During the 25th African Union summit from 7-15 June, Kenya’s president Uhuru Kenyatta took to Twitter to urge his fellow leaders to move away from reliance on development aid from donor countries.
In his tweet at the conference in South Africa, Kenyatta said that sometimes aid “only appears to be charitable” and “so often carries terms and conditions that preclude progress”.
Kenyatta has been a vocal opponent of perceived Western influence and power in Africa – notably since he was charged with crimes against humanity by the International Criminal Court. The charges, which related to post-election violence in 2007-2008 and were denied by Kenyatta, were dropped in December 2014 after key witnesses withdrew.
But despite Kenyatta’s bold call for increased African self-sufficiency, could Kenya do without aid in the near future?
Advocacy group Results has researched health financing in Kenya with the Kenya Aids NGO Consortium (Kanco). The study, Who Pays for Progress?, looks at the balance between Official Development Assistance (ODA) and Domestic Resource Mobilisation (DRM) such as tax, and will be launched in July. The data so far suggests it would be a major challenge to move away from aid in the health sector, and also difficult in other areas, such as education.
Of the overall health budget, 45% is currently provided by donors and 55% by the Kenyan state. In some programmes, the dependency on ODA is even greater. In a series of interviews in March 2015, we learned that the HIV and Aids programmes are funded 70% by donors, and work on nutrition is around 80% funded from ODA.
Even these figures do not tell the whole story – for tuberculosis programmes, 23% of funding comes from domestic sources, and 17% from ODA, but 60% of the need is completely unfunded. At present the country needs to increase funding for healthcare if it is to fulfil the ambition stated in the 2010 constitution to achieve universal health coverage.
“In the long run, all Kenyans would be happy to see a time when the country does not need aid,” said Allan Ragi, director of Kanco. “But at present, if ODA falls then we will be unable to deliver essential healthcare to the most needy.”
In the medium term, there is more cause for optimism. Economists in Kenya see ample scope to increase domestic resources, for example by improving the efficiency of the tax system.
The Kenya Revenue Authority has identified a significant number of high-net-worth individuals who could increase their tax payments, and the same is true of some multinational companies. Kenya had around 8,700 dollar millionaires in 2014 and in Nairobi alone, there are at least 65 high-net-worth individuals with wealth exceeding $30m.
As well as improving tax revenue, the country could reduce illicit financial flows out of Kenya. According to authoritative research Kenya lost $4.9bn in capital flight in 2010 alone: this is approximately $120 per person. This ties in with global analysis that shows that while high-income countries collect an average of 34% of their GDP in taxes, low-income countries in Africa only collect 17%, or even less.
The government of Kenya has identified ways to close some tax loopholes and thus make more funds available for health and other development programmes. Capital gains tax of 5% was reintroduced on 1 January this year after an absence of 30 years. The National Aids Control Council has said it can increase the domestic funding of the HIV programme from 30% to 85%, but not until 2024.
If Kenya can raise more domestic finance through taxation, and devote a greater share of the national budget to health, then the current funding gap for essential health programmes can be filled. Chatham House health economists estimate that around $86 per person per year is needed to deliver adequate health coverage in developing countries.
President Kenyatta’s “call to arms” to fellow African presidents came just a month before the Financing for Development conference in Ethiopia on 13-16 July, where the world community will debate how to pay for development priorities over the next 15 years.
Kenyatta’s call for self-sufficiency will surely find a great deal of support in Addis Ababa, but health economists will be urging caution, and will want assurances that domestic finance for health is in place before ODA dries up.
Source: The Guardian