Analysis of Allocative Efficiencies 
on the Health Sector Budget in 
Namibia
LOCAL HEALTH SYSTEM SUSTAINABILITY PROJECT
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Local Health System Sustainability Project
The Local Health System Sustainability Project (LHSS) under the USAID Integrated Health 
Systems IDIQ helps low- and middle-income countries transition to sustainable, self-financed 
health systems as a means to support access to universal health coverage. The project works 
with partner countries and local stakeholders to reduce financial barriers to care and treatment, 
ensure equitable access to essential health services for all people, and improve the quality of 
health services. Led by Abt Associates, the five-year project will build local capacity to sustain 
strong health system performance, supporting countries on their journey to self-reliance and 
prosperity.
Recommended Citation: The Local Health System Sustainability Project (LHSS) under the 
USAID Integrated Health Systems IDIQ. June 2022. Analysis of allocative inefficiencies on the 
Health Sector Budget in Namibia. Rockville, MD: Abt Associates.
Date: June 2022
Submitted to: Scott Stewart, Task Order Contracting Officer’s Representative, USAID Bureau 
for Global Health, Office of Health Systems
USAID Contract No: 7200AA18D00023/7200AA19F00014
This report was made possible by the support of the American people through the United States 
Agency for International Development (USAID). The contents are the sole responsibility of the 
authors and do not necessarily reflect the views of USAID or the United States government.
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Contents
Acronyms...................................................................................................................................iv
Executive Summary ................................................................................................................... vi
Introduction................................................................................................................................. 1
Context ....................................................................................................................................... 3
Socioeconomic Environment .............................................................................................. 3
Health Service Provision .................................................................................................... 3
Discussion of Findings ................................................................................................................ 5
Challenges in the Budgetary Planning Process .................................................................. 5
Misalignment Between Budget Formulation and Policy Imperatives ................................... 6
Low Predictability in Budget Disbursements....................................................................... 8
Limited Autonomy of Subnational Budget Holders.............................................................. 8
MoHSS Allocation to Units of Production............................................................................ 9
Consumption and Investing for the Future........................................................................10
MOHSS Budget Allocations to Health Functions ..............................................................10
Inequitable Allocations to Regions....................................................................................12
Allocations to Disease Programs......................................................................................13
Recommendations ....................................................................................................................15
Conclusion ................................................................................................................................17
References ...............................................................................................................................18
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List of Tables 
Table 1: Comparison of National Health Strategy Costing and Health-sector Budget 
Allocation............................................................................................................................ 7
Table 2: Government Health Expenditures by Function .............................................................. 9
List of Figures 
Figure 1: Top 10 Causes of Deaths in Namibia........................................................................... 4
Figure 2: Expenditure by Program Area ...................................................................................... 6
Figure 3: MoHSS on Health Care Functions .............................................................................11
Figure 4: Composition of MoHSS Expenditures by Program Area.............................................12
Figure 5: Per Capital Expenditure (2012/13-2020/21) ...............................................................13
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Acronyms
AIDS Acquired Immunodeficiency Syndrome
ART Anti-Retroviral Therapy
COVID-19 Coronavirus disease 2019
DHIS District Health Information Software
GDP Gross Domestic Product
GNI Gross National Income
GRN Government of the Republic of Namibia
HFG Health Financing and Governance Project
HIV Human Immunodeficiency Virus
HR Human Resources
HRH Human Resources for Health
IFMIS Integrated Financial Management Information System
IHME Institute for Health Metrics and Evaluation
IPD In-Patient Department
LHSS Local Health System Sustainability Project
MMR Maternal Mortality Rate
MoF Ministry of Finance
MoHSS Ministry of Health and Social Services
MTEF Medium Term Expenditure Framework
NAMAF Namibian Association of Medical Aid Funds
NAMFISA Namibia Financial Institutions Supervisory Authority
NCD Non-Communicable Disease
NIP National Institute of Pathology (NIP)
NPC National Planning Commission
OOP Out-of-Pocket
OPD Outpatient Department
PBB Program-Based Budgeting
PER Public Expenditure Review
PPP Public-Private Partnership
PSEMAS Public Service Employees Medical Aid Scheme
SADC Southern Africa Development Community
SDGs Sustainable Development Goals
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TB Tuberculosis
TWG Technical Working Group
UHC Universal Health Coverage
UMIC Upper Middle-Income Countries
WHO World Health Organization
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Executive Summary
Though the Government of the Republic of Namibia has committed to ensuring affordable, 
accessible, and equitable health services for all, this commitment is under threat as the country 
faces a constrained fiscal space. This constraint has been exacerbated by the coronavirus 
disease 2019 (COVID-19) pandemic, which has increased socioeconomic challenges, as well 
as pressure on the government to spend more on health and other sectors to address the 
impact of the disease. Furthermore, the country is already battling the increasing burden of non￾communicable diseases and unmet elimination targets for infectious diseases such as the 
human immunodeficiency virus (HIV). These challenges, along with significant population 
growth coupled with high rural-to-urban migration rates by a youthful population raise the 
urgency to increase health funding and examine how available resources can best be used. 
Namibia consistently spends a significant share of its government budget on health (almost 15% 
annually), yet it has failed to achieve the expected outcomes due to a variety of potential 
inefficiencies. This analysis identified several inefficiencies related to how the financial budget 
and other financial resources are allocated and spent. Such inefficiencies include weak 
budgetary practices, including poor implementation of program-based budgeting (PBB), limited 
program directors’ engagement in the budgeting process, use of line-item incremental 
budgeting, low budget holder autonomy and spending outside the approved budget.
Furthermore, inconsistency in budget disbursements from the Ministry of Finance (MoF) to the 
Ministry of Health and Social Services (MoHSS) and in turn to sub-national levels may force 
subnational level budget holders to prioritize goods and services that can be obtained through 
credit or accruals over those requiring cash on delivery. As a result, domestic government 
arrears totaled 2.4% of GDP in 2017, with 13% of that amount occurring in the health sector 
(PER, 2019)
While the MoHSS’s allocation of its annual budget to salaries and other staff costs has steadily 
risen to over 50% from 41% in 2009, the health sector’s expenditure on capital formation 
remains inadequate to meet the population’s growth and changing distribution, as well as 
financing technology improvements that would drive better diagnoses and treatment.
