest asset a country can have.

 

What about striving for more Development Assistance for Health from external donors?

This is also a good, yet unsustainable option. The current financial architecture of Public-Private –Partnerships (PPPs) and the blending of aid funds with private financing have many negative implications for access to health services, especially for the most vulnerable. Therefore, we need to ensure that any PPP delivers for the good of the people.

 

It is important to understand that a healthy population, both physically and mentally, is the biggest asset a country can have.

 

Let’s talk about international trade. Do you think that increased taxation on international trade and foreign investors, especially multinational corporations, is a feasible option?

Increasing taxation on international trade has two main benefits; increased tariff revenues to be used by the government, and protection of the economy.  Uganda used to receive more than 40% of its revenue through trade tariffs which has reduced as a result of trade liberalization. Government needs also to tackle  illicit financial flows, which are very common with multinational corporations. A 2018 joint report by SEATINI and Action Aid found that currently, due to illicit financial flows, Uganda annually loses US$739 million, which is about 2.6% of the GDP. This is a huge financial haemorrhage that needs to be tackled, and the regained resources could be injected into the health sector. This is the best option in my opinion, but it should be considered holistically and would require strategic actions.

 

And as the last option, what do you think about more accommodating macroeconomic policies, such as operating in a larger fiscal deficit or allowing higher inflation rates?

A healthy economy won’t prevail in a situation where inflation is high. Increased inflation rates will result in higher prices of essential commodities, like food. A larger fiscal deficit will also lead to a deeper debt trap for the country. Today, debt repayment is one of the highest items on Uganda’s national budget, leaving limited funds for social services like education and health. However, some fiscal policies could be an option, like low taxes on health products and tax exemptions for health workers, especially in remote areas. The latter could help with their retention in our public health system.

 

What are your thoughts on oil and gas spurring economic growth in the country?

Allocation is key. The oil and gas sector may spur economic growth, but gained resources may be channelled to the security, infrastructure and ICT sectors, with less regard to the health sector; similar to what happened in oil economies like Angola and Nigeria.

 

So do you think that the predicted economic growth will actually benefit the people of Uganda?

Today, economic growth is measured by GDP, and by this standard, Uganda’s economic growth has been impressive, according to the IMF and the World Bank. But we need to change the indicators and include social elements, like (quality of) employment, health and education facilities. The government should strive for welfare – not just profit – maximization. It is paramount for the state to be able to regulate the market and the economy. Non-state actors also have to demand accountability and influence resource utilization that benefits everyone.

 

Speaking of non-state actors, what do you think Ugandan civil society organizations (CSOs) should advocate?

They should  advocate equitable mobilization of resources and allocation towards the health sector. CSOs need to engage in taxation and budgeting processes and ensure transparency and accountability. It is not enough to increase the overall budget without influencing where that money is actually going to in a specific sector. Ugandan CSOs should also advocate for tax reforms that will benefit the most vulnerable to access health services.

 

And is there a role for international CSOs, like Wemos, in advocacy?

It is important for international  and local CSOs to reinforce cooperation – especially South-South – in the health sector, on mobility of health workers, provision of aid for health, and health equipment. Illicit financial flows also requires advocacy through partnerships at the national and global level. It is important to bear in mind that poor countries like Uganda need policy space in order to grow their economies and to be able to provide social services for their people.

 

The Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI) Uganda, one of Uganda’s leading NGOs working on trade, development and fiscal space, envisions a strong Africa in the world trade sector.

 

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