Appropriation Bill: Department of Health briefing; with Ministry

Meeting report

Opening Remarks by the Chairperson

The Chairperson greeted and acknowledged everyone in the meeting. He said the National Department of Health (NDoH) will present its 2023 Appropriation Bill. The Minister will start and then the rest of the officials will do the presentation. He allocated one hour for the presentation. Thereafter, the Members will ask questions and the NDoH will have to respond. He appreciated the fact that both the Minister and Deputy Minister were present in the meeting.

Opening Remarks by the Minister

Minister of Health, Dr Joe Phaahla, greeted everyone in the meeting and said that the Deputy Minister, Director-General (DG) and the Chief Financial Officer (CFO) were in the meeting with him. He said that there were a number of other senior officials also present. He understood that there is a responsibility of the NDoH to provide service to people and accounting to this Committee and other committees.

He said that he knew that there is a responsibility to account for the resources used or where the NDoH has failed to use the allocated funds for the purposes of the functions allocated to the NDoH. The NDoH has a responsibility to account to this Committee and the CFO is the one that will be taking the Committee through the presentation. He acknowledged the letter that the Committee received on the main areas to focus on and the presentation was guided by those recommendations. He said that he knew an hour had been allocated for the presentation but that, without pressure, he hoped that the presentation would not take more than 40 minutes. He and the DG will come in if certain points have to be emphasised.

Dr Sandile Buthelezi, DG, Department of Health, said that the arrangement is that the CFO does the presentation and that he will come in if there are any matters of clarification.

Briefing by the Department of Health on the 2023 Appropriation Bill

Mr Phaswa Mamogale, Chief Financial Officer, National Department of Health (NDoH), took the Committee through the presentation.

Preliminary Spending Outcomes of the 2022/23 Financial Year

He said that 97.40% of the budget was spent on the six programmes.

Programme One: Administration

This programme consists of the ministry, management, corporate services, property management and financial management. This programme spent 85.81% of its budget. There was underspending because of vacancies not being filled, rental payments being withheld, delay in payments for travel accounts and fleet services and leave gratuity not being budgeted for.

Programme Two: National Health Insurance (NHI)

The programme consists of programme management, affordable medicine, health financing and the NHI. This programme spent 86.49% of its budget. There was underspending due to vacant posts and delayed recruitment of NHI staff.

Programme Three: Communicable and Non-Communicable Diseases

This programme consists of programme management, HIV, AIDS, STI, Tuberculosis management, women’s maternal and reproductive health, child, youth and school health, communicable and non-communicable diseases, health promotion and nutrition. This programme spent 96.75% of its budget. There was underspending due to vacant posts and delays in the delivery of condoms.

Programme Four: Primary Health Care

This programme consists of programme management, district health services, environmental and port health services, emergency medical services and trauma. This programme spent 99.95% of its budget. There was overspending on fleet services.

Programme Five: Hospital System

This programme consists of programme management, health facilities infrastructure management and hospital systems. This programme spent 98.04% of its budget. There was underspending due to vacant posts and project management consultant fees.

Programme Six: Health System Governance and Human Resources

This programme consists of programme management, policy and planning, public entities management, nursing services, health information, monitoring and evaluation and human resources for health. This programme spent 99.48% of its budget.

For the COVID-19 vaccination programme, only 63.67% of the budget was spent. Regarding the conditional grants, 93.8% or R54.1bn of the budget was spent against the adjusted budget of R57.7bn. There was underspending in the district health programme grant, the health facility revitalisation grant and the NHI.

The Chairperson asked that acronyms not be used because some South Africans do not know what it is.

Mr Mamogale said that the DHIS is the district health information system.

The Minister said that HST is the Health System Trust discontinued under this programme.

Dr Buthelezi said that the HST is an organisation that has worked with the NDoH for a number of years. They produce two important reports, one on the district health environment and a South African health review, which it will pick up issues such as financial management and communicable diseases. It will look at where the NDoH is successful and where it is failing. A number of issues have to be resolved and so this working relationship has stopped until the issues are resolved.

[See slides 3-35 of the presentation for more details]

Department’s Plan to Utilise the 2023/24 Budget Allocation

There is a detailed table with a summary per programme and per economic classification. There is a detailed table around the allocation for each programme along with the conditional grants allocation per province. There are variances such as no allocation has been made to the COVID-19 vaccination programme; reduction in the district health programmes conditional grants and health facility revitalisation indirect grant; decrease in transfers and decrease under compensation for employees due to transfer to the port health services.

[See slides 36-58 of the presentation for more details]

Possible Service Delivery Implications Due to Budget Declines

Affordable medicine has increased by almost R1.5m (R43.5m in the 2022/2023 financial year and R45m in the 2023/2024 financial year). However, there is a need for health equipment replacement. Provinces have been encouraged to ringfence the medicine budget allocation. There has been a decline in the communicable disease subprogramme. The decline of R2b relates to the stoppage of COVID-19 vaccines which were allocated to the national office. Overall decline in medicine allocation at national office, excluding COVID-19, is due to decentralisation of medicine procurement to provinces. There has been a decline of R1.9b in the district health services subprogramme due to the stoppage of COVID-19 conditional grants to provinces. There has also been a decline of 42% for the environmental and port health services subprogramme.

[See slides 59-64 of the presentation for more details]

Vacant Positions and Available Posts for Recruitment

National Treasury has put a ceiling of R682 135m for the 2023/24 financial year. There are 288 vacant posts. There is a projected shortfall of R184 335m to fill vacancies. The overall vacancy rate is 24.4%. Despite the fiscal constraints, the NDoH has ringfenced R1.5m to appoint newly graduated interns.

[See slides 66-72 of the presentation for more details]

Contribution to South African Economic Reconstruction and Recovery Plan, Broad-Based Black Economic Empowerment (BBBEE) and Localisation of Goods and Services

59% of pharmaceuticals have been procured locally and 51% have been awarded to others. The NDoH has included the following in its procurement policy which will contribute to individuals who had no franchise in national elections before the 1983 and 1993 constitutions, individuals who are females and individuals who have disabilities. The NDoH supported level-one service providers to 81% and 11% to non-contributors to BBBEE. About 68% was allocated to historically disadvantaged individuals, 31% to women and one % to people with disabilities.

[See slides 74-78 of the presentation for more details]

Legal Impediments to the Department Achieving Economic Transformation

There are no known legal impediments for the NDoH to achieve economic transformation.

