80671 Cameroon Economic Update Towards Greater Equity A Special Focus on Health July 2013 © 2013 International Bank for Reconstruction and Development/The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of the staff of The World Bank with external contributions. Note that The World Bank does not necessarily own each component of the content included in the work. The World Bank therefore does not warrant that the use of the content contained in the work will not infringe on the rights of third parties. The risk of claims resulting from such infringement rests solely with you. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the Governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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Table of Contents Abbreviations and acronyms........................................................................................... v ACKNOWLEDGEMENTS............................................................................................................ vii INTRODUCTION........................................................................................................................... 1 Recent Economic Developments.....................................................................................3 Growth......................................................................................................................................................... 3 Inflation........................................................................................................................................................4 Fiscal Performance..................................................................................................................................... 5 Outlook for 2013.........................................................................................................................................6 Options for Going Forward......................................................................................................................... 7 HEALTH IN CAMEROON........................................................................................................... 15 Introduction................................................................................................................................................. 15 Cameroon’s Health Profile......................................................................................................................... 15 Resource Allocation.................................................................................................................................... 19 Options for Going Forward.......................................................................................................................25 REFERENCES............................................................................................................................ 29 Abbreviations and acronyms BEAC Banque des États d’Afrique Centrale (Central Bank of Central African States) CAR Central African Republic CEMAC Communauté Économique et Monétaire de l’Afrique Centrale (Economic and Monetary Community of Central Africa) CFAF CFA Franc CPI Consumer Price Index CU Customs Union DHS Demographic Health Survey DRC Democratic Republic of Congo ECCAS Economic Community of Central African States ECOWAS Economic Community of West African States GDP Gross Domestic Product HMIS Health Management Information System IMF International Monetary Fund LPG Liquefied Petroleum Gas MICS Multiple Indicator Cluster Survey MOH Ministry of Health OPSF Oil Price Stabilization Fund RBF Results-Based Financing SAM Social Accounting Matrix SNH Société Nationale des Hydrocarbures (national oil company) SONARA Société Nationale de Raffinage (national refinery) US$ United States Dollar VAT Value Added Tax WEO World Economic Outlook WHO World Health Organization y-o-y Year-on-year Cameroon Economic Update v ACKNOWLEDGEMENTS The Cameroon Economic Updates are produced by Cia Sjetnan, and Erik  von Uexkull are gratefully a Team led by Raju Jan Singh. Abel Bove and Paul acknowledged. Greg Binkert (Country Director for Jacob Robyn prepared the chapter on health under Cameroon), Mark Thomas (Sector Manager), and the supervision of Gaston Sorgho. For this purpose, Olivier Godron (Country Program Coordinator) the Team has built upon the recently-completed provided guidance and advice, and have been an Country Health Status Report for Cameroon. Franck invaluable source of encouragement. Adoho, Thomas Dickenson, Carlo del Ninno, and Christian Zamo carried out the work on fuel subsidies. The Team has also greatly benefited from consultations OtherTeam members include Simon Dietrich, Sylvie with Cameroon’s key policy makers and analysts, who Ndze, and Manuella Lea Palmioli. provided important insights, in particular the following institutions: the BEAC, the Technical Monitoring Comments received from Ulrich Bartsch, Jérome Committee (CTS), the Ministry of Economy and Bezzina, Dominic Haazen, Santiago Herrera, Planning, the Ministry of Finance, and the National Faustin-Ange Koyasse, Katherine Manchester, Ha Thi Institute of Statistics. The Team is also grateful to their Hong Nguyen, Hannah Nielsen, Dominique Njinkeu, colleagues at the International Monetary Fund. Cameroon Economic Update vii INTRODUCTION With these Cameroon Economic Updates, the World Bank is pursuing a program of short and frequent reports analyzing the trends and constraints in Cameroon’s economic development. Each issue, produced bi-annually, provides an update of recent economic developments, as well as a special focus on a topical issue. The Cameroon Economic Updates aim to share knowledge and stimulate debate among those interested in improving the economic management of Cameroon and unleashing its enormous potential. The notes thereby offer another voice on economic issues in Cameroon, and an additional platform for engagement, learning and exchange. This sixth issue of the Cameroon Economic Updates is entitled “Towards Greater Equity —A Special Focus on Health�. There has been little improvement in Cameroon’s health indicators over the past two decades. The regularly and ensure that budgetary allocations are under-five child mortality rate has only been reduced based on needs and performance. Cameroon could slightly, while life expectancy has, in fact, declined. also begin taking steps towards an extension of The burden of health care financing is largely born by prepayment and risk-pooling mechanisms, such as households, and risk-pooling mechanisms are quasi- mutual health organization and mandatory formal inexistent. Furthermore, the limited public resources sector insurance. By reducing individual costs, such allocated to health do not seem to be deployed policies would increase access to health services for where they are most needed. As a result, substantial the poor and protect them from spending shocks due disparities exist in health outcomes between rural and to health emergencies. urban areas, as well as across socio-economic groups. A results-based approach in health, which provides The introduction of program budgeting in 2013 funding based on results and rewards performance should improve the efficiency of public spending. Line through additional budgetary allocations and ministries will have now more flexibility in preparing bonuses, is currently being piloted in Cameroon. and executing their budgets, but will also be held The  preliminary results of this approach are accountable for results. In addition, an effective encouraging. An extension of this initiative may be an data collection and management system would help option to improve health services and outcomes, and decision-makers monitor health outcomes more ensure greater coverage of health services. Cameroon Economic Update 1 Recent Economic Developments Growth Figure 2: Export Performance, 2012 (y-o-y percent change in volume ) In spite of slow economic growth worldwide, recent 40 estimates confirm that Cameroon’s economy 30 continued to gain momentum in 2012 (Figure 1). 20 Growth is estimated to have reached 4.4 percent 10 0 in 2012 (compared with 4.2 percent in 2011) on the –10 back of continued strong performance both in oil and –20 non-oil activities. Credit to the economy has, however, –30 been subdued, rising by 2.6 percent. –40 Aluminum Cocoa Logs Bananas Coffee Cotton and wood products As in 2011, the tertiary sector was the main driver of growth, expanding by more than 5 percent, with Sources: Cameroonian authorities and Bank Staff calculations. transports, communications and financial services being particularly dynamic. In the primary sector, economic growth was mainly driven by industrial Problems related to electricity production and and export-oriented agriculture, especially by the delays in the oil sector have dampened, however, production of coffee, cotton and rubber (Figure 2). economic performance and pushed growth to Cotton production, for instance, is estimated to have the lower end of our projection range. Activities in expanded by more than a third following the return electricity, gas, and water slowed down in 2012, of farmers to the sector coupled by an expansion of expanding by a mere 0.4 percent (compared with production areas. 3.6 percent in 2011) because of low rainfall and delays in the operations of the new gas-fired power plant in Kribi. Worsening electricity shortfalls have, Figure 1: Sectoral Contributions to in turn, hampered the aluminum sector: estimated GDP Growth, 2007–12 exports were down by a third in 2012. (in percent) 6 In the oil sector, as expected, the downward trend in production observed over the past years was 4 reversed in 2012 and oil production expanded to 2 22.4 million barrels, compared to 21.6 million barrels 0 the year before (Figure 3). This reversal also allowed –2 2007 2008 2009 2010 2011 2012 an expansion in oil exports, narrowing the country’s Primary Sector Secondary Sector (excl. oil) Oil external trade deficit from 2.3 percent of GDP in Tertiary Sector GDP Growth 2011 to 1.6 percent of GDP in 2012. The pick-up in Sources: Cameroonian authorities and Bank Staff calculations. oil production was, however, lower than projected Cameroon Economic Update 3 Figure 3: Oil Production 2002–2012 Economic Update. Meanwhile, many other African (in mio barrels) countries have managed to reduce their poverty rates, sometimes quite significantly (Figure 4). 