Effect of Health Expenditure on Health Outcomes in Sub-Saharan Africa

Abstract

This paper examined the effect of health outcomes on economic growth in Sub-Saharan African (SSA) countries. With the objective of improving health outcomes, these countries have appropriated and allocated huge resources to health sector by increasing health expenditure significantly over time. However, in spite of these financial commitments to health industry, health outcomes have only shown slight response, raising questions about this significance of health expenditure in improving health outcomes across the region. The data for this paper was sourced from a sample of 45 SSA countries in the 2024 World Bank data base. The paper was based on the Grossman Human Capital Model on the demand for health, and a fixed effect model was estimated to investigate the effect of health expenditure on health outcomes. The findings revealed that public, private and external health expenditures have negative and statistically significant effects on infant mortality, but have positive and statistically significant effects on life expectancy. The fixed effects showed that public, private and external health expenditures are important in reducing infant mortality by 0.0235%, 0.0257% and 0.2270%; while fixed effects showed that public, private and external health expenditures are important in increasing life expectancy by 0.0119%, 0.00678% and 0.0578. The paper concluded that there is substantial effect of health expenditure on health outcomes in Sub-Saharan Africa. Expenditure on health causes infant mortality rate to decline while it increases life expectancy at birth. The paper recommended coordinating efforts on initiatives that include raising public health spending for countries seeking to enhance their per capita income and augmenting their health-related human capital stocks.