The Political Economy of Improving Health Care for the Poor in Rural Africa: Institutional Solutions to the Principal–Agent Problem

Abstract

Both governments and private for-profit markets have been disappointing in meeting the needs of the African poor for health care. NGO services provide a much more attractive alternative for this clientele, despite the fees they charge. They do so because they represent an institutional solution to the ‘imperfect information’ problem in health care. Through simulations based on data from Cameroon, we demonstrate that if fee-charging NGOs replace the highly subsidised but poorly managed facilities operated by African governments the poor would be better off. Those NGOs that are decentralised in their financial and personnel management are most effective. The politics of making the recommended changes are assessed.

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