Health economics in Africa: historical perspectives, current challenges, and policy recommendations for sustainable healthcare financing and resource allocation

Abstract

Health economics is crucial for optimizing resource allocation and achieving equitable health outcomes in Africa. This study reviewed the historical evolution and current state of health economics in Africa, focusing on healthcare financing mechanisms, resource allocation strategies, and policy interventions. Data from peer-reviewed articles, research reports, and grey literature were synthesized from databases like PubMed, Scopus, Google Scholar and African Journals Online (AJOL). While healthcare financing dominated the literature, this review also covers resource allocation and broader health economics, highlighting key gaps in African research. Findings highlight significant challenges such as low public expenditure, high out-of-pocket costs, and inadequate insurance coverage. Out-of-pocket payments constitute over 40% of total health expenditure in half of the studied countries, while public health expenditure remains between $8 and $129 per capita annually, far below the $4,000 per capita in high-income countries. Only three African countries have met the Abuja Declaration target of allocating 15% of government budgets to health. Innovative financing mechanisms, such as community-based health insurance schemes and public-private partnerships, show promise in expanding coverage and improving service delivery. However, challenges in implementation, financial sustainability, and socio-cultural barriers persist. Technological innovations, including digital health solutions and telemedicine, could enhance efficiency by up to 15% by 2030. Primary challenges in Africa’s health resource allocation include insufficient funding, inadequate human resources, inefficient management, poor data quality, and lack of political commitment. Policy recommendations include increasing public investment in health, improving resource allocation efficiency, and fostering sustainable financing through private sector and international donor partnerships.