Health Expenditure Analysis

for Oromia Regional State

2012/13 - 2020/21
KEY MESSAGES

1
The nominal total regional government health expenditure in Oromia increased from ETB 2.5
billion to ETB 11.7 billion between 2012/13 and 2020/21. However, the per capita spending of the
sector remains very low at US$8 in 2020/21. The low per capita public spending on health leads
to higher out-of-pocket spending by poorer households.

Recommendation: The regional government should continue to prioritise health spending through
enhanced domestic resource mobilisation efforts, along with improved efficiency of spending.

2
The share of regional government spending on the health sector was on average 12.2 per cent
between 2012/13 and 2020/21. Although the share of expenditure on health in the region was
higher than the national average (10.2 per cent) in 2020/21, it is still lower than the target (15
per cent) set by the African Union under the Abuja Declaration (2001).

Recommendation: The regional government should continue to progressively increase its spending in
the health sector to meet the 15 per cent target of the Abuja Declaration.

3
Programme-based budgeting has not yet been adopted by the region, making it difficult
to conduct disaggregated budget and expenditure analysis by programme. The line-item
budgeting in place makes it very difficult to identify nutrition, and maternal and child-related
health expenditures from the aggregate budget and expenditure lines.

Recommendation: Programme-based budgeting should be in place to identify and track budget and
expenditure for nutrition and maternal and child health programmes within the health sector.

4
Health sector spending in the region is predominantly recurrent, with little resources left for
capital spending. With primary healthcare services being delivered at health centres and health
posts, which are financed by regional budgets, the lack of capital budget for the region could
significantly hamper health service delivery.

Recommendation: Resource mobilisation within the region should be given due attention to increase
capital spending on health at regional bureau and woreda levels.

5
The region’s health budget credibility was an average of 89 per cent between 2012/13 and
2020/21, indicating under-utilisation of the health budget. The budget under-utilisation is
impacted by a low capital budget credibility. The lack of project management capacity in the
region, the shortage of foreign currency, and delays in the procurement of inputs required for
capital investments are just some of the reasons for the low health capital budget credibility.

Recommendation: Since most capital expenditure is executed by the regional health bureau, the
bureau should give due attention to improving capital budget utilisation.

1 Health Expenditure Analysis for Oromia Regional State

1. INTRODUCTION
Health sector overview there were 42,630 health extension workers
(HEWs) deployed in the country, of whom
Ethiopia’s health sector is organised in a
15,918 were in Oromia region (Table 1).1
three-tier health service delivery model.
Primary healthcare units are at the first tier of The numbers of primary healthcare delivery
the health service and are composed of health facilities and health professionals in the
posts, health centres and primary hospitals. region are low, with health professional
Each health centre is connected to five density much lower than the Sustainable
satellite health posts and provides services to Development Goal (SDG) threshold. With
approximately 25,000 people, while primary regard to lower-tier primary health facilities, the
hospitals offer inpatient and ambulatory region has 1,411 health centres and 7,099 health
services to about 100,000 people. In the posts (Table 1). The health facility to population
second tier are general hospitals, which are ratio indicates that one health centre serves
referral centres for primary hospitals and serve around 27,693 people, while one health post
an average of 1 million people. They also serve serves 5,504 people. In terms of health workers,
as training centres for health officers, nurses there are 29,473 health professionals (medical
and emergency surgeons. In the third tier are doctors, nurses, midwives, health officers)
specialised hospitals that provide services and 15,918 HEWs in the region. One medical
to populations of around 5 million, as well as doctor (general practitioner and specialist) is
serve as referral centres for general hospitals. expected to serve 15,414 people, with varying
Teaching and research hospitals, which are proportions for different categories/levels of
mostly located in Addis Ababa and the regional other health professionals such as nurses,
state capitals, are directed and managed by midwives, health officers, medical laboratory
the Ministry of Health. technicians and pharmacists. According to the
World Health Organization (WHO), the health
The Health Extension Program (HEP) is
professional density level is a key criterion to
the health sector’s primary healthcare
measure health sector staffing in a country.
delivery platform in the country. The HEP
While the SDG index threshold recommends
has played a significant role in improving
a minimum density for health workers of 4.42
access to healthcare services by providing a
doctors, nurses, and midwives per 1,000
package of primary healthcare services for
population, the health professional density in
to address family health, disease prevention,
Oromia is 0.75 per 1,000 population – a little
hygiene, and environmental sanitation. Primary
lower than the national rate of 1.1 but much
healthcare services, such as for maternal and
lower than the SDG threshold, and of the
child healthcare, tuberculosis, HIV, and family
Health Sector Transformation Plan (HSTP II)
planning, among others, are more accessible
target of 2.3.
to the community through the HEP. In 2020/21,