[See the presentation attached for more details]

The Minister said that one of the challenges that have been reflected is the fact that the allocated funds were previously R64.6b, and it is now only R60.1b. The CFO did account for this by indicating that just over R4b was accounted for the removal of specific funds and grants allocated for COVID-19 such as the procurement of vaccines and other support functions. The vaccines were administered centrally and distributed to provinces and it was also making use of the private sector. The balance was just under R2b, and it was distributed to provinces to support the mitigation against COVID-19; this included goods and services and personal protective equipment. It helped the health system to contract additional staff. He said that this is a sore point because, for the many staff members contracted for support services, professional staff and nursing staff, the provinces have to find other funds within their equitable shares to keep these essential staff members. In Gauteng, there has been an attempt to manage even though there has been a lot of unhappiness unlike the previous year when there was a big uprising at the Chris Hani Baragwanath Hospital due to termination of some of the staff. The frontline clinicians were saying that so many people were brought in under the hospice of COVID-19 and were doing functions that had to be done even before there was COVID-19. So, terminating the essential staff was putting the health system under a lot of pressure. There has not even been an increase to cater for inflation. He said that what is being presented is just for the NDoH and 89% is allocated to the provinces.

He said that the NDoH has been under continuous pressure regarding any ability to improve the capacity at the head office. The NDoH is not just a leading department for public health. But in terms of the law, it is responsible for the entire health of the country, including regulation and supervision of private sector providers. This is the reason why it is licensed and functions under particular regulations. The health market inquiry is critical for the NDoH because it does not exercise leadership and regulatory supervision over public health. The necessary capacity is needed for the NDoH to play a leadership role. There is this continuous pressure to reduce the costs of employment. It has been difficult to sustain the post at national level. There is continuous pressure to reduce, and it cannot even compete with some of the teaching institutions in terms of salaries that they are providing to attract highly qualified people to those institutions. The NDoH is not competitive in providing that leadership, which was attributed back to the fact that nearly 90% of the budget is allocated to provinces. Sometimes, there is no growth in the human resources training grants. For example, there is specialist training for a position called a registrars post. If there is stagnation in that area, the impact of the training of specialists is reduced, and central hospitals are then not able to receive adequate support. It is now reducing the number of registrants. The NDoH has to support the provinces in various ways including services such as fighting against cancer, treatment of cancer and other specialised services. He said that he is unable to respond to the explosion of communicable diseases such as cancer. He said there had been no growth in terms of HIV and Tuberculosis grants. He said this is challenging because the estimated population of HIV-positive people in the country is 7.5 million. He said that, if one looks at the performance over the years, it was 90/90 – meaning that 90% know their status and 90% are receiving treatment. Due to the pandemic, the Department has not been able to reach the target for 2022. The next target is 95/95, meaning that the target is 95% for 2025. But right now, it is only treating 5.7 million. It has to reach another two million to achieve the target of 95% of treatment. If this is done, it will help to suppress the spread of HIV since people are being treated. He said that more resources will be needed to achieve this.

Regarding the medium-term expenditure framework, the allocation does not look good. The Minister said what is more worrying is that a balance of that will depend on donors. There are two major donors. The first is the Global Fund, which is a multilateral fund to which many countries contribute, including South Africa. The second donor is PEPFAR, which is the presidential emergency plan for AIDS based on the US government. There is a lot of risk regarding the allocation, especially when South Africa does not always agree with the USA on certain issues. This has been a threat even in the previous administration, where it has been said that the USA has been giving South Africa $450m a year but does not agree with the USA. These funds do not come into the budget of the NDoH but they do assist with a number of activities to fight against HIV/AIDS. This is something that is appreciated but it does come with a lot of risk because there is always a threat hanging of saying that the fund may be taken away. For local business, the NDoH has been in the media a few weeks ago and the Committee has raised in the letter about the support of local production. He said there is this particular case where there was a procurement of a children’s vaccine and, for many years, the NDoH has had an agreement with a local manufacturer partly owned by the state, called Biovac. State ownership fell under the NDoH, but a number of years ago, a wise decision was taken to say that it is not safe or good for this to fall under the NDoH which has to procure from this company on behalf of the government. The shareholding was then moved to the Department of Science and Innovation. The state holds about 47% of Biovac, which has produced vaccines for many years. Biovac has been the one producing children's vaccines. A particular contractual agreement ended in 2020, and this was now open for competition. It has been over three years now since the expiration of the contract. There is now a new procurement contract, and there was a competitor who had a price half that of Biovac. The procurement team decided based on value for money to purchase from the provider. It costs R1bn less than that of Biovac. He said that Biovac was asking R2bn. There has been a lot of criticism since Biovac is a local company partly owned by the state. The other provider operates in South Africa but has a parent company in India. In the public domain, people were saying that the NDoH was giving the contract to an Indian company. However, it is just a parent company in India and has a huge operation in South Africa. This is one of the companies affected by the uprising in Durban, but the building has been restored. These are some of the contradictions out there.

The NDoH also comes under a lot of criticism for condoms and children's vaccines, and it was planted in the media that the local company has lost everything. The NDoH can assure the Committee that there are still other children vaccines in which the local company is quite strong and is likely to retain its market share. There is also a big chunk of R23bn for the antiretroviral treatment. There is a lot of pressure as it provides treatment to 5.7 million people and wants to reach 95% coverage, which is seven million people. If all the positive people are found, more stock will be needed. Some local companies produce antiretroviral treatments, but the prices are lower in places like India and China. Some international companies produce at a lower cost, so it becomes difficult for local companies to compete. He said that he wanted to emphasise these kinds of pressures and contradictions.

Discussion

Mr H Mmemezi (ANC) thanked the NDoH for the presentation. He said that the presentation was very enlightening. He is looking at the depressing situation in the country's poor communities. He said people are aware of justifying the lack of spending when there is finally a budget. He asked for a commitment and clear plans to avoid underspending by the NDoH. There should not even be a discussion about it, because underspending should always be avoided by looking at the needs of the people on the ground. There should be clear plans to avoid underspending and no justification for it. He said that the level of underemployment and then looking at the situation in communities is a crime. He emphasised the issue of vacancies in the NDoH. This is another area that should be avoided, and there should be no justification for it. He said there should be a clear commitment plan to ensure the NDOH fills the vacancies. There is a budget to do so. The NHI Bill has been here for some time. The readiness of the NDOH has to be changed to roll it out. This has to be a priority. He asked what the key endurances are to the finalisation of the NHI Bill and what measures are being employed to overcome them. Has the NDOH studied or assessed the infrastructure needed to roll out the NHI? What is the human resource capacity that is needed to roll this out?

