Reforming Debt Sustainability To Support Health Financing In Africa

Key Takeaways

• Debt sustainability in Africa currently constrains health spending by failing to account for the economic returns of health investment.
• Strong evidence shows that health investment in Africa delivers high returns through productivity gains, education outcomes, and improved labor force participation.
• Average per capita health expenditure in Sub-Saharan Africa remains extremely low relative to global benchmarks, reinforcing structural underinvestment.
• Misalignment between short-term debt instruments and long-term health returns increases fiscal and financing risk.
• Improving alignment between debt sustainability and health financing is critical to reflect medium-term growth effects and future revenue gains.
• Existing DSA frameworks overlook governance quality, institutional capacity, and implementation risk, all of which shape health investment outcomes.
• Results-based financing and transparency can strengthen value for money and debt service capacity.
• Expanding access to patient capital and state-dependent financing can improve resilience to economic and fiscal shocks.
• Reforming debt sustainability frameworks is essential to scaling health financing without undermining macroeconomic stability.
• A rebalanced approach can enable African governments to invest in health as a driver of growth rather than a fiscal liability.

Executive Summary

This report examines the relationship between debt sustainability in Africa and the continent’s ability to finance health systems at scale. It argues that prevailing Debt Sustainability Analysis frameworks are not fit for purpose because they systematically undervalue health investment in Africa, treating health spending primarily as a fiscal cost rather than a growth-enhancing investment. As a result, borrowing limits are set conservatively, constraining public investment in health even where economic returns are high.

The analysis highlights strong empirical evidence that health investments generate substantial economic returns through higher labor productivity, longer working lives, improved educational outcomes, and greater gender equity. Despite these benefits, health financing in Africa remains severely underfunded. Average per capita health spending in Sub-Saharan Africa is only USD 85, compared to a global average of USD 1,260, contributing to poor health outcomes and slow progress toward universal health goals.

The report concludes that aligning debt sustainability and health financing requires reforming DSA frameworks to explicitly account for the medium-term growth effects of health investment, government implementation capacity, and the quality of institutions and governance. It also emphasizes the need for patient capital, results-based financing, and state-dependent instruments to better match the long-term returns of health investments. Reforming debt sustainability frameworks is essential to unlocking sustainable health financing while preserving fiscal credibility across African economies.