1st Floor, 90 Plein Street, Cape Town, 8000

Berenice Makani-Mansomi

Telephone: (021) 403 8205   Fax 403-8118

e-mail address: [email protected] 



30 October 2004





1.      Introduction


1.1       Background


Through its vision, the Department of Health seeks to provide “an accessible, caring and high quality health system.” 


The Department’s mission is, therefore, aimed at “improving health status through prevention and promotion of healthy lifestyles and to consistently improve the health care delivery system by focussing on access, equity, efficiency, quality and sustainability.”


While the Department of Health derives its legislative mandate from several pieces of legislation, including the Constitution (No. 108 of 1996), the National Health Act (No. of 2003)  provides the overarching framework for governance of the health sector in South Africa.


During 2005/06, the Department made some changes to its programme structure by introducing a new programme, Programme 4: Human Resources. The establishment of this new programme reflects an increased focus on human resources planning for the health sector. It should also be regarded as a response to some of the commitments made by the President in his 2005 State of the Nation Address.


1.2       Strategic imperatives


The 2005 State of the Nation address outlined the following key issues for the health sector during 2005/06:[2]


However, the 2005 State of the Nation Address should also be viewed against the backdrop of the Department’s five-year strategic plan entitled, Strategic Priorities for the National Health System, 2004 – 2009.   The Plan outlines the following priorities for the period 2004 – 2009:[3]


·        Improve governance and management of the National Health System (NHS).

·        Promote healthy lifestyles.

·        Contribute towards human dignity by improving quality of care.

·        Improve management of communicable diseases and non-communicable illnesses.

·        Strengthen primary health care, Emergency Medical Services (EMS) and hospital service delivery systems.

·        Strengthen support services.

·        Human resource planning, development and management.

·        Planning, budgeting and monitoring and evaluation.

·        Prepare and implement legislation.

·        Strengthen international relations.


2.      Technical issues


For the most part, the Department’s annual report is drafted in a user-friendly format, which makes it a very useful oversight tool. With a few exceptions, the report outlines clearly defined measurable objectives per sub-programme, linked to an indicator and target for the financial year. For easy comparison, and to track progress, a column, reporting on actual performance for the financial year, is provided.  Furthermore, the measurable objectives and targets reported on in the annual report correspond with those listed in the Department’s strategic plan and Estimates of National Expenditure (ENE).


A review of annual reports often exposes how Departments change the formats of indicators, and especially targets, between ENE reports, strategic plans and annual reports. This often results in significant challenges when reviewing progress, since it is difficult to assess performance when indictors change from, example, a percentage in the strategic plan, to an actual number in the annual report. Unless the reader is familiar with the actual number of services already provided, it almost impossible to re-calculate the figure to a percentage, in order to measure actual progress, as indicated in the strategic plan. This also becomes a very useful way to mask the lack of progress or inability to meet targets outlined in a strategic plan. However, with a few exceptions, the Department in its 2005/06 annual report steers clear from changing formats for reporting, thereby making it much easier to assess its performance during the year under review.


There are, however, areas where the reporting can be strengthened to assist Parliament in its oversight function. For example, the Department would indicate an actual date as the target, but in the corresponding column where it reports on actual performance, it would only report that the task has been completed (and not indicate the date it was completed). Whenever a date is used as a target to measure performance, in reporting progress the Department should clearly indicate whether it was achieved on the date it set as a target for itself. The following examples apply:



Measurable objectives for 2005-2008


Target (05/06

Actual performance (05/06)

Strategic Planning

Implement an integrated strategic planning framework

Provincial Annual Reports analysed and trends compiled

Report on Provincial Annual Reports compiled in November 2005.

All provincial Annual Reports for 2004/05 were analysed and feedback provided.

Monitor implementation pf National and Provincial Strategic Plans (linked to the 10-point plan on NHS).

Quarterly Reports

Quarterly Reports produced in July and November 2005 and in January and April 2006.

4 Quarterly reports on the performance of the NDoH on its strategic plan were produced during 2005/06.

Health Technology Policy

Ensure safety of medical devices

Quality assurance Programme for medical devices developed

November 2005



In terms of Treasury Regulation 1.3.13, the Department’s annual report must include a report by the audit committee, which should comment on the effectiveness of internal control, the quality of in-year management and monthly/ quarterly reports, and its evaluation of the annual financial statements.  However, the Department is not in compliance with Treasury Regulations since the audit committee report is not included in the annual report.


