Donors lose faith in Zambian Health Ministry

Abstract

The Global Fund to Fight AIDS, Tuberculosis and Malaria has lost trust in Zambia's Ministry of Health to manage public sector grants. Ann Danaiya Usher reports.The Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund) has dropped the Ministry of Health in Zambia as a principal recipient of current public sector grants as a result of financial irregularities and continued concern that Zambian authorities are not moving fast enough to improve control systems. The Fund's decision comes at a time when $US millions in aid to Zambia from several other donors have been suspended in connection with corruption in the health and roads sectors (table).TableDonor funds withheld because of corruption in ZambiaUnpaid donor fundsGlobal Fund grants*Frozen since August, 2009. To be channelled through the UN Development Programme this autumn. Based on data from the Swedish Embassy in Lusaka, the Dutch Foreign Ministry, and the Global Fund.US$ 118 milionSwedish aid to health sector 2009–10SEK 180 millionSwedish budget support 2009 (cancelled)SEK 145 millionSwedish budget support 2010 (delayed)SEK 154 millionDutch aid to health sector 2009–10€20 millionDanish aid to roads sector 2009–10DKK 50 milionEU aid to roads sector 2009–10€44 millionTotal in US$ including roadsUS$ 273 million* Frozen since August, 2009. To be channelled through the UN Development Programme this autumn. Based on data from the Swedish Embassy in Lusaka, the Dutch Foreign Ministry, and the Global Fund. Open table in a new tab $137 million in Global Fund grants for Zambia were suspended in August, 2009. Recent reports in the international media that $300 million in Global Fund grants were frozen in June, 2010 are incorrect, according to Jon Lidén, Communications Director at the Global Fund. The move last year came 2 months after Sweden and the Netherlands, the two largest bilateral donors to the Zambian health sector, withheld millions of dollars in health aid after finding evidence of embezzlement.The Global Fund's decision to suspend grants was triggered by the findings of a forensic audit by the Zambian Auditor General, after a tip-off from a Zambian whistleblower. The audit identified at least one irregularity related to a Global Fund grant. The Global Fund did not make its suspension public at the time, Lidén says, because Zambian authorities were taking the matter seriously.Last year's freeze by the Global Fund was meant to be temporary, but over the past 11 months the Global Fund has become impatient with the slow progress being made by the Zambian Government. “The Government in Zambia initially showed exemplary leadership and a desire to be transparent and open and get to the bottom of the problem”, Lidén says. “But the zeal with which the government has pursued the investigation slowed down over time.”The Global Fund has now decided to drop the Ministry of Health, and has approached the UN Development Programme (UNDP) about being a channel for the current Global Fund grants instead. This move is the result of several factors: there seem to be more discrepancies in the paperwork than first anticipated; the ministry has been greatly weakened by the loss of key senior staff as a result of the corruption scandal; and, as the case has dragged on, Zambian authorities have become less collaborative. “We could not be certain that the Ministry of Health could manage such large grants at this point in time, and asked UNDP to take over”, Lidén says.In September, 2009, the Office of the Inspector General at the Global Fund launched its own audit of Global Fund grants in Zambia. John Parsons, who heads the Office of the Inspector General, says the report is currently in draft form, and will not comment on its findings until the final report is published. The Global Fund states in a press release that $8 million from a completed project were not spent, but not reported to the Global Fund. This money will be refunded by Zambia to the Global Fund.In addition to the $8 million that will now be refunded, donors estimate that some $7 million have been stolen from the Zambian Health Ministry. The case is part of a wider problem of corruption affecting aid funds to Zambia, and donors have responded by freezing funds on a much larger scale. While the Global Fund, Sweden, and the Netherlands have withheld more than $200 million in aid, a separate case of irregularities in the roads sector has caused Denmark and the EU to suspend another $65 million (table), adding to donor wariness about channelling aid funds through Zambian ministries. Lidén stresses that despite its concerns, the Global Fund anticipates that once the problems are sorted out, the Ministry of Health will become a recipient of Global Fund financing in the future. The fate of the bilateral funds, however, is less certain.A governance action plan has been agreed by donors and the Zambian Government to address corruption. It includes several conditions that Zambia must achieve before aid to the health sector starts flowing again. One of those conditions—reimbursement of the stolen funds—was met in July this year: SEK6·7 million ($0·9 million) was repaid to Sweden and €970 000 was repaid to the Netherlands. However, for Dutch and Swedish health aid to