Public Health Spending in Africa : Cyclicality, Asymmetries, and COVID-19

Abstract

The COVID-19 pandemic has renewed the global focus on the role of public health spending, particularly in developing regions where fiscal space is mostly limited. Many African countries have started reassessing the health sector as a core economic resilience component. This study examines how government health expenditure responds to macroeconomic fluctuations in African countries. Attention was given to asymmetries between positive and negative periods of GDP growth and the impact of COVID-19 on these dynamics. The analysis uses annual data from 45 African economies from 2000 to 2022 and applies a panel NARDL framework to capture nonlinear and dynamic relationships. The sample is further disaggregated into low-income and middle-income groups. The results from the full sample indicate a procyclical pattern of health spending, where expenditure rises during economic expansions, but it discloses an acyclical relationship during recessions. Further analysis reveals that health spending in low-income countries follows a similar procyclical trend, while middle-income countries exhibit a countercyclical response to positive and negative growth shocks. Inflation consistently reduces health spending across the sample. The COVID-19 period has altered the cyclical pattern of health expenditure, at least in the short-run, especially for low-income countries. These findings highlight the need for more resilient and countercyclical fiscal strategies in the health sector, specifically during economic downturns, to ensure sustained investment.