3.      Brief overview of performance in terms of strategic goals and objectives


3.1 Programme 1: Administration




·        During the year under review, the Department managed to finalise amendments to the Sterilisation Act by May 2005, as planned.

·        The Department reports that it made significant progress in drafting five pieces of legislation during the year under review. However, it should be pointed out that, with the exception of the amendments to the Sterilisation Act, not all the legislation was finalised by the target date indicated in the Department’s strategic plan:


o       Amendments to the Tobacco Products Control Act were supposed to be finalised in April 2005, but would only be tabled during 2006.

o       Amendments to the Medical Research Council (MRC) Act were supposed to be finalised in July 2005, but by the end of the financial year the only progress made was that a Ministerial Task Team was appointed to draft policy recommendations.

o       The Health Professions Council of South Africa (HPCSA) Amendment Bill was supposed to be passed by September 2005, but would only be tabled in May 2006.

o       The Pharmacy Amendment Bill was supposed to be passed in November 2005, but by the end of the financial year, the only progress was that work was initiated on the recommendations made by the Pharmacy Council.


·        Attempting to revive the Provincial Communicators Forum, the Department held a series of four meetings during the financial year, as planned.




In terms of Social Health Insurance (SHI), there is some discrepancy between the 2005/06 – 2007/08 Strategic Plan and what is reported in the Annual Report. In the Strategic Plan, the Department indicated as the measurable objective that it would ‘implement SHI policy’, whereas in the Annual Report it becomes, ‘Obtain Cabinet approval for SHI’. Similarly, the target in the Strategic Plan indicated that ‘SHI legislation passed and Statutory authority approved’, in the Annual Report it becomes ‘Obtain Cabinet approval of policy on Risk Equalisation Fund (REF). The changes suggest that the Department might have realised that it was over ambitious in its Strategic Plan and, therefore, amended the strategic objective. However, the Department provides no explanation in its Annual Report.  In addition, the Department does not report on its intention to develop alternative reimbursement mechanisms. In this regard, the Department indicated in its Strategic Plan that by March 2006 the pilot prepayment mechanisms would be implemented. It should also be noted that in the 2006/07 – 2008/09 Strategic Plan, the Department did not report on measurable objectives, targets or indictors for SHI for the next three years, which would compromise Parliament’s ability to measure progress.


Strategic Planning subprogramme did well in achieving outputs with regard to provinces. For example, all provincial Annual Performance Plans were analysed and feedback provided, as planned. However, the Department did not meet the deadlines set for April and July 2005, but instead finalised the process in November. Similarly, the subprogramme managed to analyse all provincial Annual Report and provide feedback to provincial Heads of Department as planned, but did not indicate whether this was achieved during the target date of November 2005.

                                                                                                                                                                                                                                                                                                                                                                                     3.2 Programme          2: Strategic Health Programmes




During the reporting period, Programme 2: Strategic Health Programmes was able to achieve, and in some instances even exceed, the targets set for the financial year. For example:


·        The Department expanded the Integrated Management of Childhood Illnesses (IMCI) strategy to health sub-districts, having attained 100% saturation at district level during the previous year.

·        The Department achieved its target of 20% of community health centres that are authorised to provide termination of pregnancy services.

·        In addition, 72% of health districts provided Phase 1 of school health services, exceeding the 30% target set for the financial year.

·        The 30% target set for primary health care facilities with services providers trained on pap smear was exceeded. During 2005/06, 100% of primary health care facilities were reached.

·        The percentage of eligible people living with HIV and other debilitating illnesses who receive nutrition supplements increased to 65%, which exceeded the anticipated figure of 50%.




Despite these achievements, Programme 2 faced several challenges around maternal and child health during 2005/06. It should be taken into account that some of the key strategies to achieve the health-related Millennium Development Goals (MDGs), such as the reduction of maternal mortality, infant mortality and under-five mortality, are the focus of activities of one of the sub-programmes under Programme 2. Some of the challenges experienced during 2005/06 include, but are not limited to the following:



Key Issues
















3.3 Programme 3: Health Service Delivery








Key issues














2.4 Programme 4: Human Resources





Key issues



A major challenge in evaluating the performance of Programme 4: Human Resources is the fact that there are a number of performance indicators listed in the Strategic Plan, but not reported in the current Annual Report. These include, amongst others:



Furthermore, in terms of International Health Relations, targets are often not given in terms of time or quantity, which makes comparison with actual performance difficult.



4. Human Resource Management issues 


·        By the end of the 2006/07 financial year, the Department employed a total of 1 204 persons. Compensation of employees represents an average of 2% of total expenditure.