resume, the Zambian Government must also put in place several measures specified in the action plan to improve financial governance, and it must undertake a full systems audit verified by an external accountant. Diplomatic sources in Lusaka are doubtful that these measures will be completed to the satisfaction of the donors by the end of this year.Sweden has played a leading part in talking to the Zambian authorities because Sweden and the Netherlands coordinate their aid to the health sector through a so-called silent partnership, whereby the Swedes take the lead on behalf of the Dutch. Swedish Development Minister Gunilla Carlsson has focused on the issue of corruption in aid during her 4 years in office, and has taken a special interest in the Zambia case, increasing political pressure in Sweden to adopt a hard line.Indeed, Sweden made the unusual move last year of breaking with the group of nine donors that provide budget support to Zambia's Finance Ministry and unilaterally cancelled its contribution of SEK145 million ($20 million). The budget support allocation for 2010 is also delayed.In a recent press release, Carlsson welcomed the fact that Zambia has taken Swedish criticism seriously and reimbursed the money. But she emphasises the seriousness of the matter, pointing out that the stolen aid funds could have covered polio vaccinations for 5·3 million children, or diarrhoea prevention for 10·7 million children. “We cannot be satisfied with this. According to the evaluations that have been done of the Zambia scandal, there is still a big risk that corruption can strike again,” she said.Carlsson says it will be important for Sweden and other donors to follow up on the audit being undertaken by the Global Fund. A spokesperson at the Dutch Foreign Ministry says the Netherlands shares Carlsson's concerns about financial management capacities in Zambia, noting that implementation of the action plan by Zambian authorities has been slow.In the meantime, many worry about the implications for health services in Zambia. The Global Fund plays down the affect of its actions on drug procurement. But the freeze has clearly affected health systems support, particularly the training of medical personnel. Lidén says the Global Fund grants that were withheld did not affect patient treatment, but the suspension has meant that expansion of health worker training programmes has been put on hold. The government has played down the withdrawal of donors' funds. But according to the Times of Zambia, Health Minister Kapembwa Simbao admitted that his ministry would run a deficit by almost $5 million each month as a result of the withheld Global Fund support. The Minister said the worst affected would be district health centres and hospitals, and HIV and malaria programmes. The expansion of the fight against AIDS, tuberculosis, and malaria will also be delayed.Meanwhile, the loss of Swedish and Dutch funds hits the health sector across the board. Ann Danaiya Usher writes on aid politics for Development Today The Global Fund to Fight AIDS, Tuberculosis and Malaria has lost trust in Zambia's Ministry of Health to manage public sector grants. Ann Danaiya Usher reports. The Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund) has dropped the Ministry of Health in Zambia as a principal recipient of current public sector grants as a result of financial irregularities and continued concern that Zambian authorities are not moving fast enough to improve control systems. The Fund's decision comes at a time when $US millions in aid to Zambia from several other donors have been suspended in connection with corruption in the health and roads sectors (table). $137 million in Global Fund grants for Zambia were suspended in August, 2009. Recent reports in the international media that $300 million in Global Fund grants were frozen in June, 2010 are incorrect, according to Jon Lidén, Communications Director at the Global Fund. The move last year came 2 months after Sweden and the Netherlands, the two largest bilateral donors to the Zambian health sector, withheld millions of dollars in health aid after finding evidence of embezzlement. The Global Fund's decision to suspend grants was triggered by the findings of a forensic audit by the Zambian Auditor General, after a tip-off from a Zambian whistleblower. The audit identified at least one irregularity related to a Global Fund grant. The Global Fund did not make its suspension public at the time, Lidén says, because Zambian authorities were taking the matter seriously. Last year's freeze by the Global Fund was meant to be temporary, but over the past 11 months the Global Fund has become impatient with the slow progress being made by the Zambian Government. “The Government in Zambia initially showed exemplary leadership and a desire to be transparent and open and get to the bottom of the problem”, Lidén says. “But the zeal with which the government has pursued the investigation slowed down over time.” The Global Fund has now decided to drop the Ministry of Health, and has approached the UN Development Programme (UNDP) about being a channel for the current Global Fund grants instead. This move is the result of several factors: there seem to be more discrepancies in the paperwork than first anticipated; the