The Impact of Public Health Expenditure on Health Outcomes in Zambia

Abstract

Government health expenditure is critical in enhancing the health and welfare of human capital as well as promoting economic growth. Thus, the objective of this study was to examine whether public expenditure allocations to the health sector improves health outcomes in Zambia. Zambia’s public health spending has been increasing in both nominal and real terms. It increased from K2.7 billion in 2015 to K23.2 billion in 2024 (MoFNP, 2024). The country also made steady progress in reducing under five mortality rates from 75 deaths per 1,000 live births in 2014 to 42 deaths per 1,000 live birth in 2024 (MoFNP, 2022; ZDHS, 2024). Therefore, it was imperative to investigate whether the improved health outcomes as measured by the decline in under-five mortality could be attributed to increased public health spending. To achieve its objectives, the study used the co-integration technique and the Vector Error Correction Model (VECM) considering that most economic variables are characterized as non-stationary thereby yielding spurious regression results. After achieving stationarity, the model was then estimated using the Ordinary Least Squares (OLS) method on annual time series data for under-five mortality rates (dependent variable), per capita public health spending, per capita income, immunisation (against measles), and total fertility rates for Zambia for the period 2000 to 2021 obtained from the World Bank Database (World Development Indicators). While the limitations of this study are acknowledged and results may be interpreted with caution, this study did not find evidence that per capita public health expenditure improves health outcomes in Zambia. Instead, the results provide evidence that per capita income and total fertility rates are key determinants of health outcomes in Zambia. Specifically, the elasticity for per capita income was found to be -0.29, implying that a 10 percent increase in per capita income results in a 2.9 percent reduction in under-five mortality. This study points to the fact that the Government of Zambia should implement policies aimed at promoting sustainable economic growth considering the impact of real per capita income on health outcomes. Additionally, Government should endeavor to increase its budgetary allocations to the health sector to a minimum of 15% of the national budget in line with the Abuja Declaration in order to improve health outcomes.