Human resource development and growth: improving access to and equity in the provision of education and health services in South Africa

Abstract

This paper demonstrates the importance of improving access to and equity in the provision of essential services such as education and health for enhancing human development. A major constraint to accelerating and sustaining economic growth in South Africa is the shortage of skilled human resources. Human capital formation (through appropriate education, training and health) is vital for growth. However, for sustained growth to reduce poverty and unemployment, human capital of a ‘higher order’ than the system is currently producing, in both quantitative and qualitative terms, must be generated. The paper reviews progress in the education and health sectors and identifies the challenges. It stresses the need for policy makers to recognise the link between education and health outcomes and the provision of clean water, adequate sanitation, cheap and accessible transport and effective nutrition programmes. Addressing only the education and health services is unlikely to lead to optimal outcomes in these sectors.

1 Introduction

A key impediment to the growth challenge in South Africa is the relative shortage of high quality human capital, manifested as part of the general unequal distribution of assets (land, financial capital and human capital) in the country.

Empirical analyses in developing countries show that initial inequalities in the distribution of physical capital (e.g. land) and human capital (education, skills and good health) have a negative effect on economic growth, and the effects are almost twice as great for the poor as for the population as a whole (Pillay, 2004). Moreover, the importance of assets for growth and development has been repeatedly illustrated by development economists, most forcefully by Sen (1998). What emerges from these analyses is the following: an unequal distribution of assets, especially of human capital, affects overall growth, and it affects the income growth of the poor disproportionately, presumably because an unequal distribution penalises the poor. A better distribution of assets increases the incomes of the poor, reducing poverty directly. Also, by reducing the negative effect on growth caused by income inequality, it increases aggregate growth and further reduces poverty indirectly. These findings may be relevant for understanding why South Africa has grown slowly and continues to register high poverty levels.

Given the growing evidence on the relationship between inequality and growth (Birdsall & Jaspersen, 1997; Birdsall & Londono, 1998; Sanchez, 2003; Ravallion, 2005; UNDP, 2005), it is very likely that in South Africa the persistence of income inequality is inhibiting economic growth and poverty reduction. A high level of income inequality thus cannot be meaningfully dissociated from the limited and unequal access to human capital. Therefore efforts to foster education accumulation and particularly education equality, and the health services which reinforce education outcomes, will pay off handsomely in reducing inequality and stimulating growth. Attaining optimal outcomes in education and health and the consequent increase in the stock and quality of the country's human capital can have positive and far-reaching consequences for the cycle of equality, growth and poverty reduction.

Achieving satisfactory outcomes in education and health is also dependent on the complementarity in the provision of other services, particularly among poor communities. It is crucial that policymakers are able to recognise the link between education and health outcomes and the provision of clean water, adequate sanitation, cheap and accessible transport and effective nutrition programmes.

The history of economic development during the last century demonstrates clearly that no country has been able to break out of the mode of underdevelopment characterised by small scale agriculture and low-level manufacturing activity without substantially widening and raising its human capital base. No country has been able to adopt a development pattern characterised by consistently high rates of economic growth without making a substantial investment in the human capital of its population. However, not all countries which have invested in human capital have succeeded in attaining high rates of growth and development. Human capital investment is thus a necessary but not a sufficient condition for growth and development. Countries that have been able to ‘leapfrog’ onto the growth path of higher living standards are those that were able to make substantial investments to ensure optimal outcomes in education and health (supply-side interventions) and to couple these to appropriate demand-side interventions (e.g. industrial policies and technology transfer).

The purpose of this paper is to demonstrate the importance of improving access to and equity in the provision of essential services such as education and health for enhancing human development outcomes through, inter alia, poverty eradication, economic growth and broader social development.

2 The global context

The international evidence demonstrates that the first cluster of policies required for countries to break out of their poverty traps involves investing in health and education (UNDP, 2003a). These investments contribute to economic growth and enhance human development. Moreover, education, health, nutrition and water and sanitation complement each other, with investments in any one contributing to better outcomes in the others. Policy makers thus need to recognise the synergies among the many aspects of human development. This notion of synergies among social investments is central to reducing hunger, malnutrition, disease and illiteracy – and to advancing human capabilities. The international experience also demonstrates that gender equality, especially in access to education, is central to overall human development. However, while strengthening women's health and education capabilities it is also necessary to reinforce their role in society as agents of change (UNDP, 2003a).

There is no global prescription for achieving human development goals. Diverse national situations require that countries develop strategies for achieving international targets for health and education. There are many success stories (see the Appendix for a summary of these). High performing countries in health and education show the remarkable progress that can be made within a generation, and similarities between success stories provide useful insights into what works: for example, public financing should be adequate and equitable, and women should be educated and empowered to act as agents of change.

Some high-performing countries have combined rapid economic and social progress and now have high-performing economies (e.g. Republic of Korea, Malaysia, Mauritius – World Bank, 2004). They achieved social progress early in their development processes, when national incomes were still low – suggesting a certain sequence for investments. In other high-achieving countries economic growth has been slower and less consistent. Nevertheless, all these high performers show that with the right government priorities and policies high social development is possible, even without a thriving economy. This suggests that for countries to become high achievers investments in education and health need to be the highest priority. In countries where growth has been historically low, such investments can provide the foundation for stimulating growth; in countries which are already growing, further investment in human capital development can lead to these countries embracing a growth path characterised by increasingly sophisticated technology, high value-added processes and rapidly rising standards of living.

Developing countries face three main challenges in achieving education goals, (UNDP, 2003a):

•	Limited resources. Relative to rich countries, developing countries spend much less per student and as a proportion of GNP at all levels of education.
•	Inequity. When spending is low, rich people often capture a much larger share of it – so poor people do not benefit as much.
•	Inefficiency. Inefficient spending means that a high share of recurrent spending goes on teacher salaries, leaving little for learning materials, and low-quality teaching means that students do not learn as much as they could.