1
Ministry of Health (2021). Annual Performance Report (2020/2021).

Health Expenditure Analysis for Oromia Regional State 2

Table 1. Primary health facilities and Health workers

Health facility/health worker to population ratio

Number
Oromia National

Health posts 7,099 1:5,504 1:5,811

Health centres 1,411 1:27,693 1:27,231

Medical doctors* 2,535 1:15,414 1:8,448

Nurses, midwives, health officers 26,938 1:1,450 1:963

Health extension workers (HEWs) 15,918 1:2,455 1:2,413

Source: Ministry of Health (2020/21). Annual Performance Report

* General practitioners, specialists, sub-specialists, dental surgeons

Although Oromia region has the highest state in the country, Amhara, has 84 hospitals,
number of hospitals compared to other followed by SNNPR2 with 72 hospitals, which
regions in the country, the hospital to comprise university hospitals and those
people ratio is lower than most of the managed by regional health bureaus.
larger regions (Table 2). While the number
Though the number of hospitals is higher in
of hospitals inevitably varies from region to
the larger regional states, only a few of the
region – in response, partly, to differences in
hospitals are functioning properly with the
population sizes – although Oromia region has
expected standard and quality. In addition to
the largest population size and geographic
the teaching, referral and primary hospitals,
coverage in the country and the region has
Oromia regional state has three regional
a relatively larger number of hospitals, the
laboratories, three health science colleges,
hospital to people ratio is low. Data from the
10 blood banks, two HIV centres and two
regional health bureau shows that there are
rehabilitation centres, which help to enhance
109 hospitals, of which eight are referral and
health facility access and coverage within the
teaching hospitals that belong to universities
region.
within the region. The next populous regional

Table 2. Population and public hospitals in the major regions of the country

Region Hospitalsin 2021 Population in 2021 Hospital to population ratio in 2021

Addis Ababa 13 3,773,999 1:290,307

Amhara 88 22,535,997 1:256,090

Oromia 109 39,075,002 1:358,486

SNNP 62 21,021,000 1:339,048

Tigray 41 5,641,005 1:137,585

Source: Ministry of Health (2020/21). Annual Performance Report; CSA population estimate for 20213

3 Health Expenditure Analysis for Oromia Regional State

The health sector within the region has focused on improving health financing and
approved and disseminated its own five- budget utilisation to provide universal health
year strategic plan that includes the sector’s coverage within the region.
direction, priorities, and targets. The five-
Key health sector performance indicators
year Health Sector Transformation Plan (HSTP
II) for the period 2020/21 to 2024/25 was Although the percentage of stunted, wasted,
finalised, approved, and disseminated in 2021. and underweight children in the region is
To build the capacity of leaders within the slightly lower than the national average,
health sector, leadership management and undernutrition remains a major challenge.
governance training courses were designed The region has relatively low rates of stunted,
and delivered to selected leaders from wasted and underweight children compared to
zones, town health offices, and hospitals in national rates. It was able to reduce stunting
the region. The training covered issues such from 55 per cent to 36 per cent between
as improved resource mobilisation, human 2000 and 2019, which is a 19-percentage
resource development and management, point decline (Figure 1). The region was also
and health facility access to improve clinical able to decrease the prevalence of wasted
care, emergency critical care and laboratory and underweight children, achieving a slightly
services. Additionally, support to enhance better performance compared to the national
procurement capacities to purchase medical average. However, the percentage of children
equipment, drugs and supplies was provided who are undernourished is still very high,
to prevent and control non-communicable with 36 per cent, 16 per cent and 5 per cent
and neglected tropical diseases. The strategic of under-5 children being stunted, wasted and
plan, as well as capacity-building training, also underweight, respectively.
Figure 1. Indicators of undernutrition in under-5 children: Oromia and national averages (percentage)

Stunting prevalence Wasting prevalence Underweight prevalence

70

60
58
55 52
50
45
44
41 42 38
40 37
38 36 37
35
30 31 29
26 24
23 21
20
16 13
12 12 10
10 10 10
10 11
5 7

0
2000 2005 2011 2016 2019 2000 2005 2011 2016 2019

Oromia National

Source. UNICEF Ethiopia (2019). Situation Analysis of Children and Women: Oromia Region

2
The number is before Sidama and Southwest regional states were established, which were both previously part of SNNPR..
3
Central Statistical Agency (2013). Population Projections for Ethiopia 2007–2037.