Allocation to health functions is skewed towards curative care; over 59% of the budget is spent 
on outpatient and inpatient curative care at the hospital level, while primary care receives only 
13% (MoHSS, 2022). Budgetary allocations to regions remain inequitable and are not 
adequately informed by population size, disease burden, or other evidence. Furthermore, the 
annual government budget does not provide enough detail on actual amounts allocated to 
specific disease areas beyond the overall program allocations. Addressing the potential 
inefficiencies has the potential to unlock value for money within existing resources, and helps 
the country expand delivery of adequate essential health services in line with universal health 
coverage (UHC) goals.
The following reform options are presented as potential actions that can improve resource 
allocation within the MoHSS budget and address some of the challenges identified during the 
analysis:
● Strengthen the engagement and relationship between MoHSS and MoF to improve health 
allocation alignment with national priorities. 
● Fully implement PBB and move away from the current presentational framework toward 
outcomes and performance-driven budgeting framework. 
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● Provide more autonomy to budget holders at national and subnational levels, and transition 
away from line-item budgeting as part of the comprehensive PBB reform. 
● Develop a resource-allocation formula to provide objective, independent criteria closely 
related to national priorities and health needs as a basis for budgeting resources to promote 
a more equitable allocation. 
● Identify and correct any barriers to regular and consistent disbursements of funds from the 
MoF to reduce ad hoc and accrual spending. 
● Engage MoF for the development of a framework to enable tertiary care facilities to retain 
and use funds collected directly without remitting these to the Treasury. 
● Engage the National Planning Commission (NPC) and MoF towards increasing spending on 
capital budgets as a critical driver to continued investment in infrastructure and equipment 
required for equitable quality health services. 
● Strengthen HRH management and deployment within the MoHSS towards cost control and 
improvements in the health workforce as the most significant cost driver for the health 
sector.
Implementation of the above recommendations provides a starting point for further work on 
strengthening resource allocation within the MoHSS. The recommendations are not listed in any 
order of priority and can be addressed based on stakeholder appetite and the complexity of 
reforms required. Some interventions require buy-in from other line ministries and action from 
policy-level decision-makers, while others can be undertaken within the MoHSS. This provides 
the MoHSS with a range of potential interventions, including ways to address inefficiencies in 
resource allocation that are “low-hanging fruits”. 
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Introduction
The Government of the Republic of Namibia (GRN) is mandated to deliver essential health 
services and ensure equity, sustainability, inclusion, and multi-stakeholder participation in health 
care decision-making. To realize the mandate, the government has embarked on a pathway to 
achieving universal health coverage (UHC) as a priority reform to provide equitable and 
accessible quality health services. 
However, in a climate of increased health burden due to the coronavirus disease 2019 (COVID￾19) pandemic, diminishing donor funds (especially from The Global Fund which has signaled
intention to fully transition out of Namibia), and a declining economy, achieving this objective will 
only be possible if funding is coordinated effectively and efficiencies are maximized. Increasing 
the value for money in utilization of current funding should be the GRN’s main priority, while 
making progress on UHC may require the GRN to find additional budgetary resources in the 
medium to long-term.. The GRN has drawn attention to the need to increase allocations to 
health and other line ministries and has also focused on improving the distribution and use of 
available resources. 
The economic slowdown due to COVID-19 and the increase in demand for, resources to 
counter the negative impact of the disease, high debt to GDP ratio, along with a growing 
population and changing disease burden—has increased pressure on the GRN to contain 
expenditures and achieve higher value for money in current budgets. Meanwhile, resources for 
health from international donors are under stress as funders signal intention to transition and 
ensure sustainability.
This report analyses potential allocative efficiencies that can be achieved through budgeting 
reforms to the health sector—from the national to the subnational level. WHO defines allocative 
efficiency as allocating resources to provide the optimal mix of goods and services to maximize 
benefits to society (WHO, 2018). Perfect allocative efficiency is reached only when producing 
more health gains by moving resources from one health input to another is impossible. For 
example, if Namibia could see improved health outcomes by reallocating resources from 
hospital care to primary care, it has not yet maximized allocative efficiency. In this report, 
allocative efficiencies are analyzed in the context of the Namibian health system and evaluated 
against set goals as outlined in national strategies and international benchmarks such as the 
Sustainable Development Goals (SDG). The review focuses on whether the Ministry of Health 
and Social Services (MoHSS) provides financial resources to do “the right things” and whether 
this money is allocated in the “right way”. The review also considers how the available 
resources are allocated to different regions, diseases, and levels of care. 
In conducting this analysis, an extensive literature search was conducted to identify documents 
on the Namibia health sector. Over the last few years, Namibia has commissioned various 
analyses to examine potential efficiencies within the health sector. These analyses included a 
study on hospital efficiencies done in 2018, a Public Expenditure Review (PER) conducted in 
2019, and a resource tracking of health and human immunodeficiency virus (HIV) expenditures 
survey for 2017/18. Most recently, the MoHSS has finalized a Health Sector Review (2022), 
which looked at the performance of the overall health sector, including financing. Such 
documents, amongst others, were identified during the literature search and informed this brief. 
The report relied on qualitative analysis of existing data, and though quantitative analysis was 
conducted where possible, no economic models were used to quantify the level of efficiencies. 
The analysis is not intended to be prescriptive, but rather, brings together various sources of 
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evidence to identify potential inefficiencies—providing a starting point for stakeholder discussion 
and a roadmap for reforms.
