6.6 Approaches to improve the effectiveness of African animal health services

6.6.1 Cost recovery and the removal of subsidies
6.6.2 Privatisation
6.6.3 Organisational reform
6.6.4 Relevant exercises

It is impossible to define an optimal staff:non-staff expenditure ratio, since the conditions determining it vary from one country to the next. However, the evidence suggests that a ratio of 1:1 is generally desirable. In order to achieve such a ratio without reducing staff, a budget with a current ratio of 3:1 would have to be increased by 50% and additional investments might also be required. The chances of such a budgetary increase are remote in most sub-Saharan African countries. Measures must therefore be taken within the financial constraints imposed. Such measures are difficult to take wherever entrenched organisational conventions, rigid training philosophies or pressure from professional interest groups inhibit change. Nevertheless, the following approaches are possible:

· cost recovery and the removal of subsidies
· privatisation
· organisational reform.

6.6.1 Cost recovery and the removal of subsidies

In the majority of West African countries, animal health services are provided free of charge. In at least nine countries, all vaccines and drugs are provided at no cost to the producer. In at least four others, vaccines are provided free but charges are levied for drugs and for curative treatments. Only two countries pursue a policy of cost recovery for most materials and services.

In East and Southern Africa, the majority of countries provide free vaccinations but charge the producer for drugs. Several countries have introduced a fee for individual treatments and services. However, the revenue recovered represents only a small fraction of total operating costs (between 5 and 20%; see de Haan and Nissen, 1985).

There is the potential for greater cost recovery in West Africa, and some scope for cost recovery in East and Southern Africa. However, in nearly all cases, the impact on operational budgets is likely to be limited at first, since at present, veterinary inputs account for a low proportion of overall operating costs.

The following arguments have been used in support of zero to low cost-recovery:

· Animal health services benefit all members of society, so the costs should not be borne only by those who own or raise livestock.

· Livestock producers will make less use of animal health services if full payment is required.

· Leakages in the system would not permit full cost recovery.

· The livestock subsector is already taxed in various ways (e.g. head tax, slaughter fees, internal trade tariffs etc) and the revenue from these taxes should be used to finance animal health services. (In fact, most revenue from the livestock sector tends to be absorbed by the central government and is not directly recycled to livestock services.)

The extent to which animal health services should be subsidised is debatable. There are sound arguments for continuing to subsidise some services, particularly mass vaccination against diseases such as Rinderpest and CBPP (contagious bovine pleuropneumonia). Subsidisation has been shown to increase the response to vaccination programmes in Kenya, whereas the imposition of fees for dipping in Tanzania has had the reverse effect (Sandford, 1983).

However, de Haan and Nissen (1985) argue that at least partial cost recovery is justified, and that all non-salary costs should be recouped to ensure that services can be maintained. When the service provided is more of an individual (or curative) nature, governments should give serious consideration to the recovery of all costs, since producers receiving individual attention are normally quite willing to pay for it.

The best approach to use in recovering costs is also open to question. Attempts to establish revolving funds to finance drugs and services have been generally unsuccessful (Sandford, 1983; de Haan and Nissen, 1985) and have done little to alleviate the chronic shortage of operating funds. It has been suggested that cost recovery could be improved if veterinary field staff were allowed to sell drugs to farmers at a profit to themselves, increasing the incentive to provide effective services (CTA, 1987).

6.6.2 Privatisation

Greater involvement of the private sector in the provision of veterinary services and supplies might improve the overall efficiency of health services. The funds and/or personnel released could be used to provide services deemed to be more specifically the responsibility of government.

The decision whether or not to privatise will often depend on the nature of the service provided, i.e. whether it promotes a public good or a private good. A public good (strictly defined) is one which if supplied to one person can be made available to others at no extra cost, and from which others cannot be excluded. National defence is an example. By a looser definition, public goods are ones in whose production or consumption there are externalities, i.e. they confer costs and benefits to others which are not reflected in the costs or prices paid by the immediate producers or consumers.

According to de Haan and Nissen (1985), animal health services which fall into the public good category include:

· veterinary inspection to ensure that public health standards are adhered to

· veterinary reporting and the collection of relevant statistics

· the detection of notifiable diseases and vaccination against diseases of national economic importance

· quality control of vaccines produced within the country.

These are services for which, because of this "public" nature, it is difficult to charge a full cost user fee.

The supervision, enforcement and funding of mass vaccination campaigns falls rightly within the responsibilities of government. Including the private sector in the implementation of a campaign may nonetheless be justified, and subcontracting activities under government supervision may reduce costs significantly.

