The economics of health in Sierra Leone

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UNITED NATIONS AFRICAN INSTITUTE ,, FOR ECONOMIC DEVELOPMENT

AND PLANNING DAKAR

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IDEP/ET/VII/ 259

THE ECONOMICS OF HEALTH IN SIERRA LEONE by

David Carney

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Summary

This paper summarizes the pattern of health expenditures in Sierra Leone between 1950 and 1960 and draws comparisons with educational expenditures which lead to the conclusion that in developing countries with high infant mortality, low population growth rates and a predominantly illite- rate, rural and agricultural population investment in health services is

often a p~quisite to profitable investment in education. Furthermore; the data tend to show that in such countries, contrary to the general belief; investment in health can be more expensive in terms of local and off-shore costs than investment in education, or even in directly productive economie services.

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IDEP/ET/VII/259 page 2

THE ECONOMICS OF HEALTH·!N SIERRA LEONE by

David C;:nney

This paper summarizes the main finding of a recent study, made by the writer, of health expenditures in Sierra Leone; In view of the fact that emphasis on "investment in man" with respect to education and training has always been predominant amongst social goal s in newly independant countries, and developing countries generally, the results of the study are pctrticularly interesting. They enabl e us, in the context of the recent population census of the country taken in April 1963, to assess, ~post, both the past pattern of health expenditures and the proposed investment allocation on health services, as compared respecti- vely with the past pattern of expenditures and the proposed investment alloca- tions on education.

I

Population Growth and its Implications for Economie

Develo~ment and the Heal th Services

The recent census of the population of Sierra Leone which began on 1st April 1963 and was completed in f our t o six weeks disclosed a figure of 2,160,000 as compared with an estimat e of 1,858,000 in 1948. Assuming the 1948 estimate to have been fairly accurat e, the population is seen to have increased over the fifteen-year period at a rate of approximately 1.1 percent per annum, and will probably continue to increase at this rate or a little more, say 1.5 per cent, cver the next five to ten years.

From the overal l development point of view this slowly increasing popul ation has the merit that Sierra Leone does not at the present time face a population pressure problem, the average density per square mile being 77 over a total area of 27, 796 square miles. On the contrary~here is a relative shortage of manpovrer, the total labour force being estimated at around 734,000 sorne 80 per cent, at l east, of which is employed in agriculture. This leaves about (+) The auth~r is a member of the staff of the United Nations African Institute

for Economie Development and Planning (IDEP) at Dakar, Republic of Senegal.

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146,odd or less for non-agricultural employment.

Investigation of the causes of this slow growth of population reveals that a high rat e of infant mortality is probably a primary factor. It is estimated that of every 1,000 children born at least 150 die annually

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In addition, an unknown number of the population die at later ages owing to inadequate medical and health facili t i es tf1roug[lout __ :t;_pe cQuntry. Thus._ the absence of population pressure, ironically, is due, to a l arge extent, to the inadequacies of the health services of the country. The high rate of infant mortality is a generally known fact, but its impact has only been clearly revealed with the returns pf. the recent census of the populatiqn.

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Allocation of Development Expenditure to Health Services, 1950-1960 The absence of population data in the intervening years since 1948 and the obvious absence of pressure on the l and has led in the past ,to an inadequate recognition of the gravity of the health problem of the country. _-.Additionally, _-

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the general àbsence of vital statistics for the country as a whole has obscured

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the urgency of the problem. As a result, in the alloè:ation of "investment .in

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man" as between health, education and welfare no rational criterion has been followed in the past. For example, no thought was given to the probable effects of the pattern of allocatidn on produ~tivity in the short run or in the long.

From 1950 to 1960/61 inclusive, development expenditures totalled [ 24,163,000. Of this total [ 5,259,000 or 21 percent was spent on the provision and expansion of social services. 'l'his percentage may seen small relative to the social needs of the population. Considering, however, that the cast of

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It is, however, in the allocation of expenditures between the segmynts of the social services that, in the l ight of the implication of the recent census, an excessive lopsidedness is seeJ1 to have occurred in faveur of education. Of the nearly [ 5.3 millions spent on the social services nearly f 4.4 million or

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^In^Fre^etown, the capital city, where alone birth and death registration is compulsory, infant mortality was reduced rapidly from 148.4 per thousand in 1950 to 125 per thousand in 1955, then less rapidly to 121.6 per thousand in 1960.