Ms T Tobias (ANC) suggested that National Treasury be invited to explain the shortfalls in the budget allocations, especially dealing with public servants, like doctors and nurses. She said that the Committee has to see whether things are like are being prioritised in the strategic budget allocations.

She became inaudible due to poor connectivity

Mr O Mathafa (ANC) greeted everyone and said he really appreciated the closing remarks by the Minister on the presentation. He said this made it a very comprehensive presentation and how it was narrated is very assisting to the Committee. It succinctly responds to the questions that have been posed to the NDoH.

On the closing remarks about local procurement, on who is awarded the tender, he said that the price depending on where one is located in the world might be a disadvantage, which is why some countries being called developed economies and others underdeveloped was valid. He said that an underdeveloped country is when manufacturing costs are too high, so much that one has to make up for the input costs in the price. The situation cannot remain like this, where local manufacturers and suppliers are disadvantaged. A study tour in South Korea in December showed that local companies like Samsung, Kia and Hyundai came out guns blazing to support. There was an ‘all-out support’ to protect competitiveness and profits. They also made sure that all incentives and tax benefits were available to ensure that they supported localisation. He said it is time to discuss with National Treasury or the Department of Trade, Industry and Competition to find out the exact pillars of the economic reconstruction recovery plan and how to support the localisation aspect thereof. He said that localisation is one of the critical aspects that the President has put in place, and it must be supported to ensure competitiveness and that the economy is stimulated from the bottom up. He said that this should happen for it to say next time that, based on the pillars of local economic development in the manufacturing of pharmaceuticals and medical equipment, these are the incentives that government is putting in place to ensure that the particular issue of pricing being disadvantaged to local suppliers is eradicated or minimised.

Does the NDoH believe that the NHI is sufficient? Is the NDoH happy with the progress made so far for the NHI Bill? He asked the NDoH to share a time frame for the full implementation of the NHI Bill. He raised an issue on the vacancies while noting that some of the bursary schemes have been abandoned due to budget cuts. He asked in which provinces the vacancies are and how it can mitigate the negative service delivery. He said that he was concerned about the underspending in Gauteng due to medical equipment delays. Have the delays been identified? What led to those delays? He said that he was aware that the NDoH had applied for a rollover of the funds. He said that the rollover of funds will not help if the reason for the delay in supply of this equipment remains unresolved. Had the reason for the delay been identified, had it been resolved, and would recurrence of such be prevented? He asked if the Committee could be briefed on how this issue has impacted the area of facilities. The Minister was clear that there were uprisings in Gauteng due to other service delivery concerns, so it will be good for the Committee to know which areas have been impacted. What is the status of the creditors? What is the performance in terms of payment of service providers within 30 days of invoice?

 Regarding the youth allocation and the BBBEE, he welcomed the report and said it was a beautiful looking report that even people with disabilities are covered. He said that it does, however, lack one category of people, those below the age of 35 years. He said he would love to see that information even if it is not today.

Mr A Shaik Emam (NFP) asked the NDoH to share with the Committee the facilities or wellness programmes available to the healthcare workers. He said that one has to look at the work the healthcare workers did, especially during the time of COVID-19. Healthcare workers have been seeing people die and suffer. This is a traumatic experience. He said that some people have said that they have become immune to it. There is a human side to all of us. What measures has the NDoH put in place to look at the welfare of healthcare workers consistently? Is the NDOH planning on building more training colleges for nursing staff? He said that the private sector, international companies and institutions are taking away many healthcare workers and skills from the country. People cannot keep on dying.

There is a communicable disease on the rise in South Africa. He said this has much to do with what people drink and eat. He said he did not see anything in the presentation about the plans of the NDoH to move away from a curative healthcare system to a preventative healthcare system. He suggested a dedicated budget and team to deal with this issue. He said that Coca-Cola and chocolate have too much sugar in them. There is a rise of diabetes and cancer in the country. He said that a research team advised him that dishwashing liquid is one of the root causes, and there is evidence of that effect. He said he is not an expert but found that not enough is being done, especially in the food sector. There is no oversight body to do checks. National health and city health, from his understanding, do not report to the national level. There is very little happening on the ground. He said that it is time that a budget is allocated for enough advertising. There must be oversight on all of these products. There is just a flood of products with no mechanism to see what people are eating in these food products. People are getting sick from a very early age, and one has to look at its impact on the country's healthcare system. He said that the Johnsons and Johnsons powder had been banned internationally. He has seen it being advertised on special in every other supermarket chain in South Africa. He said that he did not see anything happening about it now. He said he was aware that some of these things fall under the Department of Trade, Industry and Competition, but they have to come together on this issue.

On the issue of the NHI, he said that he wanted the NDoH to take the Committee into confidence and tell the Committee if it believes the current infrastructure, human resources and the current primary health care services that are being provided will be able to implement the NHI successfully. What does the NDoH need to make a success of the NHI? He said he does not see much in the budget dealing with this. Government funds a lot of students in medicine. There are about 1 200 graduates that qualify and have completed community service. But because of budget constraints, they have not been absorbed. He said that resources need to be found to help these graduates. A large amount of taxpayers monies are used for their study purposes and then the country might lose the graduates to the international community or the private sector. It is not acceptable. What is the NDoH doing about this? He said he did not see many provisions for vacancies for these graduates. This has to be considered. There must be a provincial mandate to employ them. If there are no resources to employ the graduates, there is going to be a problem.

There have been concerns about board examinations. There appears to be a lot of corruption regarding those that have studied abroad and then written the board examinations in South Africa. There was a huge human cry when people opposed vaccines. There have been matters raised before the courts in different parts of the country about the number of side effects of vaccines. What is the perspective of South Africa and the NDoH on this? There is now evidence to show that there are numerous side effects. Normal vaccines take over one to ten years for a trial. This vaccine was done in a couple of months. This now has an impact on health care in South Africa. People are dying and going into cardiac arrest at a young age. He said that he hoped there would be a new World Health Organisation to counter this one in the future so that there is no manipulation. He said he had seen a report with many vaccines still in stock. Are they going to say that the vaccines have expired and then dump them somewhere? How much is it going to lose? Unfortunately, the man who had saved so many lives in South Africa is now being attacked. Unfortunately, people are being manipulated in this country from a health perspective. He said that there is now a demand for condoms but very little has been done so far. He said that he was not going to complain about the underspending even though it was unacceptable.