Health Expenditure Analysis for Oromia Regional State 4

Despite reducing neonatal, infant, under-5 giving birth at health facilities and reducing
and maternal mortality rates between 2011 children’s susceptibility to diarrhoea.
and 2016, Oromia has relatively high rates Although the proportion of children aged 12–23
compared to the nation as a whole. The months who have received basic vaccinations
regional state has reduced infant and under-5 has increased, the immunisation rate is still
mortality in the past 10 years, but performance lower than the national average. Around 70
is below the national averages (Table 3). per cent of children in the region were not fully
Between 2011 and 2016, the rate of neonatal immunised in 2019. With regard to maternal
mortality (per 1,000) declined from 40 to 37, health, the proportion of women delivering
while the infant mortality rate (per 1,000) children in health facilities increased from
declined from 73 to 60. Similarly, the under-5 8 per cent in 2011 to 41 per cent in 2019. In
mortality rate (per 1,000) declined from 112 line with this, the proportion of women with
in 2011 to 79 in 2016. Although the decline in skilled birth attendance drastically increased
mortality rates is encouraging, much remains from 17 per cent in 2011 to 44 per cent in 2019.
to be done to bring the rates down even further Similarly, the regional health bureau had better
to ensure better health outcomes for children performance in creating awareness about
and mothers in the region. modern contraceptive usage, increasing the
proportion of beneficiaries from 26 per cent to
The regional health bureau had better
41 per cent between 2011 and 2019.
performance and improvement in antenatal
care, in improving the number of women

Table 3. Key health indicators: Oromia and national averages

Oromia National
Region
2011 2016 2019 2011 2016 2019

Neonatal mortality rate (per 1,000) 40 37 – 37 29 30

Infant mortality (per 1,000) 73 60 – 59 48 43

Under-5 mortality (per 1,000) 112 79 – 88 67 55

Child mortality (per 1,000) 42 20 – 31 20 12

Antenatal care provided by skilled provider (%) 31 51 71 34 62 74

Total fertility rate (%) 6 5.4 – 4.8 4.6 –

Birth occurred in health facility (%) 8 19 41 10 26 48

Children aged 12–23 months who received all
16 25 30 24 39 43
basic vaccinations (%)
Under-5 children who had diarrhoea in the two
11 11 – 13 12 –
weeks preceding the survey (%)

Prevalence of anaemia in children (%) 52 66 – 24 57 –

Use of modern contraceptive (%) 26 45 41 27 35 41

Skilled birth attendance (%) 17 20 44 10 28 50

Sources: EDHS 2011, EDHS 2016 and Mini EDHS 2019

5 Health Expenditure Analysis for Oromia Regional State

Interventions to improve maternal and child Despite undertaking and implementing
healthcare nutrition-related programmes, the
increasing numbers of people in need of
Child health-related interventions,
nutrition interventions is a critical challenge.
especially for neonatal and under-5 children,
Security and instability within the regional state
are being implemented through the HSTP.
and at national level are critical challenges that
The health bureau has undertaken high-impact
hinder the smooth delivery of health services.
interventions at kebele and community level to
Extensive drought is continuously increasing
address child health issues. Interventions focus
the number of people who demand nutritional
on advanced neonatal care, the expansion of
support from the bureau, which is sometimes
neonatal intensive care units, community-
beyond its means to meet. The national-level
and facility-based integrated management
shortage of foreign currency also impedes the
of neonatal and childhood illness, early
bureau from procuring imported medical and
childhood development, and strengthening the
other supplies in support of its health, nutrition,
immunisation programme. Additionally, the
and related interventions.
regional office has improved the referral system
for women who have complicated births, WASH in health facilities
providing them with access to comprehensive
The lack of access to basic WASH facilities
post-natal services within a few hours of giving
is one of the major challenges faced by
birth. The health bureau also implemented
health facilities in the region. According to
specific WASH interventions to deal with child-
information gathered from the health bureau,
related diseases such as diarrhoea, which is
62 per cent of health centres and 10 per cent of
the second leading cause of death in children
health posts provide access to drinking water
under-5 in the region.
services (Table 4). The share of lower-tier health
The regional bureau is increasing the facilities that have handwashing facilities is also
number of health facilities that provide very low (56 per cent of health centres and 13
adolescent- and youth-friendly health per cent of health posts). Hospitals have better
services. Oromia health bureau is currently WASH facilities, with 87 per cent and 82 per
engaged in expanding the number of health cent offering drinking water and handwashing
facilities that provide youth-friendly services facilities, respectively. Toilet facilities are
for adolescents and youth, specifically a available in 95 per cent of hospitals, although
comprehensive sexual and reproductive health only available in 60 per cent of health posts.
information service, counselling services, and As primary healthcare services are delivered
access to psycho-social support. In the past at health posts and health centres, the lack of
five years, the number of health facilities that availability of basic water and sanitation facilities
provide these services increased from 232 in makes service delivery very challenging.
2015/16 to 610 in 2019/20, which equates to 40
per cent of the health facilities (hospitals and
health centres) in the region.