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IDEP/ET/VII/25 9 page 4

86.6 per cent went into education, f. 783,000 or 14.9 per cent into medical and heal th services, the rest, or 1.5 per cent, into social welfare.

III

Trend of Health Expenditures, 1950-1960

During the decade 1950-60 devel opment expenditures on the health care services fluctuat ed considerably in accordance, gènerally, with fluctuation in total ·development revenue:and expenditure. Health expenditures rose from f 44,000 in 195 0 to f. 119, 000 in 1960-61, gi ving an a:imual average (on a. calendar year ba- sis) of f. 59,000 for the period 1950- 60, or 3 per cent of total development expenditures. This represented an annual rat e of growth of expenditure of about 10.5 per cent, al lowance being made for the smal l base from which the increase

occurred~

By comparison, the rest of the social services took one-fifth of al l development expenditures during the period, rising from f. 200,000 in 1950 to f 620,000 in 1960- 61, an annual rat e of growth of about 12 percent. Most of this expenditure went into education which received an average annual allocati~n. of 18 per cent of al l devel opment expenditures, or 75 per cent o~ social expen~i

tures. Thus educati~nal cxpenditures rose from f 167,000 in 1950 to f. 514,000 · in 1960-61, an annual rate of grovrth of 11.9 per cent.

Recurrent expenditures on health services averaged 9 per cent of total government recurrent expenditures in the calendar period 1950-60, rising from f 234,000 in 1950 t o f 909,000 in 1960-61, an annual rate of growth of 14~5 per cent. In comparison the annual rat e of growth for social services as a whol e was 19.1 per cent (rising from f 629,000 in 1950 to f 3,615, 000 in 1960-61), for education 24.4 per cent (rising from f 86,000 in 1950 to f 648,000 in 1960- 61) a~d 18.9 per cent for total government recurrent expenditures which rose from f 2,091,000 in 1950 to f. 11,827,000 in 1960-61.

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IV

·F-i-nancing of. Heal t:h. Sërvices,. 1950..,j9 60.

Table 1 summarizes the sources of devclopment financing for the health services during the period 195 0 ·to 1-960-61. \Vhile an average of 3 per cent of .:ül development expenditures during thi~ period went into health ·services 42 per cent of heal th expendi tures was financed by grant~:;··_f"rom the ·unit-ed

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Kingdom ÇoloniaLDevelopment

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Welfare Fund, leaving 58 per cent to be met from 16cal resources. The ratio of recurrent to c~pit~l cxp~pditur~~ w~s 9 1, as coînpared with a little over 3 : 1 for all development spending, 2.7 :. 1 .for education, and 3 . 1 for non-social (mostly directly productive) services.

Thus medical and health facilities are seen to have been relatively mor:.~.--~)Ç.P_~!l:?.t\1'~ tg. J'll~~l)t:_ai_!J. __ t_t19n e_t:J:U~(lt~onal .f.J.cilities or directly productive economie services .. Added to this aspect of cost is another, namely, the proportion of local to .. off-shore costs of p-roviding these faci'li ti es. For ail services, the ratio o.f. local to off-shore costs in capital expenditures was 2 : 1, as compared to 1 1/2 : 1 f()r health facilities (Tabl@-2) .•.. Thë: comparable. . ..::Ca.t.'io·

.for educ.J.tional services-was 2 : 1 and for economie services 1 1/2 : 1. Heal th

faci)_~tt.~~. W~re _mOre expensi ^Ve in terms of .foreign exchange requirements than educational facili ti es, and as expensi ve as directly pro duc ti ve-services< _ Practically all the off-shore costs o.f health facilities during the period and be.fore have been financed by grants .from the United Kingdom Colonial Development and Welfare Fund. In p~rticular, the o.f.f-shore costs of all health centres

constructed dÜring the. s2:îne pe-r:lod have. been

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Taking altogether the cost o.f expanding and maintaining the various .facilities (that ïs, the total -o.f capital and recurrent costs) it is seen that during the period under review the ratio o.f local to off-shore costs .for he.J.lth .facili ti es worked out 2-t 23 : .1 ,: as compared to 11 : 1 .for all types o.f .f.J.cilities, health as well as other (Table

2).