The health MDGs (millenium development goals) of reducing infant mortality and maternal mortality, and reversing the spread of HIV/AIDS, tuberculosis and malaria, are far from being reached in many developing countries especially those in subSaharan Africa. However, as with education, health solutions remain out of reach for millions of poor people for the same broad systemic reasons:

•	Limited resources. Governments do not spend enough on overall health, and they spend even less on primary health care.
•	Inequity. Rural health systems do not dedicate enough staff or resources to women and children.
•	Inefficiency. Vertical programmes for specific diseases are not integrated with general health systems (UNDP, 2003a).

3 The South African context

It is widely acknowledged that enormous progress has been made in South Africa since the advent of democracy in the provision of education, health and other basic services, especially to the previously disenfranchised segment of the population. In particular, the country has undoubtedly emerged as a leader among developing countries in its progressive policies and the degree of innovation it displays in formulating broad social policy.

This section reviews progress in the education and health sectors and identifies the remaining challenges. However, two issues flowing from the analysis of the global context need to be highlighted. The first (as stated earlier) is that, for optimal outcomes, policy makers need to recognise the complementarity in the provision of essential services, as described above. Secondly, there is increasing acceptance that a major constraint to accelerating and sustaining economic growth in South Africa is the serious shortage of skilled human resources. Thus human capital formation (through appropriate education, training and health) is vital for growth. However, what is needed for sustained growth to reduce poverty and unemployment is the generation of human capital of a ‘higher order’ than the system is currently managing to produce in both quantitative and, most importantly, qualitative terms.

3.1 The education sector

Education is a key component of human capital acquisition. High-achieving countries have demonstrated the value of both high and efficient investment in the educational attainment of their populations and more particularly in the development of the cognitive skills crucial for greater labour productivity, employment and economic growth. This section provides a brief review of the sector's achievements in the post-1994 period and analyses the remaining challenges.

3.1.1 Sector achievements

The achievements of the education sector have been described in detail elsewhere (Pillay, 2005b). In summary they include the following:

•	transformation of the education system from the divisions of the apartheid era to a unitary system
•	the creation of non-discriminatory school environments
•	a major quantitative expansion of the system, particularly the schooling component
•	an impressive range of policies and laws to govern education
•	a significant increase in the matriculation pass rate
•	the creation of new institutional typologies for the Further Education and Training (FET) and higher education sectors
•	the increased delivery of learning materials
•	the improved delivery of basic services such as water and sanitation, electricity, and ICT to schools
•	significant nominal increases in education expenditure.

3.1.2 Remaining challenges

Although much has been achieved in the sector in just more than 11 years, much remains to be done, particularly in generating the quantities and kinds of skills needed for accelerating and sustaining economic growth. The following are some of the remaining challenges.

3.1.2.1 Quality: Low internal efficiency and effectiveness

Efficiency in the schooling system remains very low. For example, in 1999/2000, it was estimated that 43 per cent of children drop out by the end of the seven years of primary school. This survival rate of 57 per cent compares unfavourably with the developing country average of around 78 per cent and even the subSaharan average of 58 per cent (UNESCO, 2005). The larger and poorer provinces continue to be plagued by high dropout, repetition and failure rates. These inefficiencies increase the costs of maintaining the education system at the provincial level.

The effectiveness of the schooling system is also low. Despite comparatively high levels of funding, major cross-national studies (for example, the Monitoring of Learning Achievement Study of the United Nations and the Third International Mathematics and Science Study, cited in Taylor et al., 2003) have placed South Africa very low in the international league (see Reddy et al., 2004; Van der Berg, 2004; Pillay, 2005b). In the Grade 8 Third International Mathematics and Science Study (TIMSS), South Africa's score for mathematics was 275, compared to a mean of 487 for all 38 countries participating; in science, the South African mean score was 243 compared to an average of 488 (Taylor et al., 2003). It is evident, therefore, that the quality of schooling represents the biggest challenge to policy makers. Crucial reforms are needed so that investments in cognitive skills start to pay off.

3.1.2.2 Quality: Varying external efficiency

A second quality issue relates to the external efficiency of the education system; that is, the extent to which the system, at all levels, is able to adequately prepare students for further education and gainful employment in the labour market. A better understanding is needed, for instance, of the extent to which school leavers and university graduates are able to secure employment in line with their education and training qualifications as well as of the economic returns to their education levels. In addition, policymakers could benefit from greater insights into the changing relationship between education and employment. While few analyses have been conducted, there is anecdotal evidence to suggest there is considerable variation in external efficiency across the system as a whole, across provincial jurisdictions, within provinces, and across institutions in the FET and higher education sectors.

3.1.2.3 Education financing

Although education funding increased substantially in nominal terms between 1997 and 2002, in real terms (that is, after adjusting for inflation), however, the average annual increase in current expenditure has been about 1 per cent. Real per capita current expenditure declined at an average annual rate of 1,2 per cent during this period, from R793 to R719. Overall, the share of government's total current expenditure allocated to education declined from 19,2 per cent in 1995 to 18,8 per cent in 2002; it had, however, increased to 20,6 per cent by 2004 (calculated from National Treasury, 2004a, b). In addition, real capital expenditure in education declined in total and in per capita terms. Between 1995 and 2002, real per capita capital expenditure declined at an average annual rate of 3,3 per cent. Consequently, in 2002, the real gross per capita investment in education was 18 per cent less than the corresponding expenditure for 1995 (from R73 in 1995 to R60 in 2002).