When the benefits of treatment accrue predominantly to the individual and when those who refuse to pay for a service can be denied access to it (the exclusion principle); disease control can, in theory, often be more efficiently handled by the private sector, with the government retaining responsibility only for quality control of the services provided. The problem is that the private sector is often not sufficiently developed to take on a curative role on the scale required. In these circumstances, governments may need to concentrate first on encouraging private enterprise.

(Hint to instructors: Ask the participants to think of ways of encouraging private enterprise. For example, could middle-order veterinary staff, often in over-supply in government services, form the basis for a viable private sector? Is there scope for relaxing the rules on out-of-hours private practice by government-employed veterinary surgeons or for creating professional veterinary associations to work alongside state services?)

In the pastoral zones, it may be difficult to attract private operators, and mobile personnel attached to specific communities may be better at providing low-cost services in more remote areas. Livestock owner associations might be formed for this purpose (CTA, 1987). Such a service needs to be carefully planned, with the definition of government/community responsibilities in terms of salary payment, supervision and staff selection being clearly defined at the outset.

6.6.3 Organisational reform

Restoring the balance between staff and non-staff costs implies careful exam nation of the organisation and management of animal health services. For example, the automatic recruitment of veterinary graduates and/or the continued recruitment of new junior staff will be inappropriate when existing staff are already underemployed. There may be a case for introducing early retirement (with incentives) or even for dismissing staff - a measure rarely used at present.

Again, for specific campaigns or seasonal programmes, hiring temporary staff or using staff from other departments may obviate the need to recruit permanent staff who will be under-utilised at other times of the year. When the private sector is relatively underdeveloped, the two latter options are likely to prove more effective in the short term than attempting to privatise. In any reorganisation, the following variables should be carefully considered:

· Staff densities, as exemplified by the ratio of senior to subordinate staff (Box 6.2).

· The allocation of functions among different organisations actually or potentially involved in the provision of services.

· The location and mobility of services relative to the livestock populations they serve, i.e. whether they should be centralised, dispersed, stationary or mobile.

· The level of skills required by staff in the field, hence the type of support training needed.

· The degree of integration possible among the various services, e.g. whether to provide a single, multi-purpose service or a range of specialist services. In the choice between specialist and multi-purpose services and/or their integration at different levels, technical considerations, availability of skilled staff and finances play important roles. By far the dominant influence on such a choice is technology, i.e. the types of improvements developed by research, the need for technical skills and facilities to handle inputs, and the frequency with which these inputs have to be delivered.

The important point is that options for adjustment do exist in most countries. The pros and cons of all relevant options for increasing operational efficiency should be carefully considered.

6.6.4 Relevant exercises

Exercise 6.2: Budgeting for animal health services.

Data. Refer to Exercise 3.4 for an understanding of herd projection models. Now study the following production parameters for a regional or national cattle herd raised in a communal area:

Number of cattle by age and sex category ('000 head) in 1989

Calves:
0 to 1 year-old	males:	312
	females:	3 12
Other stock:
1 to 2 year-old	males:	150
	females:	150
2 to 3 year-old	males:	140
	females:	140
Cows:		700
Bulls/oxen:		1250

Excluding calves, the total herd in 1989 was estimated at approximately 2.5 million head.

Expected performance parameters (1989-94)

Annual mortality rates:

Calves:	25%
1 to 3 year-olds:	8%
3 year-olds:	5%
Calving rate:	60%

Average annual offtake rate: 8% of the herd, excluding calves.

The offtake rate for cows is assumed to be 10% per year, with the residual number of stock slaughtered consisting of males over three years old.

Exercise: (estimated time required: 3 hours).

Question 1. Project herd numbers by category of stock in the table provided, and calculate the annual growth rate of the herd for the period 1989-94.

Herd projection and annual growth ('000 head).

Year	Stock category	Opening no.	Births	Deaths	Net sales	Closing no. (year end)	Opening no. (next year start)
1989	0-1 y.o males		312	78		234
	0-1 y.o females		312	78		234
	1-2 y.o males	150		12		138	234
	1-2 y.o females	150		12		138	234
	2-3 y.o males	140		11		129	138
	2-3 y.o females	140		11		129	138
	Bulls/oxen	1250		63	111	1076	1025
	Cows	700		35	67	599	728
	Total	2530	624	300	178	2677	2677
1990	0-1 y.o males
	0-1 y.o females
	1-2 y.o males
	1-2 y.o females
	2-3 y.o males
	2-3 y.o females
	Bulls/oxen
	Cows
	Total
1991	0-1 y.o males
	0-1 y.o females
	1-2 y.o males
	1-2 y.o females
	2-3 y.o males
	2-3 y.o females
	Bulls/oxen
	Cows
	Total
1992	0-1 y.o males
	0-1 y.o females
	1-2 y.o males
	1-2 y.o females
	2-3 y.o males
	2-3 y.o females
	Bulls/oxen
	Cows
	Total
1993	0-1 y.o males
	0-1 y.o females
	1-2 y.o males
	1-2 y.o females
	2-3 y.o males
	2-3 y.o females
	Bulls/oxen
	Cows
	Total
1994	0-1 y.o males
	0-1 y.o females
	1-2 y.o males
	1-2 y.o females
	2-3 y.o males
	2-3 y.o females
	Bulls/oxen
	Cows
	Total