Health Expenditure Analysis for Oromia Regional State 6

Table 4. Availability of WASH facilities in health centres, health posts and hospitals

Health centres Health posts Hospitals

Type of facility
No. % No. % No. %

Drinking water service 881 62 709 10 89 87

Handwashing facilities 796 56 922 13 84 82

Toilet facility 1,179 83 4,254 60 97 95

Placental pit 1,208 85 71 1 101 99

Incinerator 1,251 88 496 7 99 97

Solid waste disposal pit 1,108 78 3,616 51 96 94

Source: Oromia Health Bureau (2022)

Key takeaways
■ Although Oromia region has the highest number of hospitals compared to
other regions in the country, the number of people served by each hospital
is very high: one hospital for every 358,486 people. Increasing the number of
health facilities that provide services to the population is a key area the regional
bureau should focus on.
■ The high neonatal mortality rate, poor nutritional status of children and low
vaccination rate continue to challenge the health sector in the region. With
increasing population pressure, internal conflicts, drought and displacements,
the number of people who require health and nutritional services is increasing.
These multiple burdens on the healthcare system could cause a reversal of
the crucial gains in the health sector that have been achieved over the past 20
years.
■ The share of lower-tier health facilities (health centres and health posts) that
have WASH facilities is very low. The lack of availability of drinking water,
handwashing and toilet facilities at primary healthcare facilities makes service
delivery very challenging. The regional government should focus on improving
and making more widely available WASH services at health facilities.

7 Health Expenditure Analysis for Oromia Regional State

2. PUBLIC EXPENDITURE FOR THE HEALTH SECTOR IN
OROMIA REGION
Due to a lack of disaggregated budget Trends in health sector spending
and expenditure data, the expenditure
The nominal total government health
analysis in this report focuses only on the
expenditure in the region increased by
Oromia regional government financed
almost four-fold between 2012/13 and
health spending for the region. Total
2020/21. The highest increment in expenditure
health expenditure in the region is financed
was between 2019/20 and 2010/21, with
by the regional government, bilateral and
nominal expenditure increasing at 37 per cent
multilateral donors, out-of-pocket expenditure,
compared to an average increase of 20 per cent
Community-Based Health Insurance (CBHI)
for the previous years (Figure 2). The spending
(voluntary prepayment) and private employers.
surge in 2020/21 was partly in response to
However, the analysis in this report focuses
the COVID-19 pandemic, which resulted
only on regional government public expenditure
in increased resource flow to the health
on the health sector between 2012/13 and
sector both in the region and nationally. Real
2020/21. Programme-based budgeting has
spending on health also showed an increasing
not yet been adopted by the region, making it
trend, although at a lower rate (Figure 2). The
difficult to conduct disaggregated budget and
gap between the nominal and real values has
expenditure analysis by programme. With line-
widened over the years due to inflation, which
item budgeting in place, the expense category
has increased in recent years. In terms of per
for the health sector has only three lines: wages
capita health spending, the nominal per capita
and salaries, goods and services, and capital
spending in the region in 2020/21 was ETB 307
investments. This makes it very difficult to
(Figure 3), which is equivalent to US$8.4 This is
identify nutrition and maternal and child-related
much lower than the national per capita health
health expenditures from the aggregate budget
budget allocation in 2020/21, which was ETB
and expenditure lines. Due to the difficulty
576 (US$14.8)5
in getting disaggregated expenditure data by
programme, the analysis focuses on aggregate
government health expenditure in the region.

4
Average exchange rate for 2020/21: US$1= ETB 39.
5
UNICEF Ethiopia (2021). Public investments in health in the COVID-19 pandemic era: Health Budget brief 2020-21. Retrieved
from https://www.unicef.org/ethiopia/reports/national-and-sector-budget-brief

Health Expenditure Analysis for Oromia Regional State 8

Figure 2. Nominal and real public expenditure (billion ETB)

14
11.7
12

10 8.5

7.4
8 6.3
5.5
6 4.9
3.9
3.0
4 2.5

3.2
2 2.4 2.5 2.6 2.7 2.7
2.1
1.5 1.7
0
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Nominal health expenditure Real health expenditure

Source: Oromia Regional Plan and Development Commission (2012/13–2020/21)

Note: Real expenditure computed using the consumer price index (CPI), taking 2010 as a base year.

