Introduction
The discussion and relevance of the performance of the health sector in Mozambique has been increasingly intense, as demographic growth is recorded, which in part puts pressure on the national health system. Improving the quality of and access to health services for all is a priority for development and is included in the main strategic and operational policies, such as the Five-Year Government Programme (PQG) and the Economic and Social Plan and State Budget (PESOE), respectively. Meanwhile, there is a need for logical sequencing in the allocation of resources (human, financial and material) earmarked for the health sector, taking into account the commitments made to ensure quality, sustainability, efficiency and territorial proportionality in the provision of health services. Although the impact is reflected in the long term, a set of short-term actions, considered in the PESOE, is necessary to achieve these goals.
The health sector is largely financed by the external sector, both in the realization of investment expenditure as well as for some expenditure such as current goods and services. External capital, in the form of direct investment or loans to the health sector, has played various roles since the early days of the Mozambican economy and, in this context, there is a need to promote a rational and sustainable use of resources from these sources of financing, avoiding to see them constituting a burden on the sustainability of its service, in the case of public debt and loss of confidence of partners, in the case of donations.
This research presents findings resulting from the analysis of budget execution over the last five (5) years, taking into account the main sectoral commitments. To this end, the research presents, in a comparative manner, budget execution in relation to time, budget allocation in relation to demographic growth, as well as establishes an analogy between planned and executed expenditure in the health sector, taking as reference three spheres of expenditure allocation (district, provincial and central), with a specific look at some relevant institutions at central level.
Aligning the Value of Health Sector Expenditure with Sectoral Commitments
From 2018 to 2022, health sector expenditure in relation to total expenditure was below 15 per cent. Over this period, the average weight of health sector expenditure in relation to total expenditure was 8.4 per cent. The peak of the sector’s expenditure share, in the period under review, was recorded in 2022 at 9.5%, representing an increase of 1pp from the previous year.
Chart 1: Health Sector Expenditure vs Abuja Commitment (2018 to 2022)
Source: Author’s calculations based on GCE (2018 to 2021), PESOE (2023).
Evolution of Health Sector Expenditure in Nominal and Real Terms
In nominal terms, health sector expenditure has increased over the years from MZN 23.1 billion in 2018 to MZN 39.9 billion in 2022. However, in real terms, although there has been an increase, it has not always kept pace with the rate of inflation. Therefore, from 2018 to 2019, there was a real reduction in expenditure by MZN 1 billion, from 2020 to 2021, i.e. real expenditure decreased by MZN 2.8 billion.
Chart 2: Health Sector Budget Execution according to inflation rate (in MZN billion)
Source: Authors’ calculations based on GCE (2018 to 2021) and BdPESOE (2022).
Health Sector Operating and Investment Expenditure according to Financing Sources
Table 2: Comparison between the Plan and the Execution of the Health Sector Budget (2018 to 2022)
| Description | 2018 | 2019 | 2020 | 2021 | 2022 |
| Plan | 27,4 | 26,1 | 34,8 | 34,3 | 43,3 |
| Execution | 23,1 | 22,7 | 32,2 | 30,8 | 39,9 |
| Implementation (%) | 84% | 87% | 92% | 90% | 92% |
Of the executed budget, 77%, on average, corresponds to operating expenditure and only 23% is made up of investment expenditure. In addition, it is possible to see that, from 2020 to 2023, operating expenditure increased by 10pp at the expense of investment expenditure, which decreased by 10pp. In other words, it is understood that the government tends to sacrifice investment in the health sector, especially with regard to the construction of hospitals, purchase of equipment, etc. for expenses aimed only at ensuring the functioning of the sector.
Chart 3: Comparison of Operating Expenditure vs Investment (2018 to 2022)
Source: Author’s calculations based on GCE (2018 to 2021) and Health Sector REO (2022).
There has been a trend of increasing external dependence for the financing of health sector investment expenditure. From 2018 to 2022, external financing increased by 22pp. On the other hand, domestic financing has more than halved, i.e. from 37% to 15% in 2018 and 2022 respectively.
Chart 4: Comparison of investment expenditure by source of funds (2018 to 2022)
Source: Author’s calculations based on GCE (2018 to 2021) and Health Sector REO (2022).
From 2018 to 2022, on average, almost two-thirds of health sector expenditure (62.8%) was at the central level. The remaining 17.6 and 19 per cent were at provincial and district levels, respectively. Overall, it is important to note that from 2020 to 2022, there was a downward trend in central-level expenditure at the expense of provincial and district-level expenditure, falling from 70.3% to 58%, respectively.
Chart 5: Comparison of Health Sector Budget Execution by Scope (2018 to 2022)
Source: Author’s calculations based on the REO of the Health Sector (2018 to 2022).