44 39 34 29 24 Figure 4: Reduction in Poverty, Selected 19 Countries, Early 2000s-Late 2000s, 14 (in percent of population) 9 16 4 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 14 12 Source: SNH. 10 8 (at 3.5 percent instead of 5.1 percent) because of 6 4 operating delays in new fields. 2 0 Economic growth remains nevertheless disappointing Cameroon Tanzania Burkina Faso Benin Swaziland Zambia Mali Botswana Rwanda in Cameroon. Poor infrastructure, an unfavorable business environment, and weak governance Sources: Cameroonian authorities and Bank Staff calculations. continue to hamper economic activity and make it difficult to reach the growth rates needed to reduce poverty in a sustainable manner. The rates of economic growth observed over the recent Inflation past have not been fast enough to deliver tangible improvements in the living conditions for the average The pace of inflation slowed down in 2012, remaining Cameroonian. Overall, poverty rates in Cameroon below the 3 percent regional convergence criterion have virtually stagnated between 2001 and 2007, (Figure  5). The overall price level increased by and disparities between regions have widened, as 2.5  percent in December (y-o-y) compared to pointed out in previous issues of our Cameroon 2.7 percent over the same period the year before. Figure 5: Selected Prices: 2006–12 (y-o-y change in percent) 14 12 10 8 6 4 2 0 –2 –4 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Food Price Index Total (Headline) CPI Sources: Cameroonian authorities and Bank Staff calculations. 4 Cameroon Economic Update Inflation was mainly driven by pressures on food floods in the region in August and September which prices, peaking at 4.5 percent (y-o-y) in May, but caused substantial material destruction, including subsiding following improved food distribution homes, agricultural land (rice fields primarily), and strong harvests. The stability of retail prices and killed an important number of livestock. The for petroleum products has also contributed to difference in inflation rates may also indicate poor containing inflationary pressures. infrastructure, especially in the North, making it expensive to transport goods. The rise in prices is, however, unevenly spread across the country’s territory (Figure 6). In 2012, inflation was lowest in Yaoundé and Douala, the two main cities, with rates at 1.0 and 2.1 percent on average, Fiscal Performance respectively. Price pressures were the highest in Maroua (Far North) at 5.5 percent. These price On the fiscal side, the latest estimations for 2012 pressures were partly the result of the widespread are consistent with the projections presented in the January 2013 issue of the Cameroon Economic Update (see Table 1). On a cash basis, the overall Figure 6: Average Inflation by Major City 2012 deficit (including grants and before payment (in percent) obligations) is estimated to be lower than budgeted, 6 primarily as a result of higher oil revenues caused 5 by stronger-than-expected international oil prices. 4 Estimated total spending was in line with the 3 budget, with slight slippages in current spending 2 compensated by lower capital outlays in the last quarter of the year. As a result, the non-oil primary 1 deficit is estimated to have shrunk by almost two 0 Yaoundé Douala Buéa National Ngaoundéré Garoua Bertoua Ebolowa Bamenda Bafoussam Maroua percentage points of non-oil GDP, going from 8.6 percent of non-oil GDP in 2011 to 6.7 percent of non-oil GDP in 2012. Sources: Cameroonian authorities and Bank Staff calculations. Table 1: Fiscal Performance, 2011–12 (in percent of GDP) 2011 2012 2012 2012 Est. Budget Jan Proj. Est. Revenue and Grants 18.8 17.8 18.9 18.9 Oil Revenue 5.3 4.4 5.1 5.4 Non-oil Revenue 13.0 12.9 13.2 13.1 Grants 0.5 0.5 0.5 0.4 Total Spending 21.8 20.0 19.7 20.0 Current Spending 15.4 13.8 13.5 14.1 Capital Spending 6.4 6.2 6.2 5.9 Overall Balance –3.0 –2.2 –0.8 –1.1 Payment Obligations –0.5 –0.2 –0.2 –0.9 Overall Balance on a cash basis –3.5 –2.4 –1.0 –2.0 Sources: Cameroonian authorities and Bank Staff calculations. Recent Economic Developments 5 These narrower fiscal deficits on a cash basis reflect, Figure 7: Euro-zone — Economic Sentiment however, a continued accumulation of new payment Indicator, 2010–13 obligations (particularly related to fuel subsidies). (Index 100 = 2000) These payment obligations — the stock of which is 110 estimated to have reached about 5 percent of GDP 105 at end 2012 — will continue to put pressure on the 100 Government’s cash position. SONARA, the national 95 oil refinery, as well as fuel importers, faces revenue shortfalls stemming from the Government’s policy 90 of freezing retail prices for petroleum products. 85 As mentioned in previous issues of our Economic 80 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Update , the budgeted amount for compensating for these costs falls short of the likely actual figures: in 2012 an estimated CFAF 450 billion (3.5 percent Source: European Commission. of GDP) was needed instead of the CFAF 170 billion that was budgeted. Despite the cancellation of substantial levels of unpaid taxes, an accumulation Figure 8: Euro-Zone 2013 GDP Growth Mean of new payment obligations to SONARA — reaching Point Projections (in percent) 0.3 percent of GDP — could not be prevented in 2012. 2.5 2 Outlook for 2013 1.5 1 With the construction of large infrastructure projects 0.5 and continued efforts to improve agricultural Fourth Quarter 2012 0 productivity, the economic momentum observed First Quarter 2013 in 2012 is expected to carry over into 2013. The –0.5 Second Quarter 2013 production at the Kribi gas station (216 MW) is –1 2010 2011 2012 2013 expected to reduce power bottlenecks. In addition, the arrival of a new operator in the telecommunication Sources: Survey of Professional Forecasters, European Central Bank. sector is expected to foster investment and activity in this sector. Furthermore, the oil sector is projected to continue its recovery, with production estimated to this growing gloom. The average 2013 growth forecast increase by a further 15 percent in 2013. This would for the Eurozone has declined over the past quarters, push overall economic growth to about 5 percent indicating now the expectations of a continued in 2013. economic contraction (Figure 8). Uncertainty, however, will likely continue to surround More worrisome, the latest vintages of the IMF’s World developments in advanced economies, making Economic Outlook indicate continuous downward any economic projections particularly challenging. revisions for projected imports for Cameroon’s According to the most recent release from the main export markets, with demand in many markets European Commission, confidence remains weak in expected to decline in 2013 (Figure  9). Import the Eurozone and will continue to weigh on investment volumes are now expected to decrease in Spain and and big-ticket consumption decisions (Figure 7). The Italy — the first and fifth largest export markets for regular quarterly surveys of professional forecasters, Cameroon — by about 5 percent and 3.5 percent, carried out by the European Central Bank, capture respectively. Furthermore, the pick-up in the economy 6 Cameroon Economic Update Figure 9: 2013 Import Volume Projections, cost of fuel subsidies remains under budgeted, Main Trading Partners which undermines transparency, and will weigh (variation in percent) again on the cash position and execution of the budget. A continued freeze of retail petroleum prices Spain would require an estimated CFAF 430 billion (about Netherlands 3 percent of GDP), but only CFAF 220 billion have been budgeted. Upcoming local elections could add China further pressure on spending, as could the resolution of the situation of some financially troubled banks and France financial losses expected from certain state-owned Italy enterprises. –6 –4 –2 0 2 4 6 8 10 12 WEO Apr-2012 WEO Sep-2012 WEO Apr-2013 Options for going forward Source: International Monetary Fund. Against this backdrop, efforts to increase the Cameroonian economy’s resilience to shocks should expected in the Netherlands and France six months be strengthened, possibly through increased trade ago has given way to a prospect even gloomier than diversification, prudent debt management, and a year ago. Although remaining in positive territory, increased efficiency in public spending. The latter even projections for demand in China have been would include an examination of the various possible subject to downward revisions. options to reduce the budgetary burden caused by subsidies, especially those for petroleum products. Concerning fiscal performance, on the basis of the first quarter, the projections for 2013 would indicate a wider overall fiscal deficit in Cameroon than in Diversifying trade partners 2012. Budgeted revenues are based on ambitious expectations for the country’s economic growth With high-income countries continuing to and for international prices for crude, and thereby restructure, rebalance, and restore their fiscal are subject to downside risks. Furthermore, the policies to a sustainable path, export prospects to Table 2: Fiscal Performance, 2013 (in CFAF billion) 2013 2013 2013 Budget Q1 Est. Revenue and Grants 2649 586 2582 Oil Revenue 705 100 711 Non-oil Revenue 1878 486 1815 Grants 66 0 56 Total Spending 