Figure 3. Trend in nominal and real per capita health expenditure (ETB)

350
307

300

250 228

204
200 178
159
145
150
118
93
100 79

50 71 73 73 74 85
63 71
49 53

0
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Nominal per capita health expenditure Real per capita health expenditure

Source: Oromia Regional Plan and Development Commission (2012/13–2020/21)

Note: Real expenditure computed using the consumer price index (CPI), taking 2010 as a base year.

9 Health Expenditure Analysis for Oromia Regional State

The share of regional government spending expenditure spent on the health sector in the
on the health sector was on average 12.2 region is higher than the national average (10.2
per cent between 2012/13 and 2020/21 per cent in 2020/21), it is still lower than the 15
(Figure 4). After education, the sector ranks per cent target set by the African Union under
second in terms of the regional government’s the Abuja Declaration (2001).
expenditure priorities. Although the share of

Figure 4. Health expenditure as a proportion of total expenditure

16

14 13.6
12.7 13.0
11.7 11.8 11.9 11.7 11.8 11.9
12

10

0
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Source: Oromia Regional Plan and Development Commission (2012/13–2020/21)

Composition of health sector spending expenditure was 31 per cent, while recurrent
expenditure grew almost 10-fold (Figure 6).
Nominal capital and recurrent health
Although capital expenditure has increased
expenditure in the region both show
nominally in recent years, its real value declined
upward trends, with recurrent expenditure
by 50 per cent between 2012/13 and 2020/21,
increasing at a faster rate than capital
while real recurrent expenditure increased by
expenditure. TBetween 2012/13 and 2020/21,
two-fold over the same period (Figures 5 & 6).
the nominal percentage growth of capital

Health Expenditure Analysis for Oromia Regional State 10

Figure 5. Nominal and real capital health expenditure (billion ETB)

1.6
1.4
1.4
1.2
1.2
1.0
1.0 0.9 0.9

0.8 0.7 0.7

0.6
0.6 0.7
0.5
0.6 0.6

0.4 0.5

0.3 0.3
0.2
0.2 0.2 0.2

0.0
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Nominal capital health expenditure

Real capital health expenditure

Source: Oromia Regional Plan and Development Commission (2012/13–2020/21)

Figure 6. Nominal and real recurrent health expenditure (billion ETB)

12.0
10.5
10.0

8.0 7.8
6.8
5.8
6.0
4.8

4.0 3.5
3.0
1.9
2.0 1.5 2.9
2.2 2.4 2.5 2.4
1.6 1.7
0.9 1.1
0.0
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Nominal recurrent health expenditure

Real recurrent health expenditure

Source: Oromia Regional Plan and Development Commission (2012/13–2020/21)

11 Health Expenditure Analysis for Oromia Regional State

Spending in the health sector has remained little resource left for the region to undertake
predominantly recurrent, while the share capital investments. Currently, the regional
of capital spending has declined. The share health bureau is focusing on completing
of capital spending declined from 38 per cent existing healthcare projects, but not launching
in 2012/13 to 10.5 per cent in 2020/21 (Figure new ones due to the lack of capital budget.
7). High capital investment undertaken a As primary healthcare services delivered at
decade ago now requires recurrent spending health centres and health posts are financed
to run and maintain the health infrastructure. by regional budgets, the lack of capital budget
With the higher share of spending being at the regional level could significantly hamper
absorbed by recurrent expenses (mainly to health service delivery.
cover salaries and operational costs), there is

Figure 7. Share of capital and recurrent health spending (per cent)

100.0
8.2 8.5 8.4
10.5
13.3
90.0
22.4
80.0 28.4
34.2
38.1
70.0

60.0

50.0 91.8 91.5 91.6

89.5
77.6 86.7
40.0
65.8
61.9 71.6
30.0

20.0

10.0

0.0
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Recurrent health expenditure Capital health expenditure

Source: Oromia Regional Plan and Development Commission (2012/13–2020/21)

Health Expenditure Analysis for Oromia Regional State 12

 Key takeaways
■ Although the nominal value of health spending in Oromia region is increasing, per capita
spending remains very low at US$ 8 in 2020/21. The low per capita spending could
lead to higher out-of-pocket spending by poor households. The regional government
should continue to prioritise health spending through enhanced domestic resource
mobilisation efforts, along with improving the efficiency of spending.
■ Health sector spending in the region is predominantly recurrent, with little resources
left for capital spending. With primary healthcare services being delivered at health
centres and health posts, which are financed by the region’s budget, lack of capital
budget at the regional level could hamper health service delivery significantly. As
the number of primary health facilities in the region is very low given the size of its
population, capital investment in primary healthcare facility delivery units should be
improved.