Mr X Qayiso (ANC) thanked the NDOH for the presentation. He said that he had a number of issues that he wanted to raise. On state-owned pharmaceutical company, he said that there is a very old resolution that has to be implemented. It seemed like it was one of those things which have some resistance from somewhere. He said that he was not sure where it was coming from but the high price of medication and the importation of medication into the country should tell the Department something. The Department has to look at the issues of ensuring that there is a state-owned pharmaceutical company because there is a huge budget. This is something that is not taken seriously enough. He said that this is his own analysis based on the high prices of medication, and a reasonable portion of the medication is imported from the USA. He said that the interest in that country has doubled, if not tripled, recently. He said one also has to add the inflation of South Africa. It is now paying a high price for medication. He said that service delivery is not adjusted to the consumer price index. This says a lot of the budget intervention that is needed. Some of these things cannot be avoided. It has found a situation where the USA’s interest rates have tripled and yet South Africa has to get imported medication. It has to add the cost of the medication. At the same time, it is unable to implement a resolution which says that a state-owned pharmaceutical company should be established to carry all these costs at a reasonable price level. He wanted to understand as to what interest it is in achieving this goal. The frontline health professionals play a leading role in ensuring that they sacrifice whatever means they have to ensure service delivery to people. There have been several cases in the country where health workers were killed. He mentioned that a doctor was recently killed, which speaks to health workers' lack of security. He was not aware to what extent security of this institution has been secured in such a way that it does not hinder services to people. This is a situation where a community has been forced rather to close the community health centres. He made an example of health workers being under siege during the night next to the police station. There was a decision made to close the facility because of the security. Why does the NDoH not think broadly about the issue of provision of security in health institutions? There is no need to shut down or close a health facility because of security. Instead, it should be strengthening the security systems in the institutions. The resolution is that strategies should be in place to ensure access to healthcare on a 24-hour basis. If the Department can start to reverse that, it will definitely be working against its own research. The NDoH should ensure proper security structures are put in all the healthcare facilities where security is a problem. He said it should be similar to implementing a state-owned pharmaceutical company. He said that he often thought that, instead of seeking a solution on how to implement these, there is a small corner which says to look for reasons not to implement these. He said that this contradiction always comes to his mind where, for instance, there is service delivery for food and to do things at a reasonable price level and accessibility is high. Then people no longer complain about important medication expenses. People will also say that a state-owned pharmaceutical company can produce its own condoms and provide them to communities.

He said that he further wanted to raise the issue of accruals. He asked what the total amount is. He said that the presentation did provide details about the underspending, but suggested that a breakdown of the last five years be provided instead. This will help to see the development in the future. There is a number of incidents in this country where it seems that the issue of migration is at a better level. It has come to some extent to something called xenophobia. There is an influx of which is being caused by this issue of migration in our health institution. Has the NDoH taken into account the issue of the impact of migration to the health institution, and in what way? There has been a reduced budget, and National Treasury must come in because there is a lot of pressure that is going to emanate from what is being discussed on another platform. He said that it is going to bring a lot of bad to the NDoH, and it will have to be assisted in coming out from that abandoned situation. This always shows that not enough budget has come out to the area of compensation of employees. He asked what the cost is for the rollout of infrastructure. He noted that there was a slow kick-off of the project. What is the reason for this? There are training facilities that had to be reopened. What has happened in this regard? In what matters are the NDoH assisting the provinces insofar as underspending is concerned?

The Chairperson said that Ms N Ntlangwini (EFF) had to leave the meeting but asked if he could ask her questions on the platform. She wanted to know what is happening around Malaria and whether budget allocations have been made for Malaria. What initiatives are in place to deal with mental health especially amongst the poor and rural communities? The treatment of health seems to be a privilege for those in white areas. Are people from rural communities being taken care of, especially around cancer treatment in health facilities?

The Chairperson asked if there were any more questions before he proceeded with his questions.

Mr Mmemezi asked whether the NDoH is looking at expanding health facilities and the accessibility thereof in rural and underdeveloped provinces. This is something that has to be resolved. To what extent is the NDoH working with the Department of Higher Education to expand health facilities in universities and nursing colleges as a strategy to increase the number of health human resources to reduce the skills shortages in the health system?

Ms Tobias asked how much has been allocated for the development of vaccines.

Mr Shaik Emam said that the medical-legal claims seem to be on the rise. He asked how the NDoH is dealing with this issue. Are these budgeted separately? How is the NDoH going to try and prevent this from happening? He said that many medical practitioners in both the private and public sector such as gynaecologists, are leaving the professions or country. He said he was worried about this. What is the NDoH doing about this?

Mr Qayiso asked why it is so difficult for the NDoH to ringfence the budget for emergency services. He said that, if he was not mistaken, it was one ambulance for a population of 10 000. He said that, in reality, it is one ambulance for a population of 20 000. Why did the NDoH not reference the budget for emergency services?

The Chairperson thanked the Members for the questions and comments. He said that the question of procurement is a really big deal. The increase in the budget is also not that much of help. This is so for many departments. He said that this is due to the fact that the gross domestic product (GDP) in South Africa has been very sluggish over the years. It is a big thing that the President presented the economic reconstruction and recovery plan. This will assist with receiving more revenue from the South African Revenue Services (SARS). This source will assist with dealing with challenges. Everyone has their own role to play. It is critical to procure as much as possible and create conditions that will allow procurement of goods and services. Goods should be manufactured and produced locally. He said that it should always be at the back of the mind that, when things are imported, there is a negative contribution to the GDP of South Africa. This has an impact on the economy not growing. He understood that something things are imported because the price is low. How does the NDoH look at the social price? Is the social price the total price it is paying to the economy or the opportunity costs? The Chairperson was asking because, whenever this is done, it contributes to the unemployment rate. Whenever imports are made, it contributes to the negative GDP. This is like adding taxes as the panacea to the problems. There is a public procurement bill, but he said he was unsure how much the NDoH was involved since it affects all the departments. Problems should be solved and national imperatives should be considered, not just the price, which would always favour the established. There are always those that are undercut. The Minister should get closer to these things.

