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Letter to Mahlamba Ndlopfu: The NHI is almost certain to be dead on arrival

26 Jan 2025

By October last year, 38 government departments and 28 SOEs had accumulated a jaw-dropping figure of R123.56-billion lost to ‘irregular expenditure’. The same fellows who couldn’t organise a budget in a piggy bank now fantasise about launching yet another fund — National Health Insurance.

Ah, Chief Dwasaho! Last week, I struck a raw nerve when I poured cold water on the grandiose scheme of the National Health Insurance (NHI). When the Gwavament (sic) – the government – becomes the sole provider of health-related goods and services, it will never cut the mustard for constitutionality, such as freedom of choice or the ANC’s self-professed ideological commitment to a mixed economy.

The right hand does not know what the left hand is doing — or perhaps, in this case, they’ve never even met. On one side, we’ve recently seen the glowing fruits of liberalisation in the energy sector, finally allowing private players to step in and do what Eskom couldn’t — keep the lights on.

This spirit of pragmatism has now extended to Transnet, with private-sector participation being hailed as the saviour of our beleaguered rail and port systems.

Yet, when it comes to health, you seem intent on marching in the opposite direction. You propose nationalising healthcare services, dismantling a multibillion-rand medical aid industry, and effectively hobbling private-sector health providers.

Road Accident Fund

In this missive, my leader, I intend to remind you of the mess where the Gwavament (sic) is a sole provider. Shall we look at the Road Accident Fund (RAF)?

The RAF’s financial position is precarious at best. According to its financial information for 2022/23, total assets stood at R11.88-billion, while total liabilities soared to R35.7-billion, leaving a staggering net asset value of about R23.82-billion in deficit. And that’s without even touching on the RAF’s dubious accounting standards, which seem designed to paint a rosier picture of its financial state than reality would suggest.

The Standing Committee on Public Accounts (Scopa) is concerned about the adverse audit outcome of the RAF for the 2023/2024 financial year in the context of an ongoing disagreement with the Auditor-General over accounting standards.

In 2023, the Special Investigating Unit (SIU) began investigating 102 law firms, including the sheriffs, which received duplicate payments from the RAF of about R340-million. The SIU has recovered about R18-million. On 19 April 2023, the SIU presented its preliminary findings to Parliament’s Scopa.

The Land Bank

The Land Bank is on its knees — barely standing, thanks to years of corruption, bad debts and incompetence that seems to be a hallmark of everything state-owned and mismanaged.

In April 2020, the bank waltzed into debt default with all the grace of a drunken farmer. Flailing about and unable to pay its dues, it managed to spook one of its lenders, who promptly panicked and demanded immediate repayment.

That was the trigger for a spectacular chain reaction. The bank’s failure to cough up the cash triggered a cross-default clause, which basically meant that the bank’s entire R40-billion debt portfolio came crashing down like a house of cards.

Four-and-a-half years later, after what must have felt like an eternity in red tape hell, the bank finally wrapped up its debt restructuring — at the eye-watering cost of R10-billion to the fiscus.

And let’s not forget the long hiatus when the bank couldn’t provide loans to the agricultural sector, leaving one of the economy’s key industries high and dry. If ever there was a masterclass on how not to run a bank, this is it.

Postbank

Then there’s Postbank, a cesspool of corruption, brazen theft, incompetence and maladministration. The KPMG forensic report on governance and financial breaches at Postbank reads like the script of a tragic comedy, highlighting severe financial mismanagement with losses totalling about R89.5-million between 2021 and 2022.

If that wasn’t enough, Postbank is a preferred playground for cybercriminals, routinely losing money to cyberattacks. In one instance, it confirmed cybercrime incidents costing roughly R90-million and R18-million —quite the heist, even by Hollywood standards.

Not to be outdone, 2023 added another R120-million to the cybercrime tally. At this rate, Postbank might want to consider adding “unofficial sponsor of hackers” to its business cards.

God forbid, those higher-ups, our self-anointed political gods, have decided that this nonentity in the financial world, the Postbank, will metamorphose into a State Bank — a ridiculous idea destined to end in tears for the hardworking 7.4 million taxpayers who are already bearing the weight of the nation’s misguided economic experiments.

