By Dr Wondwosen Getaneh, Lead Expert on the Ethiopian Integrated Sustainable Financing Framework
Ethiopia’s health-financing challenge is now visible in primary healthcare delivery: medicine shortages, staffing gaps, weak facility readiness and uneven access to essential care. With external support becoming less predictable and domestic fiscal space under pressure, Ethiopia must move beyond asking for more resources and focus on preparing credible, costed and accountable health investments that can attract the right mix of public, concessional and responsible private finance.
Ethiopia unquestionably needs more resources for health. But money alone will not fill the gaps. The country must also become better at converting national health priorities into costed, implementable and accountable programmes that government, development partners and responsible private capital can support.
In other words, Ethiopia faces both a health-financing gap and a project-preparation gap.
This challenge is becoming more urgent. External health assistance is increasingly unpredictable, while debt pressures, conflict, climate shocks and the rising cost of essential imports are narrowing fiscal space. We cannot assume that the financing model which supported Ethiopia’s past health gains will remain available on the same terms.
In a country where many households are already under severe financial pressure, the answer does not lie in shifting the burden to Ethiopian families. Instead, Ethiopia needs a managed transition: one that mobilises more domestic resources, directs them towards evidence-led priorities, and uses them to anchor a credible pipeline of health investments.
There is significant scope to strengthen domestic revenue. Joint research by Ethiopia’s Ministry of Finance and the Institute for Fiscal Studies has found that the country’s tax-to-GDP ratio fell from 12.4% in 2014/15 to 7.5% in 2022/23. Global development advisory firm AfriCatalyst estimates that the annual tax gap could be between US$12 billion and US$14 billion.
This does not mean imposing broad new taxes during a cost-of-living squeeze. The immediate priority should be to collect existing taxes more effectively and fairly. Better registration, customs integrity, electronic fiscal systems, taxpayer services and compliance among those able to pay should come before new burdens on vulnerable citizens.
Mobilising revenue is only half the task. Additional fiscal space does not automatically become stronger primary healthcare, reliable medicine supplies or better maternal and child health. Between revenue collection and improved outcomes lies the difficult work of setting priorities, costing programmes, assigning responsibility and measuring results.
This is where the Ethiopian Integrated Sustainable Financing Framework, or E-ISFF, can play an important role by providing a mechanism for aligning public, private and international finance with Ethiopia’s development priorities.
Different forms of capital should perform different roles. Public revenue must finance essential public services; grants and concessional resources can support public goods and vulnerable communities; guarantees can reduce risk; and carefully governed private partnerships can provide appropriate infrastructure, technology and expertise.
Finance, however, will not align around broad aspirations. It aligns around priorities that are sufficiently prepared to inspire confidence. A health programme becomes investment-ready when it defines the problem, beneficiaries, costs, implementation model, institutional owner, risks, expected outcomes and accountability mechanisms.
This does not mean we should be trying to turn every health service into a commercial transaction. ‘Bankable’ should not mean profitable, privatised or debt-financed. It should mean sufficiently prepared to merit support from the institution best suited to finance it, including government itself.
Ethiopia could apply this approach in three areas.
First, the E-ISFF can help translate Ethiopia’s health priorities into actionable regional investment packages. These packages should integrate primary healthcare facilities, medicines, diagnostics, health personnel, infrastructure such as power and connectivity, and referral systems under transparent public ownership, with achievable timelines and clear service targets.
Second, Ethiopia can strengthen the systems that sustain health services. Investments in blood and tissue services, vaccine cold chains, emergency response, diagnostics, local pharmaceutical manufacturing, and digital logistics tools can reduce stockouts, waste, unnecessary referrals, and foreign-currency dependence. Such projects are attractive for concessional, results-based, and well-structured blended finance because their costs and benefits can be precisely measured.
Third, digital identification and payment platforms can streamline community-based health insurance, making enrollment, payments, and management easier. However, digital efficiency must be grounded in social protection: subsidizing poorer households, ensuring privacy and appeal processes, and guaranteeing access to essential care regardless of ability to pay.
Across all three areas, finance must follow national health priorities, and not the preferences of whichever funder or investor is available. Every arrangement should disclose its long-term costs, protect equitable access, and report results citizens can understand.
Ethiopia is using the E-ISFF to establish a health-investment preparation mechanism jointly led by the institutions responsible for finance and health. Its first task is to select a small number of national priorities, publish their costs and intended outcomes, and match each with the appropriate financing instrument.
What is critical is that government is taking the lead. Development partners should strengthen project preparation rather than create parallel agendas. Private partners should be engaged where they can deliver demonstrable public value. Citizens must be able to scrutinise the costs and results.
Ethiopia’s proposition is no longer simply: ‘We need more resources.’ It is: ‘Here are our priorities. Here is what they will cost. Here is the financing structure. And here is how the public will know whether we succeeded.’
The true measure of domestic resource mobilisation is not revenue collected, or finance committed. It is whether medicines are available, health workers are where they are needed, and families can seek care without being pushed further into poverty.