5. Financial issues


5.1 Financial overview for 2005/06



5.2 Qualified Financial Audit by the Auditor-General (AG)


The AG has given a qualified audit opinion of the Department of Health, and raised a number of concerns with regard to financial management. As was the case during the two previous financial years, the AG raised concerns with regard to the transfer of funds to provinces for conditional grants:


(a) The Framework for the Division of Revenue Act (No. 1 of 2005) (DoRA) indicates that the business plans for a specific grant be approved prior to any transfers being made.  However:



(b) The Framework for DoRA required quarterly performance reports, monthly financial reports and quarterly provincial liaison and quarterly visits to the provinces, as part of the monitoring mechanisms to be implemented by the Department. Despite the Department’s efforts to monitor these conditional grants, the following shortcomings were noted:


·        Late or non-submission of monthly financial reports by provinces resulting in the Department not being able to properly monitor expenditure in the provinces.

·        Late or non-submission of quarterly performance reports by provinces, resulting in the Department not being able to properly monitor performance in the provinces.

·        Quarterly visits to provinces were not always conducted.


It should be noted that the National Treasury earmarked funds to the amount of R8 million to appoint managers to monitor conditional grants, but appointments were made after the end of the year.


c) An audit of the HIV and AIDS and Hospital Revitalisation Grant reviewed the following: 


In terms of the DoRA Framework, provinces need to submit quarterly performance reports to the Department, but the majority of reports were not submitted during the year under review. This failure on the part of provinces compromised the effectiveness of review by the Department.


5.3 Emphasis of matter


5.3.1 Audit Committee


As was the case with the previous financial year, the AG raised a concern about how the audit committee operates, noting the that the minimum number of meetings were not held, as defined by section 77 of the Public Finance Management Act (No. 1 of 1999) (PMFA). Furthermore, for one meeting held, no quorum was present. The AG raised similar concerns in 2004/05.


5.3.2 Internal audit


During the year under review, the internal audit function was ineffective, and did not carry out functions as planned:



5.3.3 Non-compliance with the National Environmental Management Act (NEMA)


NEMA requires certain departments, including the Department of Health, to provide environmental implementation or management plans, and to report their compliance against the plans to the Committee for Environmental Coordination.


Due to a lack of management framework for monitoring the NEMA requirements, the Department did not comply with this requirement for 2005/06. (See key issue raised under Programme 3 above).


5.3.4 Supply Chain Management


Although a supply chain management unit has been established by the Department, as required by Treasury Regulation 16A, the unit is still not fully operational. During the year under review, delays were experienced in achieving the milestones in line with the Department’s implementation plans. Policies and procedures have been drawn up, but have not been approved by the accounting officer.


5.3.5 Lack of performance information


The Department was unable to provide performance information, as required by the National Treasury.




 Key issues


·        In terms of Treasury Regulation 1.3.13, the Department’s annual report must include a report by the audit committee, which should comment on the effectiveness of internal control, the quality of in-year management and monthly /quarterly reports, and its evaluation of the annual financial statements.  However, the audit committee report is not included in the Department’s 2005/06 annual report. What is the reason for non-compliance with Treasury Regulations?


·        As was the case during the two previous financial years, the AG expressed concern about that the Audit Committee not functioning effectively, despite the appointment of suitably qualified staff. Has the Department implemented any mechanisms to address the issue since it was first raised in 2003/04? If yes, why is the Committee still unable to hold the minimum number of meetings or hold meetings where no quorum is present?


·        In his briefing to Committee Chairpersons on 16 October 2006, the AG indicated that Director-Generals are supposed to be a member of their departmental audit committee. Is this the case for the Department? Who are the rest of the members of the audit committee, and please indicate how many members are part of the senior management (chief director upwards).


·        During the year under review, a virement was done, adding R11 million to compensation of employees under Programme 2. What was the reason for the virement? Why were there not sufficient funds available for the compensation of employees under Programme 2?


·        A virement was done to add R30 million for transfers and subsidies under the sub-programme Health Information, Research and Evaluation. What was the reason for the virement?


·        During the year under review, a virement was done, removing R14,5 million from compensation to employees. Where was this money shifted? Was Treasury approval obtained prior to the shifting of funds taking place?


·        Despite establishing a supply chain management unit, it was still not functional by the end of the financial year. In particular, policies and procedures were drawn up, but not approved by the accounting officer. Why has approval been delayed? When does the Department anticipate the unit will be fully functional?