Health sector public expenditure and administration. For the health sector, the share
fiscal decentralisation of expenditure spent at the woreda level has
increased in recent years: from 46.1 per cent
With fiscal devolution, a relatively higher
in 2012/13 to 58.6 per cent in 2020/21 (Figure
proportion of health expenditure in the
8). This increase in health expenditure at the
region is spent at woreda (district) level.
woreda-level may have a positive impact on
Regional-level health sector budget spending
overall health performance, since it indicates
is broadly divided into two levels: regional and
increased spending on primary healthcare
woreda. Budget is approved at the regional
service delivery at health posts and health
level and allocated to regional bureaus woredas
centres, including health extension services.
within the region. Each woreda then allocates
the budget to the different sectors within its

Figure 8. Proportion of regional bureau-level and woreda-level spending for the health sector (per cent)

100.0

90.0

80.0
50.4
46.1
70.0 52.7
62.9 65.0 63.9 63.3 58.6
59.4
60.0

50.0

40.0

53.9 49.6
30.0 47.3
40.6 41.4
37.1 35.0 36.1 36.7
20.0

10.0

0.0
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Regional bureau-level health spending Woreda-level health spending

Source: Oromia Regional Plan and Development Commission (2012/13–2020/21)

13 Health Expenditure Analysis for Oromia Regional State

With regard to the composition of spending 10). With the share of recurrent expenditure
by level of administration, the regional at woredas being on average 97.4 per cent
health bureau has a relatively higher share for 2012/13 to 2020/21, budget left for health-
of capital expenditure, while woredas spend related capital investments is close to non-
most of their budgets on recurrent spending existent at the woreda level. Often, the budget
As presented in Figure 9, 23.2 per cent of the is not even enough to cover the operational
regional bureau-level health spending was on costs involved in the day-to-day administration
capital investments in 2020/21. The relatively of health facilities, as a significant proportion of
higher share allocated to capital expenditure by the health budget is spent on covering salary
the regional health bureau relates to projects expenses. Increasing the number of health
that require a long time to roll-out and therefore workers, and salary increments, over the years
require higher budgets. In contrast, almost has resulted in increased recurrent expenditure
all the spending at the woreda level goes on at the woreda level, leaving no budget for
recurrent expenditure since most of the region’s capital investment to improve health facilities
health workforce is deployed at the woreda that are managed by woreda administrations.
level and paid by woreda administrations (Figure

Figure 9. Regional-level health expenditure as proportions of capital and recurrent health expenditure

100.0

90.0 20.8 20.7 18.9

23.2
80.0 30.8

70.0 50.5
55.3
65.6
60.0 68.1

50.0
79.2 79.3 81.1 76.8
40.0
69.2

30.0
49.5
44.7
20.0 34.4
31.9
10.0

0.0
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Regional bureau recurrent health spending Regional bureau capital health spending

Source: Oromia Regional Plan and Development Commission (2012/13–2020/21)

Health Expenditure Analysis for Oromia Regional State 14

Figure 10. Woreda-level health expenditure as proportions of capital and recurrent health
expenditure (per cent)

100.0
3.2 3.2 3.2 4.3 2.9 1.3 1.7 2.2 1.5

90.0

80.0

70.0

60.0

50.0
96.8 96.8 96.8 95.7 97.1 98.7 98.3 97.8 98.5
40.0

30.0

20.0

10.0

0.0
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Woreda level recurrent health spending Woreda level capital health spending

Source: Oromia Regional Plan and Development Commission (2012/13–2020/21)

A higher proportion of recurrent expenditure was, on average, 38 per cent. With the delivery
in the region is taken up by salary costs, of basic health services being free or attracting
resulting in lower spending on day-to-day a very small fee, there is little resource at the
operations that are critical to the delivery disposal of primary health facilities, which
of health services. The share of recurrent forces them to rely on the public budget to
expenditure that is spent on salaries is much cover their operational costs. The quality of
higher than the share spent on operational service that public health facilities provide is
expenses (Figure 11). Between 2012/13 and greatly compromised by the lack of sufficient
2018/19, an average of 65.7 per cent of total resources to cover the required operational
recurrent expenditure on health was spent on costs of serving the community.
salaries. The share of operational expenditure

