Lesotho has been implementing financial management reforms, including
performance-based budgeting (PBB) since 2005 in an effort to increase accountability,
transparency and effectiveness in governance, yet little is known about how
these efforts are affecting the health sector. Supported by several development
partners and $24 million in external resources, the PBB reform is intended to
strengthen government capacity to manage aid funds directly and to target
assistance to pressing social priorities. This study designed and tested a methodology
for measuring implementation progress for PBB reform in the hospital sector
in Lesotho. We found that despite some efforts on the national level to promote and
support reform implementation, staff at the hospital level were largely unaware of
the purpose of the reform and had made almost no progress in transforming
institutions and systems to fully realize reform goals. Problems can be traced to a
complex reform design, inadequate personnel and capacity to implement, professional
boundaries between financial and clinical personnel and weak leadership.
The Lesotho reform experience suggests that less complex designs for budget
reform, better adapted to the context and realities of health sectors in developing
countries, may be needed to improve governance. It also highlights the importance
of measuring reform implementation at the sectoral level.