Namibia has embarked on a roadmap to develop UHC reforms across different areas of the 
health system, including health financing. This report will inform the discussion on actions 
needed to ensure domestic resources are used to achieve more value for money. Furthermore, 
the MoHSS will develop a roadmap to implement reforms necessary to address potential 
inefficiencies. The MoHSS understands health-sector reforms are complex and require a 
systematic approach; hence, this analysis will also inform discussions in other areas of the 
health sector, including HRH, pharmaceuticals, and infrastructure, among others.
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Context
Socioeconomic Environment
Namibia’s size, combined with a dispersed population and a population density that is among 
the lowest globally make it challenging for the health sector to provide universal access to 
services across the country. With a 2020 population estimated at 2.54 million, Namibia has less 
than 3 people per km2 spread out across 14 regions (Worldometer, 2022). Approximately 60% 
of the population lives in the North, 33% in the central highlands, and 7% in the arid southern 
regions (MoHSS, 2022). Khomas region includes the capital Windhoek and accounts for about 
18% of the population. 
The country is ranked as an upper-middle-income country (UMIC) with a gross national income 
(GNI) per capita of US $4,500 (2020), which is closer to the lower bound of the per-capita GNI 
classification for a UMIC (range between US$4 045 and US$12 525) (World Bank, 2021). The 
economic impact of COVID-19 to Namibia’s economy has also been devastating, as real gross
domestic product (GDP) contracted by as much as 7.4% based on World Bank estimates and 
as low as 14% based on Kaiser Family Foundation (KFF) estimates in 2020 (World bank, 2021, 
Kff.org, 2022) even though the growth trend had started to falter as early as 2015. Ultimately 
this has affected general revenue collection, which has plateaued at 30% of the GDP. In 
response to declining fiscal space, the government has worked hard to contain public spending; 
however, fiscal deficits have increased to about 5.5% of GDP, driven largely by the reduced 
revenue of the past several years. 
Income inequality remains high in the country, with the top 10% benefitting from about about 
64% of the total income for Namibia, with the bottom 40% seeing 4% of the total income. As a 
measurement of inequality, Namibia’s latest recorded Gini Index coefficient of 0.59 (World Bank, 
2015) reveals significant income inequalities that are globally second only to South Africa. 
Regional inequalities have also persisted with development mostly crowded around the Khomas 
region, despite migration patterns to urban areas continuing to create many challenges for the 
country regarding service provision to the ever-expanding unplanned peri-urban areas. 
Health Service Provision 
Post-independence, access to health services has faced challenges, although significant 
progress has been made. The provision of health services in Namibia is currently split between 
three main provider groups: the government (70–75%), faith-based providers (15–20%), and the 
private sector (5%) (MoHSS, 2022). The primary faith-based providers (Lutheran, Roman 
Catholic, and Anglican) are not-for-profit and predominantly work in rural areas. The Health 
System Review notes that about 43.9% of the population access medical services from clinics 
and 28.1% from hospitals. In the rural areas, clinics constitute the most common providers of 
care (54%), followed by health centers with 15.1%. Due to the dispersed settlements, an 
estimated 21% of the population lives more than 10km from the nearest health facility. The 
Health System Review also shows that the private sector provides 51.5% (17.8% by private 
hospitals and 33.7% for other private-sector providers) of overall services in urban areas. 
Private facilities are mainly used by the 20% of the population covered by medical insurance, 
which is expensive and beyond the reach of many patients who pay for health services at point 
of care.
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The progress that Namibia has seen in addressing its health needs has been made even as the 
country has faced an increasing double burden of communicable and non-communicable 
diseases (NCDs). Infectious diseases remain the largest driver of morbidity and mortality. Based 
on District Health Information System (DHIS) data presented in the recent Health System 
Review, respiratory system diseases, musculo-skeletal system disorder, common cold, and 
diarrhea have remained the top causes of morbidity in out-patient department (OPD) units from 
2009 to 2020. Figure 1 below shows the top 10 leading causes of death from 2009 to 2019 
based on all-cause mortality data from the Institute for Health Metrics and Evaluation (IHME).
Figure 1: Top 10 Causes of Deaths in Namibia
Source: IHME Database, 2022.
While the country has progressed in the fight against HIV, data from IHME (2022) show that it 
remains the top cause of illness and death between 2009 and 2019. Maternal, newborn, and 
child health have emerged as key priorities to be addressed to meet SDG targets. The Health 
System Review (2022) notes that Namibia has the second-highest maternal mortality rate 
(MMR) among UMICs, with HIV/acquired immunodeficiency syndrome (AIDS) contributing 
indirectly to 37% of maternal deaths. The under-five mortality rate has decreased in the last 
decade but is still almost four times higher than the UMIC average. About 32% of under-five 
deaths occur in the first month of life, highlighting the importance of newborn care (PER, 2019). 
Over the same period, NCD’s share of mortality rose to 38.7% from 36.7%, with diabetes 
among the top-10 reasons for premature death (MoHSS, 2022). The impact of NCDs between 
2020 and 2021 may even be higher as conditions such as diabetes and high blood pressure 
exacerbated COVID-19 mortality, with the country reporting 4,075 deaths since the pandemic 
began through mid- August 2022 (Worldometer, 2022). 
The situational context for the country shows that while it has progressed in addressing some 
health needs with an advanced and better-equipped health sector compared to regional 
neighbors, Namibia cannot afford to reduce funding for health and efforts to improve health 
service delivery. Furthermore, the impact of COVID-19 on global and local economies will force 
the government to make hard choices on how it uses available resources. Faced with limited 
options to increase fiscal space for health, Namibia will need to ensure more value for money 
from current resources. This will mean exploring allocative and technical efficiencies to unlock 
savings within the existing envelope. 
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Discussion of Findings
Challenges in the Budgetary Planning Process 
Given the funding available to the state, a consideration of budgeting is essential in determining 
what services will be produced and provided within Namibia’s health system. The country’s 
budgetary process provides medium-term alignment and guidance through the Medium-Term 
Expenditure Framework (MTEF). However, various gaps and challenges have been cited at the 
Ministry level, creating potential inefficiencies in allocating financial resources. Such gaps 
include poor implementation of PBB, limited program directors’ engagement in the budgeting 
process, use of line-item incremental budgeting, and spending outside the approved budget. 
