Is Kenya Allocating Enough Funds for Healthcare? Findings and Recommendations from National and County Budget Analyses

Despite gradual increases in health budget allocations since devolution, the country still faces substantial challenges in allocating sufficient funds to meet its health sector needs and commitments. The Ministry of Health (MOH) and the Health Policy Plus (HP+) project, funded by the U.S. Agency for International Development (USAID), conducted an analysis of the national and county budgets for fiscal years (FYs) 2017/18, 2018/19, and 2019/20 to better understand resource allocation patterns at the national and county levels and to analyze alignment between health budgets and government of Kenya commitments to the health sector. The analysis revealed that overall allocations to the health sector are inadequate to meet its needs and commitments, despite significant increases to the health budget since devolution. In absolute terms, combined budget allocations to health by national and county governments grew nearly three times between FY 2013/14 and FY 2019/20, from Kenya shilling (Ksh) 78 billion to Ksh 217 billion. However, as a proportion of total government budget, allocations to the health sector increased from 7.8 percent pre-devolution in FY 2012/13 to 9.1 percent in FY 2019/20. As a share of GDP, government health allocations increased marginally, from 1.9 percent to 2.2 percent over the same period. The government of Kenya increased its absolute allocation to the MOH budget, but still not sufficiently to offset declining donor support. Donor contributions (loans and grants) allocated to the development budget, under which funding for national strategic programs for HIV, tuberculosis, malaria, medical commodities/drugs, and vaccines is provided, declined from Ksh 20 billion in FY 2017/18 to Ksh 15.2 billion in FY 2019/20. While the government of Kenya has increased its allocation to the development budget for the last three fiscal years, such allocation is still not adequate to offset the decline in donor funding, leaving a financing gap for key health inputs. Counties have increased their per capita budget for health but still largely depend on national-level fiscal transfers to fund health services. Counties increased their average per capita budget allocations to health by 5.5 percent between FY 2018/19 and FY 2019/20, from Ksh 2,531 to Ksh 2,671. However, county governments depend heavily on national shareable revenue to fund their health services, with their own county-generated revenue contributing only a small proportion to the health budget. A majority of the resources allocated to county health budgets is for recurrent expenditures and primarily for personnel expenses, leaving fewer resources for investing in expansion and consolidation of services.