Government eyes pensions to fund NHI

The idea of using funds from South Africa’s Public Investment Corporation (PIC) to finance public health infrastructure to prepare for the National Health Insurance (NHI) remains an active point of discussion within the government.

The Department of Health and the National Treasury are engaged in ongoing conversations to explore how PIC funds might help fund and modernise South Africa’s healthcare infrastructure, which could bring much-needed improvements to public hospitals and clinics across the country.

Historically, the country’s healthcare system has been deeply divided along socioeconomic lines, with private healthcare facilities often offering far superior services than those available in the public sector.

The NHI was designed to bridge this gap by ensuring that all South Africans, regardless of income level, have access to quality healthcare services.

President Cyril Ramaphosa officially signed the NHI into law in 2024, a landmark step in transforming the nation’s health system.

The potential role of the PIC in funding NHI-related infrastructure is rooted in long-standing ideas about using the nation’s public investment resources to boost public sector capabilities.

As early as a decade ago, the Department of Health suggested that the PIC, which primarily manages pension funds from public sector employees, could help finance upgrades for public hospitals.

This suggestion was made in light of the PIC’s substantial investments in private healthcare infrastructure, which has led to well-equipped facilities in the private sector while public healthcare remains under-resourced.

According to Minister of Health, Aaron Motsoaledi, this disparity prompted the department to approach the PIC, aiming to replicate the level of quality seen in private hospitals within the public health system.

However, at that time, the National Treasury was not directly involved in these discussions, resulting in limited progress.

The issue was revisited during the government’s Cabinet Lekgotla in July 2024, when the National Treasury acknowledged the possibility of using PIC funds as a source for public health infrastructure investment.

This shift in stance prompted a meeting between the National Treasury and the Department of Health on September 30, 2024, to discuss the feasibility of using PIC funds to support the NHI infrastructure projects.

This is according to Motsoaledi in a response to a parliamentary Q&A, which asked the minister whether he has discussed with Cabinet the possibility of the Public Investment Corporation (PIC) funding the building of public hospitals.

While no final decisions have been made, the discussions indicate a renewed openness toward leveraging these funds, with further meetings planned.

The PIC, which holds assets of around R2.7 trillion, mainly serves public sector entities, including the Government Employees Pension Fund (GEPF).

These funds could be channelled into social impact projects under the PIC’s mandate, provided they align with regulatory requirements and contribute to the country’s social welfare.

However, some concerns persist, as drawing from the PIC’s resources could potentially impact retirement savings and other critical funds.

In response to questions posed by Business Day, The National Treasury has reassured stakeholders that any decision would be carefully weighed to ensure compliance with pension regulations and sustainable investment practices.

National Treasury added that the government has multiple funding avenues available for public health infrastructure, including provincial budgets, public-private partnerships (PPPs), and support from the National Budget Facility for Infrastructure.

However, the discussions between the National Treasury and the Department of Health reflect a strategic consideration of all possible options, with the PIC’s potential involvement still very much on the table.

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