Public social spending in Africa: Do the poor benefit?" World Bank Research Observer 14

Education and health care are basic services essential in any effort to combat poverty and are often subsidized with public funds to help achieve that purpose. This paper examines the effectiveness of public social spending on education and health care in several African countries and finds that these programs favor not the poor, but those who are better-off. It concludes that this targeting problem cannot be solved simply by adjusting the subsidy program. The constraints that prevent the poor from taking advantage of these services must also be addressed if the public subsidies are to be effective. Public subsidies for social services such as education and health care rest on two basic policy objectives—efficiency and equity. Efficiency gains can be achieved when the subsidies produce external benefits or correct for a market failure. Equity is also an important objective of public spending. Education and health care, in particular, are understood to be basic services that are essential in any fight against poverty. The World Bank's strategy for poverty reduction, for example, combines broad-based growth with human capital development (World Bank 1990). And for that, public subsidies on investments that enhance human capital must benefit the poor. To what extent has public social spending in Africa been effective in reaching the poor? To answer this question, this article reviews the benefit incidence of govern-ment spending. It finds that government subsidies in education and health care are poorly targeted to the poor and indeed favor those who are better-off. Improving targeting to the poor involves not simply rearranging the public subsidies but also addressing the constraints that prevent the poor from accessing these services. The article examines these issues by reviewing the evidence on the benefit incidence of health spending in seven African countries and education funding in nine countries in the region