- In 2015 the UN General Assembly formally accepted a new set of 17 measurable Sustainable Development Goals (SDGs), ranging from ending world poverty to achieving gender equality and empowering women and girls by 2030. The SDG target 3 encompasses 9 sub targets focussed on ensuring healthy lives and well-being for all. These goals set by the proposed SDGs are ambitious and challenging. It will not be achieved with a business-as-usual approach. - ODA in Kenya: In 2013, ODA for Health reached its highest level at US$ 934 million. However, the outlook of future aid to Kenya remains flat. - The share of government expenditure on health in Kenya has not shown a commensurate increase with its increase in GDP. The share has actually declined from 46% of the Total Health Expenditure in 2000 to 46% in 2000. Government needs to increase its share of health expenditure to meet the rising healthcare demands. - At current level of health expenditure at US$ 1.9 BN, there exists an annual funding gap of US$ 1.4 BN to meet the needs of Healthcare services. - Kenya needs to consider several instruments of innovative financing in order to achieve its financing needs for Health. Some of the potential options presented in this digital artefact are raising additional taxes, Debt-swaps and social bonds. - There is a hope that Kenya will make a paradigm shift in its approach to health financing and the Healthcare financing gap in Kenya will be filled in with additional sources generated through innovative financing instruments.

1. Development Finance for Health
in Kenya
Current landscape and opportunities for
Innovative Finance
Expected audience: Central governments, Banks interested in impact
investments and Global ODA community

2. Structure of the digital artefact
• Current Scenario of Health Financing in Kenya
– ODA for Health
– Domestic Resources mobilised for Health
– Estimated Resource Needs in future
• Innovative financing options to expand the financial
resources for Health
– Taxes
– Public to private mechanisms
• Health bonds and loan financing
• Debt Swaps
– Impact Investments
• Social development bonds

3. SDG Target 3
Quick overview
• In 2015 the UN General Assembly formally accepted a new set of 17 measurable
Sustainable Development Goals (SDGs), ranging from ending world poverty to
achieving gender equality and empowering women and girls by 2030.
• The SDG target 3 encompasses 9 sub targets focussed on ensuring healthy lives
and well-being for all.
• These goals set by the proposed SDGs are ambitious and challenging. It will not
be achieved with a business-as-usual approach.

4. Current Scenario of Health Financing
ODA for Health in Kenya
0
500
1000
1500
2000
2500
3000
3500
4000
2005 2006 2007 2008 2009 2010 2011 2012 2013
US$millions
Trends in ODA( All sectors and Health )
Total ODA All Sectors Health and Population policy
ODA Trends 2005- 2013
• Between 2005 and 2013, Kenya has
witnessed more than 3 fold increase in
the overall ODA across all sectors. ODA for
Health has witnessed almost a 4 fold
increase during the same period.
• In 2013, ODA for Health reached its
highest level at US$ 934 million.
The outlook for international aid to Kenya
remains flat.
• Kenya transitioned from a low income to
a lower middle income country in July
2015 as per the World bank classification.
• Donors are more inclined to shift their
focus on low income countries. For Kenya,
the move into lower middle income status
would translate into a reduced priority
from donors during the SDG period.

5. Current Scenario of Health Financing
Domestic Resources for Health in Kenya
Economic Growth and government’s share
of Health expenditure.
• Between 2000 and 2013, Kenya’s
economy has shown significant growth
and it’s GDP per capita has witnessed a
2.75 fold increase.
• However, the share of government
expenditure on health has not shown a
commensurate increase. The share of
govt. expenditure on health in total
Health expenditure has actually declined
from 46% in 2000 to 46% in 2000.
• Government needs to increase its share of
health expenditure to meet the rising
healthcare demands.
46
42
0
10
20
30
40
50
60
GDPpercapitaUS$
Percentage
Growth Rates: Economy, Health
expenditure
General government expenditure on health (GGHE) as % of THE
External resources on health as % of THE
GDP per capita

6. Health Financing in Kenya
Estimated Resource Need for the Future
• The average annual resource needs for Health in
Kenya is estimated to be around US$ 3.3 BN
between the fiscal years 2013 and 2017.(1d)
• At current level of health expenditure at US$ 1.9
BN, there exists an annual funding gap of US$
1.4 BN to meet the needs of Healthcare
services.(1e)
• With the level of international financing
expected to be flat, Kenya will have to resort to
innovative financing mechanisms to fulfil its
health funding gap.
• A majority of the resources generated through
innovative financing in the post MDG era will
have to arise from domestic sources.
1d Perales, N., A. Dutta, and T. Maina. 2015. Resource Needs for the Kenya Health Sector Strategic and Investment Plan: Analysis Using the
OneHealth Tool. Washington, DC: Futures Group, Health Policy Project.
1e: NHA Health Expenditures database, WHO July 2015
Image courtesy: http://www.ddahlman.com/

7. Innovative financing for
health in Kenya
Potential Options
Image courtesy: world environment federation

8. Innovative Financing for Health
• Taxes
– On International remittances: Kenya has the potential to
raise funds by imposing a small levy on remittances.
• For instance, Gabon raised $30 million for health in 2009 by
imposing a 1.5 percent levy on companies handling
remittances.(1f)
• If India were to implement a levy of 0.005 percent on foreign
exchange transactions, it could raise $370 million per year.(1f)
– Consumption Taxes: Kenya has a high penetration of mobile
phones in its population. By imposing a small levy on phone
consumption, it has the potential to generate funds which could
be invested in health.
(1f) World Health Report 2010, WHO

9. Innovative Financing for Health
• Debt-Swap
“Debt-2-Health” is a partnership between two
countries: the creditor country cancels a bilateral debt
in exchange for the debtor country to reinvest in health
projects through Global Fund.(1g)
(1g) Garmaise, D. Two New Debt2Health Agreements Signed. aidspan.org (2010). at http://www.aidspan.org/gfo_article/two-new-
debt2health-agreements-signed
www.theglobalfund.org
As of Oct 2010, around US$
210 million of debt from
debtor countries had been
written off by creditor
countries. (1g)
Kenya has a potential to use
this mechanism to generate
additional funds.

10. Innovative Financing for Health
• Social/Development impact bonds
are performance-based investment instruments intended
to finance development programmed in low resource
countries, which are built off the model of social impact
bond (SIB) model. (1h) Kenya has a huge potential to use
these instruments to raise funds for outcome based
investments in health.
(1h) https://en.wikipedia.org/wiki/Development_impact_bond
(1i) http://www.cgdev.org/blog/first-development-impact-bond-launched
For instance, in June 2014, Instiglio, Children's Investment Fund Foundation (CIFF), Educate
Girls and UBS Optimus Foundation launched the first Development Impact Bond.(1i) The
objective of the DIB is to reduce the gender gap in education in Rural India by getting girls into
school and learning. UBS is providing an investment to an Indian NGO, Educate Girls. After
three years, CIFF (the outcome payer) will pay based on enrollment and learning outcomes.
UBS Optimus Foundation stands to receive their initial investment back plus a return on
investment based on the performance of the program.

11. Conclusion
• To meet the investment needs of the SDGs, the global community
needs a paradigm shift to move the discussion from “billions” in
overseas development assistance (ODA) to the “trillions” in
investments of all kinds: public and private, national and global, in
both capital and capacity.
• A developing country like Kenya has immense potential to raise
capital for financing the health objectives (SDG goal 3). Innovative
financing instruments will have to be rolled out by involving all the
potential stakeholders.
• There is a hope that Kenya will make a paradigm shift in its
approach to health financing and the Healthcare financing gap in
Kenya will be filled in with additional sources generated through
innovative financing instruments.