Closing the funding gap — how SA can respond to US aid cuts

Daily Maverick

11-07-2025

South Africa still lacks an action plan after the withdrawal of US aid for HIV and related health services. But when funds do arrive, how will they be managed? The answer may lie in the District Health Programme Grant.
The government's extended silence on how it plans to solve the funding crisis created by the withdrawal of US aid has thrown much of the health sector in South Africa into despair.
It has been five months since the withdrawal of the aid amounting to about R7-billion per year. It covered the salaries for 15,000 health workers, of whom 8,000 are community health workers, 2,000 are nurses, and 300 are doctors working in 27 of South Africa's high HIV priority districts. As a result, volumes of high-risk populations have lost access to care, while overstretched healthcare workers are facing increased pressure amid ongoing staff shortages.
Recently, the Global HIV Treatment Coalition and civil society organisations wrote a strongly worded letter to the government demanding action on a fully costed emergency plan. They accused the state of not taking concerted action.
They are not wrong: The government has still not made a clear plan available to the public, although there is consensus on the urgent need to strengthen the emergency response.
Plans have been developed internally in the National Department of Health, and a national technical support unit has been established in the office of the health department's director-general to support the integration of services. It is understood that several provinces are being supported to develop provincial transition plans that can be translated into concrete action.
But ongoing discussions with the National Treasury have made little meaningful progress in closing the funding gap. The Treasury has indicated that any new funding will either be part of the adjustment budget or as an emergency allocation. At this stage, it is still unclear how much money, if any, will be allocated.
There is another challenge that is yet to be considered. When the funding does arrive, there will need to be consensus on how the money is coordinated, incubated and managed.
Here, the answer may already be in our back pockets in the form of the District Health Programme Grant. The grant is a mechanism for funding South Africa's public health efforts, particularly relating to HIV, TB and other communicable diseases. As an existing instrument, this grant programme could help address issues linked to the funding gap and lay the foundation for the sustainable integration of activities previously funded by the US President's Emergency Plan for Aids Relief (Pepfar).
Why the District Health Programme Grant could work
The District Health Programme Grant presents an ideal mechanism that can be used to strengthen governance and ensure that the funding, plans and activities, down to a district level, align with national campaigns and priorities.
The grant would need to be amended to ensure that there is improved management of the conditionalities so that the funds invested meet their purpose. Conditional grants are funds allocated to provinces with the primary purpose of ensuring that national priorities are implemented consistently across the country. They facilitate targeted service delivery, equity, accountability and performance monitoring.
The District Health Programme Grant, which has a budget of about R25-billion, already has a large HIV component, so additional funding for the HIV and TB services that are needed could easily be allocated to this grant.
And if the health department amended the grant mechanism to allow for the contracting in of service providers, such as the Pepfar implementing agents, which are mostly South African NGOs previously funded by the US government, the country would be able to use the capacity built up over time in these organisations to strengthen the delivery of HIV and TB services.
The concern, however, is accountability.
In the current set-up of the grant, provinces can act more autonomously, and the grant's conditionalities are poorly managed. For the system to be more effective, there needs to be a greater emphasis on cooperative engagement, where two-way reporting between the national and provincial levels can take place.
Amending the grant to include stronger accountability mechanisms would help the health department to better coordinate and manage it.
The clock is ticking
The funding gap comes at a time when the health department has launched two ambitious campaigns to tackle HIV and TB. The Close the Gap campaign aims to enrol a record number — an additional 1.1 million — of people living with HIV on life-saving antiretroviral medicine this year.
Along with teenage girls and young women, the initiative prioritises an estimated 600,000 men who know their status but are not on treatment. This campaign aligns with the country's strategy to end TB by 2030. This year, the health department also hopes to accelerate TB case-finding by scaling up testing to five million TB tests to reduce the high rate of infections and deaths.
The linkages between the campaigns make sense. TB is the leading comorbidity for people living with HIV. HIV is also the leading contributor to TB mortality, accounting for an estimated 55% of TB deaths, according to the World Health Organization's data on TB in South Africa. The campaigns are evidence-informed and well considered.
However, the ambition is not matched by budgets that can support and ultimately enable its success. In addition to the R7-billion Pepfar funding gap, there is a funding gap of at least R600-million in TB to sufficiently fund the required five million tests needed for the campaign. Funding pressures at the provincial level are also constraining the scaling up of the capacity required to administer the tests.
A recent analysis by the South African National Aids Council situation room, which every month evaluates the HIV response as part of the Close the Gap campaign, suggests that while there are increases in the number of people being initiated on HIV treatment, the pace is not fast enough to mitigate the losses SA experiences in retaining patients in care. This has resulted in negative growth in many high-prevalence districts.
Similarly, in the first TB provincial managers' programme meeting coordinated by the national TB programme, reports of poor performance against the testing targets underpinned the underlying frustrations many are experiencing.
South Africa has made incredible progress in expanding access to healthcare in the last 30 years. These include significant declines in maternal mortality, decreases in the under-5 mortality rates, and significant declines in the incidence of TB. Much of this success, particularly in the last decade, is the result of the mass rollout of lifesaving antiretroviral treatment to about six million of the estimated eight million people in SA living with HIV.
The abrupt withdrawal of US aid has put at least some of this progress under threat.
As we look to the mid-year adjustments budget, we don't just need new money to plug the gap; we also need a sensible framework for spending that money. Channelling the funds through a tweaked District Health Programme Grant is a financial solution that will both provide some quick relief and mitigate the impact that the funding gap will have on universal health coverage more broadly in the long run.