The comparable ratios for other services are 11 : 1 fo_.r education (same as .for all types o.f .facilities taken together) and

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7 1/2 : 1 .for directly productive services. Thus health .facilities, as a group, are the most expensive to provide and maintain in terms o.f local currency

rcquirements as ~~ll as ioreign :exchange.

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TABLE I

IDEP/ET/VIr/ 259 page 6

•:·· Sources of Developmen~ Finance and Recurrent ExpeQditure on

Medical and Heal th Services in Sierra Leone, 1950-1960/61

A. Development Expenditure

Total Development Expenditure Of wh:j.ch:·: ..

Medical

&

Hcalth

(2-) C

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^& 'vL Grants (b) Local.Resources Other Social Services

(mostly educiÙion) Non-Social Services B. Recurrent Expenditure

Total

1950-1960/61

€'000 20,759

685 287 398 3' 773 16,301 69,994

100.0 3.0

18.5 78.5 100

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100.0 41.9 58. 1

Total Recurrent Expenditure

Of 111hich :

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Medical

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Health Other Social Services

Total,· Social Non-Social

C. Ratio of Recurrent to Capital Cast

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Total Development Spending (b) M~dical

&

Health

6,127 16, 814 22,941 47' 053

3.4 9

1

8.8 24.0 32.8 67.2

26.7 73.3 100.0

Source Sierra Leone Annual Financial Reports and Annual Estimates of Revenue and Exp·endi ture.

TABLE I I

Average Annual Development and Recurrent Expenditures, Local and Off-shore Costs of Medical and Health Services in Sierra Leone,

Total Development Expenditure Recurrent Costs of Existing Services

Local Costs of Deve_lopment Programmee;

Total Local Costs

Off-shore Costs of Development Progr.

Total ~xpenditures

Ratio of -Local to Off-shore Costs in:

(a) Total Expenditures

(b) Devclopment Expenditures

f.¹000 perCent 6, 363

1 ' 191 7,554

696 8,250

11 2

77.1 14.5 91 .6

8.4 100.0

1950- 1960/61 Medical

&

Health

Expenditure f'OOO perCent 557 90.1

36 5.8

593 95 .8 26 4.2 619 100..0

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23 1 1/2 1

Source : Sierra Leone Annual Financial Reports and Annual Estimates of Revenue and Expenditure.

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_a IDEP/ET/VII/25 9 page 7

It is probably for this reason that it has been much casier to spend far more on education • and econo'mic- services than on the heal th ' servicés of the country, An important contrib~tory factor is that in the fi~1d of medicine and health most of the professionals have to be trained, or obtained from, abroad and al l equipment has to come, similarly, from outside the cbuntry. For ecuca- tion, the· position is a l i t t le easier since, apart from textbooks, reading and writing materials, and building materio.ls (the position regarding which is the

same for the health ~ervices) most staff can be trained and a good deal of equipment made local ly. For directly productive investment most of the labour required can be obtained l ocally, leaving the minority of skilled and managcrial personnel to be imported. This expl anation contains certain implications for the financing of health services in countries like Sierra Leone, chiefly, that• ways and means must continually be sought to reduce sorne of the off- shore costs.

