Godongwana’s Budget promises improved funding for the health sector — but is it enough?

Public healthcare specialist Lynne Wilkinson. (Photo supplied)

13 Mar 2025

Health experts are cautiously optimistic that Finance Minister Enoch Godongwana’s budget allocation for the health sector will cover certain funding gaps in the system. However, it remains uncertain whether it will be enough to rebuild what was lost over two years of budget cuts.

After two years of severe budget constraints in the health sector, Finance Minister Enoch Godongwana’s 2025 budget speech seemed to emphasise covering funding shortfalls in the public system, with the overall health budget increasing from R277-billion in 2024/25 to R298.8-billion in 2025/26.

The health budget is projected to increase to R329-billion by 2027/28, with an average annual increase of 5.6%. In the previous Budget, the average annual increase to the health allocation stood at 3.4%, which fell below inflation.

In his budget speech, Godongwana acknowledged that the public health system had lost close to 9,000 health workers in the past year alone, as the government did not have the money to retain or replace them. Accruals in the sector, which is the money owed by departments to vendors for services already provided, had ballooned to nearly R22-billion.

“This is an untenable situation that we could not leave unresolved,” said Godongwana.

He said that R28.9-billion had been added to the health budget, mainly to keep about 9,300 healthcare workers in the country’s hospitals and clinics. It would also be used to employ 800 post-community service doctors and to ensure that pharmacies don’t run out of medicines.

There is some hope among those in the health sector that the 2025 budget allocation will cover certain funding gaps in the public system. However, it is not yet clear whether there will be capacity to build back what was lost over two years of budget cuts.

Read more: Gauteng health workers, experts raise alarm as hiring freezes pose risk to patient care

‘Bailout’ for strained health system

The budget constraints in public health in recent years have resulted in the freezing of posts at facilities and constraints on funding for equipment and service providers, across provinces.

Professor Lydia Cairncross, a senior clinician in the public health system and a member of the People’s Health Movement. (Photo: Felix Dlangamandla)

“For the last two years, we didn’t have an inflation-related increase [in the public health sector], so we essentially had a 5% cut for the last two years,” explained Professor Lydia Cairncross, a senior clinician in the public health system and a member of the People’s Health Movement, based in the Western Cape.

“When you cut the budget, you’re always cutting the staff… What happens is they immediately don’t fill any posts that become vacant. So, you get a hiring freeze.”

This in turn has resulted in reduced theatre lists for surgeries, longer waits for care and delayed treatment for patients with cancer or other chronic non-communicable diseases, according to Cairncross.

“You also impact the long-term ability of the system to deliver healthcare... You lose really good people, and then you also begin to lose institutional systems and structures that allowed us to deliver healthcare to the maximum within our resource envelope,” she said.

Cairncross expressed cautious optimism about the increase in the health budget for 2025/26 to 2027/28.

“I think it’s very good that we can anticipate stability in the next two to three years… Certainly in the Western Cape, we were at a precipice... where if we got another big cut this year, I think we would have had a quantum difference in the type of health service we could deliver,” she said.

“If we stabilise now, there’s potential for us to consolidate and begin to plan to build back.”

Rural Health Advocacy Project Director Russell Rensburg (left) with Eastern Cape health official Dr Rolene Wagner. (Photo: Tiyese Jeranji / Spotlight)

The Rural Health Advocacy Project (RHAP) welcomed the R28-billion “bailout” National Treasury had earmarked for the health sector, with RHAP director Russell Rensburg stating that Godongwana had sent out a “positive message” with his healthcare allocations.

Rensburg said the allocations would lay the foundation for a broader plan to strengthen public-funded health services, but warned that governance and oversight would be needed to ensure services reached those who needed them most.

Cairncross echoed this sentiment, saying that the public health system needed to “close the tap” on potential resource losses.

“High quality, ethical and inspired leadership of our health facilities is crucial, and we need to find a way to invest in that, not just in terms of money, but in terms of who we put in those positions, how we support them, how we evaluate the impact of what they’re doing,” she said.

“At the moment, for managers of health facilities, there isn’t a framework for what is required, how they’re supported and how they’re measured. The one measurement... is whether or not they come in on budget, but that is not a measurement that values patient outcomes or patient experience.”

Cairncross emphasised the need to find ways of protecting core social responsibilities such as health, education and social services from fluctuations in the economy and budget in future.

