Staying Afloat: South Africa Keeps a Focus on Health Priorities During a Financial Storm, 2009-2017


In 2009, South Africa's health-funding system teetered on the verge of collapse. Despite the adoption of a transparent and credible budget framework in 1994, large parts of the public health system suffered from chronic overspending and poor financial control. As wage hikes and supply costs ate into the health budget and as government revenues plummeted in the wake of the 2008 global financial crisis, the national health department had to find ways to preserve priorities, linking them more effectively to the budget. The department won agreement on a list of non-negotiable expenditure items to protect in provincial budgets, used earmarked conditional grants to channel funds to key programs, cut medicine costs by improving central procurement, rolled out a new information technology system, and improved its monitoring of provincial finances. Although the country's nine provincial health departments had important roles to play, most of them struggled. However, the Western Cape was able to set a model by controlling personnel costs, improving monitoring, and creating incentives for health facilities to collect fees. Nationally, total per-capita government revenues dropped by 5% in the immediate aftermath of the financial crisis and grew only slowly thereafter, but the health sector's strategy helped ensure progress on its key priorities even as resources fluctuated.

Leon Schreiber drafted this case study based on interviews conducted in Pretoria and Cape Town, South Africa, in August 2018. Case published October 2018.

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health care
health funding
Focus Area(s): 
Centers of Government
Financial Management
Critical Tasks: 
Budget laws & practices
Computerization of records
Consensus building
Evaluating performance
Expenditure frameworks
Financial controls
Follow-up & monitoring
Goal setting
Inter-ministerial coordination
Performance budgeting
Preparation of policy papers and choices
Strategic planning
Core Challenge: 
Credibility (trust)
Norm coordination
Country of Reform: 
South Africa
Case Studies
Leon Schreiber