It is important to ask also whether the financing of education since 1994 has genuinely moved the education system towards greater fiscal equity in schools and higher education institutions. In this respect, the record is mixed. There has been a significant narrowing of the differentials in interprovincial funding as a consequence of the equity-driven provincial funding formula. However, serious inequities persist within and across provinces, particularly in per capita learner expenditure. These discrepancies have been exacerbated by the increasing per capita differentials between schools which have the capacity (in some cases an almost unlimited one) to levy fees, and those where this capacity is severely curtailed or non-existent.

Moreover, there are serious equity questions that need to be addressed at the higher education level where there is increasing evidence that access to some of the more established institutions is increasingly now on the basis of socio-economic status (as opposed to race during the apartheid era), with the consequence that the majority of poor and rural students are still largely confined to the historically disadvantaged institutions whose capacity to produce the kinds of high level skills needed for growth is still seriously constrained. For example, it has been shown recently that African students at the University of Cape Town, on average, are more affluent (or come from more affluent backgrounds) than at the University of Fort Hare (Pillay & Nandy, 2003) [in this paper, the term ‘black’ refers to South Africans who were disenfranchised during the apartheid era; that is, everybody other than whites. The term ‘African’ refers to black South Africans from the indigenous population].

3.1.2.4 Poor management capacity

The poor management capacity of provincial education departments remains a significant constraint to delivering education services. For example, reasons given for underspending the allocated budget on Early Childhood Development (ECD) include the lack of staff to implement the ECD project, the low priority given to ECD by provincial governments, delays in the tender process and a range of other capacity-related problems (UNDP, 2003b). Such problems are also reported in respect of available donor funding and other conditional grants. The Eastern Cape Education Department reported vacancy rates of 60 per cent in some directorates in 2002 (UNDP, 2003b). In short, even when the fiscal base for supporting critical initiatives is available, the various provinces do not possess the management capacity to implement such programmes evenly and expeditiously.

3.1.2.5 Reducing backlogs

The real decline in the education budget during 1994–2001 made it extremely difficult to finance teacher development programmes and reduce the backlogs in spending on materials, classrooms and other school buildings, and other related non-personnel requirements. Fortunately, a much greater effort to spur infrastructural development in education has begun to be made since 2002.

3.1.2.6 Quantity: access to ABET and ECD

While the government has made a serious commitment to addressing the systemic deficiencies in increasing access to Adult Basic Education and Training (ABET) and ECD, the reality is that the provincial departments follow a strategy of ‘residual’ funding for these subsectors; that is, using funds that remain after addressing the needs of the schooling system. It is evident that in almost all provinces much more needs to be done with respect to funding, the development of educators and facilities, and improving efficiency in delivery in both of these subsectors. The importance of both for the development of productive human capital has been demonstrated in the experience of high-achieving countries.

3.1.2.7 Private costs of education

There is increasing evidence that the costs of education to households, in particular poor households, is increasing significantly, mainly because of market distortions in the provision of crucial education items such as uniforms, text books and transport (Pillay, 2003). In addition, for middle-income groups there is the burden of massive increases in school fees that are imposed by the school governing bodies. All this is contributing to ‘education inflation’ and to exacerbating the inequities in the system.

3.1.2.8 FET and skills development

A significant reform initiative in the sector involved the rationalisation of the technical colleges spawned during the apartheid area into a system of FET colleges. However, huge challenges still face this subsector, particularly with respect to adequate funding and to delivering the kinds of programmes that respond to the middle- and high-level skills of regional labour markets. Recent efforts to increase funding for the FET colleges (for example, through a ‘recapitalisation’ plan involving R1,5 billion) and raise their profile in skills development are to be welcomed. However, more needs to be done to increase the relevance of programmes offered, to improve the alignment between the outcomes of these colleges and the needs of local and regional labour markets.

3.1.2.9 Integration of education and training

At the national level the two major departments charged with the development of skills for the broader economy are Education and Labour. There is little evidence, however, of any serious attempts by these departments to develop a coordinated strategy for education and training, even though on paper there is a National HRD strategy that focuses specifically on coordinated policymaking in this area. For instance, the interdepartmental technical committee appointed to oversee the implementation of the HRD strategy has ceased functioning. Moreover, no attempt has been made to monitor and evaluate the strategy. With respect to the roles of both the FET Colleges and the Sector Education and Training Authorities (SETAs), greater synergy between the policies and activities of the Departments of Education and Labour could lead to better skills outcomes.

3.1.2.10 Decentralisation

Some features of the decentralised political framework are hindering the effective and full development of some aspects of the education system. One of these is the large degree of autonomy that provinces have for spending on the block grant that is allocated to them via the provincial funding formula. This means that the national Department of Education (DoE), which develops policy on all aspects of education, is almost powerless to ensure that all aspects of these policies can and will be implemented by the provinces. The examples of ABET, ECD and FET show that inadequate funding has followed the policy imperatives for these important subsectors. Many factors have contributed to this, including most importantly the political pressures to ensure funding for the schooling sector (as opposed to ABET, ECD and FET, for example), but the consequence has been that relatively little has been achieved in terms of the role these sectors should be playing in improving skills for development, mainly because the national department is unable to persuade the provinces to spend adequately on these subsectors unless it provides them with conditional grants. A vital question here is the extent to which the current decentralisation framework comprising national government and provincial departments of education with their education districts fosters the optimal utilisation of limited human resources to manage the education system.

3.1.2.11 Higher education

The higher education sector is confronted with a number of challenges which are constraining its ability to produce the appropriate mix of high level skills necessary for sustaining growth in the medium and longer terms. These challenges relate, inter alia, to declining public funding in a context of growing enrolments; the crisis in the labour market for educators and academics, characterised by rising numbers of those leaving the sector; an inability to attract young people, and the related issues of poor salaries; important equity issues to do with the access of poor, largely rural and black, students to established universities and professional programmes; and questions of poor internal and external efficiency.

3.1.2.12 School transport and roads infrastructure

An abiding feature of the rural landscape in South Africa is the large number of school children walking to school, a situation caused by rising transport costs, the complete absence of any transport system, or in some cases poor road infrastructure. The National Household Travel survey has found that over 560 000 children in South Africa – most of them black – spend over two hours a day walking to and from school (StatsSA, 2003). The absence or at best inadequate provision of school transport systems is a significant factor hampering access and equity in the education sector.

3.1.2.13 Monitoring and evaluation

The education system in the post-apartheid era has been characterised by a massive quantitative expansion in enrolments and outputs, especially in the schooling sector. There is growing evidence, however, that this expansion in numbers as well as in the allocation of resources to previously disadvantaged schools has not resulted in corresponding improvements in qualitative outcomes. Some commentators, notably Van der Berg (2004), have suggested that the continued poor quality of outcomes is fundamentally linked to inefficiency in the management of resources at the school level. More effective monitoring of the performance of schools is proposed to address the problem: ‘Dealing with the problem (poor quality of education) requires that much more attention be paid to information on system and school performance…Well-researched information on relative school performance would allow parents and principals to place more pressure on under-performing schools or teachers, whilst giving credit to those that are performing well’ (Van der Berg, 2004: 20).

Kanjee (2003) proposes a framework for evaluating the education system that includes the concepts of access, quality, equity and efficiency (AQEE):

•	access: getting to school; getting into school; getting through school
•	quality: what learners should know; where learning occurs; how learning takes place; what is actually learnt
•	efficiency: functioning of structures and systems; availability, allocation and use of human and physical resources; throughput and repetition rates
•	equity: inclusivity; absence of discrimination.

In sum, the importance of education in building up the country's stock of human capital cannot be overstated. The challenge for South Africa, given the impressive legislative, governance and funding frameworks now characterising the sector, is to increase access, improve quality and enhance equity across the system so that the requisite skills can be generated to accelerate economic growth and sustain it at levels of 7–8 per cent for the next two decades. This is what high-achieving countries have managed in order to eradicate poverty and reach high standards of living in a generation or two.

3.2 The health sector

3.2.1 Sector achievements

The achievements of the health sector post-1994 have been described in detail elsewhere (Pillay, 2005b). In summary, these achievements are:

•	creating a unitary health system
•	impressive and pioneering legislation for the transformation of the sector
•	free health care for pregnant women and children under six; free health care for people with disabilities; and later free primary health care for all citizens
•	a commitment to tackle morbidity and mortality in all its forms
•	construction and rehabilitation of health care facilities
•	increased funding
•	Strategies to deal with human resources development for the sector
•	developing a monitoring and evaluation framework.

3.2.2 Challenges

During the first ten years of democracy great strides were made in putting in place the ‘architecture’ of the health system, and there is general agreement that the array of legislation, policies and guidelines to direct the provision of services is impressive. The stumbling block has been the effective implementation of policy. In 1999, the Ministry of Health launched its Ten-Point Plan, which set out the key objectives for the Department for the period 1999–2004. Departmental activities are currently guided by the White Paper on the Transformation of the Health System (1997) and the Health Sector Strategic Framework for 2004–2009. The newly proclaimed National Health Act (effective May 2005) provides a framework for governance in the health sector, including the relationship between the three spheres of government and the regulation of the private sector. As in the education sector, while tremendous strides have been made, numerous challenges remain. A major challenge in the health sector is the attainment of the MDGs by 2015 and determining what is needed to ensure that the targets associated with the MDGs are reached.

3.2.2.1 Morbidity and mortality

The overwhelming challenge is to address the multi-pronged threat arising from the spread of HIV/AIDS, the persistently high levels of tuberculosis (TB) and malaria (however, malaria cases and deaths have decreased dramatically in the past three years) and unacceptably high infant and child mortality rates (the latest figures show both rates have stabilised to 1998 levels), and to continue developing an effective disease-preventative health system. These challenges will require a number of specific health sector strategies, including enhancing access to the public health system and improving the quality of provision, and cross-cutting strategies that address, inter alia, issues of education, nutrition and the provision of adequate sanitation and clean water. Some of these challenges are described below.

3.2.2.2 Primary health coverage and quality of health care provision

One of the key commitments of the Reconstruction and Development Programme (RDP) was to bring health facilities to rural areas, informal settlements and under-served areas. The Department of Health (DoH) sets aside funding for health infrastructure delivery programmes. Free health care for children under the age of six years continues to be provided at all government hospitals and clinics. However, the standard of service offered in clinics varies, and despite the attention health care has received since 1994 there are still problems with personnel and the expansion of health care facilities. Furthermore, it has been acknowledged that the key challenge facing the health delivery system is distribution. Inter- and intra-provincial imbalances are manifest: some provinces or areas have an oversupply and others face serious backlogs. Another concern is the balance between specialist care through teaching hospitals and the delivery of basic health services to the entire population. The District Health System is an attempt to address the latter by broadening access to primary health care. Service infrastructure backlogs do not emerge as a significant problem in this sector, at least at the health facility level. However, service interruptions in electricity, telephone service and piped water do occur and present significant risks to adequate health care provision. The Health Systems Trust annual review (HST, 2004) suggests that many clinics still do not have access to water and sanitation.

3.2.2.3 Human resources

While a variety of factors underlie the slow pace of implementation, the difficulty of recruiting and retaining skilled personnel, especially in underserved areas, is perhaps the most intractable problem compromising implementation. Without significantly more human resources, the goal of equitable access to high quality care will not be realised. Aligned with this, the necessity for strengthening the health system as a whole is brought sharply into focus by the demands placed on it in responding to HIV, and particularly through the implementation of the Department of Health's Comprehensive Plan for the Management, Care and Treatment of HIV and AIDS.

A comprehensive human resources strategy for the sector is thus urgently required. First, current human resources could be used more effectively, for example by expanding the roles and increasing the responsibilities of nurses and other paramedical personnel. (In this regard the creation of new cadres of health workers – the so-called ‘mid-level’ workers – has begun.) Secondly, further consideration needs to be given to developing and in particular funding the incentive plan to encourage health personnel to move to rural areas for reasonable periods. Thirdly, in consultation with the Department of Home Affairs, a clear policy to encourage immigration of health personnel should be formulated. Finally, steps should be taken as a matter of urgency to improve the working conditions, particularly salaries, of health personnel in the public sector, especially doctors and nurses, to reverse the outflow to the private sector and to other countries.

3.2.2.4 Equity

The huge divide between private and public health sectors is the greatest inequity in the health system, highlighting the necessity for strengthening cross-subsidisation between the sectors. Taking forward the stalled process of implementing comprehensive social health insurance must be viewed as a priority. Inequity in the health systems manifests itself in other forms as well: between provinces, within provinces, between urban and rural areas, and between the tertiary and primary health care systems (see Pillay, 2005b).

3.2.2.5 Legislation

The range of legislation passed since 1995 is impressive, and substantial progress has been made in reaching many of the goals reflected in the White Paper and required in the Constitution. Until recently, a huge gap has been the absence of national legislation to guide the developments in the sector and clarify the responsibilities of all three spheres of government. The recently promulgated National Health Act contains various provisions which could have significant implications for equity, including providing for the rights and duties of both users and health care personnel. The Act also concretises in legislative terms the functions of national and provincial departments, as well as local government.

The absence of legislation around Social Insurance is a significant gap in the government's legislative achievements. Social Insurance has long been proposed as a pillar of health care reform to ensure more equitable health care coverage. The Social Health Insurance policy would act as a mechanism for recouping fees from private patients using public hospitals but who fail to pay for services because of inefficient collecting systems. The net effect would be an additional ‘tiering’ of health services, with Social Health Insurance-funded health care servicing low and middle income workers and their families, in addition to the tax-funded services for the poor, and wealthier people continuing to purchase their health care in the private sector (HST, 2004).

3.2.2.6 Health care facilities

Public sector primary health care (PHC) facilities are the backbone of health care, so ensuring equity, effectiveness and efficiency in the provision of these services is critical to the functioning of the entire health system. The 2003 Facilities Survey provided an in-depth assessment of these services and noted that:

•	Commissioning of new PHC facilities during the past ten years is likely to have improved access to PHC services for many South Africans and the improvements in availability of water and electricity are encouraging. However, ongoing maintenance and further improvements in infrastructure to improve the quality of service provided to clients (especially those with disabilities) are still required.
•	Substantial interprovincial inequities continue to exist for most indicators.
•	Most PHC facilities provide family planning STI services and TB services five days a week. It is, however, of concern that almost one-quarter of facilities do not provide immunisation services five days a week, while antenatal care is provided by only half of facilities.
•	New indicators, particularly those related to care of HIV-positive patients, show that the health system is inadequately prepared to provide the required level and quality of care. (HST, 2004)

3.2.2.7 Monitoring and evaluation

The compilation and analysis of data, timely reporting and use of consistent, up-to-date health information are all key aspects of health care planning and management. In keeping abreast of the transformation of South Africa's health system to address the existing huge inequities it is essential that relevant and adequate information is made available to monitor and evaluate the implementation of the DoH's programmes. Information is also needed to guide the health policy agenda and decision making and planning. A dynamic national Health Information System (HIS) is therefore not only vital but a foundation for monitoring health development and evaluating the overall performance of the national health system.

It is clearly the lack of access to adequate and up-to-date information that is hampering efforts to measure progress in health care delivery. Lack of information has contributed significantly to the slow process of transforming the health system. However, this is not surprising given that about 95 per cent of government's investment in HIS in the last eight years has gone into establishing complex HI systems mainly in tertiary hospitals, leaving limited financial resources for the development of an effective District HIS (DHIS), the monitoring tool for the backbone of health care delivery (HST, 2004). Adequate human and financial resources and sustainable technologies at the district level are vital to strengthen the District Health Information System, which is crucial in effective primary health care delivery.

3.2.2.8 Financing

The health financing challenges facing the new government in 1994 were immense. Ten years on, there are both positive and negative stories. Certainly more funds in real terms have been directed to health care in the public sector. It is projected that by 2005/06 there will be an increase of R8,7 billion over the previous decade. Furthermore, after the stagnation in health funding in the late 1990s, there has been a turnaround in real spending levels, starting from 2000/01, leading to a projected real growth of R6 billion from 1998/99 to 2005/06, especially in capital and non-personnel expenditure. Nevertheless, real spending per person has struggled to match the levels of the mid to late 1990s, as the uninsured population grew by almost seven million between 1995 and 2005. Further real growth of R3 billion in personnel expenditure has masked 19 000 unfilled posts, largely because of a 28 per cent increase in average wages. Finally, the HIV/AIDS epidemic is estimated to be costing around R6 billion per year and the sector has been inadequately compensated for this (Blecher & Thomas, 2004).

Although there has been an overall increase in spending in the health sector, wage increases and inflation have undermined this, as has HIV/AIDS. Despite measures put into place to regulate the private sector, the insured population shrunk from just under 17 per cent of the population in 1997 to only 15,2 per cent of the population in 2002. Thus, while there have been real increases in the funding of health care, it is apparent that these have not been able to keep pace with the population increases, particularly for those dependent on the public sector. Much of the increases have been absorbed by increased wage costs and high medical inflation, rather than by improved service coverage and quality.

There has been a reduction in interprovincial per capita spending, but it is intra-provincial inequity that is particularly worrying at the primary care level, where per capita spending ranges from R389 to R42 between the highest and the lowest spending districts. The basic PHC package recommended by the DoH, excluding HIV-related services, is estimated to cost around R220 – given the per capita range indicated above, this could mean that many districts are simply not able to afford even this (HST, 2004). Since PHC is acknowledged to be the most equitable level of care, this is an area that needs to be targeted for attention, although it is recognised that many disadvantaged and under-served districts face a challenge both in seeking and absorbing increased resources.

While capturing accurate costing of PHC services is improving, it remains a challenge. The costing for these services has been carried out using different formulas. Although most districts have conducted District Health Expenditure Reviews, the quality of data used leaves much to be desired. Expenditure per capita varies from facility to facility, subdistrict to subdistrict and district to district. This is still a challenge, especially in rural areas. Several financing-related concerns thus need to be addressed especially the following:

•	reversing the decline in per capita expenditure
•	reducing inter-jurisdictional inequities, particularly those between districts
•	adequate funding to address PHC infrastructure needs
•	personnel costs and incentives
•	uniform costing of PHC service provision
•	health inflation, including the sharp and consistent rise in recent years in the price of private health care services.

4 Conclusions and recommendations

4.1 Lessons from developing country experience

The Appendix tabulates some examples of good practice adopted by a variety of developing countries in the search to attain optimal human development goals. In an attempt to distil some lessons for South Africa, this section categorises some of these practices under the broad headings of human development goals; innovation; accountability; equity; efficiency and effectiveness; and partnerships. (All the examples in this section are taken from UNDP, 2003a and World Bank, 2004.)

4.1.1 Develop multipronged strategies and set feasible targets to achieve human development goals

Several countries (e.g. Sri Lanka, China, Botswana, Zimbabwe) have prioritised investment in basic social services ;– primary education, basic health care – even though they were experiencing relatively low levels of economic growth. Others have been successful in combining rapid economic and social progress (e.g. South Korea, Malaysia, Mauritius). Possible lessons for South Africa are to prioritise investments in education and health care to achieve at the very minimum the international targets in these two subsectors as well with respect to other indicators of wellbeing (e.g. water and sanitation, nutrition), and to identify the human capital interventions needed to achieve higher rates of economic growth and greater equality in the distribution of such assets to promote more equitable economic and social development.

4.1.2 Develop innovative social sector strategies

There are numerous examples of countries that have adopted innovative strategies in the search for equity and efficiency in social service provision. Among these are the introduction of health insurance for school children in Egypt (to promote access); cash transfers to parents to stimulate demand for primary health care services (Mexico); and cost-sharing and revolving drug funds to reduce theft and corruption and increase the availability of drugs in clinics (Benin).

4.1.3 Ensure accountability in the provision of social services

There are numerous examples of increased stakeholder involvement to address a variety of problems and challenges: stakeholder involvement in education in India to increase water and sanitation facilities at schools; citizen report cards to enhance the accountability of local government officials in Bangalore, India; and participatory budget formulation in Brazil.

4.1.4 Make equity an overarching goal of social services provision

Examples of effective strategies to promote equity include reducing or eliminating primary school fees to stimulate enrolment (Sri Lanka, Botswana, Malawi); ensuring equity in basic health care expenditure (Kenya, Chile, Costa Rica); providing school vouchers for the poor (Bangladesh, Chile, Colombia, Puerto Rico); and setting up credit schemes and subsidies to help the poor afford user charges for water and other services (Bangladesh, Chile).

4.1.5 Improve the efficiency and effectiveness of social services provision

Examples of developing country practices that have led to improved efficiency and effectiveness of service provision are the following: reducing school repetition rates through implementing ‘automatic promotions’ (Malaysia, Costa Rica, Zimbabwe); ensuring a high ratio of nurses to doctors (Zimbabwe, Thailand); developing service contracts to ensure medical personnel remain in the public sector (Latin America, Philippines, Tanzania); rationing health funds based on essential interventions (Mexico, Bangladesh, Colombia, Zambia); providing drugs effectively through primary health care networks and decentralised facilities (southern states of India); increasing outreach through community-based health workers (Bangladesh); and developing cost-effective health surveillance systems (India, Peru, Tanzania, Sudan).

4.1.5.1 Possible action

Drawing from the examples of relatively unsophisticated but effective health surveillance systems that appear to have worked in a number of developing countries, a system could be designed and tested for use in areas of South Africa that lack a good communications infrastructure.

4.1.6 Improve delivery of services through partnerships

Governments of several developing countries have recognised the limitations of the public sector and developed partnerships with the private sector and broader civil society to improve the delivery of essential services. Examples of such practices include the privatisation with equity of water services in Bolivia, and NGO provision of primary education in Bangladesh. The challenge of moving towards the generation of high quality human capital for sustained growth and development will require a multi-pronged strategy. A number of approaches are needed to strengthen policy implementation for the enhanced development of human capabilities.

4.2 Approaches to strengthen policy implementation

4.2.1 Human development outcomes

There is a need to focus more on ‘human development outcomes’ rather than simply on ‘sector outputs’. Rather than focusing only on specific sectors, this approach emphasises the best possible route to achieving optimal human development outcomes – for example, what is the best way to achieve improved health indicators? To what extent does this depend on improvements to preventative care? What are the elements of preventative care, and how much is the responsibility of the health sector rather than sectors responsible for such matters as improved nutrition, and sanitation?

Policymakers need to recognise the synergies among the various aspects of human development (education, health, nutrition, transport, water and sanitation). Implementation strategies need to focus more on how such synergies can be enhanced, particularly through innovative delivery arrangements that spell out the roles of the provincial and local government spheres and also use the skills and other comparative advantages of the private sector and civil society. One approach would be to institute a pilot study in a poor district in each province, possibly linked to the rural development nodes, to determine how comprehensive programmes for human development can be implemented in practice.

To address the quantity and quality questions within the education and health sectors, the question of what is preventing the development of human capital should be prioritised. A particular emphasis should be placed on removing the barriers currently obstructing the quantitative expansion of education (particularly in post-secondary education) and health services for the poor, and the barriers obstructing qualitative improvements in health and education. These barriers are hampering the development of the population in general and constraining the production of the medium- and high-level skills needed for moving more of the population out of the ‘second economy’ and achieving economic growth of a ‘higher order’.

4.2.2 Efficiency and equity of social sector expenditure

There is an urgent need to intensify value for social spending. Approaches to improving the efficiency of expenditure should be investigated and promoted to enable sector participants to generate savings. Very little work has been undertaken in these sectors thus far in terms of the assessment of efficiency and equity (e.g. incidence analyses). Public financing of education and health must be made more adequate (e.g. education and health infrastructure, ABET, ECD, FET), more equitable and more efficient. To address the issue of equity of public sector expenditure, incidence analyses need to be undertaken in both sectors and across all levels.

The efficiency of expenditure should also be researched, to better understand the costs of education, particularly private costs. The education industry is probably of the order of at least R100 billion if its public and private sector components are included. Despite this enormous resource base, educational institutions are constantly engaged in a quest for more resources to meet new aspirations or unfulfilled needs. If efficiency in the sector were to improve by only 2 per cent, R2 billion would be available for other purposes. However, such gains can be accomplished only by identifying ways to use resources more efficiently. That is the purpose of cost-effective analysis: to provide a method for choosing among alternatives in order to select those that can accomplish a given result most effectively or with the least resources. Obtaining a better understanding of costs can also help to generate efficiency savings.

4.2.3 The public–private interface

In the light of international experience, strategic approaches need to be developed with respect to the public–private interface, with appropriate models respectively for the education, health and infrastructure sectors. Important lessons can be drawn from recent international experience (see Pillay, 2005a).

4.2.4 Human resources

The quality of social service provision is determined by the quality of its human resources. In South Africa today the health, education and other social sectors are characterised to varying degrees by inadequate staffing, a lack of appropriately qualified staff, and an inequitable geographical distribution of such staff. The health sector, for instance, has a 30 per cent vacancy rate in the public sector and a serious misdistribution of health personnel in small towns and rural areas. It needs an integrated HRD (human resources development) strategy that builds on the incipient departmental strategies and integrates into the national and provincial HRD strategies – this framework is now being developed by the DoH. In addition, given the time taken to build human capital, the sector needs to develop short-term (e.g. importing necessary skills) and long-term (training and retaining local talent) strategies.

4.2.5 Reducing inequities in health provision: the social health insurance scheme

The Health White Paper (DoH, 1997) envisaged new sources for funding for public health care coming from the retention of fees in the public sector, and the introduction of social health insurance (SHI), which would require all those employed in the formal sector of the economy to be insured for the costs of treatment for themselves and their dependants in public hospitals. Currently, many such individuals fail to pay for such services because of inefficient revenue collection systems. The net effect of introducing SHI would be an additional ‘tiering’ of health services, with SHI-funded health care servicing low- and middle-income workers and their families, in addition to tax-funded services for the poor, while richer households continue to purchase their health care in the private sector. To reduce the vast inequity that exists between private and public provision of health, the national department needs to move with speed to develop this scheme.

4.2.6 Improved benchmarking

Benchmarking must become a bigger part of national education and health policy than it is at present. Indicators need to be developed to help the country benchmark the performance of the health care and education systems against other countries and to help government assess the performance of its health care and education systems at devolved levels of service delivery. (The MDGs are one prominent example of current efforts to benchmark: the WHO collects and collates data for the World Health Report on an annual basis.) A much greater and better coordinated effort, including the allocation of substantially more financial resources, needs to be made to develop reliable health and education information systems; a necessary, yet often unmet, condition for ensuring accurate collection of indicator data.

In both education and health, as well in the provision of other essential services (e.g. water and sanitation, nutrition programmes), we need to know much more about what works, and what does not and why not. The recent experience of international and national benchmarking initiatives has brought to light the challenges inherent in collecting, evaluating and interpreting indicator data to guide policymaking. It has illustrated the need to define policy objectives within education and health care systems, ensure coherence between different evaluative and regulatory processes, and move away from a culture of measurement towards a culture that embraces performance and is truly evidence-driven. Adequate resources (which are relatively small in the context of total education/health/social sector spending) need to be made available for the development of appropriate benchmarking initiatives. The building blocks for such initiatives are already in place in the education and health sectors – however, they need to be developed much more fully to guide efficient and effective policymaking.

4.3 Immediate actions

In order to strengthen implementation in the education and health sectors and promote the attainment of optimal outcomes, consideration could be given to adopting the following recommendations. Two of these recommendations are ‘cross-cutting’ and two of them are sector-specific. These recommendations are advocated because they are initiatives considered necessary for strengthening policy implementation.