Guided by the state Finance Act Chapter 31 of 1991, the country’s budgeting and planning 
process is robust at the overall national level though gaps exist at the MoHSS level, with a well￾defined process from budget preparation to enactment, execution, budget control, audit, and 
assessment. The Health System Review noted a strong budget alignment to national priorities, 
including the National Strategic Plan, the Harambee Prosperity Plan, and the Health Policy.
The MTEF guides the level of resources available to line ministries over a two to three-year 
period, enabling forecasting and better prioritization. While variations in allocations are 
experienced, these generally do not differ significantly from what is projected in the MTEF. 
Annually, the Ministry of Finance (MoF) and line ministries negotiate the actual funding based 
on submitted plans and the MTEF. During this process, the National Planning Commission 
(NPC) leads in developing the capital/development budget by supporting line ministries in the 
negotiation process. Both the recurrent and development budgets are fully integrated with the 
Integrated Financial Management System (IFMIS), which has made it easier to track 
expenditures.
However, at the MoHSS level, the budget remains input- and line item-based, making it 
inflexible and difficult for managers to reallocate funds to emerging priorities at the local level. 
Line-item budgeting provided resources for specific inputs with limited linkage to the required 
health outcomes. For example, units can have a high allocation for fuel, yet other needed inputs 
such as medicines and drugs may be under-budgeted. While re-allocating funds between 
budget line items (virementing) is possible, the complex process to do so reduces the fungibility
(flexibility) of resources available to budget holders. Spending based on line-item allocations 
may therefore result in directorates chasing spending targets instead of outputs (health 
services). 
To address this, the PBB process introduced in 2005 attempted to move the focus from inputs 
to emphasizing outputs, enhanced performance-monitoring, and autonomy of the budget holder. 
Furthermore, PBB was expected to shift the budgetary planning process to focus on program 
goals, such as services to be delivered and the population to be covered. In contrast to the 
MTEF process—where MoF sets budget ceilings, and future budgets are incremental without a 
solid relationship to what outcomes need to be achieved by the MoHSS—the PBB process 
follows a bottom-up budgeting approach with sub-programs defining their goals and the 
resources needed to achieve them. 
To ensure the full benefits and potential of PBB can be realized, effective linkages with 
performance and resources allocated are needed. Though Namibia reconfigured its health￾sector budget presentation to reflect the PBB approach, PBB is not reflected in actual 
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implementation, as the MTEF still guides the overall process and budgets remain line item￾based. The 2017 PER furthermore noted that while the MoHSS adopted broad program 
classifications such as “Communicable Diseases”, it is still difficult to assess what services will 
be provided within these broad categories. 
Furthermore, because the budget remains input-based, budgets are excessively rigid within 
directorates and cannot be shifted across programs during execution as advocated by PBB 
reforms. Each directorate is still developing its own budget, and these are subsequently 
combined into one “program budget” with limited linkage to outputs and outcomes expected 
from each program. The graph below shows expenditure by different programs under the PBB 
framework as presented in the Health System Review of 2022.
Figure 2: Expenditure by Program Area
Source: Ministry of Health and Social Services Health Systems Review (2012-2021), 2022
Furthermore, the final budget is excessively opaque as it is difficult to ascertain how much was 
actually allocated to the different directorates within the MOHSS, in comparison to the old MTEF 
directorate-based budget. At the directorate level, the budgeting process remains unchanged, 
i.e., individual directorates prepare budgets for consolidation into a “program budget” by 
clustering the budgets of various directorates. This budgeting process diverges from the MTEF 
program budgets, where service delivery programs should be used instead of directorates.
Misalignment Between Budget Formulation and Policy 
Imperatives 
The disconnect between the costed national health strategy, the MTEF, and annual health 
budgets shows limited use of cost data to inform resource allocation. As highlighted by the 
Health System Review, there is no evidence that data from the costed National Health Strategy 
2017–2022 was used to inform the development of the MTEF and annual budgets for this 
period. (A costed national health strategy provides close estimates of what is required to attain 
specific health goals outlined in the national plan. Thereafter, resource allocation should closely 
follow, or be guided by, such cost estimates). Furthermore, there has been inadequate political 
will from the both the MoHSS and MoF to advance such broad budgetary reforms with 
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recommendation on strengthening PBB from an assessment in 2009 largely unimplemented to 
date. However, the on-going UHC reform process provides a key window of opportunity to 
resuscitate efforts towards budgetary reforms.
The costed plan also provides strong evidence of the “need” to progress toward UHC, as 
outlined in the strategic plan. The costing strategy identified three scenarios, with the 
“aggressive scenario” being ideal in moving the country towards the achievement of targets and 
goals outlined in the strategy. Though allocations to health following the 2017/18 budget cycle 
met and exceeded estimates for the aggressive scenario in the 2020/21 and 2021/22 cycles, 
this was mainly driven by COVID-19 spending. Over the life of the strategy, allocations did not 
significantly differ from the baseline estimates, showing the MoHSS would not have adequate 
resources to scale up implementation toward achieving ambitious strategic goals, unless current 
inefficiencies are addressed to unlock potential savings and achieve value for money in current 
budgets. The table below shows the funding gaps between the “aggressive scenario”, and 
resources allocated through annual budgets. 
