R2.82bn: that’s what we need to plug the US funding gap — for now

The national health department is convinced that all US government funding for HIV and TB projects in South Africa will end by September 30 and has calculated that it needs R2.82bn to plug the gap for the rest of the financial year after US President Donald Trump’s administration cut more than half of such support to the country in February.   

The government’s financial year runs from April 1 to March 31. 

“Without such replacement funds, we won’t be able to sustain our HIV programme,” warns the department’s deputy director-general for National Health Insurance (NHI), Nicholas Crisp. 

But these funds have yet to be raised, and the stakes are high: between 150,000 and 295,000 new HIV infections — in addition to about 130,000 annual new HIV infections — over the next four years, according to a Wits modelling study commissioned by the department. 

And up to a 38% increase in Aids-related deaths. 

That’s unless the Trump administration refunds all projects that were stopped, or the South African government takes over all the projects.

Crisp, who led the calculations, says the R2.82bn is based on salary data of the 24,264 full-time and part-time employees of current and previously US-government-funded HIV and TB organisations. The health department asked the US President’s Emergency Plan for Aids Relief (Pepfar), which supported the projects, for the figures so that it could work out how much money it would need to appoint formerly Pepfar-sponsored workers.   

Why USAID projects left a gap

Pepfar supported South Africa’s efforts to fight HIV and TB for the current US financial year — from October 1 2024 to September 30 2025 — to the tune of $439,537,828 (about R8.3bn at the current exchange rate). 

The money was sent to the country via either the US Agency for International Development (USAID) or the Centers for Disease Control & Prevention (CDC). Most of the funds went to nonprofit organisations helping the government to reach its HIV and TB goals, though private companies, public institutions, the basic education department, and the national and provincial health departments were also awarded grants. 

Crisp says Pepfar data shows about 57% of funds spent on salaries and consulting fees were channelled through USAID and 43% via the CDC. 

The staff complement of Pepfar-funded organisations came to 13,741 health workers (8,493 full-time; 5,248 part-time) who were funded via USAID and 10,523 (7,046 full-time; 3,477 part-time) whose salaries were paid via the CDC. Together, this makes up the total of 24,264 workers. 

Most of the workers are data capturers (12.5%), lay counsellors (11.1%), professional nurses (9.6%), middle managers (6.4%) and youth workers (6.2%). 

In total, there were 39 prime partners, which often received large chunks of money that were then subgranted to smaller organisations to carry out work on the ground, and 150 “implementing partners”, which either received smaller direct grants or subgrants. 

On February 26, however, the Trump administration ended all Pepfar-funded projects in South Africa that got their money through USAID, as part of a global foreign aid cut.

The few USAID projects in the country that didn’t receive termination letters never received funds to continue their activities, Bhekisisa has learnt, and have mostly also closed their programmes.   

Crisp says the available data shows that of the total Pepfar budget for South Africa (so for all costs, not just salaries) for this financial year of R8.3bn, about R4.45bn was received via USAID. 

On the other hand, projects funded through the CDC have been allowed to continue with their full budgets after a US federal court ordered the Trump administration to do so, but they only have funds until September 30. 

According to the US government, 21 CDC-funded organisations are still operating with Pepfar funds in South Africa. 

Will funding for South Africa continue after September 30? 

What happens after September 30 will depend on how the US Congress votes on the budget President Donald Trump submits, explains a former Pepfar staff head, Jirair Ratevosian. 

Ratevosian, who is an associate research scientist at Yale University, says a process known as “passback”, during which agencies and government departments, such as the state department under which USAID falls, advocate for budgets, started this week. 

A leaked White House document, which The New York Times has seen and reported on this week, proposes that Pepfar continues to exist for the 2026 financial year in the US with a budget of $2.9bn — but that it mainly focuses on HIV treatment and not prevention. 

“That might seem like a substantial amount in isolation, but it represents a 40% reduction from the current budget,” warns Ratevosian, “so if Congress votes to put through the Trump budget as is, more than half of programmes will undoubtedly be cut. And we don’t yet know if rules for what can and what can’t get funded will get even stricter.”

Trump also announced a 90-day review of foreign aid on January 20, the day on which he was inaugurated. That review technically ends on Sunday April 20; the president would need to announce the way forward. 

But many people are confused. Local CDC-funded organisations say they have no idea, and neither do their contracting officers from the US government, whether the review is still ongoing. 

Ratevosian, however, says he suspects there could be an announcement by Friday: “This is an important week in Congress, with a lot of back and forth between the budget office and other offices within the state department, which seems to suggest there could be some kind of conclusion announced as to where foreign aid is headed.”

How did the health department come to R2.82bn? 

But Crisp says the health department is operating with the assumption that all Pepfar funds for South Africa will stop and that the government should take over the responsibility for every service that is, and was, being supported by the US Aids fund. “There are instructions from the US government not to approve new projects,” he says. 

And even though the department and local Pepfar staff meet biweekly, there’s nothing they can do to stop potential cuts. Sources say local Pepfar staff are mostly bypassed, with decisions made in Washington, DC. For example, local contracting officers’ approvals for limited waivers for South African projects were overruled by the state department terminating the projects, regardless. 

The R2.82bn that the health department says it needs would cover 12 months of most USAID workers’ salaries and six months (October 1 to March 31) of CDC projects’, if workers were to be phased into the public primary health-care system. The amount comes to 63% of the actual salaries paid for by Pepfar as the health department has worked in savings, says Crisp.

