Divergence of healthcare expenditure in sub-Saharan Africa

Abstract

The study examines the convergence patterns of real healthcare expenditure per capita (RHEPC) for 43 countries of sub-Saharan African (SSA) from the period 2000 and 2017. Conventional absolute and conditional β-convergence models are first applied. Several factors such as income, democracy, urbanisation and ageing population are found to significantly affect relative RHEPC (RRHEPC) within the conditional β-convergence model. The speed of convergence of RRHEPC is higher for the conditional β-convergence model than the absolute β-convergence one. In general, β-convergence and σ-divergence are detected while no support for the stochastic convergence hypothesis is uncovered. These neoclassical models impose restrictive assumptions that countries follow the same growth path. As such the dynamic distribution approach proposed by Quah is applied to analyse the dynamics of RRHEPC. This is followed by the club convergence test as proposed by Phillips and Sul which allows individual countries to follow distinctive growth paths. Both convergence tests point towards the existence of three clubs. In sum, we find strong evidence of divergence of RHEPC among the 43 SSA countries. Policy implementations based on model results are discussed while several aspects of policy reforms in the healthcare sector within the African continent are highlighted.