BACKGROUND:
South Africa’s public health budgeting and resource allocation system is largely shaped by historical allocations, resulting in a rigid process that insufficiently reflects changing population health needs and may perpetuate inefficiencies. Improving equity in the allocation of resources across health districts and sub-districts has therefore become a priority for the Western Cape Government health system.

AIM:
To develop a strategic budgeting model that allocates health resources equitably across geographically defined health sub-districts in the Western Cape Province. Setting Western Cape Province, South Africa.

METHODS:
An Equitable Resource Allocation (ERA) model was developed using Microsoft Excel to generate recommended allocations for each health sub-district, with outputs aggregated at district level. Allocations are based on a weighted combination of population health need, estimated using demographic and epidemiological data, and demand for health services, estimated using utilisation data. Facility-level allocation estimates are derived from district totals. The approach aligns with the National Treasury’s Provincial Equitable Share methodology for allocating the national health budget across provinces. Model development followed a problem-driven iterative adaptation (PDIA) approach to ensure contextual relevance, integration with existing systems, and stakeholder buy-in. Implementation is planned as a phased process, with costs and health outcomes monitored over time.

RESULTS:
Compared with historical allocations, the ERA model recommends increased funding for some sub-districts and reduced allocations for others, highlighting inequities and historical overfunding.

CONCLUSIONS:
The ERA model provides a practical tool to strengthen budgeting processes, improve equity in resource allocation, and enhance value for the Western Cape health system.