The financing of the health system is complex and segmented, with funds flowing in all three spheres of government — national, provincial and local — as well as in the private sector. The table below is an attempt to quantify the financial flows in the South African health sector.
| 2000/01 R million | 2001/02 R million | |
| National Department of Health (NDOH) | 6 736 | 6 776 |
| Less conditional grants | 5 984 | 6 037 |
| Total available funds for NDOH | 752 | 739 |
| Provincial funding | 29 634 | 26 479* |
| Funds controlled by Health MINMEC | 30 386 | 27 218 |
| Other Government Departments | 44 89** | 4 157* |
| Local Government | 12 79** | 1 185 |
| Total estimated public sector health funding | 36 154** | 32 560 |
| Total estimated private sector health funding | 42 768 | 39 600** |
| Total estimated health sector funding | 78 922 | 72 160 |
* Budget as quoted in the Budget Review 2001.
** The figures come from various sources and have been adjusted to reflect 2001/02
values.
Structure of the Department’s Budget
The purpose for which the national Department of Health is funded is: “To promote the health of all people in South Africa through a caring and effective national health system based on the primary health care approach.”
The Budget has been divided into three programmes: Administration, Strategic Health Programmes and Health Service Delivery. In addition to these three programmes there are two major categories:
Specified Items and Conditional Grants.
BUDGET ALLOCATIONS AND ACTUAL EXPENDITURE 2001/02
| Budget R'000 | Suppl & Adj Budget R'000 | Total Budget R'000 | Actual Expenditure R'000 | Balance R'000 | |
87 667 |
26 952 |
114 619 |
3 611 |
111 008 |
|
| Programme 1 | 285 266 |
84 746 |
370 012 |
277 |
369 735 |
| Programme 2 | 139 682 |
10 402 |
150 084 |
13 439 |
136 648 |
| Programme 3 | 141 273 |
0 |
141 273 |
6 513 |
134 760 |
| Specified items | |||||
| Sub Total: (excl conditional grants) | 653 888 |
122 100 |
775 988 |
23 840 |
752 148 |
| Conditional grants | 5 957 481 |
26 812 |
5 984 293 |
0 |
5 984 293 |
| Total: | 6 611 369 |
148 912 |
6 760 281 |
23 840 |
6 736 441 |
Programme 1: Administration
This programme refers to activities related to the overall management of the Department. Sub-programmes and activities include policy formulation by the Offices of the Minister and the Director-General and the provision of transversal support services – such as legal services, financial services and human resource management. The Fixed Capital Budget is also accommodated in this programme.
PROGRAMME 1 BUDGET ALLOCATION AND ACTUAL EXPENDITURE 2001/02
| Budget R'000 | Suppl & Adj Budget R'000 | Total Budget R'000 | Actual Expenditure R'000 | Balance R'000 | |
| Minister, Management and Corporate Services | 71 467 |
4 951 |
76 418 |
1 049 |
75 369 |
| Fixed Capital (land, buildings) | 16 200 |
22 001 |
38 201 |
2 562 |
35 639 |
| Total: Programme 1 | 87 667 |
26 952 |
114 619 |
3 611 |
111 008 |
The table shows that the “operational” side of Programme 1 spent 98,6% of the allocated amount. The favourable balance on the fixed capital side of the programme is due to the fact that delays occurred in the reconstruction project at the Pretoria Forensic Laboratory. The problems have been resolved and the project is due for completion by December 2002.
Programme 2: Strategic Health Programmes
The branch for Strategic Health Programmes incorporates a large number of subprogrammes that focus on the development of key public health interventions. It accommodates the cluster HIV, AIDS, STIs and TB that includes the Government AIDS Action Plan (GAAP). The AIDS-related sub-programmes account for more than half of the programme’s budget.
PROGRAMME 2 BUDGET ALLOCATION AND ACTUAL EXPENDITURE 2001/02
| Budget R'000 | Suppl & Adj Budget R'000 | Total Budget R'000 | Actual Expenditure R'000 | Balance R'000 | |
| District Health Systems | 1 947 |
0 |
1 947 |
2 487 |
(540) |
| International Health Liaison | 34 561 |
0 |
34 561 |
35 759 |
(1 198) |
| Southern African Develop-ment Community | 1 987 |
0 |
1 987 |
1 977 |
10 |
| Health Monitoring and Evaluation | 15 419 |
1 985 |
17 404 |
18 152 |
(748) |
| Maternal, Child and Women's Health | 17 714 |
11 124 |
28 838 |
26 278 |
2 560 |
| Medicines Regulatory Affairs | 18 503 |
0 |
18 503 |
15 843 |
2 660 |
| Mental Health and Substance Abuse | 4 700 |
831 |
5 531 |
6 033 |
(502) |
| HIV, AIDS and STIs | 61 744 |
38 306 |
100 050 |
96 343 |
3 707 |
| Government AIDS Action Plan (GAAP) | 111 430 |
(4 939) |
106 491 |
112 102 |
(5 611) |
| Tuberculosis | 4 953 |
0 |
4 953 |
2 996 |
1 957 |
| Pharmaceutical Policy and Planning | 9 723 |
37 439 |
47 162 |
49 180 |
(2 018) |
| Medical Schemes | 2 585 |
0 |
2 585 |
2 585 |
0 |
| Total: Programme 2 | 285 266 |
84 746 |
370 012 |
369 735 |
277 |
The overspending by individual sub-programmes has been small. However it should be noted that six clusters in this programme over-spent. The combined under- and overspending, yielded a slight surplus of R277 000. The following observations can be made:
Programme 3: Health Service Delivery
The Health Service Delivery branch, as its name suggests, supports the delivery of health services. It includes hospital services and “non-personal” services, such as environmental health, health promotion and occupational health. It also includes the Cluster for Disease Prevention and Control that has a substantial budget covering the large forensic laboratories as well as the National Institute for Communicable Diseases (previously the National Institute for Virology).