ministry has been greatly weakened by the loss of key senior staff as a result of the corruption scandal; and, as the case has dragged on, Zambian authorities have become less collaborative. “We could not be certain that the Ministry of Health could manage such large grants at this point in time, and asked UNDP to take over”, Lidén says. In September, 2009, the Office of the Inspector General at the Global Fund launched its own audit of Global Fund grants in Zambia. John Parsons, who heads the Office of the Inspector General, says the report is currently in draft form, and will not comment on its findings until the final report is published. The Global Fund states in a press release that $8 million from a completed project were not spent, but not reported to the Global Fund. This money will be refunded by Zambia to the Global Fund. In addition to the $8 million that will now be refunded, donors estimate that some $7 million have been stolen from the Zambian Health Ministry. The case is part of a wider problem of corruption affecting aid funds to Zambia, and donors have responded by freezing funds on a much larger scale. While the Global Fund, Sweden, and the Netherlands have withheld more than $200 million in aid, a separate case of irregularities in the roads sector has caused Denmark and the EU to suspend another $65 million (table), adding to donor wariness about channelling aid funds through Zambian ministries. Lidén stresses that despite its concerns, the Global Fund anticipates that once the problems are sorted out, the Ministry of Health will become a recipient of Global Fund financing in the future. The fate of the bilateral funds, however, is less certain. A governance action plan has been agreed by donors and the Zambian Government to address corruption. It includes several conditions that Zambia must achieve before aid to the health sector starts flowing again. One of those conditions—reimbursement of the stolen funds—was met in July this year: SEK6·7 million ($0·9 million) was repaid to Sweden and €970 000 was repaid to the Netherlands. However, for Dutch and Swedish health aid to resume, the Zambian Government must also put in place several measures specified in the action plan to improve financial governance, and it must undertake a full systems audit verified by an external accountant. Diplomatic sources in Lusaka are doubtful that these measures will be completed to the satisfaction of the donors by the end of this year. Sweden has played a leading part in talking to the Zambian authorities because Sweden and the Netherlands coordinate their aid to the health sector through a so-called silent partnership, whereby the Swedes take the lead on behalf of the Dutch. Swedish Development Minister Gunilla Carlsson has focused on the issue of corruption in aid during her 4 years in office, and has taken a special interest in the Zambia case, increasing political pressure in Sweden to adopt a hard line. Indeed, Sweden made the unusual move last year of breaking with the group of nine donors that provide budget support to Zambia's Finance Ministry and unilaterally cancelled its contribution of SEK145 million ($20 million). The budget support allocation for 2010 is also delayed. In a recent press release, Carlsson welcomed the fact that Zambia has taken Swedish criticism seriously and reimbursed the money. But she emphasises the seriousness of the matter, pointing out that the stolen aid funds could have covered polio vaccinations for 5·3 million children, or diarrhoea prevention for 10·7 million children. “We cannot be satisfied with this. According to the evaluations that have been done of the Zambia scandal, there is still a big risk that corruption can strike again,” she said. Carlsson says it will be important for Sweden and other donors to follow up on the audit being undertaken by the Global Fund. A spokesperson at the Dutch Foreign Ministry says the Netherlands shares Carlsson's concerns about financial management capacities in Zambia, noting that implementation of the action plan by Zambian authorities has been slow. In the meantime, many worry about the implications for health services in Zambia. The Global Fund plays down the affect of its actions on drug procurement. But the freeze has clearly affected health systems support, particularly the training of medical personnel. Lidén says the Global Fund grants that were withheld did not affect patient treatment, but the suspension has meant that expansion of health worker training programmes has been put on hold. The government has played down the withdrawal of donors' funds. But according to the Times of Zambia, Health Minister Kapembwa Simbao admitted that his ministry would run a deficit by almost $5 million each month as a result of the withheld Global Fund support. The Minister said the worst affected would be district health centres and hospitals, and HIV and malaria programmes. The expansion of the fight against AIDS, tuberculosis, and malaria will also be delayed. Meanwhile, the loss of Swedish and Dutch funds hits the health sector across the board. Ann Danaiya Usher writes on aid politics for Development Today Ann Danaiya Usher writes on aid politics for Development Today Ann Danaiya Usher writes on aid politics for Development Today