2971 468 3078 Current Spending 2014 366 2207 Capital Spending 957 102 871 Overall Balance –322 118 –496 Arrears –26 –44 –44 Overall Balance on a cash basis –348 74 –540 Sources: Cameroonian authorities and Bank Staff calculations. Recent Economic Developments 7 Cameroon’s traditional markets will remain limited. especially agricultural ones, and may be easier to In this environment, Cameroon could think about enter, as their standards would be closer to those of diversifying its export markets even further away from Cameroon. In this regard, the CEMAC Customs Union its traditional partners. A more diversified product (CU) should become a reality through the adoption base, as well as more diversified markets, would of a harmonized tariff nomenclature, standards, increase the resilience of the economy and reduce common customs regulations, and a regional its vulnerability to external shocks. payment system. Beyond CEMAC, there would be a need to facilitate trade between CEMAC countries and More than half of developing country trade is now the DRC, as well as the rest of the ECCAS.1 Cameroon with other developing countries (up from 37 percent could also capitalize on the trading potential with in 2001). Even excluding China‘s exports to other the vast consumer market in Nigeria and, through developing countries and its imports from them, trade Nigeria, access the entire ECOWAS regional market.2 between the remaining developing countries has also outpaced trade with high-income countries by a wide Traders in Cameroon are still faced, however, with margin over the last decade. Interestingly, the rapid burdensome procedures for both exports and expansion of intra-developing country trade reflects imports. It takes for instance 12 documents to import more than just trade in commodities, with the value a commodity and 11 documents to export one in of developing-country exports of manufactures rising Cameroon as compared to an average of about 6 to at about the same rate as the value of commodities 8 in a sample of emerging economies. Port efficiency as a whole. needs to be improved. Dwell time at Douala — the amount of time a shipment waits at the port — was As already pointed out in last year’s July issue of 18.6 days in 2010, compared to an average dwell our Cameroon Economic Update , Cameroon is time of four days in Durban (South Africa), 11 days ideally positioned to take advantage of the economic in Mombassa (Kenya) and 14 days in Dar es Salaam opportunities offered by greater trade. Due to its (Tanzania). Movements of freight inland should also strategic location neighboring Nigeria, the Democratic be made easier and cheaper. This would require, in Republic of Congo (DRC), and Gabon, and potential addition to better roads, a more competitive transport crossing point to the landlocked countries of Central sector and fewer roadblocks. Africa (Chad and the CAR), Cameroon is a natural hub for the region with the port of Douala as the main entrance. Prudent debt management In addition, the country is diverse with a geography The most recent joint IMF-World Bank low-income that ranges from Sahelian semi-desert in the north country debt sustainability analysis indicates that through grassland to equatorial forest in the south, Cameroon’s risk of debt distress remains low, opening favoring varied economic and agricultural activities. the possibility for some limited non-concessional Furthermore, Cameroon is endowed with significant natural resources, including oil, high value timber 1 CEMAC refers to the Economic and Monetary Community of Central Africa. Member countries include Cameroon, Chad, the species, and agricultural products (coffee, cotton, Central African Republic, Equatorial Guinea, Gabon, and the cocoa). Untapped resources include natural gas, Republic of Congo. ECCAS (the Economic Community of Central bauxite, diamonds, gold, iron, and cobalt. African States) is a wider grouping of Central African States and includes, in addition to the CEMAC countries, Angola, Burundi, the Democratic Republic of Congo, Rwanda, and Sao Tome and Seizing trade opportunities in the regional context Principe. could provide a good learning ground for becoming 2 ECOWAS (the Economic Community of West African States) includes Benin, Burkina Faso, Cape Verde, Côte d’Ivoire, Gambia, competitive on the world scene. The region seems to Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, offer promising markets for Cameroonian products, Senegal, Sierra Leone and Togo. 8 Cameroon Economic Update Figure 10: Public Debt, 2004–12 may not always be attractive for the country or be (in percent of GDP) easily analyzed. 70 The National Committee for Debt Management has 60 become fully operational and its Technical Committee 50 is meeting regularly to discuss technical issues on 40 debt management. The authorities are strengthening 30 their analytical capacity to better analyze foreign 20 lending proposals and are making progress in the 10 preparation of a Medium-Term Debt Management 0 Strategy. Protection against operational risks has 2004 2005 2006 2007 2008 2009 2010 2011 2012 also improved with a more rigorous and secure debt Sources: Cameroonian authorities and Bank Staff calculations. recording system, ensuring safe backups of the databases. However, the legal framework governing borrowing. In this context, the authorities are actively debt management could be clarified and institutional using the room provided by the country’s low level responsibilities centralized. of public debt to tap non-traditional creditors and the nascent domestic capital market by issuing a Government bond and Treasury bills (Figure 10). More effective public spending These provide alternative sources of financing for the budget, complementing any possible shortfall in Cameroon could also try to increase the value of fiscal savings. the public money it spends. In many areas, public spending does not seem to be going where it Tapping the emerging domestic capital market could, could have the highest impact. Per student public however, also be a source of vulnerability. In this investment in primary education does not seem to be regard, efforts to create a liquid secondary market driven by the needs of classrooms, for instance (i.e. for Government bonds would help sustain investors’ the number of students by classrooms). According interest in future bond issues. Improvements in fiscal to the data from the project logbook ( Journal reporting would also foster investors’ confidence, des projets ), the departments where the number since it will make the Government’s fiscal position of pupils per classroom was the highest in 2011 more transparent. Furthermore, stronger project selection and preparation would contribute to Figure 11: Public Investment in Primary ensuring that the proceeds of new borrowing would Education (2012) vs. Number of Students be put at the most productive use. (2011) As the Government is turning to non-traditional 14 creditors and non-concessional external borrowing, 12 its debt management capacity would also need to 10 be strengthened, building on recent achievements. 8 6 The ongoing crisis in advanced economies offers in 4 this regard both opportunities and challenges. Banks 2 in advanced economies seem to be increasingly 0 interested in Cameroon’s economy, attracted by its 0 20 40 60 80 100 120 140 160 economic growth and low debt levels. At the same Number of students per classroom time, the financial conditions attached to these loans Sources: Cameroonian authorities and Bank Staff calculations. Recent Economic Developments 9 received the least investment per pupil the following decision to freeze retail fuel prices have steadily year (Figure 11). As we will see in the next chapter, a 3 increased and are the highest in the region (Figures 12 similar observation can be made in the health sector. and 13), putting pressure on other budgetary items that may be more conducive to growth or shared prosperity. Reducing the �scal burden of fuel subsidies Subsidies on petroleum products (excluding kerosene) benefit mainly the richest segment of the The composition of public spending could also be urban population: the richest 10 percent (Figures 14 examined to enhance its efficiency. In this regard, and 15). By contrast, subsidies on kerosene, used the increasingly significant burden represented by mostly for lighting, favor more the rural areas and subsidies, particularly fuel subsidies, is a source of are less biased, although the richest still benefit the concern. The costs in terms of GDP related to the most from this policy (Figure 16). Even in terms of people’s income (estimated by their consumption), fuel subsidies do not favor the poorest segments fiGUre 12: Cost of fuel subsidies, 2008–2012 (in percent of Gdp) fiGUre 14: distribution of fuel subsidies 4.0 by location 3.5 (in percent) 3.0 2.5 100 Urban Rural 2.0 80 1.5 1.0 60 0.5 40 0 2008 2009 2010 2011 2012 20 Sources: Cameroonian authorities, IMF Staff estimations. 0 Fuel (minus kerosene) Kerosene Sources: Cameroonian authorities and Bank Staff calculations. fiGUre 13: Cost of fuel subsidies — selected Countries, 2012 (in percent of Gdp) 4.0 fiGUre 15: distribution of fuel subsidies 3.5 (excl. kerosene) by income Group and 3.0 location 2.5 (in percent) 2.0 1.5 60 Urban Rural 1.0 50 0.5 40 0 Cameroon Congo Chad Equatorial Gabon Average 30 Guinea oil-exporters Sources : CEMAC member countries and IMF Staff estimations. 20 10 3 The project logbook covers public investment by project. Only 0 The 2 3 4 5 6 7 8 9 The 30–50 percent of the total investment of budget (deconcentrated poorest richest and decentralized spending, as well as some centralized expenditure) can be mapped geographically. Sources: Cameroonian authorities and Bank Staff calculations. 