15 Health Expenditure Analysis for Oromia Regional State

Figure 11. Composition of recurrent expenditure at woreda level (per cent)

100.0

90.0
31.1 25.7
35.9 32.6 31.8 30.8
80.0 37.7
39.2
43.1
70.0

60.0

50.0

40.0 74.3
68.2 69.2
68.9 67.4
64.1 62.3
30.0 60.8
56.9
20.0

10.0

0.0
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Salary expenditure Non-salary expediture

Source: Oromia Regional Plan and Development Commission (2012/13–2020/21)

Health budget credibility credibility than the capital budget is because

the recurrent budget is dominated by salary
The region’s health budget credibility was
expenses, which are more predictable and
on average 89 per cent between 2012/13 and
relatively easier to execute than the capital
2020/21 (Figure 12). Measured as the share of
budget. The capital budget is commonly spent
actual expenditure from the approved regional
on managing mega-projects, which may be
budget, budget credibility measures the extent
influenced by external factors beyond the
to which the region’s health budget is reliable.
control of the sector bureau. In this regard,
The sector’s budget credibility increased
the lack of project management capacity in the
from 92 per cent in 2012/13 to 100 per cent
region, the shortage of foreign exchange, and
in 2020/21. Comparing the credibility of the
delays in the procurement of inputs required
budget components, the average credibility for
for capital investments are just some of the
the recurrent budget is 99 per cent, yet only
reasons for the lower capital budget credibility
62 per cent for the capital budget. The main
of the health sector.
reason why the recurrent budget has better

Health Expenditure Analysis for Oromia Regional State 16

Figure 12. Regional health budget credibility rate (per cent)

109
105 106
100 102
98 96
92 93 91 93 93 91
89 88
87 86
84
79
77 75

60
58 59
52 48
43

2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Total Recurrent Capital

Source: Oromia Regional Plan and Development Commission (2012/13–2020/21)

The regional health bureau faces many address various humanitarian and emergency
challenges to improve budget allocation needs. Another challenge is the lack of human
and utilisation in the health sector. One resource within healthcare financing, and poor
challenge raised through the key informant leadership and management skills, resulting in
interviews was the variation between a poor data management and an inadequate
requested and actual budget allocation to reporting system. This contributes to poor
the health sector. There seem to be frequent decision-making in the sector. The continual
shifts in the regional government’s priorities increase in the number of people who demand
when allocating budget across the different health services and nutrition interventions,
sectors. For instance, in the 2021/22 budget along with frequent budget delays on the part
year, the government’s major priority was of the Ministry of Finance, have their own
the agriculture sector, resulting in a shift in impact on health sector performance in the
resources to agriculture. The health bureau region. This may be one reason why Oromia
reported that the regional health bureau did state has the highest hospital to population
not receive the whole allocated budget due to ratio of all regions in the country.
resource limitations and a shift of resources to

17 Health Expenditure Analysis for Oromia Regional State

 Key takeaways
■ A relatively higher proportion of the region’s spending is utilised at the woreda level
(58.6 per cent in 2020/21). As primary healthcare services at health centres and
health posts are mostly managed by woredas, the ongoing increase in spending at
the woreda level is a move in the right direction.
■ Recurrent expenditure in the region, particularly woreda-level spending, is taken
up by salary expenses, resulting in lower spending on day-to-day operations that
are critical to the delivery of health services. The service quality that public health
facilities provide is greatly compromised by the lack of sufficient resources to cover
the required operational costs of delivering services to the community. Increased
resources should be made available at the woreda level to cover operational costs
in health facilities.
■ The capital budget credibility is significantly lower than the recurrent budget
credibility. The lack of project management capacity in the region, foreign exchange
shortages, and delays in the procurement of inputs required for capital investments
are just some of the reasons for the lower capital budget credibility. As most capital
expenditure is executed by the regional health bureau, the bureau should give due
attention to improving capital budget utilisation.