Table 1: Comparison of National Health Strategy Costing and Health-sector Budget 
Allocation
Cost
Scenarios 2017/18 2018/19 2019/20 2020/21 2021/22 Total (N$)
Aggressive 
Scenario N$7,410M N$7,717M N$7,785M N$7,848M N$7,909M N$38,669M
High Impact 
Scenario N$6,881M N$7,179M N$7,246M N$7,335M N$7,435M N$36,076M
Baseline 
Scenario N$6,462M N$6,728M N$6,767M N$6,809M N$6,853M N$33,618M
Budget 
Allocation N$6, 982M N$6,712M N$6,873M N$8,052M N$8,141M N$32,761M
Variance
(budget 
compared 
against 
aggressive 
scenario)
(N$428M) (N$1,005M) (N$912M) N$204M N$232M (N5,908M)
Source: Ministry of Health and Social Services Health Systems Review (2012-2021), 2022
Such discrepancies between final allocation from the MoF versus the MoHSS bids often point to 
a wide variation in perspective between the two ministries, wherein health is often regarded as a 
consumption rather than a vital economic driver. Furthermore, with discrete and off-budget 
donor funds being directed to health, the MoF widely believes that the sector is well-funded from 
such additional resources. Thus, it is always essential to bridge the gap in perspectives between 
the two ministries while taking into account enough data from resource tracking, costing, and 
other health strategies to present a robust health budget bid. Furthermore, involving focal 
persons from MoF in planning and routine strategic processes for the MoHSS can help bridge 
the gap and bolster the relationship between the two ministries, thereby improving the alignment 
of the budget-formulation process to national and ministerial goals.
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Low Predictability in Budget Disbursements
An essential component in efficiently allocating resources is the timeliness and predictability of 
disbursements. However, while allocations may be nominally efficient “on paper”, when 
disbursements are late and/or unpredictable, budget holders can be forced to make inefficient, 
or potentially inefficient, prioritization decisions. Furthermore, goods and services that can be 
obtained through credit or accruals are often prioritized over those requiring “cash on delivery” 
when cash on hand is limited. For example, the PER (2019) report shows that about 13% of 
government domestic arrears occurred in the health sector (7.4% of the annual MoHSS 
expenditures). These were largely driven by internal inefficiencies such as the National Institute 
of Pathology (NIP) setting prices without consulting the MoHSS, and wastage due to requested 
unnecessary tests by inexperienced physicians (PER, 2019). As a result, unpaid invoices 
accumulated due to underestimating NIP expenditures, leading to arrears. The Health System 
Review notes that the MoHSS spends more than the allocated budget; however, most of the 
disbursements are made towards the last quarter of the fiscal year. This ultimately results in a 
rush to exhaust the budget, sometimes to the detriment of priority services. 
Limited Autonomy of Subnational Budget Holders
The 2019 PER report noted that health facilities and regions have limited management 
autonomy and financial management capacity, which impedes the efficient management of 
resources. Only a small portion of the national health budget is managed at the subnational 
level. Big-ticket items, such as health worker costs, are paid from the national level, while 
regional directors have some, but limited, autonomy to manage them. Minimal funds are 
disbursed to primary care facilities, with operational budgets being managed at the regional 
level. 
Furthermore, primary care facilities cannot generate any income as most services provided at 
this level are provided to patients free of charge. Ultimately, this means allocation decisions 
made at the national level significantly impact the ability of primary care facilities to deliver 
essential services. This contradicts PBB principles, where providers at different levels require 
autonomy linked to performance management; however, most facility staff cannot currently be 
held accountable for the quality and quantity of services provided. Service provision is limited to 
whatever commodities and other resources the region and national level provide.
Budget disbursement from the national level is managed at the regional level or tertiary 
hospitals. However, the cash flow problems partly attributable to the restrictive monthly release 
system to regions and tertiary level hospitals inhibits regions and tertiary hospitals’ ability to 
operate effectively. Negotiations on revised monthly or quarterly projections of cashflow 
requirements can drag out the release of funds to regions and tertiary hospitals to 10–14 days 
until MoF funds are received. The unpredictability of financing deters regions and hospitals from 
being able to adequately plan activities or implement services. 
Furthermore, the PER notes that in 2018 the public health sector collected N$82,857,379 in 
total across all levels of care (equivalent to 23.7% of the total operating budget for referral 
hospitals). These funds could provide crucial liquidity during government cash flow problems but 
are currently unavailable to hospitals as they are returned to Treasury. Still, retention of 
revenues may become an incentive for improved revenue management by facilities resulting in 
higher user fees, which in turn could become another barrier to access services. The PER also 
notes that while attempts have been made to enable tertiary hospitals to retain their revenues, 
these have not been successful as central governments cite potential risks such as fraud and 
mismanagement. This finding was bolstered by results from the Health Financing and 
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Governance Project Hospital Efficiencies study in 2018, which shows that hospital committees 
are inefficient in making allocation decisions, including prioritizing procurements. Instances were 
noted where procurements have been issued multiple times, as there is no control over what 
has been approved/authorized, and the quality/completion of work is not monitored before 
payment. 
Over the last few years, the government has begun a decentralization process expected to 
transfer more autonomy to regional leadership in resource allocation and disbursement. It is still 
unclear if this will improve allocation efficiencies at the subnational level. However, the current 
challenges already indicate the need for intensive capacity-building at the lower level if gaps 
observed at the national levels are not to be compounded.
The strengths of national-level budgetary processes are usually the focus when looking at 
national health budgets; however, what happens at the subnational level usually more directly 
impacts service delivery, user experiences, and patient outcomes. Addressing some of the
challenges noted at the subnational level and providing more autonomy linked with capacity will 
help ensure efficient allocation of resources at this level. With limited resources, allocation 
decisions at the micro-level can have a far more significant impact on service delivery, and 
ultimately improve the quality and quantity of care.
MoHSS Allocation to Units of Production
The government budget allocation to various cost areas shows how funding is used to purchase 
various combinations of inputs. The MoHSS allocates over 50% of the annual budget on 
salaries and other staff costs, and this has been steadily growing over time. Trends data from 
the resource-tracking exercise for 2017/18 and the Health System Review (2022) show 
increases in expenditure for salaries, allowances, and ‘other expenditures elsewhere not 
classified’. Capital expenditures, pharmaceuticals, and medical supplies have been relatively 
constant, even though marginal declines were seen between 2015 and 2018. Table 2 below 
shows the allocation trends to various cost categories between 2015 and 2018.