10 Cameroon eConomiC Update of Cameroon’s population, representing only about Figure 16: Distribution of Kerosene Subsidies 2 percent of their income (Figure 17). by Income Group and Location (in percent) Transport, public administration and forestry are the 12 most important consumers of petroleum products Urban Rural and thus the largest beneficiaries in absolute 10 terms of the freeze in fuel prices (Figure 18). The 8 transport sector accounts for 30 percent of total 6 intermediary fuel consumption (i.e. fuel not directly 4 used by consumers or exported), while the public 2 administration and forestry each account for about 0 15 percent. Agriculture, although representing a The 2 3 4 5 6 7 8 9 The poorest richest large share of economic activity and employment, is only a marginal consumer of fuel even when Sources: Cameroonian authorities and Bank Staff calculations. the transport of agriculture products is taken into account (1.3  percent of total intermediary fuel consumption). Figure 17: Fuel Subsidies as Share of The need for these subsidies, as well as the various Consumption by Income Group (in percent) possible options to reduce the budgetary burden they represent, should be openly and candidly discussed. 5 As highlighted by other countries’ experience (Box 1), 4 a comprehensive and carefully planned approach is essential. The context and constraints to reform 3 should be appropriately analyzed and understood 2 before making any decisions on the sequencing, 1 timing, and extent of price changes. Consultations with stakeholders and the population at large should 0 The 2 3 4 5 6 7 8 9 The also be undertaken to determine an acceptable and poorest richest sufficient package of compensatory measures and Sources: Cameroonian authorities and Bank Staff calculations. avoid surprises. In this regard, interviews and discussions with focal Figure 18: Fuel Consumption by Sector (in percent of total intermediary fuel consumption) groups undertaken in Cameroon on the subject of fuel subsidies have revealed a very low level of knowledge on the issue. This would suggest that a significant effort is still required to communicate both the cost Other Transport and benefits of the current subsidy policies, and the 37% 30% importance of reform, notably in terms of fiscal space available for public investments. A phasing out of fuel subsidies would create the fiscal space for urgently needed investments in other sectors. Reallocating the Public CFAF 430 billion (3 percent of GDP and 17 percent of Agriculture Administration 1% Forestry 16% total Government revenue) projected to be spent on 14% Fishing fuel subsidies in 2013 to sectors such as education or 2% health could significantly improve the living conditions Sources: Cameroonian authorities and Bank Staff calculations. Recent Economic Developments 11 Box 1: Reforming Fuel Subsidies - Selected Case Studies Indonesia (1997-2005) Context: Reforming fuel subsidies has been a persistent policy challenge in Indonesia. Indonesia has attempted to tackle subsidy reform a number of times to improve the fiscal position and achieve other policy objectives such as improving energy efficiency and protecting the environment. Reforms since 1997: The first two attempts of cutting subsidies in 1998 and 2003 were unsuccessful. Drastic cuts instead of a gradual approach, poor communication and general dissatisfaction with the Government led to violent protests and the measures were finally rolled back. Concerned over the increasing fiscal pressure from fuel subsidies, the Government undertook two large fuel price increases in 2005. As a result, the price of diesel fuel doubled and that of kerosene nearly tripled. Protests again took place in opposition to the reform, but with less intensity than before. The Government was led by President Yudhoyono who was first elected in 2004 and won a convincing reelection in 2009. Mitigating measures: The 2005 reforms were accompanied by unconditional cash transfers for the poor which covered 19.2 million households (35 percent of the population). Other measures included the health insurance for the poor program, school operational assistance program, and expanded rural infrastructure support project. A number of analyses have credited the reduced intensity of protests in 2005 to the creation of these welfare programs. Lessons: A rapid reduction in subsidies can generate opposition to reform, while a popular Government and a clear communication strategy increase the likelihood of success. Targeted cash transfers have proved to be effective and popular mitigating measures. Philippines (1996) Context: The Philippines are a net oil importer. Until the late 1990s, the downstream oil sector was heavily regulated, resulting in price subsidies of fuel products when international oil prices rose. The Oil Price Stabilization Fund (OPSF) stabilized domestic prices of fuel products by collecting or paying out the difference between regulated domestic prices and actual import costs. Increases in domestic prices were politically difficult to implement. As a result, the national Government had to replenish regularly the OPSF. Reforms: Initially, the political environment was not conducive to a fuel subsidies reform, because President Ramos had won the election only by a small margin and his party was a minority in both chambers of Congress. Nevertheless, a public communication campaign began at an early stage and included a nationwide road-show to inform the public of the problems of oil price subsidies. While the president‘s party was a minority in Congress, he set up a coordination body between the executive and the two chambers of Congress and used it to prioritize the oil deregulation bill and forge consensus on it. In 1996, the Government passed the law to abolish the OPSF and allow the prices to move freely. The industry remains liberalized today and movements in international oil prices have been passed through onto domestic prices. Mitigating measures: The 1996 law included a transition period during which fuel product prices were adjusted monthly using an automatic pricing mechanism. During this period, the Government provided transfers to the OPSF to absorb price increases in excess of a threshold. More recently, the authorities announced several measures to mitigate the impact of the food and fuel crisis in mid-2008. The Government launched a package of pro-poor spending programs that are financed by windfall VAT revenue from high oil prices. The policy package included electricity subsidies for indigent families, college scholarships for low-income students, and subsidized loans to convert engines of public transportation to less costly LPGs. In addition, the Government distributed subsidized rice to low-income families and started a conditional cash transfer program. Lessons: The Philippines’ experience underscores the importance of planning, persistence, and a good communication plan in achieving a successful outcome. The survival of the reform to date can be attributed due to its comprehensiveness and mitigating measures for the poor during the 2008 fuel price hike which helped maintain popular support. Source: International Monetary Fund (2013a). 12 Cameroon Economic Update of Cameroon’s people, its human capital, and its would be observed in transport, fishing, and forestry productivity. The effect on the overall price level would (7.5 percent, 7 percent and 5.2 percent, respectively). also be limited. The effects of alternative scenarios could be worked An increase in fuel prices could have direct and out. Assuming these same increases as above for all indirect effects on the cost of living for households. petroleum products except kerosene would suggest a Directly, households are affected through their own one-time overall price adjustment of about 2 percent. consumption of gasoline or kerosene. Indirectly, they Because subsidies for kerosene do not account for the are also affected since petroleum products are used bulk of the fiscal costs, excluding them from a price as intermediary products in many sectors and their adjustment would not erode much the potential fiscal higher price will feed into the price of the final good savings of this action. This scenario would generate produced by these sectors. fiscal savings of about CFAF 350 billion (2.7 percent of GDP). Yet another example where the prices for all To capture both these effects, the interdependence of petroleum products except again kerosene would rise sectors needs to be taken into account and a Social by CFAF 150 would lead to a one-time overall price Accounting Matrix (SAM) multiplier analysis has adjustment of only 1.1 percent, but save the budget been used for this purpose. A SAM is an input-output about CFA 210 billion (1.6 percent of GDP). table, representing the transactions being carried out between sectors for a given year. It describes These one-time price adjustments could be further all the income received and expenditures made by contained through accompanying measures. The households and various sectors, thus capturing the price structure for petroleum products contains for linkages within the economy. instance a number of taxes that could be revisited and simplified. Furthermore, as mentioned in last Using this framework, the hypothetical effect on year’s July issue of the Cameroon Economic Update, prices of several scenarios for fuel price reform can over-regulation plagues the transport systems in be simulated for illustrative purposes. Removing all Cameroon. Transport prices charged to shippers tend fuel subsidies, for instance, would imply an increase to be disconnected from the actual vehicle operating of 43 percent, 55 percent, and 105 percent for costs. The system seeks to protect existing transport gasoline, diesel, and kerosene, respectively, and lead to a one-time adjustment of about 3 percent in the overall price level (Figure 19). The highest increases Figure 20: Average Transport Prices: A Global Comparison, 2007 (in US cents per tkm) Figures 19: Price Changes by Product Africa: Douala-N’Djamena (in percent) Africa: Mombasa-Kampala 8 Africa: Lome-Ouagadougou 7 6 Africa: Durban-Lusaka 5 West Europe Long Distance (France) 4 China 3 United States 2 1 Brazil 0 Pakistan Transport Fishing Forestry Machine Water Vehicle Agriculture Overall maintenance and maintenance products price 0 5 10 15 sanitation level Sources: Cameroonian authorities and Bank Staff calculations. Source: World Bank. Recent Economic Developments 13 operators at the expense of encouraging competition. average transport price on the Douala-N’Djamena Inefficient operators and aging truck fleets are thus corridor, for instance, is about 11 cents per ton Km: kept afloat, pushing down the quality of road transport almost double than that of China, three times higher services to the lowest level possible, since there is than in Brazil, and more than five times higher than in no incentive to offer better services. As a result, the Pakistan (Figure 20).4 4 Teravaninthorn and Raballand (2009). 