Private sector key player in universal healthcare

Let me start with distressing statistics. Every year, close to 100 million people globally get back under the poverty line, living on less than $2 a day due to the expenditure incurred by spending out of pocket funds to seek medical care. This is distressing because it is happening against the backdrop of economic progress across many African countries. Does it mean that the cost of healthcare is reducing the benefits from economic growth? To an extent, that is true. In Kenya for instance, nearly one million people slide into poverty annually due to the burden of healthcare.

This ‘catastrophic expenditure’, a jargon used by the World Bank to explain the cost of healthcare relative to household income, affects not only the poorest but also the middle class, who lose their investments and savings to treat themselves or their relatives. Non-Communicable Diseases are the main causes of poverty in the developing world, but are regarded as a threat in developed countries.

Poorer countries are straining to offer affordable and quality healthcare to their citizens because of funding challenges, but sometime also due to poor governance which then leads to wastage, theft and inefficiencies. But, this might soon change if the discussions going on within the multi-lateral institutions and governments in conjunction with private sector on how to tackle funding gaps leading to tangible solutions bear fruit.

Funding

Official Development Aid (ODA) is too small to sufficiently bridge the gap according to Michel Sidibe, the Director General of UNAids. Universal Health Care coverage is not just a priority in Kenya, but across the globe. The inspiration for this goal other than being one of President Uhuru Kenyatta’s Big Four agendas, is that it is the third item on the United Nations Sustainable Development Goals.

There is a huge interest by private partners in investing in universal healthcare. The private sector has abundant sources. The question is how to squeeze these funds from private business. Big companies that include the Dutch Conglomerate Philips, Pharmaceutical giant Novartis, Johnson and Johnson, General Electric and many other Fortune 500 companies are involved in devising models for actualizing the attainment of the SDG goals through many programmes.

For these companies, it is simply business unsual. More discussions centre on whether these businesses should include social benefits and create a dual bottom-line approach where both profit and reduction of burden on the poorest sections of the society can be realised in this so-called impact investments. There are good arguments for involving the private sector in these matters. First, the public sector cannot on its own mobilize sufficient resources to invest in public services. Simply put, public resources are strained.

Debt financing

In Kenya, we are now financing a large junk of our development projects through debt financing. There is clearly limited room to expand this. President Kenyatta’s Big Four agenda will face funding challenges unless innovative ways are found to attract private capital. The cumulative size of private sector wealth market in 2015 is to the tune of $260 trillion and just a small fraction of this can fund the SDGs.

But as long as poor countries do not have a well developed governance structure, many large corporations will shy away from committing capital if, for example, agreements and contracts signed are not respected. Private partnership also promotes ownership of the programmes and divorces the mind from thinking about an inanimate thing called Government.

In addition to these safeguards, good data is needed. Most managers I interact with show frustration over the lack of data on funding gaps. But most importantly, risk from political upheaval. During the period after the August 8, 2017 General Election, according to Washington-based Corporate Council of Africa (CCA), many US firms opted to invest in neighbouring Uganda and Rwanda instead of coming to Kenya. Reason: Kenya was unsafe. A private partnership is sensitive to political climate and therefore all should strive to ensure peace and stability is upheld.

The handshake between President Kenyatta and NASA leader Raila Odinga has been seen as signalling a new beginning. Time will tell. Critiques of the private-public partnership think that since the last meeting in Davos, Switzerland, there have been many conferences and lobbying for private public partnership and want us to move from talking to doing. I bet a lot also depends on what we do to make this happen.

Mr Guleid is a governance consultant and the chairman, FCDC Secretariat