(John McCann/M&G)
President Cyril Ramaphosa’s commitment to establishing centralised funds like the National Health Insurance (NHI) and the Transformation Fund are “terrible” ideas that will breed corruption and not improve the country’s health or economic well-being, Institute of Race Relations geopolitics researcher Nicholas Lorimer has said.
The funds will instead create opportunities for political patronage and corruption on an even grander scale than previously experienced with centralised state funds, most recently seen with the National Lottery and the government’s Covid-19 relief funds, Lorimer and other analysts said in response to Ramaphosa’s statements in his State of the Nation address.
In his speech last week, the president committed to going ahead with plans to roll out the R300 billion NHI and to injecting R20 billion into a controversial new R100 billion Transformation Fund to support black-owned businesses.
Ramaphosa said the government would proceed with the preparatory work to establish the NHI this year.
This included developing the first phase of a single electronic health record, preparatory work to establish ministerial advisory committees on health technologies and healthcare benefits and an accreditation framework for health service providers.
The Transformation Fund, proposed by Trade, Industry and Competition Minister Parks Tau, will see the 3% of net after-tax profits which companies are required to spend on enterprise and supplier development under broad-based black economic empowerment codes of good practice diverted to the central fund for disbursement to black businesses.
The concept of the two centralised funds is a “terrible idea” as they will lead to political corruption, despite the assertion that reallocating resources from the private sector will ensure better healthcare through universal coverage for everyone, on the one hand, and economic growth, on the other, Lorimer said.
“We’ve seen from so many examples of centralised funds — and the transformation fund is another example of this — that when the government tends to put an enormous amount of money in a big pot and centralise all decision-making, it usually doesn’t actually result in anything particularly positive,” he said.
“In fact, it generally becomes a political patronage bank where it’s poured over as a resource to be drained by handing it out to politically favoured connections and it doesn’t do that much good.”
“The quintessential example of this is the lottery and how that money is often very badly misspent or directed in ways that stink of corruption. And that’s exactly why the Transformation Fund and the NHI are a terrible idea, because they will increase the incentives for politicians to engage in corrupt activities and redirect funds away from South Africans.”
He said the government should instead be trying to decentralise the systems so that money can be made available where it needs to be spent.
“If we take the Transformation Fund, money that’s currently spent by businesses on charities and social projects and upliftment, the government has said, ‘Well, you know, this is not going to cost business anymore. We’re just going to take the money you really spend on these things and we’re going to direct it ourselves.’
“It’s almost certainly going to be producing worse outcomes than allowing businesses to individually choose where to spend that money in uplifting people,” he said.
“It’s very likely going to be spent on projects that don’t go anywhere. It’s the exact kind of thinking that’s got us into the low [economic] growth mess and we really need to change direction.”
Lorimer added that there was no point in putting checks and balances in place to safeguard the funds as there was low accountability in the country and weak law-enforcement action against corruption.
He cited the report from the state capture commission as a very detailed investigation that had not helped “because we’ve got an accountability problem in South Africa and a law-enforcement problem, and as long as those problems are not solved, then checks and balances don’t help”.
“Law enforcement needs to be fixed … so, I think we can say with a high degree of certainty that the NHI Fund, the Transformation Fund, are going to be enormous sites of corruption and that will proceed unchecked,” Lorimer said.
Centre for Risk Analysis executive director Chris Hattingh said the government was implementing policies that spurred increased dependence on the state, while the NHI — which has been in the pipeline for 25 years — was “not happening anytime soon”, if the state’s effort to establish centralised, digital health records was anything to go by.
An electronic health record would be “essential” to enabling the NHI to gather the level of data required to inform strategic purchasing of health-related goods and services, University of KwaZulu-Natal School of Health Sciences senior lecturer Andy Gray said.
“It is a massive undertaking and many countries have failed in their efforts to get a single national system developed and implemented. It is unclear what progress has been made to date,” he said.
In addition, the government has not yet clarified exactly how it would raise sufficient funds for the NHI.
“All the NHI Act states is that all possible sources will be considered,” Gray said.
According to the Act, the revenue sources for the fund consist of money to which the fund is entitled in terms of section 49 (which deals with money appropriated annually by parliament), any interest or return on investment made by the fund, any money paid erroneously to the fund which cannot be refunded, any bequests or donations and other money to which the fund may become legally entitled.
Gray said there was certainly a risk that centralised funds such as the NHI could be used as opportunities for patronage and corruption, adding: “But whether it is a greater or lesser risk that is posed by current financing provisions, in both the public and private sectors, is open to question. However, this would be a massive undertaking, requiring effective governance and management.”
Alex van den Heever from the University of the Witwatersrand School of Governance does not have high expectations of what the NHI’s ministerial advisory committee can achieve.
“There have been numerous advisory committees made up of politically acceptable people which, therefore, have delivered nothing of substance,” he noted.
“The [existing] office of health standards compliance offers a limited form of quality assessment for the purposes of accreditation. Unfortunately, even with its limited approach, the political nature of the appointments into the board and the executive structurally undermines its independence.
“Such an organisation is therefore open to abuse — where accreditation decisions could be used to shake down private facilities — if their continued existence depended on the outcomes.”
He said a completely new governance framework was required to transform public health services.
“The current system is over-centralised, with politicians appointing operational heads. This has led to institutionalised corruption, which has severely compromised patient care. There are, however, no proposals by the government to amend the compromised governance frameworks. As a consequence, nothing is likely to change.”
Van den Heever added that there were no funds for the NHI “not now or in the future”.
“This has been obvious from 2007. The proposals were never subjected to financial appraisal. Had this been done up front, the lack of feasibility would have been technically apparent upfront, and a lot of time wasted on the NHI framework would have been saved.
“The absence of an appraisal, which should include a feasibility analysis, should be a red flag. You only avoid such assessments if you are frightened of the results,” he said.
The University of KwaZulu-Natal’s Gray noted that phase one of the NHI roll-out would involve a first draft of regulations to establish structures and enable some budget allocation for early planning.
“It will be important to see how the current NHI branch in the national department of health manages to support those efforts, while continuing to function in terms of existing public sector systems,” Gray said.
“Some of those key structures, such as the Affordable Medicines Directorate, have also been impacted by the [United States Agency for International Development] funding crunch. AMD accounted for 41 of the 220 US-funded posts in the [department of health].”
President Donald Trump issued an executive order freezing all United States Agency for International Development funding unilaterally to organisations across the globe, including South Africa, on the day he took office last month. Hundreds of non-profit organisations face an uncertain future, and many will be forced to close their doors, as they relied entirely on aid grants from the agency.