AfriForum today sent a letter to President Cyril Ramaphosa, Finance Minister Tito Mboweni and Minister of Health Zweli Mkhize warning the civil rights organization that the implementation of national health insurance (NHI) could eventually lead to the downgrading of the country’s credit rating to junk status .
This comes after the credit rating agency Moody’s recently downgraded South Africa’s credit rating from a stable to a negative outlook. The reason for this downgrade according to Mood is the bleak growth prospects and growing public debt. In its letter, AfriForum argues that unaffordable, ideological policies such as the NHI will lead to South Africa being downgraded to junk status, as the country simply cannot fund it.
“To continue with the implementation of the NHI will not only be disastrous for the South African economy; it will also inflate government debt to levels that will make it impossible to escape the downgrade to junk status in the foreseeable future, ”says Natasha Venter, AfriForum’s spokesperson for the NHI.
According to AfriForum’s report on the NHI, this plan will cost the country R446,8 billion a year. The total income from income tax collections (the country’s main source of income and main source of financing for the NHI) amounted to just over R425 billion in 2017, making it clear that the NHI will be unaffordable and unsustainable.
According to Venter, high unemployment and poverty, a small tax base and the poor performance of the public health industry mean that a government-funded system that promises “free health care for all” is not suitable for South Africa.
“NHI’s ideological goal is to give people access to healthcare. In fact, downgrading to junk status (which may lead to the implementation of the NHI) will undermine people’s chances of economic success by reducing salaries or leading to further job losses. In short, the implementation of the NHI has the potential to completely destroy the country’s already weak economy. AfriForum therefore appeals to the President, as well as the Finance and Health Minister, to seriously reconsider the implementation of the NHI, ”concludes Venter.