Pathway 1: How did Zambia change its approach to health spending?

New foundations for health system governance and financing in Zambia

In 1991, Zambia held its first multiparty elections since 1968. The opposition Movement for Multi-Party Democracy defeated the United National Independence Party, which had held power since Zambia’s independence from the United Kingdom in 1964.¹ Most of that time was marked by social and economic instability—caused, in part, by one of the most substantial debt burdens in the world.² Public health expenditures fell, as did government investment in related services such as subsidies for staple foods. Key health indicators reflected these strained circumstances: in particular, the 1992 Zambia Demographic and Health Survey reported a 15% rise in under-five mortality between 1977–81 and 1987–91.^3,4

The new government aimed to reverse these trends and establish a health system that could deliver “cost-effective, quality health care as close to the family as possible.”⁵ To accomplish this goal, they built new foundations for its administration at the district and community levels. These foundations gave local authorities the power to oversee service delivery, set health system priorities, manage resources, and monitor system performance.² According to Zambia’s Ministry of Health, the purpose of this approach to health care is to:

. . . ensure effective participation of communities and hence assure relevance of interventions. The district forms the basic point of reference for the articulation of peoples' power in health care. Through district health management teams, popular representation and technical/professional interests will provide an opportunity to give Zambia a health care system that is responsive to local and national interests and needs.⁶

The structures of governance Zambia has built to do this work are deeply rooted in a history of community-led policy planning.^7,8They have evolved over time, but they have consistently aimed to strengthen district-level capacity and to give government and donors the ability to channel health funding directly to localities where it can be spent in alignment with local priorities.

Strengthening district-level capacity through local service provision and strategic planning

Shortly after the 1991 election, the new government restructured Zambia’s Ministry of Health as part of its pledge to rebuild the country’s health system.⁹ As part of this reorganization, the country redistributed previously centralized powers to officials at the provincial and district levels. The Central Board of Health (CBoH), established in 1996, took responsibility for managing and paying for health service delivery nationwide, and the Ministry of Health retained the power to set policy, priorities, and budgets.^10,11 The National Health Service Act of 1995 established formal structures within the CBoH to implement policy, increase accountability, and provide services at the district level across Zambia.²

The law established District Health Management Teams, overseen by District Health Boards composed of health officials and community members, which enabled bottom-up planning and community engagement.¹⁰

• The law also established community planning, advocacy, and oversight committees known as Neighborhood Health Committees (NHCs) to coordinate and connect communities to health facilities at the local level.¹² (They replaced existing village health committees.)¹³ NHC membership was drawn from each health center’s catchment area, and included representatives from local government, nongovernmental organizations, civil society organizations, and the private sector. Although the National Health Service Act of 2005 eliminated the legal requirement for NHCs, they remained active. As of 2011, more than 80% of health facilities had an active NHC.

NHCs choose community members to serve as community health assistants (CHAs) and supervise their operations. They also conduct local needs assessments to contribute to the development of district action plans. The role of NHCs complements that of Zambia’s health facility committees, which include facility and District Health Management Team staff.

Zambia’s National Health Service Act granted a degree of managerial autonomy to districts and health facilities (particularly for planning and budgeting functions), which aimed to ensure that all levels of the system had resources available when needed. Although overall resource allocation, establishment of Essential Health Service packages, procurement, and the recruitment, training, and deployment of health workers remain under central control, district-level authorities have autonomy to manage disbursements within existing budgets and guidelines, and local needs are reflected in overall prioritization and resource allocation decisions via routine bottom-up budgeting and planning processes.

Districts have limited autonomy to use a small portion (10%–19%) of cash disbursements with discretion, to cover certain operational and administrative expenses (e.g., fuel costs, utility bills). These kinds of discretionary, operational amounts still have some constraints such as minimum percentage allocations by cost type (e.g., 5% for supplementary drugs).¹⁴

The district health offices manage a consultative process with a range of health stakeholder groups, including health facility and community representatives and NGOs, which all feeds into the development of district action plans and budgets. These are then submitted to provincial and central authorities in ministries of health and finance for final approval and implementation.¹⁴

Read more about recent challenges in district financial autonomy.

Measurement for accountability and results-based financing

The CBoH aimed to improve health outcomes in Zambia by measuring and improving the performance of health facilities and districts nationwide.¹⁵ One of its earliest responsibilities was to optimize resource allocation strategically via performance-based contracting.¹⁵ To ensure Zambia’s health system was getting the most out of the money it spent on service delivery, the CBoH steering committees that managed public and donor health funding were charged with performing quarterly audits on the district and hospital boards they contracted to provide services on behalf of the MoH. Budget transfers from the CBoH to individual districts were contingent on their performance on these audits.¹¹ However, many argued that the CBoH’s performance-based approach to contracting—and even the separation between the CBoH and the Ministry of Health (MoH)—was mostly theoretical.¹⁵ As a result, Zambia’s Parliament abolished the CBoH and performance-based contracting in 2006, and the Ministry of Health became responsible for direct provision of health services once again.¹⁶

Though it was relatively short-lived, the CBoH did improve the capacity of Zambia’s health system, and these improvements—including ongoing management capacity via a cadre of professionals trained in health management; the establishment of routine monitoring and evaluation structures in the health system, including the Financial and Administrative Management System; and structures that encouraged funding transparency through the Sector-Wide Approach (SWAp)—persisted after its abolition. Zambia’s experience with the CBoH improved the health system’s ability to align priorities, manage resources, maintain structures for oversight and accountability, increase system capacity, monitor performance, and tie financing to performance targets.

