On Malawi’s health financing system

Universal coverage implies guaranteeing access to appropriate mix of health services: (preventive, curative and rehabilitative) care to all citizens at an affordable cost. One of the major factors restricting countries from achieving universal coverage is the availability of resources for the health sector.


The World Health Organisation (WHO) admits that no country, no matter how rich, has been able to ensure that everyone has immediate access to every medical technology and intervention required to improve their health or prolong their lives. Thus, the need for countries to raise sufficient funds cannot be overemphasised.

Health financing policy, however, cannot afford to just focus on how to raise sufficient revenue. According to the WHO, the following health financing functions are of paramount importance: (i) revenue collection, whereby financial contributions should be collected in sufficient quantities, equitably and efficiently; (ii) pooling of contributions so that costs of accessing health services are shared and not met only by individuals at the time they fall ill, and (iii) purchasing and/or provision, with contributions being used to purchase or to provide appropriate and effective health interventions in the most efficient and equitable way.

The sustenance of the “almost free” health services offered in public facilities in Malawi therefore calls for innovative ways of collecting revenue, pooling of risks, purchasing and provision of services. This is the right moment to at least start consultations with possible stakeholders regarding equitable health care financing in Malawi. The withholding of aid by donors coupled with the global economic crisis that mostly originated from developed economies saw the cancellation of round eleven of the Global Fund for Aids, tuberculosis and malaria, has created a window of opportunity for policy makers to reassess how to move forward in order to promote and protect the health of Malawians not to mention the attainment of the health related MDG’s by 2015.

Malawi’s National Health Accounts (NHA) clearly indicates that we have become heavily dependent on donor funds to finance our health care system including all HIV and Aids programmes. Such overdependence on donor funds exposes the country to serious shocks and undermines the country’s ability to sustain the provision of health care in the event of “sour relations” with donors over political and governance issues as the case is at present.

Given Malawi’s large informal sector, we could consider the introduction of community based insurance schemes (CBHI’s) to complement tax revenue and private insurance schemes in their functions of generating revenue for the health care sector? Indeed the majority of people in the informal sector are too poor to make any contributions, nonetheless, the informal sector is heterogeneous and comprises of people who engage in various small scale income generating activities such as day labours, tin smiths, subsistence farmers, peddlers and grocery owners etc. With the necessary technical support for strengthening of CBHI’s, such schemes could actually be efficient, feasible, and sustainable at the same time encouraging utilization of essential health services by the poor. Apart from promoting public-private partnerships with private health care providers, government could also “incentivise” corporations to start providing onsite health services to their employees and their dependants. Doing this could help mitigate some of the major challenges of revenue generation and service delivery.

Finally we could draw lessons from the South African Revenue Authority (Sars) which has put in place effective and innovative measures of collecting taxes by utilising advanced technology. The idea is not to increase the tax rate which could be viewed as retrogressive but rather to widen the tax base and thus minimising tax avoidance. We could also learn from Zimbabwe which introduced a new three percent Aids tax levy in 2000 which mandates companies and individuals to pay three percent of their income to the National Aids Trust Fund (Naft).

These funds are collected by the Zimbabwe Revenue Authority (Zimra) and disbursed directly to National Aids Councils. However, the success of such a new Aids levy is more likely to depend on the number of profitable organisations in Malawi, the trust of Malawians in the collecting organisation namely MRA and the solidarity of the people of Malawi. These could be the first major steps towards achieving universal coverage.

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