Health Sector Expenditure Execution at Central Level
In the period under review, the execution of central level expenditure was, on average, 160%. It should be noted that the peak of execution was recorded in 2020 in the order of 280%, an increase of 185pp over the previous year. However, this execution may be associated with the fact that, between 2020 and 2021, the health sector benefited from external aid to finance the prevention and treatment of COVID-19.
Table 3: Comparison between the Plan and the Execution of the Health Sector Budget by Central Scope (2018 to 2022)
| Description | 2018 | 2019 | 2020 | 2021 | 2022 |
| Plan | 15,2 | 16,9 | 12,6 | 20,8 | 25,4 |
| Execution | 21,3 | 16,0 | 35,3 | 32,4 | 33,1 |
| Execution (%) | 140% | 95% | 280% | 156% | 130% |
On average, 55% of expenditure was spent on operating expenditure and the remaining 45% on investment expenditure.
Chart 6: Comparison of Operating Expenditure vs Investment by Central Scope (2018 to 2022)
Source: Author’s calculations based on the REO of the Health Sector (2018 to 2022).
There has been a trend of increasing external financing at the expense of internal financing of central spending. In the period under review, external funding almost doubled from 48% to 83% from 2018 to 2022. In contrast, internal financing fell by almost three times, from 52% to 17%, over the same period.
Chart 7: Level of Execution of the Central Health Sector Budget by Source of Funds (2018 to 2022)
Source: Author’s calculations based on the REO of the Health Sector (2018 to 2022).
Execution of Health Sector Expenditure at the Provincial Level
Operating expenditure accounts for the largest share of provincial expenditure, averaging 79% over the last five years. Investment expenditure constitutes an annual average of 21%.
Table 4: Comparison between the Plan and the Execution of the Health Sector Budget by Provincial Scope (2018 to 2022)
| Description | 2018 | 2019 | 2020 | 2021 | 2022 |
| Plan | 5,8 | 4,9 | 6,3 | 8,9 | 6,8 |
| Execution | 6,2 | 6,6 | 7,2 | 7,7 | 9,5 |
| Execution (%) | 108% | 134% | 115% | 86% | 140% |
Operating expenditure accounts for the largest share of provincial expenditure, averaging 79% over the last five years. Investment expenditure constitutes an annual average of 21%.
Chart 8: Comparison of Operating Expenditure vs Investment by Provincial Scope (2018 to 2022)
Source: Author’s calculations based on the REO of the Health Sector (2018 to 2022).
Regarding the investment expenditure, there is an exacerbated external dependence. On average, 79 per cent of resources come from external sources and only 21 per cent on average come from internal sources.
Chart 9: Provincial Health Sector Budget Execution Level by Source of Funds (2018 to 2022)
Source: Author’s calculations based on the REO of the Health Sector (2018 to 2022).
Execution of Health Sector Expenditure at District Level
Regarding district-level expenditure, table 7 indicates that, in the period under review, execution averaged 130%. It should be noted that there has been an upward trend in the execution of public expenditure in the last three years, from 115% to 171%.
Table 5: Comparison between Plan and Execution of Health Sector Expenditure by District Scope (2018 to 2022)
| Description | 2018 | 2019 | 2020 | 2021 | 2022 |
| Plan | 4,6 | 5,5 | 6,7 | 6,8 | 8,5 |
| Execution | 5,3 | 6,7 | 7,7 | 8,7 | 14,5 |
| Execution (%) | 115% | 122% | 115% | 129% | 171% |
At district level, the disparity between operating and investment expenditure is more critical. Chart 13 indicates that, on average, in the period under review, about 93 per cent of expenditure went to finance recurrent expenditure, with a focus on personnel costs. For example, in 2020, 2021 and 2022, personnel expenditure accounted for 87%, 85% and 88% respectively. In other words, over the last three years, on average, 87 per cent of district-level expenditure has gone towards the payment of salaries and wages and other personnel costs. On the other hand, investment expenditure represented, on average, about 7 per cent of district-level expenditure. It is also important to note that 100 per cent of capital expenditure is derived from external sources.
Chart 10: Comparison of Operating Expenditure VS Investment by District Scope (2018 to 2022)
Source: Author’s calculations based on the REO of the Health Sector (2018 to 2022).
Budget Execution by Central Institution
Implementation of the MoH budget. Over the last 5 years, the MoH has executed on average 85% of planned expenditure. The highest point of Budget Execution was in 2020, at 133%. However, in the following year, expenditure decreased to the most critical point of the last five years, 54%, in 2021, settling at 59% in 2022. It should be noted that, in the period under review, 100% of the MoH’s expenditure was for operating expenditure.