Key policy issues

■ The region’s health sector expenditure classification system lacks disaggregation.
There is no disaggregated data on health expenditure to track child-related health
expenditures or nutrition-specific interventions. This is a broad national challenge,
as programme-based budgeting is only implemented at the federal level, with the sub-
national regions, including Oromia, using line-item budgeting. This calls for reform of the
chart of accounts and budget templates to make sure health programmes are identifiable
in the budget and expenditure data. This will allow for better tracking and monitoring to
measure and advocate for increased investment in specific programmes, including those
that are child-sensitive.
■ Although there are funds flowing into the health sector in the region from multiple
donors, there is no systematic mechanism to measure off-budget health sector
expenditures. There is a need to shift off-budget financing of the health sector to
on-budget records to better plan, execute and monitor how much is being spent on
healthcare services.
■ Internal conflicts, drought, health crises such as COVID-19 and an increasing
population put additional pressure on the health system in the region. This highlights
the need for more commitment to increasing investment in the health sector in the
short, medium and long terms, through further increments in public budget allocation
and improved budget utilisation in the region.
■ Limited human resource capacity and delays in the release of budget from the
federal government are also issues that challenge the health sector in Oromia
region. The federal government should deliver the required technical support and budget
on time so that health and nutrition strategic plans can be successfully implemented in
the region.

Health Expenditure Analysis for Oromia Regional State 18

19
Gregorian calendar 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Ethiopian fiscal year 2005 2006 2007 2008 2009 2010 2011 2012 2013

Regional expenditure (in million Birr)

Total regional expenditure 21,043 25,180 32,637 36,058 47,039 49,543 57,355 71,797 98,243

Total regional recurrent expenditure 12,083 15,108 21,547 24,084 34,664 40,352 45,588 51,812 69,041

Total regional capital expenditure 8,960 10,071 11,089 11,974 12,374 9,190 11,767 19,985 29,202

Total bureau-level expenditure 11,333 13,252 14,960 15,802 18,476 19,579 23,267 31,200 44,463

Bureau-level recurrent expenditure 3,195 4,262 5,488 6,517 8,615 11,956 14,090 14,090 17,550

Bureau-level capital expenditure 8,139 8,990 9,472 9,285 9,861 7,622 9,176 17,110 26,912

Total woreda-level expenditure 9,709 11,928 17,677 20,256 28,562 31,265 34,089 40,597 53,780

Health Expenditure Analysis for Oromia Regional State

expenditure, 2012/13–2020/21

Woreda-level recurrent expenditure 8,888 10,846 16,059 17,567 26,049 29,697 31,498 37,722 51,490

Woreda-level capital expenditure 821 1,081 1,618 2,689 2,513 1,568 2,591 2,875 2,290
Annex: Oromia regional state health

Source: Oromia Regional Plan and Development Commission

Regional health expenditure (in million Birr)

Total regional health expenditure 2,464 2,961 3,874 4,890 5,510 6,296 7,432 8,492 11,701

Regional recurrent health expenditure 1,525 1,949 3,006 3,499 4,779 5,782 6,798 7,781 10,471

Regional capital health expenditure 940 1,012 867 1,391 730 514 634 711 1,230

Total bureau-level health expenditure 1,327 1,470 1,573 2,314 2,044 2,206 2,680 3,119 4,848

Bureau-level recurrent health expenditure 424 506 779 1,034 1,414 1,746 2,126 2,528 3,722

Bureau-level capital health expenditure 904 964 794 1,279 631 459 554 591 1,126

Total woreda-level health expenditure 1,137 1,491 2,300 2,577 3,465 4,090 4,753 5,374 6,853

Woreda-level recurrent health expenditure 1,101 1,443 2,227 2,465 3,366 4,036 4,672 5,254 6,749

Woreda-level capital health expenditure 36 48 73 112 100 55 80 120 104

This budget brief analysing health public budget and expenditure of the Oromia
Regional State for the period 2012/13 to 2020/21 was produced through a partnership
between the Ethiopian Economics Association (EEA) and UNICEF Ethiopia. Technical
support and coordination from UNICEF Ethiopia was provided by Fanaye Tadesse
Techane ftechane@unicef.org and Zeleka Paulos zpaulos@unicef.org. EEA is
responsible for the data collection and accuracy of the information presented. The
main objective of this budget brief is to synthesize complex budget and expenditure
information so that it is easily understood by stakeholders, to foster discourse, and
to inform policy and financial decision-making processes of the regional government.
The analysis presents budget and expenditure that are recorded on-budget by the
Oromia Regional State.

For further information on social policy or the Oromia Regional State, contact:

Samson Muradzikwa Benny Krasniqi

Chief of Social Policy Chief Field Office, Oromia Field Office
UNICEF Ethiopia UNICEF Ethiopia
smuradzikwa@unicef.org bkrasniqi@unicef.org

© United Nations Children’s Fund (UNICEF), Ethiopia 2023

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