Public-private partnership vital in healthcare funding

Richard Ngatia, chairman of the Kenya National Chamber of Commerce, Nairobi Chapter
For many Kenyans without health insurance, falling sick can at best become a financial crisis and at worse, a death sentence. Quite often, many people have had to turn to friends and relatives to clear medical bills and meet funeral expenses for their loved one. It is for this reason that legislative organs need to be supportive of the funding model for provision of healthcare where private capital comes in to support the government.

A lot of resources and time go into enabling the private sector jump in to the complementation of social services which often are essential, especially to the most disadvantaged. Rather than frustrate the efforts intended to help achieve service provision, right to oversight granted, legislators should be an enabling arm since the people they represent are the immediate beneficiaries. This is where we must appreciate that while the government might mean well for its people, scarcity of resources translates into long waiting periods for execution - but at the cost of lives.

Our conversation must change to how private business can play an active role and enable the government achieve its goals, including affordable housing, manufacturing, healthcare and food security.

To be clear, business is driven by pursuit of profit. However, it is clear that private ventures would likely deliver better results in the end than the government’s direct involvement other than in sensitive services such as security.

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Public Private Partnerships (PPP) have been one proven financing option that has enabled governments bridge the gap in resource allocation and upgrade aging public healthcare systems. Over the last few years, the health sector PPP has brought immense benefits to the poor in areas where it has been embraced whole heartedly.

In Kenya for example, PPP is credited to have accelerated reduction of infant mortality rates by almost 50 per cent and post-maternal mortality by 50 per cent through small private clinics in rural areas that work with the state-run National Hospital Insurance Fund. This same partnership has improved prevention and treatment of TB, malaria and HIV and Aids considerably over the past two decades.

Formal sector

However, Kenya’s rising population and falling mortality rates mean more demand for affordable healthcare. This is made worse by the country’s high unemployment rate that has seen comprehensive health insurance the purview of the less than five million people working in the formal sector. 

The government’s ambitious plan to provide universal and affordable healthcare over the next four years is thus well placed. However, realising this ambition that few developing economies have managed requires the country’s policy makers to expedite the establishment of structures that will draw more private sector participation in public healthcare. 

According to the World Bank, Kenya already sits in the top-ten African countries in terms of developing systems that facilitate PPP and is only second to Tanzania in East Africa. However, much still needs to be done to scale the number of partnerships and projects required in the public healthcare system at the national level and especially in counties. This includes strengthening the implementation of PPP regulations that touch on procurement and financing to allow counties tap from a diverse mix of financing including corporate bonds. Already counties access commercial facilities to fund recurrent expenditure like salaries and a similar appetite for debt should be adopted to bring affordable healthcare closer to the ordinary Mwananchi.

It would help to strengthen capacity building at the National Treasury and the Ministry of Health in structuring the private sector-driven projects. By their nature, PPP negotiations entail long and complex models balancing the need to find the most cost effective financing for the state and making it as easy as possible for the investor to exit once the project has been completed.

In this regard, the government could do well with more PPP experts such as lawyers and actuaries to ensure negotiations and projects keep the needs of public taxpayers at heart while ensuring commerce thrives.

- The writer is the chairman of National Chamber of Commerce and Industry, Nairobi Chapter.  

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Public-private partnershipRichard NgatiaKNCCI