Resource Type: Technical Brief
Authors: Ethiopia Health Sector Financing Reform/Health Finance and Governance Project
Published: June 2018

Resource Description: Prior to the endorsement of Ethiopia’s Health Care Financing Strategy, underfinancing of the health sector was a major contributor to the deterioration of the quality and efficiency of health service delivery. There was little government spending on infrastructure and human resources development, and the government-allocated operational budget for medical equipment, drugs, and medical supplies was insufficient to meet health facility daily needs. Despite the long tradition of charging user fees for health services, health facilities collected little revenue, because the fees had not been revised to keep up with facility costs, and a significant number of patients did not pay because they had been approved for free services by their local government (before the fee waiver program was in place). Also, however negligible their fee revenue was, health facilities were required to remit all of it to the then Bureau of Finance and Economic Development (BOFED)/Ministry of Finance and Economic Development. Thus, facilities had no incentive to work toward mobilizing more resources from user fees. Moreover, facilities had no authority to decide how to use their government-allocated budget to best address their facility priorities and community health needs.