Table 2: Government Health Expenditures by Function
Economic Function 2015/16 2016/17 2017/18 Trend
Salaries 41% 43% 46% + 
Allowances 6% 6% 7% + 
Pharmaceuticals 16% 14% 12% - 
Medical supplies 6% 9% 4% - 
Other 22% 21% 26% + 
Capital 9% 7% 4% - 
Source: Ministry of Health and Social Services Health Systems Review (2012-2021), 2022
Inefficiencies in the distribution of staff, inadequate training, and unnecessary procedures have 
contributed to driving upwards the share of MoHSS budget allocated to staff costs. A qualitative 
review on technical efficiencies in hospitals in Namibia conducted by the HFG project in 2018 
highlighted how HRH challenges led to inefficiencies—including excessive laboratory tests from
under qualified doctors and poor diagnoses of patients. The report noted that “Overworked and 
inappropriately trained staff can result in poorer health outcomes due to incorrect diagnoses and 
treatment, which in the longer term may result in the need for more expensive treatment options 
and multiple return visits” (HFG, 2018). 
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The PER (2019) also noted that sharp increases in HRH costs resulted from unbudgeted 
overtime expenses as the limited staff available tried to cover the workload. The Health System 
Review shows the country is still using level determinations established in 2003 to staff facilities, 
despite significant population and disease burden increases in the ensuing decades. Ultimately, 
continued high allocation of costs to staff crowd out investments in other essential inputs 
required for service delivery, including capital costs, technology, and drugs.
Consumption and Investing for the Future
The health sector’s expenditure on capital formation remains low and inadequate to meet the 
growing population, changing distribution, and financing of technology improvements for better 
diagnoses and treatment. As shown in Table 2 above, from 2015, capital spending declined 
from 9% to only 4% by 2018. While this reflects the GRN’s commitment to reducing expenditure, 
the capital spending level is potentially inefficient compared with increased staff costs from 41% 
to 46%. The MoHSS has developed several plans to build new facilities including secondary 
referral hospitals in Windhoek and refurbishment of Windhoek Central Hospital and Katutura 
Hospital, however, these plans have remained largely unfunded. The MoHSS has cited major 
challenges within the two referral hospitals in Windhoek including overcrowding, dilapidated 
infrastructure amongst others, with refurbishments largely inadequate to meet growing need
(Windhoek Express, 2022). As migration patterns increase rural-to-urban movement, further 
investment in new and expanded facilities is essential. For example, it was noted that Windhoek 
in the Khomas region has no secondary hospitals owned by the government and patients often 
move from primary care to tertiary care, resulting in overcrowding and other knock-on 
inefficiencies
While health care remains labor-intensive, investments in new technology offer opportunities for 
faster diagnoses and better patient outcomes that can reduce the length of patient hospital 
stays or time in OPD units. Increased capital spending can help the MoHSS reduce health 
workers’ time attending to the same cases. Across many countries, investments in technology 
such as telemedicine and mobile clinics offer opportunities to expand services to remote and 
sparsely populated communities without spending on buildings, which are usually more costly.
MOHSS Budget Allocations to Health Functions
Though Namibia adopted a primary health care approach as a critical pathway towards 
achieving UHC, this is not well-reflected in how resources are allocated to its different health￾system levels and functions. For example, MoHSS expenditure by program area shows that 
curative and clinical care services account for the greater proportion of the expenditure 
compared to other programs. The curative and clinical care services program comprises 
outpatient and inpatient services for referral and regional hospitals, support for clinical services, 
and Central Medical Stores’ expenditures. The chart below from the 2019 PER shows spending 
in curative care at 59%, followed by administration at 20%.
Hospital care remains labor-intensive; hence, employment costs account for a significant share 
of expenditure at the hospital level. The Health System Review showed that over the 2012/13–
2020/21 period, employment costs have absorbed more than 60% of the hospital expenditure. 
Meanwhile, expenditure on pharmaceuticals at the hospital level is minimal, partly because of 
the procurement centralization of medicine and pharmaceuticals.
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Spending on primary care has slowly 
increased over the last three years to 
about 13% of total funding, shown in 
Figure 3 above. However, this is still low, 
and most community and public-health 
interventions remain donor-funded, 
especially for diseases such as HIV, 
tuberculosis (TB), and malaria. Whilst 
there are no benchmarks on proportion of 
health budgets countries must spend at 
primary care level, declarations such as 
the Alma Ata continue to emphasis the 
high return on investments invested at the 
primary and community level in 
comparison to more costly tertiary care. 
Thus, it is essential for the country to 
critically assess gaps at the primary care 
level, including the community and channel 
more resources to address these 
especially in rural and remote communities.
The 14 regions through the Regional 
Health and Social Welfare Services directorate receive the largest annual budget allocation, 
even though this share has declined significantly over the years as shown in Figure 4 below.
This allocation includes resources for regional administration, funds for district hospitals and 
primary care facilities. The second-largest allocation goes to the country’s five tertiary hospitals 
located in Windhoek (2), Oshakati (1), Rundu (1) and Onandjokwe (1), which mainly provide 
referral services.
The high cost of secondary and tertiary care continues to crowd out primary care and public 
health-promotion programs. Though primary health care is less costly as it requires basic 
medicines and low-skilled health workers, it is often overshadowed by the high costs of 
specialized medical care needed at tertiary hospitals, such as specialist doctors and diagnostic 
equipment. Furthermore, ruptures in primary care drive patients to seek perceived better-quality 
care from tertiary hospitals. Additionally, colonial legacies such as the pre-independence, 
hospital-focused curative model exacerbate this allocative inefficiency. These factors, combined 
with historical budgeting approaches, continue to motivate larger budget allocations to hospitals.
Attempts to address overcrowding at hospitals often result in more money, health care workers 
and equipment being “thrown” at hospitals to capacitate them at the expense of primary care. 
