Inside the government’s confused response to the US funding crisis
The government could have used emergency allocations to finance defunded services but has failed to do so
The Ivan Toms Centre for Health building in Green Point, Cape Town, remains closed months after US aid was withdrawn. Archive photo: Jesse Copelyn
In late-January, the US suspended billions of dollars of international aid, including for HIV-related programmes in South Africa. The South African government could have responded by triggering an emergency funding mechanism but has failed to do so yet. In the meantime, activists, health researchers and even technical advisors to government are growing increasingly frustrated with the government’s lack of transparency on this issue.
In order to finance some of the health services that have been defunded by the US, the National Health Department could bypass the budget and secure emergency funding from the National Treasury. But this hasn’t happened yet.
This emergency funding mechanism falls under section 16 of the Public Finance Management Act. It authorises the finance minister to allocate funds in exceptional cases “which cannot, without serious prejudice to the public interest, be postponed to a future parliamentary appropriation of funds”.
It has long been proposed by civil society as a way for the health department to save crucial HIV-related services that have been defunded by the US. Section 16 allocations can be financed by the Treasury’s contingency reserve or via borrowing. The contingency reserve exists partially to deal with unexpected funding gaps like the one the health department has been facing for the last two and half months.
In late January US president Donald Trump signed an executive order suspending virtually all of the US’s international development funding globally. Since then, the US has moved to terminate thousands of aid contracts. This includes several billion rands worth of grants that were sponsoring crucial HIV-related services in South Africa.
Spotlight and GroundUp sent questions to the National Health Department about why it hadn’t secured emergency funding from the National Treasury since the crisis began in January. In response, spokesperson Foster Mohale stated that the Treasury did not “indicate that they might look favourably on a motivation for section 16 funding.”
It is unclear why the health department needs to be told that their application will be looked on favourably in order for them to apply.
Somewhat confusingly, Mohale also stated that the health department had sent the National Treasury a letter which included “firm proposals about [a] section 16 application”.
We asked the National Treasury’s media office about this. It confirmed the existence of this proposal, saying that they had received it on 15 April.
Our questions to the health department had been sent on 14 April.
Thus, it seems the health department only submitted their letter to Treasury with “firm proposals about a section 16 application” the day after we asked them questions about why they hadn’t done so.
Perhaps even more strangely, Mohale claimed that “The National Treasury has not formally responded to the proposal”. Yet it appears that the health department had only just sent this proposal to the Treasury when he made this claim. (Treasury told us that they received it on 15 April, which is the same day that Mohale said they hadn’t responded). The National Treasury’s media office said they responded the next day on 16 April.
Confusion and counter-claims
Despite these bizarre media engagements, sources in government and civil society say that this isn’t the first time that the National Treasury and Health Department have been in communication about emergency funding. Instead, discussions about this have been ongoing.
The health department has apparently already submitted important information to the National Treasury as part of its request for financing, but has not provided detailed plans about how they would spend emergency funds. This is needed before a section 16 allocation can be issued.
“As we understand, Treasury has been waiting for the full motivation from the department of health around a special emergency allocation,” said Fatima Hassan, of the Health Justice Initiative, “As of 14 April that information has not been submitted”.
Since only some of the US funding gap can be financed through a section 16 allocation, the health department likely needs to provide very specific details about which services it wants to finance and how it plans to do this.
Civil society groups are concerned that the National Health Department has done very little to gather information that would allow it to make such an assessment.
For a start, there appears to have been some confusion about how the evaluation should be conducted in the first place. On 25 February, an article was published in IOL which quoted health minister Aaron Motsoaledi as saying that the health department had hired Deloitte to conduct an investigation. But in response to questions from Spotlight and GroundUp, Mohale denied that Deloitte had been hired.
“The company made an offer of support but the procurement of the pro bono offer would have taken too long,” he said “so the department did the analysis of the available data itself.”
It remains unclear what kinds of analysis the department has been doing. The US began suspending its global aid operations in late-January, yet it took the National Health Department until early March just to meet with the defunded organisations.
This meeting didn’t include all of the defunded organisations, according to Hassan, who also stated that many of those that were invited were only given a few hours of notice before the meeting started. Note, participants had to attend the meeting physically in Centurion.