14 Cameroon Economic Update HEALTH IN CAMEROON Introduction data on health generated in Cameroon, but there is little standardization, collection, consolidation, and Over the past two decades, Cameroon has achieved analysis. Health centers routinely fill in reports to the one of the smallest reductions in the under-five child district authorities which are officially in charge of data mortality rate in the world and life expectancy has even collection, planning, and monitoring and evaluation. In declined. The burden of health care financing is largely addition, donors and the regional MOH administration born by households and risk-pooling mechanisms regularly request reports on health activities. This are quasi-inexistent. The limited public resources routine data is, however, rarely compiled at the allocated to health do not seem to be deployed where national level. As a result, Government and donors they are the most needed. As a result, substantial rely on ad hoc and punctual surveys such as national disparities exist in health outcomes between rural and household survey or Demographic and Health urban areas, as well as across socio-economic groups, Surveys (DHSs) to assess and measure outcomes in thereby perpetuating poverty and vulnerability. Cameroon’s health sector. In light of the aim of making Cameroon an emerging This chapter draws on the recently-completed economy, the lack of progress in health outcomes Country Health Status Report for Cameroon and is should be a source of concern. The role of human able to describe Cameroon’s health profile, discuss capital has been recognized as being indispensable the resources allocated to health (financial and to economic growth. Good health raises human capital staffing), and suggest some options going forward. and therefore the economic productivity of individuals The introduction of program budgeting in 2013 should and, thereby, the economic growth rate of the country improve the efficiency of public spending, narrowing as a whole. Better health increases workforce the gap between needs and budgetary allocations. productivity, whether skilled or unskilled, by improving In addition, a more effective data collection and general physical and mental capacities, such as vigor, management system would be called for; prepayment cognitive functioning and reasoning ability, and by and risk-pooling mechanisms such as mutual health reducing illness and incapacity. Furthermore, good organization and mandatory formal sector insurance health helps improve levels of education by increasing may need to be extended; and approaches rewarding levels of schooling and scholastic performance. performance currently being piloted in Cameroon Without a labor force with the minimum levels of could be rolled out further. education and health, an economy is not able to sustain an appropriate and continuous growth path. Cameroon’s Health Profile The availability of appropriate and timely data on health is problematic in Cameroon. No annual Over the last two decades, there has been little report on health statistics has been produced in change in Cameroon’s health indicators. The over a decade. This does not mean that there is no under-five child mortality rate has slightly improved. Cameroon Economic Update 15 About 16 more children out of every 1,000 survive economically comparable (Figures 23 and 24). For their first five years in Cameroon than two decades instance, Cameroon has one of the highest under-five ago. This slight progress pales, however, compared child mortality rates in the world (122 deaths per to an average of 65 additional children surviving in 1,000 live births), exceeding the average in developing Sub-Saharan Africa (Figure 21). Life expectancy in Sub-Saharan Africa (108 deaths per 1,000 live births) Cameroon has even declined since 1990 by about two with malaria, pneumonia and diarrhea being the main years, while countries in Sub-Saharan Africa have on causes of death. Similarly, its maternal mortality ratio average gained about five years (Figure 22). is also higher than the average for Sub-Saharan Africa and has increased substantially over the past decade. As a result, Cameroon’s health indicators lag behind The ratio is slightly higher than those observed in those of the rest of Sub-Saharan Africa and behind countries such as Liberia and Sudan, and even higher those observed in countries to which Cameroon is than neighboring CAR and Chad. Pregnancy and Figure 21: Changes in Under-5 Child Mortality Figure 23: Under-5 Child Mortality, 2011 Rates, 1990–2010 (per 1,000 live births) (per 1,000 live births) 140 0 120 –10 100 –20 80 –30 –40 60 –50 40 –60 20 –70 0 –80 Cameroon Sub-Saharan Africa (developing only) Low income countries Lower middle income countries Middle income countries –90 CAR Cameroon Burundi Ghana Lower middle income Burkina Faso Low income Sub-Saharan Africa Senegal Benin Nigeria Sources: World Development Indicators, Bank Staff calculations. Source: World Development Indicators. Figure 22: Changes in Life Expectancy Figure 24: Maternal Mortality, 2010 at Birth, 1990–2010 (per 100,000 live births) (in years) 800 8 700 600 6 500 4 400 2 300 200 0 100 –2 0 Cameroon Sub-Saharan Africa (developing only) Low income countries Lower middle income countries Middle income countries –4 Cameroon CAR Cote d'Ivoire Burundi Sub-Saharan Africa Senegal Nigeria Lower middle income Low income Burkina Faso Benin Ghana Sources: World Development Indicators, Bank Staff calculations. Source: World Development Indicators. 16 Cameroon Economic Update childbirth remain significant risk factors for mortality: 2004, although the share of children significantly One woman dies every two hours from complications below the average has increased in the poorest from pregnancy or childbirth, and one pregnancy out quintile (Figure 27). Despite this progress, mortality of 127 is fatal. levels remain substantially higher, however, among the poor and in the rural areas (Figures 28 and 29). Within Cameroon, substantial disparities exist in For instance, the under-five child mortality rate in health outcomes between rural and urban areas and households in the poorest quintile (i.e. the poorest across socio-economic groups. According to data 20 percent of households) is more than twice as high from DHS, progress has been made between 2004 as that observed in households in the richest quintile. and 2011 in reducing infant mortality rates both in rural and urban areas, and across income levels At the regional level, a similar story can be told. (Figures 25 and 26). Reductions in under-five child Significant progress has been made to reduce infant mortality rates have been most pronounced in the and under-five child mortality in many regions, but middle quintiles. Indicators of malnutrition (height major geographic discrepancies remain (Figures 30 and weight for age) also suggest that the nutritional and 31). The greatest reductions in child mortality status of the population has overall improved since were observed in the East (90 per 1,000 live births) Figure 25: Changes in Infant Mortality Rates Figure 27: Changes in Malnutrition, 2004–11 by Location, 2004–2011 by Socio-economic Status (per 1,000 live births) (in percent below -2SE) Infant Mortality Under 5 Mortality 10 0 5 –10 0 –20 –5 Urban Rural –10 Height-for-age Weight-for-height Weight-for-age –30 Poorest quintile Second Middle Fourth Richest quintile Sources: DHS-MICS (2011), DHS (2004), Bank Staff calculations. Sources: DHS-MICS (2011), DHS (2004), Bank Staff calculations. Figure 26: Evolution of Under 5 Mortality Figure 28: Infant Mortality Rates By Rates by Socio-economic Status, 2004–11 Location, 2011 (per 1,000 live births) (per 1,000 live births) 200 The poorest Q2 Q3 Q4 The richest 0 –5 150 –10 Urban Rural –15 100 –20 –25 50 –30 –35 0 Infant Mortality Under 5 Mortality Sources: DHS-MICS (2011), DHS (2004), Bank Staff calculations. Sources: DHS-MICS (2011), Bank Staff calculations. HEALTH IN CAMEROON 17 Figure 29: Under 5 Mortality Rates by Figure 31: Under 5 Mortality by Region, 2011 Socio-economic Status, 2011 (per 1,000 live births) (per 1,000 live births) 250 200 200 150 150 100 100 50 50 0 North-West Douala Yaoundé East West South Littoral (excl Douala) Centre (excl Yaoundé) South-West Adamawa Far North North 0 The poorest Q2 Q3 Q4 The richest Sources: DHS-MICS (2011), Bank Staff calculations. Sources: DHS-MICS (2011), Bank Staff calculations. Similar observations can be made in terms of utilization of health services. While the use of pre-natal Figure 30: Changes in Under-5 Child Mortality health service is close to 100 percent for the richest by Region, 2004–11 quintile of the population, it is below 60 percent for (per 1,000 live births) the poorest. The richer you are, the more likely you 20 are to benefit from delivery assisted by a qualified 0 professional (nurse and/or doctor). The poorest are –20 more likely to be assisted by a friend or a traditional –40 midwife. Coverage for assisted deliveries among the richest quintile is almost five times higher to that –60 observed in the poorest quintile (Figure 32). –80 –100 East South Yaoundé North-West West Far North South-West North Littoral (excl. Douala) Adamawa Douala Centre (excl. Yaoundé) Figure 32: Assisted Deliveries by Socio-economic Status, 2011 (in percent) Sources: DHS-MICS (2011), DHS (2004), Bank Staff calculations. 