This inherently inefficient approach perpetuates challenges at the tertiary level while neglecting 
primary care, including health promotion, which is essential to addressing most health needs at 
low cost.
Figure 3: MoHSS on Health Care Functions
Source: World Bank, Public Expenditure Review for Health, 
2019
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Figure 4: Composition of MoHSS Expenditures by Program Area
Source: Ministry of Health and Social Services Health Systems Review (2012-2021), 2022
Inequitable Allocations to Regions 
Budgetary allocations to regions remain inequitable and not adequately informed by evidence 
such as population sizes or disease burdens. The Health System Review noted that despite the 
large share of budget allocated to regional programs shown in Figure 4 above, there are no 
specific methods, norms, or rules for regional budget allocations. Ultimately, regional bids are 
mainly based on ‘normative needs’ related more to the previous budget allocations than disease 
burden. Per capita expenditure shows no apparent relationship to regional needs. 
The Health System Review noted that although Omusati had the total highest expenditure 
(N$2,689,545,817), it had low per capita (N$11,177) spending compared to Karas (at N$17,457 
per capita and total expenditure of N$1,406,331,963). Khomas region has the highest 
population and has the lowest per capita expenditure (N$ 2,607 per person); however, this may 
be higher if data from the two central hospitals—which also serve as district hospitals for the 
region—are included (accounted for separately under the tertiary hospital services budget). 
Such variations between population and allocations show only one metric for assessing the 
equity of the allocations to regions. Further analysis utilizing disease burden, poverty, and other 
factors may support different outlooks. Figure 5 below shows the variations in per capita 
expenditure for the various regions.
Analysis conducted in 2012 when the MoHSS attempted to develop a resource-allocation 
formula shows inequitable and inefficient allocation to regions. The current allocation approach 
does not consider the different contexts, development goals, and other criteria such as equity, 
population, or disease burden. Overall, the allocation appears arbitrary, showing the need for an 
explicit approach to guide how regions allocate resources. Thus, a resource-allocation formula 
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that provides clear objectives and independent criteria are required to maximize health 
outcomes for the country. Such a formula will enable the MoHSS to apply different weighting to 
criteria at each budget cycle and adjust allocations in a responsive approach as regional 
conditions, government goals, and population dynamics change.
Figure 5: Per Capital Expenditure (2012/13-2020/21)
Source: Ministry of Health and Social Services Health Systems Review (2012-2021), 2022
Allocations to Disease Programs 
The annual government budget does not provide enough detail on allocations to various 
disease areas; however, total health-sector funding favors infectious diseases based on the 
Resource Tracking (2017/18) report. Emerging data show NCDs are increasingly becoming 
among Namibia’s most significant burden drivers yet remain underfunded and under provided. 
An assessment on the implementation of the 2014 District Health Services package conducted 
in 2022 to inform revision of the EHSP showed that NCDs were amongst the top under provided 
services at district and primary care facilities. The report highlighted inadequate training for 
health care workers on providing NCD diagnoses and treatment, shortages of essential drugs 
required and specialist services for advanced care were only available in Windhoek.
As the largest funder of health in Namibia—contributing over 62% of the total funding in 
2017/2018—the GRN’s allocation patterns to disease areas have the strongest impact, even in 
the presence of other funders. NCDs accounted for 33% of GRN health expenditures, with 
infectious and parasitic diseases accounting for 38%, and reproductive health accounting for 
10%. Expenditure for reproductive health declined sharply from 38% in 2012/13 to 10% in 
2017/18. HIV/AIDS remains the largest driver of spending within infectious disease areas, 
consuming 64% of the total expenditure on communicable diseases, as reported by the 
Resource Tracking exercise on health and HIV spending of 2017/18. Of this expenditure, the 
central government contributed 61%, bilateral and multi-lateral donors contributed 33%, 
domestic corporations contributed 4%, and households contributed 2%. 
The government predominantly funds anti-retroviral treatment (ART), while donors 
predominantly fund preventive care. Data from the Resource Tracking of health and HIV 
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expenditures for 2017/18 showed that an estimated 74% of total HIV/AIDS expenditures went 
towards care and treatment; ART consumed the bulk of funds, and HIV testing and counseling 
consumed an estimated 10%. The ART expenditures were predominantly funded by the GRN, 
which provided an estimated 63% of the total ART expenditures. Prevention programs 
consumed 9%—predominantly funded by external partners who provided an estimated 89% of 
the total prevention expenditures. 
Namibia’s spending pattern for diseases continues to mirror a global trend where budgetary and 
allocation decisions are less responsive to evidence of NCDs remaining underfunded. As 
treatment approaches and availability of different ART regimens have improved, NCDs are 
becoming a significant cause of morbidity and mortality across the general population and even 
more pronounced in people living with HIV; Cervical cancer has been noted as one of the 
leading cancers in people living with HIV. Additionally, as PLHIV are getting older, countries will 
soon need to address an aging population on ARVs that will have increased likelihood of renal 
complications and other NCD-related expressions. The COVID-19 pandemic also increased the 
risk of death in patients with NCDs, such as hypertension and diabetes. Despite NCDs 
contributing to over 30% of total deaths annually and continuing to rise in Namibia and other 
countries, resource allocation from governments and donors remains in favor of HIV/AIDS. 
Furthermore, disease-specific spending has created silos that leave many health systems less 
resilient and exposed to shocks such as pandemics, natural disasters, and human conflict. This 
evidence points to a need to critically review disease-specific investments, diversify allocations 
to respond to emerging threats, and create robust health systems that deliver adequate, 
appropriate, and responsive patient care.
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Recommendations
The country has made significant progress in addressing the health needs of its population. 
Across the Southern African Development Community region, Namibia has one of the highest 
budgetary allocations to health, consistently meeting the Abuja Declaration. However, as shown 
above, more money for health has not adequately led to more health. Though the country has 
achieved good progress in some areas when measured against other UMICs—especially in the 
fight against HIV/AIDS—the country has regressed significantly in maternal and child health 
care. The discussion above demonstrates potential inefficiencies where the country can do 
better if it reforms the way budgetary resources are allocated. Allocative efficiencies do not 
result in more resources becoming available, but rather, enable the government to achieve 
better health outcomes at the same level of spending. 
