Like many nations, Kenya has recently made efforts to achieve Universal Health Coverage (UHC) by 2030. Despite strong legislation and policy guidelines at national level, however, the biggest challenge for UHC implementation is at subnational level. In this blog, we draw on the Institute of Public Finance (IPF) cases from Laikipia, Nakuru and Isiolo sub-national governments on how persistent financial constraints such as limited budgets, delayed disbursements and rising service costs are making Kenya’s health system sick.
To maintain quality service delivery in the face of severe resource constraints, these sub-national governments have adopted diverse and innovative approaches. While counties can draw lessons from each other on how best to manage similar challenges, most of the coping strategies adopted are only short- term fixes. Achieving lasting progress towards UHC will require coordinated intervention from different stakeholders including the National Treasury, all 47 sub-national governments, and the Kenya Medical Supplies Agency (KEMSA). With great optimism and 5 years to 2030, we make practical recommendations for longer term solutions as we navigate Kenyan’s path to health for all.
Public Finance Management (PFM) Challenges Facing Counties
Sub-national governments continue to grapple with several Human Resources for Health (HRH) related challenges that directly affect health service delivery. Some of these include delayed salary payments for health workers and staff shortages across cadres. Salary delays, largely linked to delays in equitable share transfers from the national government, are mainly mitigated through credit arrangements with local banks. However, in some months, when such arrangements are not commonly relied upon, health workers continue providing services despite not receiving their salaries on time.
To address staff shortages, sub-national governments and health facilities hire temporary staff who are remunerated at lower rates, resulting in a growing proportion of the health workforce on temporary terms. For example, in Nakuru, temporary staff currently account for 49 percent of the total health workforce, an increase from just 10 percent in 2016. At the facility level, the temporary staff are paid through a framework which allows health facilities to collect and use revenue at source. In most cases, these resources are ring-fenced under the Facility Improvement Financing (FIF)[1] laws across sub-national governments. Although this has helped bridge immediate workforce gaps, it has resulted in a large share of FIF being channelled to salaries, leaving little for other critical operational needs such as medical commodities. As both health workforce and medical commodities are integral to service delivery, there is a need to maintain a careful balance in FIF spending between the two.
Unsteady supply of medical commodities and supplies is a persistent challenge across all sub-national governments. Current public funds allocations for medical commodities are insufficient to meet the demand. For example, in Financial Year (FY) 2023/24, Nakuru, Laikipia and Isiolo sub-national governments allocated only 52, 29 and 32 percent, respectively, of the required amount for medical supplies and commodities. Still, procurement delays, driven by late equitable share transfers from the national government, also lead to frequent stockouts, particularly in level 2 and 3 facilities. These facilities are disproportionately affected due to their limited FIF revenues, which restricts their ability to cushion against supply disruptions. Even when money is available and procurement proceeds, low KEMSA fill rates, averaging between 50 and 60 percent, further exacerbate stockouts and disrupt service delivery.[2]
To address these challenges, health facilities have relied on a mix of interventions. These include credit arrangements with suppliers, redistribution of commodities across facilities and the maintenance of buffer stocks. However, these strategies remain inadequate due to factors such as poor relationships with suppliers, logistical constraints and insufficient funding, thereby necessitating longer-term and more sustainable solutions. Especially, if the national government and sub-national governments are truly committed to achieving UHC by 2030, then it must be followed by timely investment of public funds to cure the sick health system.
In sum, while sub-national governments have made significant progress in sustaining service delivery despite persistent challenges, greater efforts are required from multiple actors to address these challenges. In contexts like Kenya, sub-national governments should strengthen their revenue mobilization to generate adequate resources for priority services- with health being at the top. These efforts should be complemented with timely and predictable transfers to counties by the National Treasury, implementation of a harmonized pay scale across all cadres of temporary health workers by counties and better fill rates by KEMSA. Without such reforms, the ability of counties to deliver quality, equitable and uninterrupted health services will remain severely constrained.
[1] Facility Improvement Financing (FIF) refers to the revenues that public health facilities, retain, plan for and utilize. FIF sources include user fees, insurance reimbursements and other revenue streams, with utilization varying across facilities. Under the FIF Act, 2023 all public health facilities have the authority to retain and utilize these funds.
[2] Examining how counties finance, procure, and manage essential medicines and supplies: A case study of four counties in Kenya. Link
This blog is authored by Vivian Nganga, Project Officer at the Institute of Public Finance.
