In a recent development, South African Health Minister Dr Aaron Motsoaledi suggested using PIC funds to finance the construction of public hospitals and support the NHI initiative. However, financial experts argue that the PIC, which manages over R2.7 trillion in assets for the Government Employees Pension Fund (GEPF), should only fund revenue-generating government health projects that align with its mandate.
DA MP Michéle Clarke raised this issue in parliament, questioning Motsoaledi on whether he had reached an agreement with the PIC or discussed this funding approach with the Cabinet. Motsoaledi described past and ongoing discussions with the National Treasury and the PIC.
He emphasised that the idea originated over a decade ago from a desire to provide the public sector with infrastructure quality similar to PIC-funded private hospitals.
PIC investments must yield returns
Motsoaledi revealed that the National Treasury had suggested the PIC as a potential funding source for public sector infrastructure. However, experts like Professor Alex van den Heever, chair of Social Security Systems Administration at Wits University, and Jannie Rossouw, a visiting professor at Wits Business School, strongly oppose this move.
They contend that PIC investments are intended to yield financial returns for pensioners and should only be redirected to government projects with a clear revenue strategy.
Van den Heever pointed out that the PIC is structured to generate returns for GEPF beneficiaries and cautioned that using PIC funds in this manner would violate its mandate. He likened the PIC’s role to that of an investment, not a development agency. He remarked that the PIC does not “own these funds” but is a custodian acting on behalf of government employees and pensioners.
Critics argue that Motsoaledi’s approach, lacking a concrete budget for NHI, could strain the PIC and negatively affect pension fund growth. Moreover, Van den Heever suggests exploring alternative funding sources, such as the Industrial Development Corporation or the Development Bank, as more appropriate options than relying on PIC assets.
While discussions with the National Treasury are reportedly ongoing, the debate raises fundamental questions about protecting the PIC’s mandate and ensuring fiscal responsibility in implementing South Africa’s ambitious healthcare reforms.