The MoHSS has embarked on a process to galvanize stakeholders towards making progress on 
the UHC pathway through developing a policy and implementation plan. The policy will identify 
opportunities and gaps in current service delivery and potential assets to be leveraged by the 
country to progress to UHC within its current context. One of the critical areas to be examined 
during this process is health financing—focusing on increasing domestic funding and ensuring 
value for money for available resources. This analysis will provide a starting point to catalyze 
discussions on how to improve efficiencies in the allocation of resources. Based on the analysis 
above, the following recommendations are presented as potential interventions and 
opportunities to unlock more health for money within the health sector in Namibia. 
The following reform options are presented as potential actions that can improve resource 
allocation within the MoHSS budget:
● Strengthen the engagement and relationship between MoHSS and MoF to improve health￾allocation alignment with national priorities. This will include ensuring active participation of 
MoF in key decision-making platforms for health, such as UHC Technical Working Groups, 
annual planning meetings and strategy development, and strengthening other routine direct 
engagement at technical and policy levels between the two ministries.
● Fully implement PBB while moving away from the current presentational framework and 
toward outcomes and performance-driven budgeting. This will include increased 
engagement of directorates, units, individual programs, and regions to outline performance 
goals that are fully reflected in the budget. 
● Provide more autonomy to budget holders at national and subnational levels, moving away 
from line-item budgeting as part of the comprehensive PBB reform. This will enable budget 
holders to be flexible on how and where to spend the limited resources available responsive 
to program and facility priorities.
● Develop a resource-allocation formula to provide objective, independent criteria closely 
aligned with national priorities and health needs as a basis for budgeting resources to 
promote a more equitable allocation. Such a formula should guide resource allocation to 
disease areas, health care functions, levels of care, and different regions.
● Lobby for timely and predictable disbursement of funds from the MoF to reduce ad hoc and 
accrual spending. This should also include streamlining the disbursement process to the 
subnational level to ensure they are timely. 
● Engage the MoF for the development of a framework to enable tertiary care facilities to 
retain and use funds collected directly without remitting these to the Treasury. Such funds 
will provide a buffer to counter disbursement delays from the national level and allow for 
greater budget autonomy—allowing facilities to be responsive to changing health needs and 
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service provision. Furthermore, the management of revenue at the local level may improve 
efficiency in collecting such funds. As part of this process, strong capacity development 
should be included to build autonomy and skills for effective resource allocation, 
management, and prioritization at subnational levels.
● Engage the NPC and MoF in increasing spending on capital budgets as a critical driver to 
continued investment in infrastructure and equipment required for equitable quality health 
services. This should include developing a long-term infrastructure plan linked to population 
growth, disease trends, and technological advances in the health sector.
● Strengthen HRH management and deployment within the MoHSS to control the cost of the 
health workforce, the health sector's most significant cost driver. This will include developing 
the capacity of regional managers to make HRH planning and management decisions, use 
HRH systems data, and fully understand HRH practices' impact on regional and national 
health expenditure. At planning level, HRH requirements should be aligned to the EHSP 
with adequate workforce planning and development including training, recruitment, 
deployment, remuneration and retention amongst others.
These recommendations are not listed in any order of priority and can be tackled based on 
stakeholder appetite and the complexity of reforms required. Some interventions require buy-in 
from other line ministries and action from policy-level decision makers, while others can be 
tackled within the MoHSS. This provides the MoHSS with a range of potential interventions, 
including ways to address inefficiencies in resource allocation that are “low-hanging fruits”. 
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Conclusion
Namibia has committed to providing adequate, affordable, and equitable health services to its 
population as part of its sustainable development goals and national strategic plans. The 
country recognizes that achieving this task will require tough decisions on “how much to spend”, 
“where to spend”, and “on what to spend”, including tradeoffs. Recognizing allocative efficiency 
as a critical frontier to distributing limited resources is crucial in this decision-making process. 
Identifying potential areas where the country can further improve resource allocation and 
utilization will help streamline discussions and assist decision makers to agree on concrete 
steps required. 
This analysis provides a starting point by identifying current gaps and offering possible 
solutions. However, it is not exhaustive, as allocation decisions occur across all health-system 
components, including HRH, medicines, information systems, and facilities. Different 
instruments of analysis are available to examine the health system’s various parts to assist 
decision makers in making more effective allocations. However, financial allocative efficiencies 
should not be addressed in isolation but as part of a broad effort that includes further analysis 
and engagement of key stakeholders to explore potential efficiencies in other health-system 
components. Furthermore, while financial efficiency is critical, it should always be considered 
within the context of the broader health system goals of “providing adequate, affordable and 
equitable, quality health services.” The on-going UHC reform process provides a unique window 
of opportunity for the country to mobilize political and technical support towards addressing 
inefficiencies as it seeks to progress towards attainment of UHC.
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World Bank. May 2019. Namibia Health Sector Public Expenditure Review. Washington, DC: 
World Bank.
Ministry of Health and Social Services (MoHSS), Republic of Namibia. 2022. Health Sector 
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Worldometer. https://www.worldometers.info/world-population/namibia-population/. Accessed: 
16 May 2022
World Bank, Where We Work: Namibia. 
https://www.worldbank.org/en/country/namibia/overview. Accessed September 13, 2021. 
Henriette Lamprecht, Katutura Hospital to be renovated bit by bit, 2022.
Katutura hospital to be renovated bit by bit - Windhoek Express (we.com.na). Accessed: 
26 September 2022
Namibia COVID - Coronavirus Statistics - Worldometer (worldometers.info). Accessed, June 6, 
2022
IHME Database, 2022. Namibia | Institute for Health Metrics and Evaluation (healthdata.org). 
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