The deliberate actions taken by South Korea to grow its local economy have been mentioned. The executive must have this discussion. The Committee is aware that health is a concurrent function. How does the Minister propose these things be dealt with? He said that when the NDoH spoke about some of the conditional grants, the Committee understood the strategies of the provinces. He said the NDoH should speak more about the products and the challenges. This should be shared because Members of the Committee will always ask such questions. He said about R768m underspent on vaccines, especially COVID-19 vaccination. The Chairperson asked why the NDoH did not reach out to other programmes. The President had said that infrastructure is critical to grow the economy. What is the NDoH doing in this regard? There is so much money being underspent. He made examples of the impact of service delivery, jobs and small businesses. There is such a big budget but the NDoH is still underspending. The Chairperson then referenced transversal contracts and asked what the involvement of the NDoH is in adjudicating those tenders.

Regarding the percentage of procurement, as far as pharmaceuticals are concerned, are those things being manufactured in South Africa or is the company based in South Africa? Does local procurement equal local manufacturer? Is the NDoH participating in any employment initiatives? Is the NDoH also participating in the Presidential Employment Stimulus Initiative (PESI)? If so, how has the PESI dealt with the challenges of employees, especially during COVID-19? The buildings that the NDoH are paying for or using – are these buildings owned or rented by the NDoH? Why would government rent things? Government is permanent and would make sense if it owned its buildings. What is happening in the area of fighting against HIV/AIDS?

Responses

Minister Phaahla delegated to his team to answer specific questions while responding to some questions. He said that, insofar as the NHI, including the readiness of infrastructure and human resources, is concerned, there has been a number of engagements with colleagues at National Treasury and Cabinet level. There has been a number of bilateral meetings and ballot meetings with the Minister and his team looking at various aspects of support to strengthen the health delivery platform which will positively contribute to the preparedness of the NHI. He said there are a few things the NDoH is not happy about. There is some sort of understanding that, as part of building the NHI even before both Houses of Parliament pass the NHI Bill, the financial capacity must be strengthened to prepare and strengthen the public health delivery platform. One of the sources of possible increases in funding would be tax credits allocated to the medical aid industry. If those tax credits were redirected into the public health platform, it would be a huge input. A proposal has been made progressively to start redirecting the income from keeping those tax credits to the medical aid industry and to redirect those funds to the public health system. It could contribute enormously to infrastructure, equipment and human resources. To the disappointment of the NDoH, National Treasury increased the tax credit allocation instead of reducing and reallocation those resources. He said that he wanted to communicate that there were difficulties.

He said that he supported local manufacturing. There has been engagement with different departments and National Treasury on this, but the team will speak about this more. He said that the matter of doctors who finish community service and are then unemployed is something that is being death with. He said a process is underway and the team will give more details on this. Insofar as the state-owned pharmaceutical company is concerned, the executive lies at the Department of Science and Innovation (DSI). This decision was taken to avoid conflict of interest in health. So, the DSI is the one driving this.

He said that the emergency service ambulances are mainly in the urban areas. There is also sometimes violence in fixed facilities. It is a matter that the NDoH has been grappling with in terms of how to best deal with the issues of security. There has been some pressure. Rather than relying on private security companies, it should insource. There has been a discussion with one of the embassies to get some common approach as to how to deal with this issue of security. There are benefits to insourcing but there are also some negative parts. The security staff is permanent, and one has to keep upgrading the training. The NDoH is not the primary department for security and training. From security operations overall, there is an uncontested benefit of where there is a possibility of people moving around to avoid familiarity. The effectiveness of security personnel is linked to avoiding too much familiarity, like using the environment and people, and they become part and parcel of the problem. When one employs full-time staff, those are some of the problems. He said that there had been some discussion on this previously. It has to find the best way to deal with the situation. It also has to look at the cost implications because there have been criticisms of the money paid for private security. A lot of money goes to private security but little to the personnel. The owners take much of it as profit, and the security personnel are paid peanuts. They get easily corrupted because they get little income with no protection, no benefits or pension or medical scheme. There are all these issues, and it is a matter of bringing back the accruals.

Regarding the development of vaccines, the NDoH is the customer and the consumer. The NDoH has been working very closely with the DSI to transfer knowledge of vaccine manufacturing. The NDoH is working together with the DSI, and there has been support from the World Health Organisation for a hub in South Africa on the mRNA vaccines. This has been informed by scientists. He acknowledged this shot to prominence through the COVID-19 vaccines but the scientists have said that the technology, once mastered, can help produce and manufacture other vaccines, pharmaceuticals and medicines against viruses, bacteria and cancer. He said that viruses and germs initiate some cancers. The DSI is the custodian of that technology. The DSI is funding the programmes but the NDoH works closely with it. He said there is an obligation to ensure that whatever is produced is relevant and is going to be useful for major disease patterns in the country. There is indeed a major issue with medical-legal claims. The NDoH is working with the provinces in terms of various intervention strategies to mitigate against the impact of medical-legal claims and case management. This is to ensure that all the cases are properly monitored and that fraudulent claims are identified and acted upon. This is on both the legal and forensics side. The NDoH is in the process of creating an entity within the national Department to bring in experts who can help support the provinces to ensure that it can deal with this issue. This goes beyond the public sector because it affects private practitioners, like special obstetricians, paediatricians and also the neurosurgeons. Certain categories are more vulnerable to litigations. The NDoH is working with the Department of Child Justice to change the law, especially on state liability. Once those amendments can be done, it will help private practitioners. He asked to team to respond to the questions and then he will come back at the end.

Deputy Minister Dhlomo said that the NDoH envisaged having this NHI vessel health coverage. An independent institution called the Office of Health Standard Compliance was created. This institution visits health facilities in both the private and public sectors. It wants to establish the readiness to become an ideal clinic and ideal hospital. The health facilities will receive a compliance certificate if they meet the criteria. Those that do not meet the criteria will be issued with a compliance notice to fix the issues to receive a compliance certificate. He said that this is non-negotiable for the infrastructure project. Two weeks ago, there was a second presidential health compact and reports were made to the President on things that people were not happy about such as not being happy with the state of health in the country. In 2018, it looked at these reports and it came up with nine pillars such as human resources and infrastructure. These nine pillars have to be looked at and have to be the focus of the NDoH. So, two weeks ago, there was this meeting to see how far it has come. This is a really good enabler for handing over the NHI to the private sector, because there are already good facilities. There are a lot of good facilities in the private sector but other state-of-the-art hospitals and clinics in the country have been built by the government.

