Population Research and Policy Review 17: 55–70, 1998.
1998 Kluwer Academic Publishers. Printed in the Netherlands.
Financing rural health services in Kenya
GERMANO MWABU & JOSEPH WANG’OMBE
University of Nairobi, Nairobi, Kenya
Abstract. The paper analyzes household expenditure on medical care and the willingness to
contribute towards service improvements at government health facilities. The analysis is based
on survey data from two rural districts in Kenya situated approximately four hundred miles
apart. The main ﬁnding is that medical care expenditure rises as household income increases,
but the probability of willingness to pay fees for service improvement at government clinics
declines with income. Income is an important determinant of the willingness to participate
in a hypothetical government insurance scheme, with the probability of participation falling
as income rises. These results should be interpreted with caution because of the potential for
incorrect reporting of the willingness to pay for services that have an element of a social good.
The policy implications of the results are brieﬂy discussed.
Key words: Kenya, Medical care, User charges, Willingness to pay
A system of user charges for health services is increasingly being adopted in
sub-Saharan Africa both to diversify sources of funds for health ministries
and to promote efﬁciency in service provision and use. Some 29 African
countries for instance, already have national systems of user fees for health
care (Shaw & Grifﬁn 1995). It appears likely that other countries in sub-
Saharan Africa will soon experiment with this mechanism of health services
ﬁnancing because of severe budgetary constraints that governments in the
region face in providing basic health services to the population (World Bank
1994). Thus, given the potential for widespread adoption of user charges in
low-income areas, it is important to understand their budgetary effects as well
as their probable demographic and welfare consequences.
Budgetary effects of user fees in the health sector are straightfoward to
compute and are relatively well documented in the health ﬁnance literature
in Africa. During the period 1981 through 1986 for example, the proportion
of revenue from user fees, as a percent of government recurrent expendi-
tures on health services in some 16 African countries, varied from 0.5% in
Burkina Faso to about 20% in Ethiopia (Shaw & Grifﬁn 1995). Despite some
notable cases, budgetary impacts of user fees in sub-Saharan Africa have