100 80 and the South (50 per 1,000 live births), while the rate 60 hardly changed in Douala5. Child mortality remains 40 nevertheless extremely high in the poorest parts of 20 the country, such as the North or the Far North, where 0 close to 20 percent of the children born die before Poorest Second Middle Fourth Richest their fifth birthday (191 deaths and 168 deaths per quintile quintile 1,000 live births in the North and the Fart North, respectively). Source: DHS-MICS (2011). Geographically, the Northern Regions have the fewest 5 Changes in under-five mortality rates between 2004 and 2011 may be over-estimated for the Eastern region because of sample assisted deliveries (Figure 33). Between the two most size constraints in that region in the 2011 DHS-MICS. recent DHS surveys (2004 and 2011), the percentage 18 Cameroon Economic Update fiGUre 33: assisted deliveries by fiGUre 34: percentage children aged region, 2011 12–23 months fully vaccinated, 2011 IBRD 40106 (in percent) CAMEROON 12° E 14° E Lake Chad 16° E VACCINATIONS, 2011 0 40 80 120 160 Kilometers 100 30.9 EXTREME NORD 0 40 80 120 Miles 35.2 SUD 38.1 NORD 80 12° N 12° N 47.3 EST 51.6 CENTRE (EXCLUDING YAOUNDÉ) 53.7 ADAMAOUA 60 63.7 OUEST 66.3 LITTORAL (EXCLUDING DOUALA) EXTREME CH A D 75.2 SUD-OUEST NORD 82.5 NORD-OUEST Maroua 40 PROVINCE CAPITALS N I G E R I A NATIONAL CAPITAL 10° N 10° N PROVINCE BOUNDARIES 20 INTERNATIONAL BOUNDARIES Garoua Bé 8° E 10° E no 0 ué This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any NORD Douala West Littoral (excl. Douala) North-West Yaoundé South South-West Center (excl. Yaoundé) East Adamawa North Far North endorsement or acceptance of such boundaries. Fa ro 8° N 8° N a Vin Ngaoundéré ADAMAOUA m ére NORD- Dj OUEST 6° N Bamenda 6° N Source: DHS-MIS (2011). Mb u SUD- om Bafoussam L OUEST OUEST C E N T R AL A F R I CA N Mbam Sana ga R E PUBL I C CENTRE Kadei Bertoua i ur Wo LITTORAL EST of childbirth deliveries that were assisted by a health Buéa 4° N 4° N Douala YAOUNDÉ EQUATORIAL Nyong professional increased on average from 61.7 percent GUINEA Bou mba Ebolowa to 63.6 percent. In the Far North, however, only SUD Dja Kom 21.8  percent of births were attended by skilled 2° N G ulf of 2° N G uine a EQUATORIAL GABON personnel, compared to 93 percent in the Littoral and GUINEA 10° E 12° E 14° E CONGO 16° E GSDPM Map Design Unit 91.6 percent in the West. JUNE 2013 Substantial differences in maternal mortality also preventing individuals from falling into poverty as the show that pregnancy-related deaths are substantially result of catastrophic unplanned medical expenses, higher in rural than in urban areas. Women and and protecting and improving the health status of newborns in poor and rural communities have a populations by ensuring financial access to these higher risk of death and higher chances of early essential services. childbirth (young people aged 10 to 24 in these segments of the population have a 33 percent The way health care is financed affects the overall pregnancy rate). Similarly, as shown in Figure 34, performance of health systems. Direct purchasing the proportion of children aged 12–23 months with full immunization varies from 30.9 percent in the Far of health services when needed by an individual North to 82.5 percent in the North West. (user fee) is a driver of inequity, as it depends on this individual’s wealth. This effect can be mitigated, however, through prepayment mechanisms such Resource Allocation as health insurance, pooling the risk at the level of a group of contributors. Alternatively, public spending Why are there such great variations in health financed by general taxation and external support outcomes across geographic locations and socio- could fund the delivery of health services and facilitate economic status? An efficient and well-performing cross-subsidization from the wealthy to the poor. health system should ensure that individuals have access to effective preventive and curative health In light of the poor results in health indicators, care. A good health care financing strategy would Cameroon overall spends quite a lot compared thus aim at reducing inequalities in access to services, to Sub-Saharan African countries (Figure 35). HealtH in Cameroon 19 Figure 35: Health Expenditure, 2010 Figure 36: Public Health Expenditure, (in US$ per capita) Selected Countries, 2010 80 (in percent of GDP) 70 4.5 60 4.0 50 3.5 3.0 40 2.5 30 2.0 20 1.5 10 1.0 0 0.5 DRC Ethiopia CAR Burundi Mozambique Gambia Chad Benin Kenya Burkina Faso Sub-Saharan Africa* Senegal Cameroon Nigeria Ghana Cote d’Ivoire 0.0 Cameroon Nigeria Kenya Gabon CAR Benin Ethiopia Sub-Saharan Africa Low & middle income Ghana Burundi Senegal Mozambique Burkina Faso Source: World Development Indicators. * excluding South Africa, Somalia and Zimbabwe. Source: World Development Indicators. Cameroon spends US$61 per person on health, only US$ 17 (i.e. 28 percent — of which US$ 8 were above the average for Sub-Saharan Africa excluding provided by international donors). Compared to South Africa (US$ 51), and in line with countries other CEMAC countries, Cameroon has been for the such Senegal and Nigeria. These numbers include last decade the country that has allocated the lowest spending in health sector from Government, external share of its public spending to health (Figure 38). The donors, and private sources (i.e. out-of-pocket cost of health care is thus largely borne by households payments from beneficiaries). and Cameroon has one of the highest levels of direct payments from the users (out-of-pocket) relative to Public spending in the health sector in Cameroon total health expenditure in all of Sub-Saharan Africa. is, however, low. While public resources allocated to Out of 37 countries in Africa with available data for health have progressively increased over the past 2009, Cameroon had the fifth highest level of out-of- ten years, they remain one of the lowest in Africa pocket spending relative to total spending (Figure 39). in terms of GDP (Figure 36) at 1.5 percent of GDP. Relative to the total budget of the Government, the share allocated to the health sector in Cameroon also falls below the average of Sub-Saharan African Figure 37: Public Health Expenditure, countries and has only recently moved above the 2001–10 (in percent of Budget) average of CEMAC countries (Figure 37). The budget 16 share allocated to health in Cameroon also falls short of the WHO recommendation of 10 percent, as well 14 as of its Abuja commitment. The Government of 12 Cameroon pledged in 2001 in Abuja, along with other 10 members of the African Union, to allocate 15 percent 8 of its annual budget to the health sector. In spite of 6 this, public spending for health over the last decade 4 has never exceeded 9 percent of the total budget. 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Abuja commitment WHO target Sub-Saharan Africa As a result, out of the US$61 per Cameroonian spent CEMAC Cameroon on health in 2010, the Government contributed Source: World Development Indicators. 20 Cameroon Economic Update fiGUre 38: public Health spending, selected fiGUre 40: sources of Household Health Countries, 1995-2012 Care financing, 2011 (in percent of total health expenditure) (in percent) 60 80 60 40 40 20 20 0 0 The richest Fourth Middle Second The poorest 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Salary/liquid funds Loan (with & without interest) Low & middle income Sub-Saharan Africa Savings Sale of goods or animals Cameroon CEMAC Sources: DHS-MICS (2011), Bank Staff calculations. Source: World Development Indicators. Usually when user fees are charged, all patients Indicator Cluster Survey (DHS-MICS), among pay the same price regardless of their capacity to households who sought any type of health care, the pay. Consequently, the risk of financial catastrophe poorest income quintile was eight times more likely and impoverishment is high. When prepayment to cover medical expenditures through the sale of mechanisms are not available and patients pay at the household goods than the richest quintile (Figure 40). point of service, the sick bear all of the financial risks associated with paying for care. The user must decide One way to reduce reliance on direct payments is to if he can afford to receive care, and often for poor encourage risk-pooling and prepayment methods to households this means choosing between paying for finance health care. Risk-pooling mechanisms are, health services and paying for other essentials, such however, quasi non-existent in Cameroon. In 2006, as food or education. Often households are forced to there were 120 micro-insurance schemes covering sell household goods or livestock in order to cover approximately one percent of Cameroon’s population. the cost of health services. According to the 2011 Since then, Cameroon has put in place a Strategic Cameroon Demographic and Health Survey-Multiple Plan for the Promotion and the Development of fiGUre 39: out-of-pocket Health expenditure, 2009 (in percent of total health expenditure) 90 80 70 60 50 40 30 20 10 0 Namibia Botswana Equatorial Guinea Mozambique South Africa Lesotho Djibouti Rwanda Cape Verde Zimbabwe Liberia Senegal Zambia Burkina Faso Burundi Ghana Average SSA Niger Benin Guinea-Bissau Ethiopia Tchad Congo Kenya Gabon Uganda Eritrea Togo Cameroon Sudan Côte d'Ivoire Sierra Leone Guinea Mali CAR Source: World Development Indicators. HealtH in Cameroon 21 Mutual Health Insurance (2005–2015), which Even when public resources are allocated, available aims to cover 40 percent of the population by 2015 data suggest that they may not be deployed where through mutual health insurance schemes, but little they are most needed. According to the data from the progress has been made with only one percent of DHS and from the project logbook, for instance, public the population being covered in 2010. Here, also, investments do not seem to be related to the needs important regional disparities can be observed, with of the population. Regions where under-five child health insurance coverage in the North-West about mortality was high in 2004, for instance, received on thirty times higher than in the East (Figure 41). average less investment in health in per capita terms during 2010–12 (Figure 42).6 The same observation can be made with regards to assisted deliveries: Figure 41: Health Insurance Coverage, 2009 regions with lower rates of assisted deliveries in (in percent of population) 2008 received, on average, less public funding in 3.5 subsequent years (Figure 43). 