PROGRAMME 3 BUDGET ALLOCATION AND ACTUAL EXPENDITURE 2001/02
| Budget R'000 | Suppl & Adj Budget R'000 | Total Budget R'000 | Actual Expenditure R'000 | Balance R'000 | |
| Disease Prevention and Control | 60 193 |
5 030 |
65 223 |
58 333 |
6 890 |
| Hospital Services | 12 565 |
1 990 |
14 555 |
13 139 |
1 416 |
| Human Resources | 6 239 |
3 382 |
9 621 |
9 988 |
(367) |
| Non-Personal Health Services | 58 122 |
0 |
58 122 |
53 204 |
4 918 |
| Health and Welfare Sector Negotiations | 2 563 |
0 |
2 563 |
1 981 |
582 |
| Total: Programme 3 | 139 682 |
10 402 |
150 084 |
136 645 |
13 439 |
Programme 3 shows a favourable balance of R 13 439 000. This is explained below.
Specified Items
Funding for the following sub-programmes is included in this section:
Funds for the MRC and Vaccine Production Units flowed as planned.
SPECIFIED ITEMS BUDGET ALLOCATION AND ACTUAL EXPENDITURE 2001/02
| Budget R'000 | Suppl & Adj Budget R'000 | Total Budget R'000 | Actual Expenditure R'000 | Balance R'000 | |
| Medical Research Council | 127 221 |
0 |
127 221 |
127 221 |
0 |
| Vaccine Production | 4 052 |
0 |
4 052 |
4 052 |
0 |
| Poverty Relief | 10 000 |
0 |
10 000 |
3 487 |
6 513 |
| Total: Specified Items | 141 273 |
0 |
141 273 |
134 760 |
6 513 |
The under-spending in the Poverty Relief Programme can largely be attributed to slow spending by provinces. In many cases funds were in fact spent but the route for submission of paper work to account for transactions is long and slow. The Department’s requirement that poverty relief should take the form of sustainable projects rather than short-term relief may also have delayed spending.
Conditional Grants and Transfer Payments
The new Division of Revenue Act requires that funds earmarked for the provinces by way of conditional grants should flow according to a pre-negotiated payment schedule. As can be seen in the table the Department complied with this requirement.
CONDITIONAL GRANTS AND TRANSFER PAYMENTS BUDGET ALLOCATION AND ACTUAL EXPENDITURE 2001/02
| Budget R'000 | Suppl & Adj Budget R'000 | Total Budget R'000 | Actual Expenditure R'000 | Balance R'000 | |
| Central Hospital | 3 270 920 |
0 |
3 270 920 |
3 270 920 |
0 |
| Health Professional Training and Research | 1 234 090 |
0 |
1 234 090 |
1 234 090 |
0 |
| Redistribution of Specialized Health Services | 182 160 |
6 514 |
188 674 |
188 674 |
0 |
| Hospital Rehabilitation | 500 000 |
500 000 |
500 000 |
0 |
|
| Nkosi Luthuli Hospital | 103 800 |
103 800 |
103 800 |
0 |
|
| Pretoria Central Hospital | 50 000 |
50 000 |
50 000 |
0 |
|
| Primary School Nutrition Programme | 582 411 |
582 411 |
582 411 |
0 |
|
| HIV and AIDS | 34 100 |
54 398 |
54 398 |
0 |
|
| Total: Conditional Grants | 5 957 481 |
5 984 293 |
5 984 293 |
0 |
General discussion
Irregular expenditure
The Department incurred two items of expenditure, to the value of R2,18-million, that can defined as irregular as procurement procedures were not followed. In addition the Department identified five further instances to the value of R373 000 where irregular expenditure may have been incurred.
These matters have been reported to the State Tender Board and are being dealt with.
Financial Monitoring
For the first time since 1997/98 has the risk of overspending become a material consideration. From this report it can be seen that this risk will have to be carefully managed in 2002/3.
Concluding remarks
Overall, the Department spent 99,6% of the funds allocated under its Budget.
The picture is somewhat less satisfactory when the Conditional Grants are taken out of the equation. The Department spent 96,9% of “own” funds allocated. If the Medico Legal allocation is disregarded, the Department spent 98,2% of the allocated funds for its “own” activities.
The Department’s funding requirements are, by and large, catered for in the Medium Term Expenditure Framework.
However, the recent slide of the value of the Rand against hard currencies and the subsequent wave of inflation will impact severely on Health Sector budgets.
THE HEALTH DONATION FUND AND THE KING GEORGE V FUND
Both of these hold small amounts of money and are separately audited. A financial report on each of these funds, including the Auditor-General’s statement, available from the Department of Health’s Chief Financial Officer on request.