“Because several different projects worked in the same districts, doing more or less the same work, there were many managers, whose salaries made up a large proportion of costs in such districts,” explains Crisp. “So we modelled our calculations on cutting down on managers. If we incorporate health workers into our primary health-care system, fewer managers would be required, as they wouldn’t all be working on different projects.

“Duplication, such as too many of the same type of workers, for instance, data capturers, in the same subdistricts, has also been addressed.” 

This has resulted in cost savings of 37%, which will translate to R1.632bn. 

Which provinces have been hit hardest? 

Because of the ending of USAID projects, Pepfar now supports projects in less than half — 12 — of the 27 health districts with high HIV infection rates in which it used to.

The four provinces that have been hit the hardest, because they had received almost all their Pepfar funding through USAID, are: Limpopo (97.2%), Mpumalanga (93.5%), the Free State (87.3%) and the Western Cape (93.5%).

But Crisp warns that it would be unwise to incorporate all Pepfar-project staff into the public health sector straight away, as some programmes are successful because nonprofits are sometimes trusted more than government by groups, such as transgender people, sex workers and injecting drug users, groups that have a higher chance of getting HIV. “It may work better to look at a model where former NGO workers are ‘absorbed’ into primary health-care services in a year plus from now, once the programme is fully integrated into the provincial district health services.”

The impact of cuts on the national health department 

Crisp warns that Pepfar cuts have left the national health department “extremely vulnerable” because it has lost two-thirds of the staff who manage “key functions”.   

For years, the department has been working on digitising the public health information system. One of its most important projects, on which the NHI rollout depends, is developing an “electronic medical record for each person, on which all that person’s health data will be stored. The Council for Scientific & Industrial Research [CSIR] works with the health department on this, and 82 of the 102 CSIR staff are funded through the CDC. The CDC also pays for hardware. The funding for digital health projects is R258m for the current financial year, which could now potentially be stopped for the year thereafter,” says Crisp. 

The health department also gets R35m from Pepfar to pay for the salaries of 34 people, and two logistics companies, who manage and roll out a chronic medicines programme, known as CCMDD, for about 3.3-million people who collect their HIV and other medicines from pickup points close to their homes. “Without this programme, all of these people will collect their medicines from hospitals and clinics, which will create long waiting lines and frustrate patients to the extent that they will no longer go to collect their medicines,” Crisp explains. 

Lastly, the department gets R47.4m to manage parts of the demand generation and analysis needed in managing the tenders for 1,300 medicines and other pharmaceutical products. The process of selecting medicines and monitoring the supplier and stock relies on a team employed by an NGO. 

Crisp cautions: “Without the 40 people who provide the services that should essentially be full-time health department jobs, and which will be core functions in the NHI, the whole pharmaceutical supply system will be compromised.”   

Where will the money come from — and what’s the timeline? 

The health department knows that funds to fill the Pepfar funding gap won’t come from one source only, says Crisp. “Not a single donor has R8bn to give to us annually, and neither does the government.”

He says so far the health department has received R1bn of additional antiretroviral drugs (ARVs) from the Global Fund for HIV, TB and Malaria, to treat people with HIV. “That means the department can buy fewer ARVs itself and then instead use the money to contract formerly Pepfar-funded NGOs to do some work, but tender processes will, unfortunately, complicate processes because tenders take so long to award.” 

The health department has proposed to the National Treasury that it grant the department an exemption to allow it to contract all or some of the more than 30 Pepfar prime partners to help run the country’s HIV programme “through the transition to becoming self-sufficient”. 

Crisp says the idea is to create a simple service-level agreement that will be used for all partners and for the Treasury to create a conditional grant or earmarked allocation for this purpose that will be managed by the department.

He says the health department has spoken to the Treasury about “a budget over and above” its already allocated budget. Two of the ways the department is looking to make this happen are to have an “adjustment appropriation” in September or to obtain emergency funding through section 16 of the Public Finance Management Act (PFMA). 

But Crisp says the Treasury has not yet agreed to funding. 

“The fiscal position is very tight, so the Treasury is wanting extremely detailed plans for any additional funds. The problem is that the situation is very fluid, was centrally funded by Pepfar, and is likely to keep changing as the departments learn what is essential. The national health department believes that a centrally managed ‘top-up fund’ from emergency funding through section 16 of the PFMA could work.” 

Another plan the department, embassies, philanthropic foundations, and businesses are working on is the establishment of a “trust fund”, similar to the Solidarity Fund during Covid, to which many organisations contribute. The idea would be to have private funding available that can be used at short notice and without government bureaucracy to address emergencies, Crisp says.

So far, a working group has been created, which has met at least twice. “We understand that there are now more parties involved and that they are still discussing what is possible by way of support,” says Crisp.

But now, the department remains in a dilemma: it doesn’t yet have any large financial commitment for the R2.8bn it needs. 

Crisp warns: “The risk is that without the additional funding to plug essential gaps, some services will be terminated or scaled down. 

“If patients who are familiar with a particular programme are left guessing, they may abandon treatment and not move elsewhere. That would be bad because it makes them vulnerable and may create opportunities for drug resistance and for new HIV infections to increase again, working against all the progress we’ve made over the past two decades.” 

This story was produced by the Bhekisisa Centre for Health Journalism. Sign up for the newsletter.