There is improvement in this every day. There will not be a big bang on the day of readiness but it will go in a steady fashion day by day and week by week. A week before, it was a very historic day for the Portfolio Committee on Health, where the Committee wrapped up its deliberations on the NHI Bill. The Portfolio Committee Chairperson said it was ready to bring the NHI to National Assembly for debate. Hopefully, it will be endorsed by both the National Assembly and the National Council of Provinces. The NDoH is ready and cannot wait to start the process. It will be implemented incrementally and steadily. It is not looking to have everything ready in one day in every facility in the country. Other countries will be maturing on universal health coverage that started way before South Africa, but the most important thing is the commitment to start. Everyone has now gone into this and it is doing really well.

Last year, the NDoH launched a strategy national security plan on non-communicable diseases. This programme considers many behavioural programmes such as eating, drinking and exercising, as mentioned by Mr Shaik Emam. He said that there are many risks, whether people drink or not, smoke or not and exercise or not. There is also the risk of air pollution. He said that drinking, eating, smoking and exercising are something that can be individually controlled. The country should support the citizens to minimise air pollution because, if it is controlled or reduced, the impact will not be so much. It is not only about what is being done in the health sector but also what people are doing individually. There is an increase in awareness of these processes in terms of cancer, cardiovascular diseases, chronic lung diseases, mental health and diabetes. Two weeks ago, there was a mental health conference. There is a non-communicable diseases campaign, but more can be done if there is support from all the cities in the country to maximise the campaign. This will help to reduce the impacts and for people to live a long and healthier life. He said that the Minister mentioned the issue regarding the health market inquiry report and that people are not exercising enough and adequate regulatory oversight over the private health sector. He said it might have been a slip of the tongue but the Minister said public sector instead of the private health sector. He said that he just wanted to correct this.

Dr Buthelezi said that a committee of four DGs had been put together to deal with the issue of local procurement. It is the NDoH, National Treasury, DSI and the Department of Trade, Industry and Competition. The four DGs will report back to the ministers at the end of the month. He said that the legislatures must empower accounting officers regarding policy direction. He was happy that the public procurement deal had been made public. Currently, it becomes the problem of the Special Investigating Unit if there is no enabling policy and legislation. A joint committee between the NDoH and the Department of Higher Education deals with matters relating to health, sciences and medical education. He said the committee is called the Joint Health Science and Joint Health Community. This committee is co-chaired by the DG of NDoH and the Department of Higher Education DG. It looks at the services it needs, the training and the kind of production it is dealing with. The Department of Higher Education has a programme called higher health to ensure that there are health services within the institutions of learning including prevention programmes. There was a similar one for the vaccination. The PESI programme was introduced in 2020 to the NDoH and has participated in the recruitment of nurses but only offered three month contracts. This created a problem with the unions as the unions demanded that people be employed permanently. There were about 200 of them, and it was only a three-month contract.

He said he had the privilege in his previous role to be part of the team looking into the local condom manufacturing problem in the country. He said that latex is needed and the four main countries that manufacture latex are Malaysia, Vietnam, Thailand and Indonesia. So, even if condoms are manufactured in South Africa, the latex still has to be imported. There is a huge import cost. There is one company that manufactures condoms but it is struggling. There are a number of cases in the USA on the Johnsons and Johnson’s powders, which claimed that the powder contains talcum and that talcum was linked to ovarian cancer. The company has been taken to court. But when it comes to South Africa, this powder is not regulated under the Medicines and Related Substances Act (Act 101 of 1965). The NDoH as the custodian of that Act, cannot do anything when it comes to this issue. The accounting officers are always expected to nominate officials to participate at all levels of the transversal tenders. The NDoH is part of this as an end-user, evaluator and contract awarder. In the annual performance plans, there is an indication of non-communicable diseases. One of the indicators is about how to restrict the advertising of unhealthy foods that are targeted at children. There is currently 39 nursing colleges that are at different levels of refurbishment. The NDoH has finished four nursing colleges in the last three years – Middleburg, Thohoyandou, Chris Hani Baragwanath and Butterworth. The NDoH was due to do Henrietta Stockdale Nursing College in Kimberly but the province decided to relocate to another area. The NDoH is waiting on confirmation and then it will proceed with the work.

He said, on the issue of Gauteng, there has been support for the provinces. There is a forum to look at how the provinces have been assisted. A dedicated support unit works with provinces to assist them in areas where it has underspending. There is underspending in Gauteng, especially when it comes to conditional grants. There is now an intervention implemented by the NDoH, where the transferring accounting officer will no longer transfer money if there are no procurement plans. Provinces only start to worry in the third or fourth quarter of the financial year. This is too late to make budget adjustments and procure equipment. The procurement plans have to take place in the first and second quarters of the financial year. The CFO and the accounting officer are very strict on this one. In Gauteng, there has been a delay on the number of equipment, including linear accelerators, in several hospitals. The province has assured the NDoH that it is now in the final stages of procurement. He said the provincial treasury has a complicated procurement system but the NDoH is constantly working with them. There has been an engagement with the CFO and the Head of the Department of Gauteng. He said that there are dedicated employee assistance programmes in each province. It works internationally, with sometimes external service providers are used. He mentioned that external service providers were used, especially during the time of COVID-19. The wellness clinical staff is now in its final stage, and most provinces have done the same.

On the matter of mental support, specifically in KZN, he indicated that provision had been made for mental support, especially at the University of KwaZulu-Natal, Pietermaritzburg. There is support for the caretakers that had to carry the branch of the pandemic.

On the board examinations issue, he said there is information around this and it has gone to court. Some of the students have failed the examinations, especially those who have studied outside of South Africa. There is a current one, and it is not really formal or around the fraudulent examinations. Some students have not been afforded the opportunity to write. He said that people at the borders are really struggling. There are about 60% of deliveries in those hospitals and those people in the country illegally. Legally, it cannot exclude foreigners – those under the age of five and maternity cases. A team has been put together to develop a business case because there is a lot of pressure on a number of hospitals in Gauteng, Musina, Mpumalanga, Limpopo and other provinces. He said that the hospital at the border of Mozambique is seeing almost 80% of deliveries that come from across. This is a bigger government issue, and the National Treasury should help with compensation mechanisms.

Prof Nicholas Crisp, DDG: NHI, NDoH, said the NHI Bill is ready to go to the National Assembly for voting. It has been prepared for a number of years and is ready for the implementation of the NHI Bill. The NDoH has consolidated a branch and is currently busy with the employment of people to do some of the preparatory work which will enable the NDoH to design what is necessary for the schedule 3A entity as soon as the NHI Bill is passed into law. The foundational work being done in preparation for the financing is largely concentrated on the digital capacity. It has to understand how to manage the benefits and the payments that are specified in the NHI Bill. It ensured to put in the necessary risk identification and fraud management processes. It will be looking at product procurement within the NHI. The current funds being spent in the health space is about 8.5% of the gross domestic product. It will move depending on where it is now. In the public space, it is about R265bn, which is largely in the provincial departments’ equitable share and R60bn that is in the conditional grants, and other smaller amounts in the public service. He said that these have to be systematically moved. He said that R277m is spent in the private sector and is only spent on only about 15-20% of the population. There has to be an alternative way of moving that money. The provisions in the NHI Bill are for different forms of taxation which will get to National Treasury and the Minister of Finance when the time arrives. The NDoH is disappointed with the R35b tax credits that have been increased rather than being moved to enable the NDoH to do some innovative work on strategic planning in the primary healthcare environment. There will be engagement on this matter as it builds the capabilities and improves the service delivery level.

The NHI Bill separates the purchaser and the provider. Over the years, funding has been allocated to various projects to test various ways of strengthening and improving the service delivery capacity including ideal clinics and hospitals and the different ways of contracting into the public service. Some of these projects are now able to be strengthened, and they will be able to move into the new service delivery format. He said some of these things had shown the NDoH how not to do things. These things will now be avoided because there is a need to strengthen the infrastructure in the public sector. He said he does not think that people understand that, once the Department is able to refer, patients are entirely dependent on the public sector into the private facilities and purchases of services through the fund. Once this is done, the pressure will be relieved on some of the public facilities which are overburdened at the moment. It will allow for some breathing space and additional time to do more maintenance and take off the heat of the staff in that environment. At the moment, it spends about R5 200 per capita in the public sector on health care and R28 700 per capita in the private sector per annum. This is clearly not sustainable and the aim is to amend this. People are looking for good reasons not to implement the NHI. However, from the NDoH perspective, it sees health as not being a tradable commodity but as a public good. A public good is something that needs to be dealt with with due care and responsibility by the government. This is the reason why the NDoH is so anxious and that it should move into the next phases of implementation of the NHI Bill. This is not a process where one can switch on the NHI and then the next year, everything is sorted. He said that there had been countries that the NDoH has worked with and have said that it can take between 15-30 years to roll out this size of reform fully. The NDoH does not expect it to be any different in South Africa. He said that other countries have said that one cannot define every corner of the health service for 30 years into the future, but one can have confidence in the framework that has been put in place to start. This is what the NHI Bill does.

He said that he is aware that people have various negative views of vaccines. Vaccines have been available for many years and are the single most efficient way to deal with communicable diseases. There has been an intervention to eliminate measles, tuberculosis, polio and smallpox. The vaccines have helped to get rid of these diseases almost completely. All vaccines and medicines have side effects. This is not new news to anyone in the world. He said that some foodstuffs have side effects for some people. The NDoH monitors these side effects. There is a very robust reporting mechanism in South Africa called the ‘Adverse Events Following Immunisation’, with research done on every single case being done. These reports are sent to the South African Health Products Regulatory Authority (SAHPRA), the regulator responsible for pharmacovigilance, when those cases are notified, especially if they are serious adverse events. There is a global classification of what is being investigated thoroughly and what is reported. This information can also be found in the public domain, which is on the website of the SAHPRA. Every new case is being monitored. The NDoH is aware of the mild side effects frequently perceived as short-term side effects. Occasionally, there are very serious side effects which even people can get from peanuts and other foodstuff. The NDoH follows the science, the evidence and what is happening around the world. It is part of a very big reporting and global community. It is not concerned that there is something very dramatically different with these vaccines that it is using now or other vaccines. The mRNA vaccine was used for the first time during the COVID-19 pandemic as a mass programme around the world, but it has been around for many years. Many experimental vaccines leading up to the mRNA have been tested in other environments for other diseases. The NDoH is very happy with the mRNA vaccine hub in Cape Town, which will put South Africa in a good position to deal with new diseases or to respond to the diseases.

He said that intellectual property is very important. South Africa has to work with the rest of Africa to maintain that intellectual property and not have to go buy these elsewhere in the world. He said that all the vaccines procured two to three years ago would not be used, but they will be used until the expiration date and then destroyed them. There is a very clear and robust process for destroying any biological product. The NDoH will be very transparent about this in the public space. The manufacturing of vaccines and any other pharmaceutical is something that the NDoH is really interested in. He said that it was explained before that it is the purchaser of these products and is working closely with the public sector for the potential of manufacturing in South Africa. It is also working with the private sector. He said that active pharmaceutical products which are the basic substance needed for manufacturing, are not made in South Africa. He said nearly all active pharmaceutical ingredients for both pharmaceutical products and biological products like vaccines are imported. These are imported at a price because of the intellectual property. So, whether it is a public or private sector manufacturer, the active pharmaceutical ingredients still have to be imported, and it still has to pay for the intellectual property. He said that it is far more complicated than it meets the eye. There are transversal contracts that the NDoH is managing. There are about 1 200 of the main products, and it pays for more local products. Finishing, packaging, and labelling must be done in line with the standards of South Africa. It is prepared to pay a premium of up to 15%, which goes into the tender documents. It is not cheaper to manufacture in South Africa unless it is able to manufacture active pharmaceutical ingredients, which it is not currently. There is a long road ahead before it can get out of this situation. Several large pharmaceutical manufacturers in the private space in South Africa are working with international companies around the world. He said they are involved in the local packaging. There is preferential treatment, so it allows it to create jobs in South Africa.

Ms Jeanette Hunter, DDG: Primary Health Care and Hospital Management Systems, NDoH, said there is a budget for controlling Malaria in the country and, to some extent, the neighbouring countries. The budget is not enough. There is a number of districts in three provinces where Malaria is endemic. These districts are in KwaZulu- Natal, Mpumalanga and Limpopo. The NDoH is doing very well with the programme. As part of the sustainable developmental goals, South Africa has set a target to reach zero Malaria in the country by 2030. The NDoH is working systematically towards reaching this goal of zero incidences of Malaria. It has done well in the 2022/23 financial year. The recent National Institute for Communicable Diseases report indicated that there have been one-three cases of Malaria in provinces that are not endemic. This is often found in Gauteng and North West, where there is suitcase Malaria, meaning that travel has brought it into the non-endemic provinces. This raises alarms and has to be attended to. The NDoH is serious about eradicating Malaria in this country, so every case must be taken seriously. There is a programme for both the endemic and non-endemic provinces. In the endemic provinces, spraying is focused so that it can start at the source of Malaria even before people become sick. South Africa has been directly supporting Mozambique to help lower the cases there so that South Africa can be successful. There is a collaboration between the landlocked countries in South Africa and the neighbouring countries. The country is doing well in this regard. Government has done a lot in setting up, especially primary healthcare in the rural areas of South Africa. In terms of all the programmes on mental health, the NDoH is not taking them to the rural areas because they are already there. The NDoH is just strengthening what is already there. She said that with mental health, it started about two years ago to roll it out into the primary healthcare facilities through investing in specialist skills to deploy in those facilities. There is also training generalist skills to be able to attend to mental health in terms of prevention and treatment.

Mr Mamogale said that the information on the five years of underspending on the direct and indirect grants would be supplied to the Committee. He said that money on the vaccines is not earmarked funding insofar as the question about the R768m is concerned. The NDoH could not move the money without the approval of National Treasury. This request has been made. In the accrual sector, between 2017/18, it was sitting on R14.1bn, and was decreased to about R8b in 2019/20. During COVID-19, it increased to R15.3b and in 2021/22, it increased to R16b. Gauteng was sitting on R6.3b, KwaZulu-Natal sat on R1.4b, Eastern Cape on R4.6b and North West on R1.3b. The other provinces were all under a billion. The NDoH was sitting on R750m in the previous financial year. It is busy finalising the compilation of the accruals which will then be shared with the Committee. He said an analysis would be done and the information would be provided to the Committee. Some of the invoices were not paid within 30 days, but the NDoH now ensures that all suppliers are paid within the required timeframe. There is medicine that is manufactured in South Africa and some that are imported to the country. There are service providers that do the packaging and distribution within the country.

Dr Buthelezi said that the Department of Public Works and Infrastructure is the custodian of all the buildings. The Department of Public Works and Infrastructure is subletting the building to the NDoH. He said that there is a comprehensive report on the ambulances, and it can be shared with the Committee.

Minister Phaahla said that he was aware that the NDoH had run out of time, but he just wanted to raise a few things. He said that provinces have reached out to the NDoH to intervene on its behalf regarding the transversal tender for metro motor vehicles such as ambulances. Service providers are appointed based on those transversal tenders to fix broken ambulances. He said that the fixing sometimes takes really long and there is no flexibility because the service providers are procured in terms of the transversal tender. He said that the concurrent functions are really a complex situation for which the NDoH has to navigate and work cooperatively. For instance, conditional grants are a leverage through which it is able to drive certain programmes such as communicable and non-communicable diseases as well as infrastructure. The NDoH is able to intervene, but at the same time, if the province is not performing, there is a difficulty – especially if allocations have already been made. For example, if Gauteng was not moving to fix the damage after the fire, there is hope or expectation that the building could be fixed since the NDoH provides the revitalisation grant. The Premier asked the NDoH to step in because the infrastructure from their side was moving very slowly. So, when the NDoH comes in, there is this hope that it could use the funds to actually drive the process of rehabilitating the building by using the national infrastructure team. He said that National Treasury said that this could be implemented if funds have been allocated to the province. So, for example, if funds have been already allocated and the province is not performing, one cannot say in the middle of the financial year who is going to implement the programme. There are these kinds of difficult situations at both an administrative and political level. The NDoH does provide support to ensure that there is service delivery. The NDoH has been pushing for delegation of the big four hospitals that have not been functioning so that the financial authority or the CEO can make decisions when remedial work is needed at the hospital. So, there has been this agreement that the delegation will be going to the CEO but it has not been happening. The NDoH has been pushing to ensure that those improvements are being made. It is navigating through negotiations and seeing how it can help where possible. He thanked the Committee for this opportunity and apologised for going beyond 12h00.

The Chairperson thanked the Minister and said that this was time well spent. The issues of health are so critical. He said that, before letting the Department go, he asked Dr K Jacobs (ANC), the Portfolio Committee on Health Chairperson, if he had any comments. He realised that Dr Jacobs might no longer be in the meeting and asked if any other Members of the Portfolio Committee on Health wanted to comment.

Mr N Xaba (ANC) said that Ms A Gela (ANC) is on the platform and may want to comment since she has been following everything.

Ms Gela thanked the Chairperson for the opportunity. She said that she thought the NDoH had fully set out the important issues. She recounted that, in the previous week, the Portfolio Committee on Health dealt with the A-list of the NHI Bill. She said that, on 24 May 2023, the NHI Bill would be brought to the House for approval. She had noted the challenges the NDoH faces, and she believed that the Department would overcome them. It will request more resources for the NDoH because, without health, it is nothing. She once again thanked the NDoH for presenting and thanked the Chairperson for this opportunity.

The Chairperson thanked the Minister and Deputy Minister. He said that there are a lot of issues that have to be dealt with. He thanked the rest of the Department’s officials. He said he appreciated the presentation and that the Committee is aware of the challenges that the NDoH. He mentioned the importance of the value of money. He knew about the limitation of resources. The performance of the economy has not been good for a number of years, including the health pandemic (COVID-19), which impacted the economy. These are all the things that have to be dealt with. He once again thanked the Department and its officials.

Consideration and adoption of minutes

The Committee went through the minutes of 09 May 2023.

The minutes of 09 May 2023 were duly adopted as a reflection of what transpired on that day.

Concluding Remarks by the Chairperson

The Chairperson thanked the Members for engaging with the presentation by the NDoH. The critical issues that have been raised are very much appreciated. He thanked the support staff and the Members of the public.

The meeting was adjourned.