Countries like Tanzania and Malawi rely heavily on donor funding, while others like Nigeria and Ghana see a disproportionate burden on private spending. For instance, Nigeria’s health expenditure is 76% out-of-pocket, underscoring the financial strain on individuals and the need for systemic reform.

Innovation in Financing: Beyond the Traditional

To bridge the persistent health financing gap in Sub-Saharan Africa, there is a need for a comprehensive approach to innovative financing - leveraging non-traditional methods that mobilize domestic resources and enhance efficiency. These mechanisms fall into three key archetypes:

1. Government Funding Schemes: These involve strategic fiscal policies such as tax earmarking and levies. Nigeria’s sugar tax, which imposes NGN 10 per litre on sweetened beverages, is a prime example of using excise duties to fund health-related initiatives. Similarly, Rwanda has increased taxes on tobacco and alcohol to support expanded health insurance coverage for non-communicable diseases (NCDs). Zimbabwe’s AIDS levy - a 3% tax on corporate and income earnings - has been instrumental in sustainably financing the country’s HIV/AIDS response
2. Multi-sectoral Financing: This archetype focuses on pooling resources across public and private sectors. Mechanisms such as social and development impact bonds, public-private partnerships, and policies that attract private investment are central to this model. These approaches not only diversify funding sources but also foster shared accountability and innovation in service delivery.
3. Community-based Fundraising: Grassroots-driven models like crowdfunding platforms, lottery awards, sales-linked donations and structured diaspora health funding, empower communities to contribute directly to health initiatives. These mechanisms tap into local solidarity and can be particularly effective in addressing specific, time-sensitive health challenges.

By embracing these diverse financing models, countries can reduce overreliance on out-of-pocket spending and donor aid, while building more resilient and equitable health systems.

What Makes Innovative Health Financing Work?

IQVIA identifies three critical success factors for initiating and scaling innovative financing:

1. Strong Political Leadership and an Enabling Environment:: Governments must prioritize health and create policies that support innovative financing.
2. Transparency and Accountability: Stakeholders need confidence in how funds are used and the outcomes achieved.
3. Partnerships and Implementation Capabilities: Collaborations with trusted local actors and a robust infrastructure are essential.

The Role of Data: A Catalyst for Innovative Financing

IQVIA sees better data as a common denominator to achieve the above-mentioned critical success factors. Here are just three examples: