As the government’s efforts to secure supplies of Covid-19 vaccines find growing success, the Treasury is considering raising taxes as one of several possible mechanisms to fund the biggest vaccination drive in SA’s history.
More than 30-million doses have so far been promised in direct deals with vaccine manufacturers and agreements with multilateral agencies.
After weeks of criticism over the pace at which the government has moved to procure vaccines, President Cyril Ramaphosa and health minister Zweli Mkhize went on a media offensive last week to assure anxious citizens that the state is in intense negotiations with suppliers and that millions of doses of Covid-19 vaccines have been earmarked for SA.
These include: up to 12-million doses from the international vaccine financing vehicle Covax, depending on whether it provides single-shot or two-dose vaccines, the first tranche of which is due to arrive in February; 1.5-million doses of AstraZeneca’s shot, manufactured under licence by the Serum Institute of India, with the first 1-million doses slated to arrive by the end of January; 12.25-million doses from the African Vaccine Acquisition Task Team (Avatt), of which the first 2-million will flow between March and June; and another 9-million doses from Johnson & Johnson, according to Mkhize’s spokesperson, Lwazi Manzi.
Treasury director-general Dondo Mogajane said the government viewed Covid-19 vaccines as a public good and was committed to financing their rollout, with or without support from the private sector and medical schemes. "SA will not take us seriously if I can find money for SAA but not for vaccines," he said in an interview with Business Day on Sunday.
The department of health has estimated a maximum cost of R20bn to vaccinate the entire country, while more recent internal estimates done by the Treasury are far lower than this.
The Treasury is exploring a range of potential financing options for Covid-19 vaccines, including raising taxes, widening the budget deficit and reprioritising government spending.
The government also has scope to use provisions in section 16 of the Public Finance Management Act, which allows it to make appropriate funds available through parliament in an emergency, outside of the budget process.
"In my view this is a good case for emergency funding, because this pandemic can kill, and kill quickly," said Mogajane.
SA has Africa’s biggest Covid-19 burden, with more than 1.3-million cases and 36,850 deaths recorded to date. It is grappling with a huge resurgence in infections, driven partly by a highly contagious new variant: a third of the cases recorded in SA to date have occurred in the past month.
Avatt task team spokesperson George Sibotshiwe said the vaccines secured by the initiative were allocated to AU members using a population-based formula, which gave SA 4.5% of the 270-million total secured to date.
"If other countries decline or fail to take up their allocation, they are allocated to other countries that want them, using the same equitable formula. SA will be allocated 4.5% of the 50-million available for the period March to June," he said.
Of the vaccine doses secured by Avatt, SA has provisionally been allocated 2.2-million doses of Pfizer’s shot; 4.5-million from AstraZeneca; and 5.4-million from Johnson & Johnson, according to John Nkengasong, the director of the African Centres for Disease Control.
Earlier this month, Mkhize announced that SA’s Covid-19 vaccination strategy aimed to immunise 67% of the population by the end of the year. At the time, medical scheme administrator Discovery Health said medical schemes would fund the shots for their members and would pay above cost in order to subsidise an equal number of people who did not have cover. However, it is not clear what legal mechanism will be used to bring this subsidy into effect, according to one of SA’s key industry associations for medical schemes and administrators.
The Board of Healthcare Funders was concerned by reports that medical schemes have made this funding available, since the Medical Schemes Act did not permit schemes to pay for healthcare services for non-medical scheme people, said MD Katlego Mothudi.
"Several considerations need to be made around the proposed funding mechanisms to ensure that this can be done above board, following a sound governance framework and within the prescripts of the Medical Schemes Act as well as individual medical scheme rules."
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