USAID Funding Cuts Push South African HIV and TB Services into Business Rescue, Staff Demand Salaries

In a major blow to the South African nonprofit sector, USAID funding cuts have forced the Maternal, Adolescent and Child Health Institute (MatCH) to enter business rescue, following a legal battle over unpaid salaries. This crisis is putting essential HIV and tuberculosis (TB) services at risk for thousands across South Africa, especially in regions like KwaZulu-Natal, the Eastern Cape, and Mpumalanga.

The Impact of USAID Cuts on South African HIV and TB Services

MatCH, a key nonprofit organization funded by USAID, provides crucial community-based services aimed at combating HIV and TB. However, the organization has been facing severe financial difficulties after USAID suspended its grants following a foreign aid review ordered by former President Donald Trump. This move has thrown the organization into turmoil, impacting over 900 employees who were temporarily laid off and left without pay since February 2025.

The Legal Battle: Employees Demand Salaries

In response to the sudden suspension of funding, nearly 900 MatCH employees took their grievances to court, demanding that the organization pay their outstanding salaries. In February, the Durban Labour Court ruled in favor of the employees, stating that MatCH had violated the Labour Relations Act by failing to consult properly before imposing temporary layoffs. The court order compelled MatCH to reinstate the employees and ensure they are paid for February and March, despite the ongoing financial struggles.

The organization was granted a temporary reprieve when business rescue practitioner Ken Stewart took charge, attempting to stabilize the situation. Stewart has been trying to manage the crisis by authorizing some payments using unspent USAID funds, but with limited success. MatCH has yet to receive additional funds from USAID, and the future of the organization remains uncertain.

Business Rescue: A Last Resort

On March 10, MatCH was placed under business rescue, a move designed to help the organization navigate its financial challenges while seeking a way to continue operations. According to Stewart, the business rescue process is focused on “damage control,” as he tries to balance the demands of creditors and employees while adhering to South African labor laws.

The first creditors’ meeting was held on March 20, and a business rescue plan is expected to be submitted by mid-April. However, Stewart has requested an extension until the end of June to account for the outcome of the U.S. foreign aid review, which will determine the future of USAID’s support for MatCH and other organizations.

USAID Funding Cuts: A Broader Impact

The disruption caused by these USAID cuts is part of a larger issue surrounding changes to U.S. foreign aid policy. The executive order issued by President Trump in late 2024 has affected thousands of organizations globally, with MatCH among the hardest hit. The suspension of funding has led to severe consequences for both employees and the communities they serve.

As the situation unfolds, the future of South Africa’s HIV and TB services remains uncertain, with MatCH employees and beneficiaries alike waiting for clarity on whether USAID will restore the funding necessary to continue vital healthcare services.

{Source Daily Maverick}

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