UIF

Another cash cow ripe for exploitation is the Unemployment Insurance Fund (UIF), which has consistently received qualified audit opinions over several years, highlighting ongoing financial mismanagement issues. Civil servants have come to regard the fund as their personal piggy bank.

The SIU recently uncovered further alarming irregularities beyond the widely publicised corruption surrounding personal protective equipment (PPE). It identified 6,140 government officials who had fraudulently claimed UIF benefits, amounting to a staggering R41,009,737. These illicit claims were processed through 3,959 bank accounts, with 581 of these accounts linked to multiple beneficiaries.

In addition, 79 irregularities involving members of the South African National Defence Force (SANDF) were flagged, with 59 SANDF members receiving illegal payments totalling R327,630.

NSFAS

The spectacle of the National Student Financial Aid Scheme (NSFAS) is well known. The SIU discovered that about 40,000 ineligible students received NSFAS funding, amounting to R5-billion between 2018 and 2021.

Meanwhile, my late brother’s daughter, Nsiko, studied for three years at college, and each year her funding application was denied — even though she is an orphan and a former South African Social Security Agency (SASSA) recipient.

According to the AG, NSFAS is in shambles. NSFAS received an adverse audit opinion for its 2021/22 financial statements, a regression from the previous year. The AG identified material and pervasive misstatements in the financial statements that were not corrected.

NSFAS’s 2022/23 financial report is expected to be tabled in Parliament a year later than mandated, while the 2023/24 report was due to be submitted to the Auditor-General by the end of October 2024. Has it?

In addition, the disclosure of irregular expenditure contained material errors amounting to R780.2-million for 2021/22 and R7.5-billion for 2020/21, according to the AG.

Compensation Fund

Moreover, significant issues, including corruption, financial mismanagement and operational inefficiencies have plagued the Compensation Fund. These challenges have been extensively reported in the media.

The Auditor-General has repeatedly issued disclaimers of audit opinion for the Compensation Fund, citing significant internal control deficiencies. In the 2021/22 financial year, the fund received yet another disclaimer, highlighting persistent financial reporting and compliance issues.

These adverse public opinions led Scopa in May 2021 to call for a full-scale forensic investigation into the Compensation Fund to be instituted to cover 10 years. Did it happen?

Furthermore, we have the persistent theft of public money, which is termed in accounting terms, “irregular, wasteful and fruitless expenditure.” In October 2024, the AG briefed the Standing Committee on Appropriations on these peculiar types of expenditure incurred by national government departments and state-owned entities (SOEs) over the past five financial years.

In simple language, the expenditure was “in vain.” The committee was informed that 36 departments had recorded R1.48-billion in fruitless and wasteful expenditure, while 27 state-owned enterprises (SOEs) had been responsible for a further R2.08-billion.

In terms of irregular expenditure, 38 government departments had accumulated R50.65-billion, and 27 SOEs had recorded R69.35-billion. That’s a jaw-dropping figure of R123.56-billion lost forever with no consequence management.

Glorious chaos

I am merely peeling back the first flimsy layer of the onion to reveal the glorious chaos of government-owned funds. The same fellows who couldn’t organise a budget in a piggy bank now fantasise about launching yet another fund — the NHI Fund.

In 2024, Discovery Health pointed out that to fund the Department of Health’s estimated NHI cost of R200-billion annually without hiking taxes, South Africa’s economy would need to grow at an unimaginable rate of 7.2% per year for the next 20 years.

Since 2009, our economy has barely scraped past 1%, teetering between technical recession and negligible growth.

Meanwhile, Health Minister Dr Aaron Motsoaledi avoids discussing funding mechanisms for the NHI, aside from hinting at clawing back a few billion by slashing subsidies to medical aid members. That’s a meagre R347 per taxpayer per month — an amount that could hardly buy you a stethoscope, let alone cover the health needs of 63.02 million people.

It’s like trying to run the Comrades (pun intended) Marathon in flip-flops — ambitious, but bound to end in disaster. In short, the NHI is self-evidently dead on arrival.

Till next week, my man. Send me nowhere near NHI ideologues. DM

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