Health equity starts with informal sector inclusion

By Gaston Kikuwi and Anna Mbise

Since gaining independence, Tanzania has prioritized providing essential social services, particular­ly education and healthcare, free of charge. However, the country’s capacity to sustain this model began to wane in the late 1980s, prompting significant health sector reforms.

In the early 1990s, the first wave of reforms aimed to improve health financing by transitioning from a solely budget-funded system to a mixed financing model. Key mile­stones included the introduction of user fees in 1993, the Communi­ty Health Fund (CHF) in 1996 as a pilot project in Igunga District, Tabora Region and the National Health Insurance Fund (NHIF) in 1999.

These initiatives were intend­ed to boost funding, enhance com­munity participation, and increase provider accountability.

However, there are valuable les­sons to be learned. The NHIF, along with its voluntary counterpart, the improved Community Health Fund (iCHF), was designed to cover wage-employed individuals, espe­cially civil servants, and households from the entire community. How­ever, the vast majority of informal sector workers were not included, coupled with high dropouts, which weakened the sustainability of the Fund.

In response, civil society organi­zations such as the VIBINDO Soci­ety and many others introduced micro health insurance schemes like UMASIDA, MBAKAYO, Atman Msimbazi Center, Atman Manzese Scheme, CHAWANA-Bima, Mbu­rahati Health Trust Fund, and many more, targeting the informal sector. Despite their good intentions, most of these schemes collapsed due to challenges related to coverage, benefit packages, outreach, govern­ance, fraud, and public mistrust.

These lessons, especially in the context of this year’s Labour Day celebration, need to be considered to guarantee a socially just, fair, and inclusive health coverage for all workers.

As of now, the combined coverage of the National Health Insurance Fund (NHIF) and the Commu­nity Health Fund (CHF) remains below 8% of Tanzania’s total popu­lation, including formal and infor­mal workers. This has resulted in a highly fragmented and inequitable health system, characterized by limited access to services and wide­spread financial hardship caused by out-of-pocket payments. Consider­ing the significantly low coverage as a sad reality of Tanzania in the 21st century, there is a strong need for concerted action.

Tanzania continues to face a heavy burden of diseases, with non-communicable diseases (NCDs) being a leading cause of death. Meanwhile, workers in the informal sector, who make up near­ly 80% of the population, remain largely uncovered by health insur­ance. Public investment in health remains low, consistently falling below the 15% benchmark set by the Abuja Declaration.

In the 2024/2025 national budget, the Ministry of Finance allocated only 5.15% of the total Sh 49.3 trillion budget to the health sector. The current per capi­ta health spending stands at just US$11, significantly below the World Health Organization’s rec­ommended US$34.

The Universal Health Cover­age Act 2023

Recognizing the urgent need for reform, the Parliament of Tanza­nia passed the Universal Health Coverage (UHC) Act 2023, which was assented to by the President in August 2023.

The Act mandates compulsory health insurance for all Tanzani­ans and for non-citizens residing in the country for more than 30 days. It seeks to integrate existing schemes such as NHIF, CHF, and private insurance under one unified system.

The UHC will be financed through a variety of sources, includ­ing member contributions, govern­ment health budgets, donor funds, a dedicated health fund account, mobile money transactions, bet­ting revenues, and levies on alcohol, cosmetics, soft drinks, and motor insurance.

UHC is structured around three benefit packages:

1. Mandatory Basic Package, covering services from dis­pensaries to public hospitals.

2. Community Health Ser­vices Package, addressing community-level healthcare needs.

3. Supplementary Services Package, offering additional benefits.

The Tanzania Insurance Regu­latory Authority (TIRA) has been tasked with supervising the imple­mentation of all health insurance schemes.

Stakeholders’ reflections and recommendations

Connecting with this year’s May Day theme set by the Trade Union Congress of Tanzania (TUCTA) and the broader labour movement, “The 2025 General Elections Should Give Us Leaders Who Will Protect Workers’ Rights,” VIBINDO, the umbrella organization for informal sector associations emphasizes the need for inclusive implementation of the Universal Health Coverage (UHC) Act of 2023.

On various occasions, VIBINDO, in collaboration with Friedrich Ebert Stiftung (FES) Tanzania, has organized stakeholder workshops, including sessions held at the end of 2024 and in April 2025, to reflect on the UHC Act. During these work­shops, participants analyzed critical aspects of the UHC scheme, such as financing, governance, and out­reach, while discussing its implica­tions for informal sector workers and other unemployed members of society. Specifically, VIBINDO would like to see strategic and inclusive actions as follows:

1. Expanding financing sourc­es

Participants noted that the cur­rent funding model outlined in the Act is insufficient. Suggested addi­tional funding sources include:

• A gradual increase in govern­ment health budgets, reach­ing 15% within 6–8 years.

• Revenue from the mining sector via a Sovereign Wealth Fund.

• Contributions from large fishing firms and major investment projects.

• Funds from local content ini­tiatives, tourism, and sports events, such as football and dance.

• Levies on mobile commu­nication towers and digital economy platforms.

2. Establishing a UHC super­visory board

To ensure efficiency and sustain­ability, stakeholders proposed the formation of a UHC Board. This body would guide the responsi­ble ministry on UHC matters and include members from public and private healthcare providers.

3. Mobilizing the informal sec­tor

Given its significant contribution to the GDP and its vast workforce, informal sector workers must be meaningfully engaged. The Act should mandate organizations representing informal workers to serve as agents for outreach, mobi­lization, member enrollment, and the collection of health insurance premiums.

With the UHC Act in place and implementation underway, Tanza­nia has an opportunity to redefine its health landscape. By strength­ening governance, expanding financing sources, and mobilizing the informal sector, the nation can make significant strides toward achieving universal access to quali­ty and affordable healthcare.

However, the path forward demands unwavering political will, cross-sectoral collaboration, and genuine community engagement to ensure that no one is left behind.

About the authors:

Gaston Kikuwi-VIBINDO Chairperson

Anna Mbise-FES Trade Union Coordinator