In 2008, Zambia used a grant from the World Bank to pilot a new results-based financing (RBF) system to incentivize the provision of maternal, neonatal, and child health services using community-level structures for planning and oversight.¹⁷ Under the supervision of Neighborhood Health Committees, RBF awarded unit incentive payments to PHC facilities for service indicators including curative consultations (US$ 0.20), institutional delivery by a skilled birth attendant (US$ 0.64), antenatal visits (US$ 1.60), postnatal visits (US$ 3.30), full immunization of under-one children (US$ 2.30), pregnant women receiving three doses of malaria intermittent preventive therapy (US$ 1.60), new users of modern contraceptive methods (US$ 0.60), pregnant women counseled and tested for HIV (US$ 1.80), and HIV-infected pregnant women given nevirapine and zidovudine (US$ 2.00).^18,19

Between 2008 and 2018, RBF reached 58 districts in the country’s five poorest provinces: more than 900 health centers, health posts, and district hospitals monitored by 1,300 NHCs.²⁰ Facility and neighborhood committees were involved in the planning process for allocating the RBF revenue: health centers could distribute up to 60% of the RBF funds to staff as individual bonuses, but they had to reinvest the remainder in facility operations .^18,21

One trial carried out during the scale-up of the RBF pilot found that staff in participating facilities were more likely to report improvements in job satisfaction and motivation,²² although another found no effect on staff satisfaction and absenteeism.²³ However, patients reported that they perceived improved quality of care in RBF districts.²³

Facilities in those districts were also more likely to report supervisory and performance assessment visits to community health workers, increased authority for staff, and clearer facility policies and procedures.²⁴ However, the country abandoned RBF after donor support was discontinued because the Ministry of Health did not have the resources to fund it alone.²⁵

Other reforms aimed to gather key data to facilitate performance-based decision-making. In the early 1990s, Zambia established a Financial and Administrative Management System: a system of cash books, ledgers, and paper forms to facilitate budgeting and financial tracking across the health system.²⁶ This was created to facilitate the SWAp joint-monitoring mechanism. Similarly, in 1996, officials introduced a Health Management Information System (HMIS) to ensure transparent reporting and monitoring of health data.²⁷ In 2014, the MoH adopted an Electronic Logistics Management System (eLIMs) to manage supply chain data for drugs and supplies related to HIV, malaria, reproductive health, and essential medicines.²⁸

Zambia’s HMIS monitors health inputs, outputs, and outcomes data in all district hospitals and health centers. The system includes modules on infectious disease morbidity and mortality, maternal and child health services, and surveillance, as well as a module for community-based activities and outreach.^29,30 As of 2018, data collection is paper-based at the facility level; then data are aggregated, digitized, and transmitted to the Ministry of Health by the District Health Office using DHIS2 open source software.³¹ As Figure 8 shows, since 2010 HMIS reporting completeness rates in Zambia have been consistently above 90%, although key informants report that data quality can be suboptimal at facilities and districts with limited capacity.

Sector-wide approaches and donor coordination

In 1993, Zambia became one of the first countries to adopt a sector-wide approach (SWAp) to donor coordination.³² SWAps are coordination mechanisms that bring together governments, donors, and related stakeholders to carry out joint planning, financing, monitoring, and oversight of health programs.³³ Their goal is to increase health system efficiency by streamlining spending decisions.

In Zambia, the SWAp began at the national level: the Ministry of Health established stakeholder consultations to review program performance and advise policy adoptions. Subsequently, officials earmarked pooled funding to finance PHC provision at the district level, delegating responsibility for managing and allocating funds to the districts. Studies showed small improvements in administrative efficiency,³² and the SWAp remains the umbrella for all government and donor activity in the health sector under the National Health Strategic Plan (NHSP) framework.

Coordination between government and donors on the financing of health services remains crucial to ensure coverage and efficiency of programming because it avoids financing gaps and duplication between budgets. SWAps and other multisectoral coordination groups can serve as coalescing mechanisms around planning, financing, and oversight of antipoverty programs, which often explicitly prioritize national PHC goals. However, although some countries have tested the use of pooled funding mechanisms over time, others have not consistently maintained them.

In Zambia, at the national level, the SWAp established ‘basket funding’, a pooled funding mechanism that earmarked funds to be channeled to districts to support Zambia’s NHSP, which included PHC-centered goals. (Since 1994, Zambia’s Ministry of Health has published NHSPs every five years; they have consistently made explicit the country’s commitment to PHC)³⁴. At the district level, District Health Management Teams manage stakeholder coordination outside of the SWAp mechanism. However, the basket funding approach was discontinued in 2009 when donors withdrew their funding from the Ministry of Health after a corruption scandal.³⁵