Question 2. Complete the following animal health staff and recurrent budget table:

Item		Annual 1989 growth rate (%)	1994
Total staff (no.)
	Veterinarians	20	3%
	Auxiliary staff	500	5%
Wages rates/annum (L$) (per person):
	Veterinarians	12,000	7%
	Auxiliary staf		7%
Staff budget (L$)		740,000
Non-staff budget (L$)		500,000
Total recurrent budget (L$)		1,240,000	6%

Question 3. Relate the above table to the herd projection results you have derived and:

· Estimate the total herd:senior staff ratio and total herd:total staff ratio for 1989 and 1994.

· Calculate the staff:non-staff budget ratio for 1994; compare this ratio to that for 1989 and comment on the results.

· Calculate the level of non-staff expenditure/head of cattle for 1994 in real terms, assuming the appropriate price indices for 1989 and 1994 are 100 and 112, respectively (1989 prices).
Compare this result with that obtained for 1989. What does the result imply about the effectiveness of the veterinary service?

· Do you think that the projected herd size and production levels can be achieved as assumed, given the envisaged changes in manpower and budget resources? If not, why not? Which production parameters are most likely to be affected by these changes?

Question 4. What could be done to maintain or even improve the effectiveness of the animal health service if these budgetary and manpower trends continue?

Question 5. The information given in Tables 6.10 and 6.11 relates to the animal health services of two African countries, A and B. Examine the financing and staffing structure for each country and compare the two countries in terms of:

· The absolute level of expenditure in US$/LU, taking into consideration such factors as livestock density (LU/km²) and staffing density (LU/staff).

· The average annual rate of change in total, staff and non-staff expenditure per LU between years one and nine.

· The operating funds available per staff member per month for years five and eight.

Exercise 6.3: Group Exercise: Budget and manpower planning for the livestock services.

Policy making involves people and organisations at different levels within government. Discuss the extent to which managers of livestock services, in one country to be selected by the group, are able to influence policy changes with respect to the following:

· the total budget available for livestock services
· staff:non-staff cost ratios
· the ratio of high level:auxiliary staff.

To pursue the discussion, let the group divide into subgroups of three. Assign one of the following roles to each member of the subgroup:

· Minister of Agriculture
· Director, National Livestock Services
· Head, Livestock Policy Analysis Unit.

Persuade the Minister on a proposed change of policy.

Table 6.10. Financing and staffing of livestock services in Country A¹.

¹ For country A, the total area of agricultural land (arable plus grazing land) is 76,200 km².
² In year 6 constant prices.

Table 6.11. Financing and staffing of livestock services in Country B¹.

¹ For country B, the total area of agricultural land (as defined above) is 56,460 km².
² In year 6 at constant prices.

Important points (6.5-6.6) · Africa's animal health services are in decline primarily because of poor budgeting and manpower planning by governments. · Livestock services in African countries do not receive an allocation proportionate to the contribution of the livestock subsector to GDR · The major cause of poor performance in animal health services is the disproportionately high expenditure on staff costs in relation to non-staff costs. · The ratio between staff and non-staff recurrent costs is expressed as the coefficient of efficiency (CE) where: CE = non-staff expenditure/staff expenditure · The CE has declined in recent years for most African countries. · Besides CE, two other ratios affecting the efficiency of animal health services are: - the ratio of senior to auxiliary staff - the ratio of staff to tropical livestock units (TLU). · In order to improve the effectiveness of animal health services, a staff: non-staff expenditure ratio of 1:1 appears desirable. The chances of attaining such a ratio are remote in most sub-Saharan African countries. · Three major approaches to improving the effectiveness of animal health services are: - cost recovery and removal of subsidies - privatisation - organisational reforms. · Cost recovery may not prove effective since revenue recovered from such a measure will constitute only a very small fraction of the total operating cost. · Privatisation of veterinary services and supplies seems promising in improving the efficiency of animal health services. However, some essential services Should not be privatised. · Privatisation will not be successful unless governments encourage private enterprise.