4.3.1 Recommendation 1: cross-cutting – addressing policy complementarity

Pilot programmes should be undertaken in one district municipality in each province to assess the determinants of optimal education and health outcomes, in the context of adequate provision of other infrastructure and basic services such as water, sanitation and nutrition. Alternatively, it may be more useful to concentrate on fewer provinces but focus on a larger sample of municipalities with control sites in both urban and rural areas. A particular objective of these pilot programmes should be to determine the optimal resource allocation needed to obtain the best outcomes in education and health. Often this may require a substantial financial investment to improve water and sanitation, which would lead to better outcomes in health, rather than increasing the health budget per se. These pilot programmes, moreover, could build on the current integrated rural development strategy (ISRDS) and the urban renewal programme (URP).

4.3.2 Recommendation 2: cross-cutting – improving coordination between the spheres to enhance delivery

A review (in a sample of two or three provinces) should be undertaken to determine how the scarce human resources distributed across three spheres of government and other sublayers (e.g. education and health districts, district municipalities) could be used in the most efficient and effective manner. The key issue is to determine how the limited administrative capacity available in the public sector can be used to ensure the effective delivery of essential services (education, health, water, sanitation, roads) to the poorest of the poor. In practical terms, this would involve making case studies of a sample of provincial government departments, education and health districts and municipalities to determine what current human and other resources are available for implementing education and health policies and how these resources are currently being used, and identifying the major constraints on effective delivery of essential services.

4.3.3 Recommendation 3: health – benchmarking

A national framework for benchmarking should be developed and implemented that links the various subsectors (primary health care, tertiary hospitals) and the various spheres (national and provincial – including health districts and municipalities). Consideration needs to be given to the development of a policy-driven framework, resource requirements, the impact of decentralisation, problems of data availability and the development of meaningful indicators. The development of a benchmarking framework may require an independent investigation to identify current strengths and weaknesses, review the effectiveness of other models in similar economies worldwide, and recommend enhancements where necessary.

4.3.4 Recommendation 4: education – assessing the equity and efficiency of public expenditure

Three sets of actions are recommended here:

•	Internal efficiency: the Department of Education should develop a framework for benchmarking the performance of educational institutions, including schools, FET and higher education institutions so that policy makers can get a better understanding of the education system's internal efficiency. These measures should go beyond measuring wastage and repetition rates to establishing a set of consistent measures of cognitive skills (e.g. literacy and numeracy).
•	External efficiency: the Departments of Education and Labour should jointly undertake an initial assessment of the responsiveness of the labour market to FET, higher education and SETA outcomes. Subsequently, all post-secondary institutions should be encouraged and supported to undertake such assessments on a regular basis so that they are able to develop a better sense of changing labour market conditions both regionally and nationally.
•	Incidence of education expenditure: as part of its benchmarking policy and in the interests of promoting equity, the Department of Education should undertake, on a regular basis, measurements of the incidence of public expenditure in schooling, FET and higher education.

Acknowledgments

The author acknowledges helpful comments from Miriam Altman, Marina Mayer, Renette du Toit and two anonymous referees. Funding for the project on which this paper is based was provided by the Services Sector Steering Committee of Directors-General of the Government of South Africa. The provision of financial resources and guidance by the Committee is gratefully acknowledged.

Appendix: The provision of essential services: Examples of best/good practice in developing countries

Table

Issue	Country
Achieving human development goals	Sri Lanka, 1945–52: life expectancy increased by 12 years
	China, 1953–62: life expectancy increased by 13 years
	Botswana: more than doubled gross enrolment ratios between 1960–80 (from 40% to 91%
	Zimbabwe, 1960–85: gross primary enrolment ratio increased from 75% to 124%
Combining rapid economic and social progress	Korea, Malaysia, Mauritius
Health insurance for school children	Egypt, early 1990s
Cash transfers to parents to stimulate demand for primary health care services	Mexico: Progresa scheme
Cost-sharing and revolving drug funds – increasing availability of drugs in clinics	Benin
School autonomy, resulting in reduced teacher absenteeism	Nicaragua
Stakeholder involvement in education, resulting in massive increase in water and sanitation facilities at schools	India, 1990s
Citizen report cards, to enhance accountability of local government officials	Bangalore, India, early 1990s
Participatory budget formulation	Porto Alegre, Brazil, 1990s
Greater transparency in school funding	Uganda
Reducing or eliminating primary school fees to stimulate enrolment	Sri Lanka (1945), Botswana (1973), Malawi (1994)
Reducing repetition rates through implementing ‘automatic promotions’	Costa Rica, Malaysia, Zimbabwe
Using local materials for school construction	Cameroon, Niger, India
De-linking teacher salaries from advanced qualifications	South Africa, 1990s
Equity in basic health care expenditure	Kenya, Chile, Costa Rica
High ratio of nurses to doctors	Zimbabwe (1990), Thailand (1990)
Service contracts to ensure medical personnel remain in public sector	Latin America, Philippines, Tanzania
Rationing health funds based on essential interventions	Mexico, Bangladesh, Colombia, Zambia
Integrating disease-specific programmes with overall health structures	India: tuberculosis programme
Providing drugs effectively through primary health care networks and decentralised facilities	Southern states of India
Social marketing (information campaigns) to increase condom use	Tanzania 1993–96
Integrated management of childhood illness (IMCI) in rural areas	Tanzania
Use of health posts or temporary ‘health camps’ to extend PHC outreach among disadvantaged and tribal groups	Karnataka State, India
Increasing outreach through community-based health workers	Bangladesh
Cost-effective health surveillance systems	India, Tanzania, Sudan
School vouchers for the poor	Bangladesh, Chile, Colombia, Puerto Rico
Credit schemes to help the poor cover user charges	Grameen Bank, Bangladesh
Privatisation of water services with equity	Bolivia
Subsidies to households to offset costs of privatisation	Chile
Effective regulation of clinical health services	Kenya, Mexico, India
NGO provision of primary education	Bangladesh
NGO involvement in education and awareness campaigning, water sector	South Africa
Cost recovery in higher education	India, South Africa