Table 6: Comparison between the Plan and the Execution of the MISAU Budget (2018 to 2022) (in MZN billion)
| Description | 2018 | 2019 | 2020 | 2021 | 2022 |
| Plan | 1.8 | 1.9 | 1.4 | 3.5 | 3.6 |
| Execution | 1.8 | 1.6 | 1.8 | 1.9 | 2.1 |
| Execution (%) | 97% | 83% | 133% | 54% | 59% |
Budget execution of the Maputo Central Hospital (HCM). From 2018 to 2022, HCM executed on average 72% of expenditure. Overall, Budget Execution has reduced from 82% in 2018, the highest point, to 56% in 2022, the most critical point.
Table 7: Comparison between HCM Budget Plan and Execution (2018 to 2022) (in MZN billion)
| Description | 2018 | 2019 | 2020 | 2021 | 2022 |
| Plan | 1.7 | 1.6 | 1.6 | 1.6 | 2.8 |
| Execution | 1.4 | 1.1 | 1.2 | 1.2 | 1.6 |
| Execution (%) | 82% | 71% | 74% | 76% | 56% |
Budget execution of the Medicines and Medical Supplies Centre. In 2019, 2020 and 2022, the centralized medicines department executed on average 130% of the planned expenditure. In 2018, the budget shows that there was in principle no amount allocated Medicines and Medical Supplies.
Table 8: Comparison between the Plan and the Execution of the Budget of the Central of Medicines and Medical Articles (2018 to 2022) (in MZN million)
| Description | 2018 | 2019 | 2020 | 2021 | 2022 |
| Plan | 278.4 | 190.5 | 186.9 | 0.0 | 181.0 |
| Execution | 0.9 | 272.2 | 310.1 | 168.3 | 148.4 |
| Execution (%) | 0% | 143% | 166% | 82% |
Budget execution of the National Institute of Health. In the period under review, the National Institute of Health had, on average, a budget execution from 2019 to 2022 above 100%. However, in the first year of the analysis, there was initially no value allocated to the NHI. In 2019, the execution was below 61% and in the subsequent years the execution was above plan, with 186%, 110% and 115% in 2020, 2021 and 2022, respectively.
Table 9: Comparison between the Plan and the Execution of the Budget of the National Institute of Health (2018 to 2022) (in MZN million)
| Description | 2018 | 2019 | 2020 | 2021 | 2022 |
| Plan | 0.0 | 104.4 | 60.1 | 127.0 | 174.6 |
| Execution | 20.9 | 63.5 | 111.6 | 140.1 | 201.3 |
| Execution (%) | 61% | 186% | 110% | 115% |
Budget execution of the Regional Health Development Centre. In 2018 and 2020, although the Regional Health Development Centre was not planned, it had an average execution of about MZN 21.5 million. However, in 2021 and 2022, the Execution was below the planned, 91% and 63% respectively.
Table 10: Comparison between the Plan and the Budget Execution of the Regional Health Development Centre (2018 to 2022) (in MZN million).
| Description | 2018 | 2019 | 2020 | 2021 | 2022 | |
| Plan | 0,0 | 0,0 | 0,0 | 25,2 | 36,1 | |
| Execution | 21,9 | 17,5 | 25,0 | 23,0 | 22,6 | |
| Execution (%) | 91% | 63% |
Budget execution of the Maputo Institute of Health Sciences. Similar to the Regional Health Development Centre, the Institute of Health Sciences did not plan expenditure for 2018 to 2020. However, in 2021 and 2022, Execution was below plan at 59% and 41% respectively (see graph 13).
Table 11: Comparison between the Plan and the Budget Execution of the Maputo Institute of Health Sciences (2018 to 2022) (in MZN million)
| Description | 2018 | 2019 | 2020 | 2021 | 2022 |
| Plan | 0.00 | 0.00 | 0.00 | 38.50 | 55.08 |
| Execution | 24.4 | 20.9 | 17.3 | 22.9 | 22.6 |
| Execution (%) | 59% | 41% |
RECOMMENDATIONS
- Increase the State Budget allocated to the health sector and ensure its implementation, taking into account the minimum demands assumed in the Abuja Commitment regarding the allocation of 15% of public resources to the health sector.
- Consistently increase health sector spending to cover the purchasing power eroded by inflation from one year to the next.
- Ensure that the increase in the health sector budget is accompanied by a proportionate allocation in investment expenditure, reflecting further expansion of health services.
- Reverse the trend of increasing external financing for capital expenditure. Due to the critical nature of the health sector and especially capital expenditure, there should be no increasing reliance on external funding sources of an unpredictable nature.
- The decentralization effort, at provincial and district level, should include not only current expenditures such as salary payments, but also include those expenditures related to strategic investments that can be executed by the province or district.
- Health sector institutions should improve their planning to minimally reflect the needs of the sector during the year, avoiding budget deviations from one line item or institution to another, as well as avoiding balances carried over from one financial year to the next, and eliminating institutions with no budget allocation but with expenditure incurred in a given financial year.
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