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96 Fighting the Diseases of Poverty
Table 3 Leakage rates for health care, selected countries
Country Year Leakage rate Type of expenditure
Ghana 2000 80% Non-salary budget
Peru 2001 71 “Glass of Milk” Program
Tanzania 1999 40 Non-salary budget
Uganda 2000 70 Drugs and supplies
Source: Lindelow, Kushnarova, and Kaiser, 2005
it was 60 per cent. Table 3 summarizes available evidence for the
health sector in four countries: Ghana, Peru, Tanzania and Uganda
where leakage is 70 per cent or higher in all but Tanzania. High
leakage means inadequate funding for non-salary spending, which
makes the job of service delivery exceedingly difficult and necessarily
imposes on patients to finance “free” health care through
financial or in-kind contributions. In Nigeria, Papua New Guinea,
Rwanda, Senegal, there is evidence of leakage but neither the levels
nor the sources of the problem have been determined. Leakages are
a reflection of delays and bottlenecks in budget execution and
supply management, poor record keeping and underutilization of
audits, as well as incompetence and criminal acts. Incomplete and
error riddled records complicate efforts to track financial flows,
which is why so few countries have comparable data despite the
number of country studies undertaken.
In the case of education in Uganda, informing the public of
expected school transfers and reporting receipt of funds to the community
led to dramatic increases in non-salary budgets. Effectively
the community monitored and pressured local officials to make sure
that funds were applied as intended (Reinikka and Svensson, 2004).
Informal payments
Informal payments can be defined as “payments to individual and
institutional providers, in kind or in cash, that are made outside
official payment channels or are purchases meant to be covered by
the health care system. This encompasses ‘envelope’ payments to