Cape Town, 22 April 2025 — The Financial and Fiscal Commission (FFC) presented a detailed analysis of South Africa’s health sector to the Parliamentary Portfolio Committee on Health, emphasizing fiscal trends, conditional grant performance, institutional effectiveness, and the progression of the National Health Insurance (NHI) programme.

Constitutional Role and Sector Context

The FFC, a constitutionally mandated advisory body, reaffirmed its role in guiding equitable revenue allocations and emphasized the state’s duty to progressively realize access to healthcare as outlined in Section 27 of the Constitution. It noted persistent inefficiencies in health spending, despite a relatively high health expenditure-to-GDP ratio of around 8%. The Commission highlighted the stark divide between private and public healthcare systems, describing it as a structural inequity hindering access and efficiency.

Budget Overview and Allocations

The 2025 Budget allocates R64.8 billion to the National Department of Health—an upward revision of 1.7% from the 2024 MTEF. The budget focuses on hiring healthcare workers, boosting medical supplies, and laying groundwork for NHI implementation. However, the FFC flagged consistent underspending in prior years and raised concerns that the modest increases may not adequately address systemic shortfalls.

Specific budget programme adjustments for 2025/26 include:

• A 3.8% increase for hospital systems (R936.9 million).

• A 1.1% increase for health system governance and human resources.

• A 2.8% decrease in administration, reflecting reprioritization.

Conditional Grant Performance

Conditional grants remain critical to provincial health funding:

• District Health Programme Grant: R28.3 billion allocated, with minimal year-on-year growth (0.4% average).

• Human Resources and Training Grant: R5.6 billion allocation; growth of 2.0% nationally, with the Northern Cape receiving the highest increase.

• National Tertiary Services Grant: Increased by 5.8%, with the North West receiving a significant 24% rise.

• NHI Grant: R466 million allocated, with a 1% average increase across provinces.

Health Entities and Performance Variances

The FFC reported varying performance and budget deviations among key entities:

• SAMRC received the largest budget increase (22.4%) but is expected to see a 46% drop in research outputs.

• SAHPRA showed budget increases but had gaps in licensing and safety signal detection performance.

• OHSC maintained strong certification results but underperformed in compliance inspections.

• NHLS demonstrated solid results in disease testing and surveillance.

National Health Insurance (NHI)

The FFC detailed the phased implementation of the NHI through direct and indirect grants, targeting expanded service coverage, electronic health systems, and infrastructure revitalization. The direct NHI grants outperformed indirect components in spending efficiency. The Commission reiterated the need for a unified electronic health record system and urged alignment of NHI funding with core programme activities.

Recommendations

The FFC made several policy and funding recommendations:

• Align health entity budgets with performance and core mandates.

• Improve data management and transparency across all health institutions.

• Develop a national, integrated patient registry for effective NHI operations.

• Reprioritize existing resources to improve hospital efficiency and quality.

• Strengthen accountability frameworks and management practices at public health facilities.

The presentation underscores the FFC’s ongoing advisory role in improving health sector outcomes through informed, equitable resource allocation and system reforms.