29 The management implications of cost recovezy schemes are considerable and there is little evidence that they have been studied in the ncesary depth. 'Me schemes would pnerate only loal currency, how would this be converted into foreign **exchange** after the inevitable departure of the external donors? In al lkelihood, the scheme would encourage inappropriate use and overprescription of drugs as availability of funds for MCH and preventive care would be cosely tied to the lvel of drug use. The scheme would do little to improve the efficiency of the drug supply systemi Participants in a WHO workshop on fnancing essential drugs, held in Harre, Zimbabwe in March 1988 came to three main cnclusions. Furst, there was agreement that considerable savings are to be found within the drug supply systemn As has been shown in the dsbcion above, the typical drug supply system has many inefficiencies which can be corrected, with significant savings to be made. The fst step in increaing availability of drugs should be to rationalize procurement and use. Another possiblity is to increase resources for drugs through realocation of health sector expeiditures (WHO, 1988d) A second conclusion was that *cost recovery brought with it hidden costs, both in terms of decreased utilization of health facilities, and in terms of the administrative costs such schemes entailed. Giving drugs away free was much easier than charging for them. Special care would need to be taken to ensure that the fee system did not disourage vulnerable groups most in need **Lif** care, but klat able to pay. Manaement of the funds was a concern; and when the costs of improved accounting, transport and supervion, etc. were taken into account, the ratio of administrative costs to atual funds reuwered w lihkely to be less fvorable in rural area.

The inequity of charging the rural poor while urban dwellers continued to receive free care was of concern as welL A recent World Bank study suggested that a 'modest' fee would be 1% of annual income, which should suffice for two annual visits. (World Bankr, 1987) But the significant inequality of income distribution patterns in many African countries, with income highly concentrated in the upper 10% or 20% of the population, is another cause for concern when setting a fee. Data for nine low-income countries showed that on average, the top quintile had about 52% of incme; the second quintile, 20%; the third quintile, 12%; the fourth quintile, 10%; and the owest quintile, 6% of income. (World Bank, 1985) In Guinea-Bissau, for eanmple, average per capita income was estimated at $170 in 1986; yet if income distribution followed this pattern, the owest income quintile would have an average per capita income of about $50. Roughly half of the population would have kl than $100 per year, and the highest quintile would have about $425. If the World Bank proposal were adopted in setting the fee, the lvel might be set at $1.70 for two visit. Such a fee would represent over 3% of per capita income for the lowest quintile, but only about 0.4% for the highest quintie. Furthermore, per capita income usually counts goods which are not traded (such as home-consumed produce) and thus not cownerted into csh; and