Effect of Healthcare budget allocation on County government economic growth in Kenya

Abstract

It is generally believed that economic growth and development happens only when a nation or state ensures that the available resources are properly allocated to various productive economic units. The health of a nation is the backbone for economic growth and as a matter of concern every nation must invest in the healthcare of her citizens who are the human capital and drivers of economic growth. A sick population is an unproductive population. In Kenya, health care budgetary allocation by Kenyan government continue to fall short of the basic minimum despite having global commitments such as the Abuja declaration where it is expected to allocate at least 15 percent the total allocation to healthcare. There however has been an increase in terms of the amount the government has been spending on healthcare from approximately KSh 271 billion (6.7 % of GDP) in 2012/13 to 346 billion (5.2% of GDP). In 2017/18, MoH allocated KSh. 155 Billion to healthcare. Thus, the research sought to establish the effect of health budget allocation on economic growth of the devolved county governments in Kenya. The study was guided by the Solow-Swan theory of growth, Wagner Theory of increasing state spending, Theory of budgetary allocation and Buchanan's theory of healthcare spending. The study used a descriptive research design and conducted a census of the 47 Counties in Kenya. The research data was gathered for a four years between 2015 and 2018. Descriptive statistical tools and the panel regression analysis used to scrutinize using the STATA statistical analysis software. The correlation analysis results revealed that healthcare budgetary allocation, national allocation share and internal appropriations had a positive correlation with the county’s gross product respectively. The regression results revealed that healthcare budgetary allocation had a positive and significant relationship with Counties economic growth whereas the national allocation share had a positive and significant relationship with economic growth whilst internal appropriations (own revenue generation) had a positive and significant relationship with economic growth of Kenyan Counties. The study concluded that healthcare budgetary allocation, national allocation share and internal appropriations had a statistically significant and positive relationship with economic growth of Counties in Kenya. The study recommended that the administration of county governments in Kenya should allocate more monetary resources in health care functions so to enhance the counties growth economically since poor investment in healthcare is a serious constraint hindering improvement of healthcare provision as well enhanced economic development. The study recommended an additional research on how healthcare budgetary allocations affects counties economic growth under which the qualitative views and opinions of county administrators, policy makers and citizens will be incorporated.