News just in - the impasse over donor funding freeze to the Zambian Ministry of Health has ended. Sweden (SIDA) has finally agreed to release the frozen funds to MoH in Zambia. This follows protracted discussions on the specifics of how to go ahead.

Two major obstacles have been overcome

The major sticking point was on how best to undertake the financial audits at the MoH. The donors had preferred to use external auditors, while the government preferred to use government auditors at the Office of the Auditor General. The compromise agreement is that the office of the Auditor General will work with external auditors in undertaking this task.

The second obstacle to the release of frozen funds was the donor requirement that the MoH pay back the money to SIDA and Netherlands before release of new funding - this would be a lot of money in one go for Zambia. This demand from donors was further complicated by the fact that the allegations are (at time of writing) not yet proven as the cases are in courts of law. The partners have reached compromise position and repayments will be made in smaller amounts as agreed and in due course, spaced over a period of time.

Mutual accountability – and common commitment

Pressure on both sides also contributed in reaching this agreement. It is agreed that SIDA will release its funding in three tranches, the first following this agreement and the other two following the commencement and completion of the audits. Tensions in the partnership are noticeably reduced the will to move on is regained, with the pace of activities picking up vigorously and new initiatives now underway. There is strong hope that the IHP+ Country Compact will be signed in due course, although there are no concrete indications yet. My own guess is that the signing of the IHP+ Country Compact will be early next year (if not this December 2009 since documents are already in place).

Agreeing accountability mechanisms improves partnerships

What lessons can we learn from this? One clear lesson is that the IHP+ partnership should be about serving the best interests of people. It is possible to overcome pride, self-interest and disputes over the moral high ground in order to focus on building shared values on health issues. The Zambian experience tells us that when it comes to the crunch, the desire to serve humanity prevails and compromises have to be made in order to achieve this ultimate goal. Another lesson from this experience is that mutual accountability in a partnership can be reached through negotiation, and should be backed up by binding grievance and redress procedures. Agreement to resort to them in times of crisis helps to promote productive resolution of disputes and thus the predictability of long-term funding agreements. 

The importance of a mechanism to enforce mutual accountability and responsibility is echoed some of the early findings from IHP+Results in-country research – click here to read more.

Thabale Ngulube is the IHP+Results Country Representative for Zambia

Crime and punishment – but who loses out?

Revelations of corruption earlier this year led to the Dutch Ministry and the SIDA (Sweden) freezing their funding to the Zambian Ministry of Health (MoH)  - see my previous blogs.  The Global Fund and GAVI (whose funds are said to be part of those misappropriated) soon followed suit, with other donors threatening to withhold or delay release of funding. 

Attempts to agree a resumption of funding have involved tricky conditionalities. For example, requiring the recovery and repatriation of stolen funds to Sweden and Netherlands.  Doing this would mean pre-judging the ongoing court process and thus puts the government in a difficult situation.  This stalemate has meant significantly reduced donor funding to MoH and a 25% reduction in funding between the 2009 and the 2010 health budgets. 

What are the implications of this shortfall in funding?

The first clear outcome of this is that the country is moving away from the Abuja target of 15% of the national budget going to health, since the government has simply no other sources to replace lost funding.  Zambia’s dependence on donor funding means the donors call the shots, and the Zambian government has limited room to respond. Can IHP+ principles and commitments be fulfilled in such a way?  Our first annual report will be looking at such issues and we’d like to hear your views, so please sign up to leave a comment.

The second outcome arises from the effects of reduced funding to health in the 2010 budget. Spending on personnel is slightly above 2009 approved and authorized estimates, while allocations to consumables (including medicines), infrastructure and interventions have been severely curtailed.

Potential impacts include shortages of medicines, fewer health interventions and reduced maintenance and creation of physical infrastructure.  Most severely hit has been the (2008, 4-year) plan to increase training capacity for human resources.  Allocations to training institutions have been savagely cut, while other institutions have reduced intakes. What health workers we have, may spend more time doing less due to the lack of resources to do so, meaning a severely depleted capacity to respond to and contain global epidemics.

Wider threats to the IHP+ process: who judges in a partnership?

This is a worrisome picture and tensions in the Zambian partnership are increasing, with some government officials describing the IHP+ as “a partnership that hurts people”.  The knee-jerk response of the donor community has divided opinions, with others urging for resumption of funding.  Furthermore, 2011 will bring the national elections.  This is likely to become an election issue, bringing new dangers including the politicisation of the issues or conversely, their neglect, since they are so difficult to untangle. 

Beyond this, there is a need to consider issues of adjudication.  At the height of the crisis, a governance committee was formed to try to arrange the resumption of donor funding.  It was agreed that, if the government complied with 80% of donor-set conditions, funding would be resumed.  Despite government work to achieve 80% compliance, country representatives replied that their HQs demanded 100% compliance and reported that their HQs wanted misappropriated funds to be recovered and returned before resumption of funding.  These new demands were a setback to the government’s enthusiasm for a quick resolution.  Somehow, apart from appearing punitive in nature, for many that response has called into question donor intentions and sincerity.

The question needs to be asked: does the IHP+ partnership come with sanctions?  If so, these need to be made explicit and possibly agreed to rather than coming ad hoc.  Otherwise we will never obtain the goal of ‘long term predictability of funding commitments for health’.

Latest Update --

Last week I attended a Health Financing Technical working group meeting. It emerged that some funding (from CIDA) is with the MoH but cannot be used until after the corruption allegation enquiry is complete.  However, these funds were formally approved for release and use by the MoH at a SAG meeting in March 2009 (well before the scandal).  When the scandal broke in May, authority to use was withdrawn, leading many to ask the question: "when funds are authorized for release and use, is this authorisation not binding to all parties?”  Others argue that, once transferred, the MoH owns the funds and should therefore have the discretion to use the funds for agreed programmes and account for them in due course. 

In the discussion that followed, one participant reported reading an MoU being drafted in one of our neighbouring countries.  He reported seeing a clause stating: "if 5% or more of funds are misappropriated, the country will have to refund all the money to the donors".   Despite the promises, accountability in the IHP+ still seems to be a one-way street. 

Thabale Nugulube is the IHP+Results Country Representative for Zambia

Corruption Scandal Prompts Calls for Greater Transparency and Accountability

Zambia was due to sign the IHP+ Memorandum Addendum on 30th April 2009. But in an unexpected twist the signing ceremony had to be put off as government, donors and civil society found themselves embroiled in an impasse over government procurement plans. The situation has been compounded by a US$ 6m financial corruption scandal, discovered by an investigation by the Anti-Corruption Commission. These events drew loud calls from civil society, the public and other stakeholders for forensic audit of the corruption scandal and Ministry of Health (MoH) financial systems, as well as of all line ministries to reassure both the public and donors that public funds were safe in the hands of government.

Governmental investigations continue and donor funding remains frozen. As core issues of accountability, transparency, and management systems were debated across the country, SIDA (Sweden) stated that there would be an immediate freeze in funding to the health sector pending assurances that future funding would not be prey to such corruption. This action was soon followed by a similar freeze by the Dutch government [lt1].

What are the implications for Civil Society and IHP+ Results?

read more...