Ina Opperman

By Ina Opperman

Business Journalist

NHI shows how ‘schizophrenic’ South Africa’s government is – BLSA

In a week where the NCOP passed legislation to solve the crises with water and electricity, citizens also got a new crisis: the NHI Act.

Busisiwe Mavuso, CEO of Business Leadership South Africa (BLSA), has accused the government of being “schizophrenic”. She said the NHI Act signed by President Cyril Ramaphosa last week is a threat to South Africa’s healthcare sector, forcing the private sector out of healthcare, yet at the same time it brings in the private sector to solve the electricity and water crises.

“Last week saw major strides forward in the legislative and policy environment and a major stride backwards,” says Mavuso. “The National Council of Provinces (NCOP) passed amendments to the Electricity Regulation Act, meaning it now only awaits the president’s signature.

“This legislation consolidates the major reform effort made in the electricity sector. It will result in the unbundling of the grid operator from Eskom and the establishment of an open market for electricity, radically transforming how electricity is generated and sold.”

She says producers will compete to sell electricity into the grid, potentially reducing the cost of electricity for the first time in many years and consolidating the end of load shedding.

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The NCOP also passed the National Water Resources Infrastructure Agency Bill, an important part of the overall strategy to stabilise water supply in South Africa. The agency will oversee the planning and implementation of large-scale bulk water infrastructure, consolidating the Trans-Caledonian Tunnel Authority and other assets to rationalise the management of bulk water infrastructure.

Good news for providing quality, clean water

Mavuso says it should be able to attract private sector funding, driving critical investment that is needed to fix and build new infrastructure. “This is a key part of the wider effort to provide quality clean water to all, although the last-mile efforts of municipalities still need significant work in many places.”

She points out the passing of both pieces of legislations show the power of the state and private sector working in tandem. “The private sector is good at managing operational risk, raising investment and building infrastructure. It is good at maintaining infrastructure, given that it depends on consistent and functional infrastructure to provide the outputs that generate its revenue.”

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Good partnerships between the state and private sector are formed when there is appropriate allocation of risks to those who are best positioned to manage them, she says. “These kinds of structural reforms are vital for economic growth. They do not deliver immediate results but rather establish the environment where investment can happen and over time much greater economic activity results.”

Mavuso say it is key to solving South Africa’s unemployment crisis that reached 32.9% last week, the highest level outside of the Covid pandemic.

Then came NHI

Then came the signing of the National Health Insurance Bill in stark contrast. “Instead of joining the best of public and private, it poses a major threat to the health sector as it stands. Despite significant objections from the private sector, ranging from healthcare practitioners to medical aids, the president has chosen to ignore the many recommendations that would have improved the workability of a national health insurance scheme.”

She said in a BLSA media statement last week that the legislation is unworkable, economically damaging and contrary to the precepts of the South African Constitution. “It establishes a single buyer model, effectively the opposite of what has been done in the electricity sector and proposes to force all other medical insurance to restrict itself to only those benefits not provided by the single fund.”

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Mavuso says this flies in the face of the demonstrated success of competitive markets in providing services that the state used to monopolise.

“The NHI Act is a huge blow to professionals working in the private sector who must now consider their options for the future. Our ability to attract global skills depends on having access to quality medical services for their families.

“Our ambitions of becoming a regional hub for business across the continent is now seriously threatened. If you were planning to set up a new business with a choice between South Africa’s cities and competitors like Mauritius, Nairobi or Gaborone, where would you go?”

NHI Act is unworkable

She says the good news, if it can be called that, is that the legislation is unworkable. “There is simply no funding for it. It also faces many legal challenges: from the way it was drafted to its constitutionality. I expect that litigation will start from various quarters about the bill.

“Even on its own timeline, full implementation is only going to happen after 2032/33. While it is scant assurance, I hope our healthcare professionals, as well as the many medical scheme members who depend on them will remain committed to the existing system.”

Mavuso points out the tragedy is that there are feasible ways to deliver universal healthcare which business strongly supports. “Organised business, among others, made many recommendations as part of the consultation process on how these can be achieved.

“Those recommendations were roundly ignored. The legislation is in every way counterproductive as it will damage the private as well as the public healthcare systems while missing an opportunity to actually deliver improved healthcare for everyone.”

She says so much can be achieved for South Africa when we work productively together, drawing on our respective strengths. “Last week in many ways showed that, with big strides to solve our electricity and water challenges.

“It is a tragedy that the opposite was also true – counterproductive and unworkable legislation that will leave everyone worse off. My sincere hope is that the next administration can resolve this incoherence.”