·        The AG indicated that the Department did not furnish the relevant performance information, as prescribed by the National Treasury. Please provide an overview of the type of information required, as well as the reason for failing to comply.


·        Why was only 8% of the total number of cases reported to the fraud hotline during 2005/06 investigated?


·        During the year under review, which provinces failed to submit quarterly reports on their hospital revitalisation grants to the Department? What was the reason for provinces not complying with the Division of Revenue Act (DoRA) Framework? What mechanisms has the Department put in place to ensure greater compliance from provinces during 2006/07?


·        What was the reason for transferring R1,3 billion to provinces, prior to the approval of business  plans, in contradiction with the DoRA Framework?


·        Why were R110 million more transferred to provinces, than what amounts to in individual business plans? Was this money budgeted for?


·        As part of the monitoring mechanism to be implemented by the Department for conditional grants, quarterly visits to provinces are supposed to take place, as prescribed by the DoRA Framework. What was the reason for the Department failing to comply with DoRA? How will this issue be addressed in future?



6. Conclusion


In terms of the technical aspects of reporting, the Department’s 2005/06 Annual Report can generally regarded as a significant improvement on the previous financial year. To a large extent, the Annual Report corresponds with the reporting format used in the 2005/06 – 2007/08 Strategic Plan, which makes for easy comparison and monitoring of progress. However, there are still instances where the Department does not indicate whether the target for a specific measurable objective has been achieved on the planned date, as indicated in the Strategic Plan. Another concern is the absence of a report by the Audit Committee, which contravenes the PMFA and National Treasury Regulations.


The management of communicable and non-communicable diseases was identified as a key priority in the Department’s five–year strategic framework, as well as the 2005 State of the Nation Address (SONA).   It is evident that the Department performed well in some instances in meeting its targets, and in others even exceeded it own targets. However, the eradication of polio and measles, as well as meeting some of the targets relating to TB remains a challenge. Progress with regard to some of the targets relating to HIV and AIDS remains mixed. In some instances the Department is meeting, and even exceeding its own targets, while others are failing to meet targets.


Human resources was identified a priority for the next five years, while the State of the Nation Address also indicated the need to increase the numbers of Community Health Workers (CHWs). The launching of the National Human Resource Plan during the year under review can, therefore, be considered a milestone for the Department. In addition, the Department adopted a Skills Development Policy. The Department also managed to exceed the numbers of CHW it planned on training to implement the Comprehensive HIV and AIDS Plan, and the Department appears to be on track with regard to its other targets relating to CHWs. A concern, however, is the fact that the Health and Welfare Sector Education and Training Authority (HWSETA) did not expand its learnership programme due to limited funding. In terms of the Department’s Strategic Plan, SETA learnerships were supposed to be developed for, amongst other, nursing, pharmacy, occupational therapy, physiotherapy, and radiography.


EMS appears to be a serious challenge for the Department, and as was the case in 2004/05, the Department is struggling to meet some of the targets. The situation clearly needs to be monitored by Parliament, since strengthening EMS, together with PHC and the hospital service delivery system, remains a key five-year strategic priority. The hospital revitalisation programme, as identified in the SONA, continued during the year under review, and the Department managed to meet most of its targets, although it does not relate to actual spending on conditional grants.


The 2005/06 Annual Report marks the 3rd consecutive year that the Department of Health received a qualified report by the AG. This relates mainly to non-compliance with the DoRA framework for conditional grants. While the internal audit function is not an item for qualification, the AG for the 3rd year in a row pointed to problems in how the committee functions, which has important implications for the internal control function.





Department of Health. 2006. Annual Report 2005/06. Pretoria: Department of Health.


Department of Health. 2005. Strategic Plan 2005/06 – 2007/08. Pretoria: Department of Health.


Republic of South Africa. (2005). Estimates of National Expenditure, 2005. Cape Town: Formeset Printers.


Research Unit of Parliament of Republic of South Africa. 2006. The Strategic imperatives for South Africa as set out in the 2006 State of the Nation Address. Cape Town: Parliament of RSA.


Department of Health. 2004. Strategic Priorities for the National Health System, 2004 – 2009. Pretoria: Department of Health.


C:\bmakani-mausomi\My Documents\My Documents\2006\RESEARCH\Health\Department of Health Report and Documents\Annual Report, Dept Health 2006 final.doc

[1] This Report does not include an analysis of the health conditional grants. A separate report on conditional grants will be drafted.

[2] “ The Strategic imperatives for South Africa as set out in the 2006 State of the Nation Address.”

[3]Strategic Priorities for the National Health System, 2004 – 2009.”