Technical efficiency of public expenditure on health in east Africa: the post-reforms period (1995-2015)

Efficient use of public resources is necessary for economic development. This study assesses technical efficiency of public expenditure on health and it`s determinant for East African countries (Kenya, Uganda, United republic of Tanzania, Rwanda and Burundi). The study employ panel data extracted from WDI (World Development Indicators) between 1995-2015.TheSFA (stochastic frontier analysis) is used to determine technical efficiency of public expenditure of which the output variable is HALE (Health Adjusted life year) and input variables are health expenditure per capital, adult literate rate and secondary school enrolment. In determining the factors which lead to efficiency feasible generalized least square method was used on the second stage of analysis with some environmental, economic and government factors. From the analysis the study shows that in East Africa public resources on health are efficiently utilized with higher efficient country being Tanzania followed by Rwanda, Kenya, Uganda and Burundi with efficiency score of 0.96, 0.94, 0.939, 0.937, and 0.92 respectively. However, the results indicate that country with higher health expenditure per capital is not necessarily the most efficient one. Furthermore, the study shows that among the factors which lead to efficiency are control of corruption, presence of political stability and absence of violence, effectiveness of revenue mobilization, private and public health expenditure and incidence of HIV and TB while the factor which lead to inefficiency includes income inequality and out of pocket expenditure. The policy implication for this study is that the government should keep on abolishing corruption, reducing out of pocket expenditure and income inequality so that to efficiency on public expenditure can be attained.