RESYST Working Paper 2: Providing financial protection and funding health service benefits for the informal sector: evidence from sub-Saharan Africa

April 2013
Jane Chuma, Stephen Mulupi, Diane McIntyre

In the context of initiatives to promote universal coverage, there is an emphasis on increasing prepayment funding for health services.  This paper aims to contribute towards debates on how best to promote financial protection and access to needed health care for those outside the formal employment sector (i.e. those who work in the informal sector, are unemployed or are not economically active) through prepayment funding, with a particular focus on the African context.  It reviews literature on alternative domestic prepayment funding mechanisms in relation to the three dimensions of universal coverage: population coverage, service coverage and cost coverage.

Key things to note from this review are the challenges of contribution arrangements for this population - even where legal provisions make membership mandatory. We recommend that additional health financing arrangements to cover poor and vulnerable groups (e.g. tax funding and innovative financing approaches) are adequately explored in terms of the principles of fair financing before countries move towards implementing contributory schemes for those outside the formal sector which, as indicated in this review,  have limited capacity to offer adequate financial risk protection to their members.

Financing Informal sector