Financial pressure mounting on health ministry
The Ministry of Health and Social Services (MoHSS) deferred year-end payments are increasing in terms of drug procurement, which is an indication of the financial pressure in the ministry. In 2015/16, the percentage deferred at year-end stood at 29%, in 2016/17 at 18%, 2017/18 77%, and 2018/19 32%. The Ministry of Finance yesterday held a stakeholders engagement to find solutions to the challenges faced by the health ministry.
According to a briefing note from the finance ministry, from 2015/16 to 2018/19, health spending is down by 30 to 40% in real terms, and also the allocated budget is not always spent during applicable years, indicating shortcomings in the procurement process.
Overall, drug procurement is a complex process with different products being procured each year and up to 60 suppliers preparing competitive bids. During the last three years, Central Medical Stores (CMS) has not been able to secure one contract via this process. Procurements have been considered as emergency buy-outs as a mechanism to get around the inherent problems in the procurement contract process.
According to the report, CMS has submitted five tenders above N$25 million for review and approval by the central procurement board in the last three years. It stated that four have failed for process or time reasons. The only procurement was for antiretrovirals (ARVs), which is a relatively easy procurement of a small number of products with significant price competitiveness.
However, an ARV tender failed in 2017 and according to the report “the failure at the Central Procurement Board of Namibia should be clarified, lack of product knowledge is a possible reason for failure.”
In recent years, the MoHSS has been required to fully fund the HIV interventions, which consumes 40% of the budget. Over the last four years, CMS has suffered a perfect storm of a 30% decrease in funding due to the fiscal pressures, the lack of perpetual access to the funds through a ring-fenced fund dedicated to buying CMS items only, 20% to 30% increase in price due to being unable to write international contracts. This means that 40% of the health ministry’s budget is now dedicated to HIV responses and which ministry officials say has proven cumbersome and is a very slow processing of buy-outs.
The Director in the Directorate of Professionalisation and Capacity Strengthening in the finance ministry, Francois Brand, said the purpose of this week’s meeting was to identify the issues that the ministry of health is facing in the field of procurement.
“We want to understand whether the issues are coming from the planning stage, bad evaluation, contract management or the entire cycle. We want to understand whether the problem is external to develop policies and solutions to these problems. Whether to amend the Act to find solutions to the problems,” said Brand.