As we understand, this is the only meeting that the department has yet held with defunded organisations, and it seemingly only came about following a wave of international media attention.
Has the department done anything?
Spotlight and GroundUp have been able to identify only a few minor cases in which the National Health Department has responded to the US funding cuts. These instances primarily involve unit heads doing what they can to adapt to the situation and protect their staff.
For instance, in the health department’s procurement unit, a few staff members were funded by the US Agency for International Development (USAID). After USAID pulled funding, the unit made arrangements to retain these staff members in the short-term.
The head of procurement, Khadija Jamaloodien, told Spotlight and GroundUp that “We have been able to retain some capacity for a short period with the support of other partners.” To retain staff on a more permanent basis, posts would need to be created and then advertised, she said.
Similarly, the health department’s Central Chronic Medicines Dispensing and Distribution (CCMDD) programme had two USAID-funded staff members. The head of the CCMDD, Maggie Munsamy said that a separate donor had provided funds to retain these staff.
Beyond this it seems very little has been done to address the closure of key US-funded services. One technical advisor to the health department told Spotlight and GroundUp: “Our government is in denial. I think they are not appreciating the extent of the gaps that have been created.”
“They’ve done nothing to replace the [US-funded] infrastructure…. There is still no communication from the department of health as to what now…. When I speak to the department of health and ask what we can do, there is a defining silence.”
Parliament in recess during an emergency
The same concerns have been echoed by several civil society groups. Hassan states that since 5 February a coalition of organisations has sent two letters to the government asking for information about what it’s doing to address the US funding cuts. Signatories to these letters include the Health Justice Initiative, the Treatment Action Campaign, Cancer Alliance, and SWEAT.
These letters have been addressed to the ministers of health, finance and international relations, as well as the presidency. Thus far, they haven’t received a single response, she says.
Asked about this, Mohale stated that “The department has met all role players that are affected by the PEPFAR pause. During [these] meetings they were provided with the background to the problem as well as actions taken to address the challenges. Some of the organisations that are part of that letter such as TAC, were invited to the meetings and they participated in the discussions.”
In response, Hassan stated that “several groups have requested information as far back as February. To respond by saying that one of those groups may have been involved in one or two meetings is hardly satisfactory”.
It appears that Hassan’s coalition is not the only one to be ignored by the government on this issue.
On 4 April the Global HIV Treatment Coalition, which includes prominent health researchers and activists, sent a letter to the chairperson of the Portfolio Committee on Health. Its lead signatory was Zackie Achmat, the co-founder of TAC. The letter urged the Portfolio committee to call for the funding of programmes that were previously US backed. It also requested a meeting with the portfolio committee.
In response, the group was met with silence.
On 10 April, Spotlight and GroundUp sent a question to the committee about why they hadn’t responded to the letter. Shortly after, the Portfolio Committee sent Achmat an email saying that Parliament is in recess and that “a date will be communicated once the committee reconvenes”.
Responding to this, Achmat told Spotlight and GroundUp: “When there is a global and national emergency, not to mention our budget crisis, Parliament should not be in recess when needed”.
Dire consequences
If the South African government continues to stonewall civil society actors and delay its response to the crisis, the results could be dire. The most recently available data suggests that USAID has so far slashed 89% of its grants to South African organisations, worth billions of rands. And it’s not clear how many of the remaining 11% are still active; at least one of the grants on the retained list has been cancelled since this data was published.
As a result USAID-funded drop-in centres that provide HIV treatment and prevention services have closed. And thousands of USAID-backed health staff working in government clinics and community settings have lost their jobs. A recent modelling study estimates that if the South African government fails to step in, US funding cuts could cause up to 65,000 extra HIV-related deaths by the end of 2028.
If the government doesn’t secure emergency funding to cover defunded services, it would need to wait until the budget adjustment period in September or October to allocate any additional money.
In the meantime, certain clinics would continue to operate without crucial US-funded health workers, including data capturers and HIV testing staff. Thousands of orphaned children with HIV will continue to be left without USAID-funded counselors. US-funded clinical trials testing new HIV and TB treatments and vaccines will be compromised. And USAID-funded services for rape survivors will remain unavailable.
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