South Africa

Three reasons why the NHI will never happen

Efficient Group chief economist Dawie Roodt gave three reasons why the government’s national health insurance (NHI) scheme will never happen – finances, legal challenges, and ineffective implementation. 

Roodt’s comments come after President Cyril Rampahosa enacted the NHI Bill on 15 May 2024.

The government has been discussing implementing NHI in South Africa for years and released an NHI Green Paper in 2011. However, the Bill was only introduced to Parliament in 2019.

Last year, the Portfolio Committee on Health approved the Bill, followed by the National Assembly and the National Council of Provinces. It was passed on to the President in December 2023.

The NHI Act aims to transform South Africa’s healthcare system, achieve universal coverage for health services, and overcome critical socio-economic imbalances and inequities.

NHI critics – including industry roleplayers – have argued that the government’s scheme is unimplementable and unsustainable in its current form.

Roodt echoed this sentiment at AfriForum’s recent NHI Conference, saying he does not believe the NHI Act will ever be implemented.

“I don’t think it’s going to happen – or at the very least, not the way people think it will happen,” he said. If NHI is ever implemented in South Africa, Roodt said it would likely take decades.

He gave three reasons for this view – South Africa’s dismal finances, several legal challenges facing the NHI Act, and the government’s inability to implement its plans successfully.


Finance Minister Enoch Godongwana

“In the first place, we all know that there is no money for it,” Roodt said.

NHI Deputy Director General Nicholas Crisp said the only way to move medical aid money into the NHI fund is through taxes.

“Whether that is through VAT or other taxes is a matter for the National Treasury and the Money Bill, which will come later,” he said.

NHI is expected to cost the country an additional R200 billion in funding each year, which can only be raised by higher taxes.

Discovery has estimated that the following tax increases would be needed to fund the NHI –

  • A 31% increase in personal income tax or
  • A 6.5% increase in VAT or
  • A ten times increase in payroll tax

These figures are worrying for a country with a small tax base already being squeezed to raise revenue for the government. 

Calculations done by FTI Consulting show that every South African worker will have to pay an additional R18,780 in tax per year to fund the NHI. 

FTI clarified that the additional tax amount indicated by the government is not the total cost of the NHI, as it will probably need much more to implement fully. 

“If you were to do that, I would argue that you would destroy the economy,” Discovery CEO Adrian Gore previously said.

“It’s not a healthcare issue – it creates a real economic problem. I don’t think people would bear paying 30% more taxes and having 70% less healthcare.”

Legal challenges

Health Minister Joe Phaahla
Health Minister Joe Phaahla

“The second reason is that there are many legal problems surrounding the NHI legislation. It looks like the government will be in the courts for many years,” Roodt said.

Since the signing of the NHI Bill, several organisations have expressed their intention to challenge the legislation in court. 

Business groups, such as Business for South Africa (B4SA), have said the NHI, as proposed, has no practical funding model, does not pass constitutional muster, and will be tied up in the courts.

Business Unity South Africa CEO Cas Coovadia said that, in response to the NHI becoming law, the organisation would consider its options, including legal action. 

“Our subsequent actions will be guided by our belief that it is essential that we get the NHI right through all means still at our disposal, including appropriate legal interventions,” Coovadia said. 

Trade union Solidarity has already taken the National Department of Health to court once before over the NHI late last year and promised to challenge it by all means necessary. 

South Africa’s main opposition party, the Democratic Alliance, has also said it would take the government to court over the implementation of the NHI. 

Health Minister Joe Phaahla said the government is ready to defend the NHI in court and understands that some corners of South Africa are willing to engage in ‘lawfare’ to prevent the scheme from being implemented. 


Cyril Ramaphosa
President Cyril Ramaphosa

“The third reason why NHI won’t happen is that one of the advantages to having a totally incompetent government is that they also can’t implement a bad idea,” Roodt said. “They simply don’t have the ability to implement this system.” 

This sentiment was echoed by several business leaders last year.

Capitec CEO Gerrie Fourie previously said South Africa’s biggest challenge is that the government does not deliver and execute its plans to fix the country’s problems. 

FirstRand CEO Alan Pullinger said the government is not prepared to do the hard work to get South Africa off the greylist. 

He said South Africa’s banking industry faces a “profound geopolitical risk” from the government’s close ties with Russia. 

Standard Bank CEO Sim Tshabalala has also said South Africa is losing its competitive advantage over the rest of Africa.

The country’s risk premium deters investment and makes it harder to raise capital to stimulate economic growth. 

“We are competing on the continent and with emerging markets for this capital. So if they have decreased the risk of investing in their country and generated greater returns, the money will then rather go to those places than South Africa,” he said. 


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