3.0 2.5 2.0 Figure 42: Public Investment in Health 1.5 (average 2010-12) vs. Child Mortality (2004) 1.0 by Regions 0.5 0.06 0.0 West North-West Adamawa South-West West Littoral South Centre Far North North East Total 0.05 0.04 South-West North-West Sources: Etude Diagnostique des Mutulles de Sante au Cameroun 0.03 Littoral South (2010), Bank Staff calculations. 0.02 Center 0.01 Several factors contribute to the low coverage and Adamawa Far North East North sustainability of these schemes. Information and 0 50 70 90 110 130 150 170 190 210 230 awareness among the beneficiary populations are not Under 5 Child Mortality (per 1,000 live births) widespread. Membership is low and in turn revenue collection is limited. Relations with contracted health Sources: Cameroonian authorities and Bank Staff calculations. care providers are poor. In addition, financial and technical support as well as leadership from the A similar story unfolds regarding health personnel. associated ministries tends to be limited. Cameroon enjoys one of the highest densities of nurses and doctors in Sub-Saharan Africa (Figure 44). Longer-term plans for expanding prepayment and With 1.9 doctors per 10,000 people, for instance, incorporating community and micro-insurance Cameroon is significantly above the average of into the broader pool are also important. Pools that 1.3 doctors per 10,000 people in Sub-Saharan Africa. protect the health needs of only a small number of The country has also almost twice as many doctors people are not viable in the long run. A few episodes as the minimum recommended by the WHO (1 doctor of expensive illness will wipe them out. Multiple pools, per 10,000 people). The main issue regarding each with their own administrations and information systems, are also inefficient and make it difficult to achieve equity. Usually, one of the pools will provide high benefits to relatively wealthy people, who will 6 These numbers take also into account each region’s area to recognize that providing a given service to a population sparsely not want to cross-subsidize the costs of poorer, less scattered will cost more than if the population was more densely healthy people. concentrated. 22 Cameroon Economic Update Figure 43: Public Investment in Health Figure 45: Health Staff — Regional (average 2010-12) vs. Assisted Deliveries Distribution, 2011 (2008) by Regions (in percent of total) 50 0.06 Nurses Doctors 40 West 0.05 30 0.04 South-West 20 0.03 South North-West 0.02 Littoral 10 Far North East Center 0.01 0 Adamawa Center Littoral West Far North South West North North-West East Adamawa South North 0 0 10 20 30 40 50 60 70 80 90 100 Assisted Deliveries (in percent of total) Source: Cameroon Health Workforce Census (2011). Sources: Cameroonian authorities and Bank Staff calculations. human resources in the health sector is thus not the 18 percent of the population, accounts for almost numbers, but their distribution across the country. 40 percent of the physicians. On the other hand, the Far North, which is also home to 18 percent of the The distribution of health professionals is highly population, has only eight percent of physicians. In urban-focused and varies significantly by region addition, absenteeism in Cameroon is a problem, (Figures 45 and 46). The majority of physicians in especially in rural remote areas, and contributes to the country are based in urban areas and more than the migration of health personnel towards urban half of Cameroon’s health workforce is employed in centers. Data from a recent World Bank study (2012a) three administrative regions: the Center, Littoral and showed that only 32 percent, 45 percent and 58 percent the West, which are home to the three largest cities of health facilities in the South-West, North-West and in Cameroon (Yaoundé, Douala, and Bafoussam). East regions, respectively, operated with full staff on The Center Region (including Yaoundé), home to only the day of the survey. Figure 44: Physician Density, Selected Countries, 2009 (per 10,000 people) 10 8 6 4 2 0 Mali DRC CAR Liberia Sierra Leone Malawi Niger Ethiopia Rwanda Mozambique Burundi Chad Guinea-Bissau Lesotho Eritrea Togo Zambia Senegal Benin Burkina Faso Ghana Congo Guinea Uganda Average SSA Kenya Côte d'Ivoire Zimbabwe Cameroon Gabon Botswana Namibia Cape Verde South Africa Physicians density (per 10,000 population) WHO recommendation (minimum) Source: World Development Indicators. HEALTH IN CAMEROON 23 Figure 46: Number of Doctors by Incentives for health staff to work in difficult Region, 2011 environments or to perform are limited. Even though (per 10,000 people) bonuses to health staff are provided, they are based 2.5 on skills (i.e. training) and vary based on grade and Public Private years of services rather than performance. Similarly, 2 there are limited career options or opportunities 1.5 for career development working in rural areas. In fact, being far from urban centers tends to have a 1 negative impact on promotion opportunities. Overall, 0.5 health staff are therefore better off working in urban centers, where living conditions are better, salary 0 and premium identical, and the chances of being North-West Far North Adamawa North South-West East West South Littoral Center promoted higher relative to staff in rural areas. Sources: Cameroon Health Workforce Census (2011), Bank Staff Financial incentives are, however, not the only driver calculations. of motivation. A recent survey of health professionals conducted in the Center, North and East Regions of Cameroon showed that an increase of 50 percent Furthermore, the distribution of health workers does in salaries was not as important as good working not seem to follow health needs. Looking at the infant conditions, i.e. the availability of equipment and mortality rates across regions in 2004 and the density material (Figure 48).7 Were health workers, doctors of health workers (measured as a ratio to population) and nurses to be given appropriate equipment and in 2011, density is the lowest in the regions where supply of medicine, they would be more than twice health outcomes are the poorest (Figure 47). The more likely to choose a rural posting than without this North, Far North and Adamawa Regions had the incentive. Rewarding working in difficult conditions highest infant mortality rates in the country, but some by accessing training and offering opportunities to of the lowest densities of health workers. progress career-wise is also an important factor of motivation to ensure retention and service delivery in remote areas. Figure 47: Under 5 Child Mortality Rate (2004) Figure 48: Preferences for Rural Job Postings vs. Health Personnel Density (2011) (odd ratios) 18 2.5 Center 16 2 14 Littoral West 1.5 12 South East South-West 1 10 Adamawa North 0.5 8 6 0 North-West Far North 25% Bonus Infrastructure 50% Bonus Lodging Urban Transfer Accessibility Career Development 4 90 110 130 150 170 190 210 Under 5 Child Mortality Rate (per 1,000 live births, 2004) Sources: Cameroonian authorities and Bank Staff calculations. Sources: Cameroonian authorities and Bank Staff calculations. 7 The survey covered 351 health professionals (doctors and  nurses) and medical students. 24 Cameroon Economic Update Options for Going Forward Production and use of high quality data Program Budgeting In this new budget environment, one major challenge for Cameroon will be to ensure that resource allocation in the health sector is evidence- The introduction of program budgeting starting in based. Setting up an effective data collection and 2013 should improve efficiency of public spending. management system would be critical to help The new approach places the line ministries at the decision-makers monitor health outcomes more center of the budget cycle. These ministries will have regularly, and ensure that budgetary allocations now more flexibility in preparing and executing their are based on needs and performance. Data to budgets, but will also be held accountable for results. be collected would have to be prioritized and As such, program budgeting addresses many of the standards provided for, to ensure that the additional critical short-comings that have affected the country’s data collected by external actors are comparable public expenditure management in the past: excessive and usable. A well-designed functioning health centralization of the budget processes, leading to low management information system (HMIS) would not budget execution and poor strategic allocation of only enable the Ministry of Public Health to design resources; and poor value-for-money and quality of evidence-based policy and be reactive to unforeseen service delivery. shocks (e.g. capturing early signs of epidemic), but