Why SA should call for a tax to bail out global health at the G20

By Dr Prinitha Pillay and Nonkosi Khumalo

When the Group of 20 (G20) nations, including South Africa, meet in France from November 3-4, one of the key items on the agenda will be a proposal for a financial transaction tax that would generate revenue to address the debt crisis stemming from the global recession.

News reports on the recession primarily focus on unemployment, bailed-out banks and sagging currencies, but there is another side of the story. Countries facing high burdens of disease have been hugely impacted as donors retreat from funding commitments for lifesaving global health programmes. Patients across Southern Africa are in a precarious situation as health budgets shrink, threatening supply of essential drugs and potentially slowing the scale-up of lifesaving interventions. As the world spent R89 trillion on bailing out banks from September 2008 to September 2009, in roughly the same period, two million people died of Aids — the majority of deaths occurring in Southern Africa.

The proposed financial transaction tax (FTT), which would be levied on stock markets, is one way to raise much-needed funds for global health. An FTT in Europe alone, which has been proposed by France and Germany, could raise R617 billion annually.

As detailed in a recent report titled “Five Lives: How a Financial Transaction Tax Could Support Global Health” by Médecins Sans Frontières/Doctors Without Borders (MSF), even a portion of an FTT going to global health could make significant inroads in scaling up key medical interventions, such as vaccinations, health services for expectant mothers and newborns, effective treatment for malnutrition, malaria prevention, and life-saving HIV and TB treatment.

While European countries are increasingly looking to the FTT as a way to address the debt crisis, President Jacob Zuma — the only African representative of the G20 and a leader in the fight against HIV — would do well for the region by calling on the G20 to consider an FTT earmark for global health.

The extra funding from an FTT could come when it’s needed most. Funding for HIV fell for the first time in 2009, and continued to fall last year. For the first time in its 10-year history, the Global Fund to Fight Aids, TB and Malaria will have to skip a year of approving new proposals due to lack of funding. At a UN meeting this past June, governments — including all of those in the G20 — committed to scale up life-saving HIV treatment to reach 15 million people by 2015. But where is the funding to pay for the antiretrovirals (ARVs) for an extra eight million people?

South Africa has already stated that an FTT for development is a good idea. Earlier this month, Minister of Finance Pravin Gordhan co-signed an open letter with France’s finance minister, stating that monies from an FTT should be considered for climate change mitigation and development. Speaking at the Brics (Brazil, Russia, India, China, South Africa) ministers of finance meeting in September, Gordhan stated: “The issue of financial transaction taxes is an important one. Given the fiscal challenges that many parts of the world face today, the issues of development aid and climate financing — both mitigation and adaption — are serious challenges. South Africa does have that tax on share transactions and we will certainly want to consider financial transactions taxes generally.” Minister of Health Aaron Motsoaledi has also publicly supported using such a tax for health.

South Africa has shown commitment to tackle HIV through its draft National Strategic Plan for HIV and Aids, STIs and TB for 2012-2016. Currently, 1.4 million people are accessing life-saving ARVs in South Africa. As the country with the largest number of people on ARVs in the world, South Africa knows what scale-up has meant for those directly impacted, as well as for the country as a whole. The South African government, led by President Zuma, should bring this reality to bear on discussions at the G20 next week by calling for an FTT earmark for global health.

Dr Prinitha Pillay is the board president of Médecins Sans Frontières/Doctors Without Borders South Africa.

Nonkosi Khumalo is the acting general secretary of the Treatment Action Campaign.