Foreign grants from the British Government b1 the past have been an easy way of avoiding the impact of these costs on the foreign exchange reserves of the country. Now that this source of assistance has been eut off since the country beca_;;m_' e politically independent in 1961, _the Sierra Leone Government has been expl oring

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al ternative outside sources to fill in the gap, However, in this arca of pu~lic

cxpenditure where direct financial returns cannat be expected the task is by no means an easy one. There i s, ncverthel ess, a ray of hope - perhaps not a very bright one. Now that the International Development Association has turned its attention to investment in the socië:~l service field it may prove possibl e for countries like Sierra Leone to obtaining financing for thcir health program- mes if sound projects are prescnted,

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Need to Redress Pattern of Expenditure in Human Investmcnt in Favour of Heal th Services

There are obvious reasons why the pattern of expenditure on education and heal th may be considered unbalanced and in necd of adjustment in favour of health

service~; First lyj after the basic necessities - food, shel ter and clothing - although cl osely bound up with t hem, the health of the population cornes next in importance. In the present stage of the Sierra Leone economy formal education does not pl2.y a very significant part in the economie process, since t he bulk of production ·is agricultural and mineral output and i s the work of a large.1y il l i terate o.nd unskilled people 'w'orking wi th tradi t ional means and a.-.prirrii ti ve t echnology. For the most part, therefore, improvement of the skill and

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IDEP /ET/VII/ 25 9 page 8

technology of the farmer and the miner, who constitute the majority of the population at the present time. depends more on practical demonstration-Of better methods tha~ on formal institutional education which is beyond the reach of the majority of the present adult population; more on l i teracy compaigns, c9mmunity development anq audio-visual techniques to promote better living than on formal cl asses in arithmetic, history and geography.

Secondly, with the majority of the present adul t population being i l l i terat e, increases in ·productivity must depend on better health and diet, given the efficacy of the demonstration of better methods and the provision in agriculture of maketing and credit faci l i t ies, water control measures and improved transportation.

Thirdly, only as the pop1J.lation grov1s and wi th i t the proportion of children and young persans does the demand for general education increase and therewith the chance of altering the structure of employment, the pattern of skills and the composition of the total output of the economy. Considering, however, the current high rate of infant mortality the growth of population and the demand for education can only· occur with a rapid reduction in the infant mortality rate through the provision, expension and improvement of the health services.

Al l these considerations l ead t o one major conclusion, namely, that at the present time the progress and wel fare of the people of Sierra Leone gratly

depends on the improvement of their health and diet and the reduction of mortality. But this is just another way of saying that there is urgent need for increased expenditure on the provision, expansion and improvement of health (and nutrition) services rel atively to expenditure on institutional forms of education.

In this respect, the current Ten-Year Plan of Sierra Leone

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gives an indication of the arder of importance among social expenditures that is desirable : 21 per cent of total development expenditure (the largest al loca- tion) is planned for the health services, 10.5 per cent for the education and 1.6 per cent for social welfare. The pivotal point of the health programme is a project for the construction of a network of 146 additional health centres in the Provinces where 91 per cent of the country•s population reside. This project, if completed within the ten-year period of the Plan should pr9vide a health

y-ëarnëy~i5:--Ten:Year-PÏan-o:f-Ëëonomië-and Socicü Developmcnt f or Sierra Leone, 1962/63 - 1971/72 ~Govcrnmcnt Printcr, Si-2rre~ Leone, 1962).

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center within a maximum dist~nce of 15 miles of any settled locality.

VI

C 0 N C L U S I 0 N

Investment in education and trùining is now generally recognized as

~n important type of social overhead necessary for the efficient productive performance of any society. However, as the case of Sierra Leone illustrates, in developing countries with high inf~nt mortality, low population growth rates and predominantly i l l i terat e, rural and agricultural population investment in health services i s often a prerequisite to profitable investment in education.

Furthermore, increased expenditures on health services are more likely to result in immediate gains to productivity than increas~d expenditures on education, in such circumstances. What is frequently l i t t le recognized, however, is that, contrary to the general bel ief, investment in health can be more expensive in

t~rms of local and off-shore cost s than investment in education, or even in directly productive economie services, in such countries.

I.D.E.P.

Dùkar, April,

Senegal 1964.

The economics of health in Sierra Leone

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