“As a society, as a country, we have to hold steady and protect the health, education and social services budget. They don’t have to increase, necessarily, where we don’t have that fiscal capacity, but they should not be cut,” she said.

Read more: Petition to SA ministers of finance and health — don’t hike VAT, raise tax on harmful products

Read more: ‘The axe has fallen’ — Trump’s USAid issues notices to terminate funding for key health programmes across SA

Health Promotion Levy and VAT

A key concern in the health sector has been the recent cut in aid from the US President’s Emergency Plan for Aids Relief (Pepfar), which supported key HIV/Aids programmes across South Africa. Pepfar was suspended after US President Donald Trump signed an executive order pausing almost all foreign development assistance in January.

At the end of February, the United States Agency for International Development (USAid) – which distributed about half the Pepfar funding for South Africa, alongside the Centers for Disease Control and Prevention – issued notices terminating its Pepfar funding to South African organisations for good.

In the lead-up to the budget speech, prominent health practitioners and organisations petitioned Godongwana and Health Minister Aaron Motsoaledi to increase the Health Promotion Levy (HPL), a tax on sugar-sweetened beverages designed to reduce consumption and address rising rates of obesity and related diseases.

Minister of Health Aaron Motsoaledi. (Photo: Gallo Images / Frennie Shivambu)

They argued that increasing the HPL to 20% would assist in covering the funding shortfall caused by the Pepfar cut, decrease obesity and provide an alternative to raising value-added tax (VAT).

However, the 2025 Budget Review shows that the National Treasury has proposed cancelling an inflationary increase to the HPL that was due to take effect from 1 April, “to allow the sugar industry more time to restructure in response to regional competition”.

Godongwana announced that the VAT rate would be increased by 0.5% in 2025/26, and by another 0.5% in the following year.

In a statement released after the budget speech, the Healthy Living Alliance (Heala) stated it was “deeply disappointed” by the finance minister’s decision to increase VAT instead of increasing the HPL.

“The proposed increase in VAT is a regressive measure. Indeed, leading voices on tax justice have indicated how its increase will bring thousands, if not close to millions, in our country closer to poverty and economic disaster,” said Heala.

“We have lost an opportunity to save the lives of thousands of South Africans. We have lost the opportunity to protect the most vulnerable amongst us, the poor. Since its inception in 2018, the [health promotion] levy has contributed R10-billion to the fiscus and has the potential to do more. This is money which could be spent on various health promotion interventions.”

Public healthcare specialist Lynne Wilkinson. (Photo supplied)

Lynne Wilkinson, a Gauteng-based public health specialist in the HIV/Aids sector, noted that Godongwana’s budget speech didn’t explicitly acknowledge the impact of the Pepfar funding withdrawal on HIV services.

“We now have clarity that the additional provisional R28.9-billion in the medium term – with R9.3-billion allocated for the next fiscal year – is not a response to the Pepfar crisis, but other critically important gaps in public sector service delivery,” she said.

“A similar provisional budget is required now to cover the posts and gaps left in HIV service delivery, if we are to stem an increase in deaths and new HIV infections. We do not have time to wait until the mid-year budget.”

While the overall health budget increase was notable, said Wilkinson, it remained “inadequate” for addressing the scale of workforce shortages and the growing pressures on public health service delivery.

“With the district health services budget increasing by just R203-million (0.82%), even maintaining existing staffing levels will be a challenge,” she said.

NHI funding

Over the Medium-Term Expenditure Framework, the indirect and direct conditional grants for the National Health Insurance (NHI) were allocated R8.5-billion and R1.4-billion, respectively.

“As part of strengthening the health system and preparing for the national health insurance policy, the Department of Health will fund the development of a patient information system, a centralised chronic medicine dispensing and distribution system, and a facility medicine stock surveillance system,” stated the 2025 Budget Review.

Cairncross told Daily Maverick that to make the NHI a reality, there was first a need to build up the public health system, as there was “no NHI without a high-quality public health system”.

“I would have liked to see a very focused and intentional budget put aside to rebuild parts of the health system that are crumbling at the moment, as a foundation to NHI.

“It’s almost like two parallel things that are happening: there’s NHI planning, and then there’s the health system. But they should be integrated. It is one thing, and NHI will fail if our health system fails,” she warned. DM

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South Africa

‘Bailout’ for strained health system

Health Promotion Levy and VAT

NHI funding