also assess implemented policies. Cameroon Economic Update 25 In Rwanda, Burundi and Burkina Faso, for example, Risk-sharing mechanisms and access the Ministries of Health are able to maintain an for the poor up-to-date HMIS thanks to the use of incentives and sanctions for the generation and use of HMIS data Cameroon could take steps towards designing at the health facility, district and sub-national levels. policies that foster access by the poor to health- Health facilities receive poor performance points enhancing services and protect the poor from and even financial sanctions if they do not submit catastrophic health spending. The extension of their monthly HMIS report on time. Management of prepayment and risk-pooling mechanisms such facility-level data is a key criterion in the evaluation as mutual health organizations, mandatory formal of the performance of managers. sector insurance and potentially cross-subsidization Box 2: More Health for Every Dollar: Results-Based Financing What is Results-based financing? Results-Based Financing (RBF) is an instrument that links financing to pre-determined results, with payment made only upon verification that the agreed-upon results have actually been delivered. RBF for health refers to any program that transfers money or goods to either patients when they take health-related actions (such as having their children immunized) or to healthcare providers, when they achieve performance targets (such as immunizing a certain percentage of children in a given area). What Makes Results-based Financing different? Traditionally funding for health has been directed toward inputs—salaries, construction, training, equipment. Improved health was assumed to follow, but this has not always happened. Despite billions of dollars over the last decade, many countries in Africa are still falling short, particularly in areas that require a functioning health system. Sub-Saharan Africa, for instance, has the highest rate of maternal deaths in the world with an average of about 900 deaths per 100,000 live births. Child deaths and malnutrition are also serious problems. The fundamental issue is the poor performance of the public health care system, including low levels of physical access in some places; poor quality of care; a lack of adequate incentive structures for health workers; weak management; and inadequate data of sufficient quality to monitor and evaluate progress. Individuals must demand services; health workers must be motivated to deliver adequate care; and the institutions they work for must be encouraged to make the systemic changes required to achieve health goals. RBF flips the whole equation on its head, starting with the result—more children immunized, for example—and letting health workers and managers on the ground decide how to achieve them. The Potential of RBF A number of developing country experiences strongly suggest that RBF can work. There are currently three countries (Rwanda, Burundi and Sierra Leone) with nationwide programs and 14 countries with ongoing pilots. These programs help improve health; strengthen health systems; spur innovation, creativity and country ownership; and encourage reforms that confer authority and flexibility to local service-delivery levels, fostering problem-solving where it is most needed. When poor patients or households have been offered financial or material rewards for adopting health-promoting practices, they respond and health indicators improve. Similarly, when health workers and facilities are given bonuses upon achieving targets, those targets tend to be met. Results-based financing has also been shown to help to increase patient demand for health services. In addition to improving health, results-based financing can also contribute to strengthening a country’s health information system. Because accurate monitoring and evaluation of RBF schemes require the development of robust health information and management systems, incorporating the RBF concept, even into donor funds aimed at specific diseases, reinforces efforts to improve the timeliness, credibility and accuracy of national reporting and monitoring, thus contributing to improving the overall capacity of a country’s health system. Source: L. Morgan (2012) 26 Cameroon Economic Update between the two could contribute to reducing remoteness, allowing greater compensation to those financial risks associated with illness. serving in more remote or difficult areas. Second, the introduction of pro-poor financing In addition, more efficient approaches to purchasing mechanisms, such as conditional and unconditional services should be sought. In order to improve health cash transfers and vouchers for health services, could outcomes in rural areas of Cameroon, financing and payment mechanisms related to rural health improve equity and efficiency by increasing public worker recruitment and retention should consider a investments in health while reducing private spending common performance-based approach that improves by the poor. The introduction of voucher-type governance at the local level through transparent systems such as “kits obstétricaux� to subsidize the budgeting and allocation, personnel evaluation, monitoring of pregnancy are currently being piloted democratization of decision-making processes, in the Far North, North, Adamawa and East regions. patient-oriented services, improved reporting and verification, and financial incentives to health care providers. Getting the incentives right Results-Based Financing (RBF) has shown promising The national health workforce should be distributed preliminary results in health worker retention and in a manner that responds to the severe geographic service delivery outcomes in rural areas (Boxes 2 imbalances in health outcomes in Cameroon and and 3). This new approach to improve health service improve coverage of essential health services. The delivery outcomes is currently being piloted in the question is how to ensure health personnel will North-West, South-West, East and Littoral. In each region, performance contracts govern results- stay in rural areas. In this regard, health workforce based payments to facilities, including performance retention policies should include a combination of bonuses for health workers employed at contracted both monetary and non-financial incentives. The facilities. Currently over 400 primary and secondary package could include the provision and maintenance care health facilities have signed RBF contracts. of supplies and equipment for the delivery of a clearly defined set of basic services, in addition to The RBF strategy in Cameroon has adopted an salary bonuses for rural postings. Implementation of additional “equity bonus� mechanism, where health this policy may be more effective if health facilities facilities located in “difficult� zones receive up to were first classified according to varying levels of 50 percent higher payment levels for services Box 3: The Right Incentives Lead to Measurable Results in Rwanda In an effort to improve maternal and child health, Rwanda began paying for performance at the health facility level in 2006. At the time, health workers and facilities were in short supply (only 36 hospitals and 369 health centers in a country of nine million people, and only one doctor per 50,000 inhabitants). Many people lacked access to care, and the quality of care was often low. In 2001, three non-Governmental organizations working in Rwanda attempted to address the problem by raising health workers’ salaries. Nothing changed. Then they tried linking bonuses directly to performance — for example, if the health worker or facility could show that ten more women had given birth in a facility rather than at home where women risk dying from complication, they would receive a bonus. Paying for performance worked. Following three successful RBF pilots, the Government of Rwanda designed and implemented a nationwide RBF scheme, folding a rigorous impact evaluation into the roll out. Results released in 2009 revealed significant improvements in the deliveries and preventive care visits by young children. Source: F. Niyuhire (2010) HEALTH IN CAMEROON 27 provided. Such an approach responds to both Figure 49: Increase in Services in RBF improved financing incentives for health workers and Facilities, Littoral, 2011-12 provision of medical equipment and supplies, the (in percent) two job attributes identified as the most important in 25 employment decisions for health professionals, and 20 thus could be an important strategy to improving health worker recruitment and retention in rural areas. 15 10 In addition, results-based financing could contribute to improving health facility management practices. 5 By reinforcing transparency and providing health 0 facilities with autonomy to manage their own Health Children of Modern Pregnant Institutional facility 0-11 months contraception women VAT deliveries resources for investing in improved service delivery, utilization correctly acceptation vaccinated efficiency gains can be achieved through better targeted resource management at the local level. By Sources: Cameroonian authorities and Bank Staff calculations. paying for services that can be delivered at health centers (such as non-complicated deliveries), RBF allows hospital resources to be used for complicated care. contraception all have increased significantly in RBF facilities (Figure 49). In the North-West, South-West The evaluation of the first two years of implementation and Eastern regions of the country, a rigorous impact of RBF in Littoral was recently completed. Comparing evaluation of RBF is currently under implementation over a two-year period (2011-13) facilities where RBF to measure the impact of results-based financing on has been implemented with ones where no reform health outcomes. 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