Background Paper: Health Infrastructure Grant in the 2013 Division of Revenue Bill
1. Introduction
The 2013 Division of Revenue Bill proposes new modifications in the grant design for health,
especially health infrastructure related grants. This comes in the context of heightened focus
in the public sector infrastructure delivery, especially as it relates to the rollout of the National
Health Insurance (NHI).
Accordingly, this brief sets the context for discussion on the new modifications in the grant
design for health, especially as it related to health infrastructure delivery. The discussion is
between the Standing Committee on Appropriations and the Department of Health, including
other invited stakeholders.
2. Review of the Expenditure Performance of Health Grants as at the Third
Quarter of the 2012/13 Financial Year
Grant name
Hospital Revitalisation
Grant
Available Budget
Transferred to
Provinces
Actual Spending by
Provinces
Amount
percentage
R 4.5 billion
R 3. 3 billion
R 2.7 billion
58.6
National Health Insurance
Grant
R 150 million
R 135 million
R 14 9 million
10.0
Nursing College & Schools
Grant
R 100 million
R 78. 1 million
R 35.2 million
35.2
Comprehensive HIV &
AIDS grant
R 8.8billion
Source: national Treasury (2012)
R 8.9 billion
R 6.4 billion
72.9
As shown in table 1 above, except for the Comprehensive HIV & Aids Grant which spent
72.9 percent of its R8.8 billion allocated budget; all other health grants show poor
performance as follows:

The National Health Insurance Grant had the slowest spending pattern at only R14.9
million or 10 percent of its R150 million available budget.

The Nursing College and Schools Grant also had a slow spending at 35.2 million or
35.2 percent of the R100 million available budget
Name: Musa Zamisa
Contact: 021 403 8201

Even the Hospital Revitalisation Grant displayed slow spending at R2.7 billion or 58.6
percent against its available budget of R4.5 billion..
3. Overview of the health grants and proposed changes as per the 2013 Division
of Revenue Bill
The 2013 Division of Revenue Bill merges 3 health infrastructure grants into 1 grant called
the Heath Facility Revitalisation Grant and introduces a new grant called the National Health
Grant.

Heath Facility Revitalisation Grant
The allocation of the health Facility Revitalisation Grant over the medium term period is:
-
R5. 1 billion in 2013/14,
-
R4.7 billion in 2014/15,
-
And R4.billion in 2015/16.
The 3 different components of this grant include the following (which were formally standalone grants):
o
Hospital Revitalisation Grant component
o
Nursing College and Schools component
o
Health Infrastructure component
Important Note
According to the National Treasury, the rationale for this new approach is to allow
departments to shift funds within the 3 different components (if necessary) without affecting
the overall budget process.

National Health Grant
The National Health Grant is an indirect grant to provinces, which means it will be allocated
to provinces based on performance. It will be converted into a direct grant in case a province
has proven capacity to spend. This grant has the following two components:
-
National Health insurance component
-
Health Facility Revitalisation component
The overall allocation over the MTEF is as follows:
o
R1.1 billion in 2013/14;
Name: Musa Zamisa
Contact: 021 403 8201
o
R 2.1 billion in 2014/15;
o
R2.1 billion in 2015/16
Important note
The two components of the National Health Grant resemble similarities, both in terms of
name and purpose, with other direct grants to provincial health departments. According to
National Treasury, this does not amount to duplication but it seeks to improve performance
by allowing intervention by the National Health department.
Questions

Given the slow spending of just 58.6 percent in the 2012/13 third quarter, how much
would the Department have spent on the Hospital Revitalisation Grant by 31 March
2013?

Given the slow spending of just 35.2 percent in the 2012/13 third quarter, how much
would the Department have spent on the Nursing Colleges and Schools Grant by 31
March 2013?

Given the slow spending of just 10 percent in the 2012/13 third quarter, how much
would the Department have spent on the National Health Insurance Grant by 31
March 2013?

Were provincial departments of health fully consulted and satisfied with the new
changes in the disbursement of health grants?

Will provincial health departments be able to grasp the new modifications in the grant
design without potential confusion that might disturb the implementation of projects
especially the NHI pilot projects?

How will the new disbursement impact on the speed at which money is received by
provinces to implement projects, especially given the urgency of revitalised health
infrastructure?

To what extent could the new approach to grant allocation result to undue
reprioritisation of finds between grant component to an extent that budgets is spent
on’ easier’ project at the expense of ‘difficult projects’?

What mechanisms are put in place to ensure that the grant system performs without
un-intended consequences?
Name: Musa Zamisa
Contact: 021 403 8201
Reference
National Treasury (2013) Division of Revenue Bill
National Treasury (2012) Division of Revenue Bill
National Treasury (2012) Third Quarterly Expenditure Report
Name: Musa Zamisa
Contact: 021 403 8201