Corruption and mismanagement plunge Zambia’s drug procurement into chaos

By Charles Mafa

Zambia’s drug procurement system is in turmoil, starting with officials at the medical supply agency attempting to exploit a border clearance loophole for personal enrichment. This scandal has led to a series of dismissals, a blame game, and the transfer of Health Minister Sylvia Masebo.

The chaos at the Chirundu border resulted in 38 trucks being delayed for a month, highlighting significant financial vulnerabilities and systemic challenges within the Zambia Medicines and Medical Supplies Agency (Zammsa).

The ministry of health now has a new minister, Elijah Muchima, who was moved from the ministry of lands, while Masebo was reassigned to replace the former. Additionally, director general Victor Nyasulu who was initially suspended and charged with negligence has now lost his job.

However, there are growing questions about whether these changes will address the underlying systematic issues facing Zammsa. For example, halfway through the year, Zammsa has received just K400 million from the government, despite being allocated K4.9 billion for the 2024 drugs budget, MakanDay has established.

This shortfall exacerbates an already chaotic drug procurement system, further complicated by alleged corruption within Zammsa. Recently, officials at the agency attempted to exploit a border clearance loophole, causing a month-long delay for 38 trucks at the Chirundu border.

Additionally, over 20 trucks laden with medicine and medical supplies, primarily IV fluids, were being diverted to a private warehouse owned by the transport company J & J Zambia since January this year.

The plan by those involved was to deliberately delay the clearance of medicine and medical supplies, causing high demurrage and storage charges to accumulate. This would allegedly result in them receiving hefty kickbacks from the well-orchestrated scheme.

Erratic government funding

Although the government has reportedly released an additional K400 million to Zammsa, a well-placed source at the health ministry revealed that these funds have not yet been received at the time of gathering information for this story.

The same source informed MakanDay that some medicine suppliers are threatening legal action over outstanding debts. Additionally, bailiffs are threatening to seize medicines from one of the hired warehouses due to unpaid rental fees.

A source at Zammsa revealed that while the issue with the 38 trucks stranded at the border for a month is being resolved, other trucks at the border and inland still require K17 million for clearance as of July 21, 2024.

Reacting to the scandal, the government has warned that it will not shield anyone involved in the Zammsa saga.

“Government will not shield anyone involved in the ZAMMSA saga, where 61 containers of medicines were initially marooned at the J & J private depot in Lusaka’s Makeni area, but will ensure that the law takes its course,” said Cornelias Mweetwa, minister of information and media and government spokesperson, during a press conference in Lusaka.

Chaotic distribution system

Additionally, MakanDay has found that Zammsa is in such a weak financial position that it has already exhausted its operational funds for the period from January to December. As a result, the agency is struggling to pay workers and is two months behind on statutory requirements, including pay-as-you-earn, national pension scheme authority (Napsa) contributions, and health insurance for its workers.

“Right now, we owe Napsa and Nhima for the past two months. Although we managed to clear these debts in previous months due to the effective management of the former director general (Billy Mweetwa), negotiations are still ongoing with the revenue authority,” said another Zammsa insider.

“The board was not aware of that particular matter (the missing trucks), but they are aware of our bankruptcy. We don’t pay NHIMA, we don’t pay ZRA, we don’t pay NAPSA, we don’t pay anything. When we get money, we pay just the net pay,” Nyasulu, the fired director general, told News Diggers newspaper recently.

The agency’s organisational structure, with multiple high-salaried directors, adds to its financial challenges. With seven directors overseeing supply and planning, procurement, finance, warehouse and distribution, internal affairs, legal affairs, and human resource, along with a director general, the agency incurs significant salary and allowance expenses. Beyond these directors, the institution also employs numerous senior managers and their assistants. This is excessive for an institution dependent on external support, according to a former senior employee.

“They have a bloated workforce to the extent that people joke, every time you throw a stone from Buseko (neighbouring market), there’s a good chance you’ll hit a director or a senior manager,’ he jibed.

Drug stock levels have improved to over 70% since UPND took office but distribution issues persist.

Although drug stock levels have improved to over 70 percent under President Hakainde Hichilema’s government, which took office in August 2021, Zammsa is struggling to store and distribute medicines and medical supplies from its hubs to public health facilities across the country due to a lack of funds. Zammsa also fails to enforce an effective system to monitor nationwide drug distribution.

“On a daily basis, we receive numerous delivery notes from various health facilities reporting shortages of medicines, despite the agency packing all the requested supplies,” the source said.

Dependency on donors and administrative failures

The medical supply system in Zambia faces significant administrative failures, with the health ministry heavily reliant on external donors for national drug needs. This reliance creates confusion and coordination challenges.

The donors involved are in three categories – those who buy and provide in-kind assistance of drugs, those who bring money into the country and those who provide budgetary support to the health ministry.

Experts say this arrangement leads to coordination challenges across institutions that buy drugs. It can lead to over-supply of some drugs and shortages of others as donors sometimes have to assume that certain drugs have been, or have not been, provided by others.

Shortages force emergency procurement by both the ministry of health and at times by cooperating partners themselves. On occasions donors end up supplying the country with drugs that are not even on the list of essential drugs.

Then, some donors give their funds directly to the ministry of health while others channel it through the ministry of finance (MoF). The MoF then makes the funds available to the health ministry for drug purchasing based on a disbursal schedule. This often leads to buying in fragmented quantities, some of which are too small to be floated by international tender.

Thus, government pays a higher price for drugs that could have been procured cheaper if bulk procurement were carried out. Sources at the MoF cite “poor accountability” as the reason for controlled and “staggered disbursal” of budgeted funds to the health ministry.

Third-party involvement extends beyond procurement to distribution. Companies such as Africa Global Logistics (AGL) and CilTax Limited, contracted by the USAID Programme for Advancing Supply Chain (Pasco), are involved in drug distribution, creating additional challenges.

“In the third-party distribution of drugs, no Zammsa staff are involved in the delivery. This raises concerns about accountability, as it’s difficult to ensure that pharmacists at health facilities do not tamper with the boxes during delivery,” the source familiar with distribution added.

Zammsa has seven medical hubs outside Lusaka, in Choma, Mongu, Chipata, Kabompo, Mpika, Luanshya, and Mansa. Some hubs, such as those in Chipata, Choma, and Kabompo, have been adopted by the Churches Health Association of Zambia (Chaz), which funds drug distribution for the entire year. The Pasco programme supports the Mpika and Mansa hubs.

“Unfortunately, even these hubs, which have been funded for a year and supported by Chaz and other partners, are struggling despite the financial support they have received. The funds are not managed locally by each hub but are instead controlled by the headquarters in Lusaka,” the source explained.

As a result, nearly K9 million in unused funds were returned to Chaz, leading to a reduction in this year’s funding. Chaz has still provided financial support, but this assistance has diminished due to Zammsa’s failure to fully utilise the allocated funds.

Unending game of musical chairs

Zammsa has had five multiple director generals under the current government, with ongoing instability at the top.

In August 2022, Billy Mweetwa became director general after a tumultuous period for the agency, during which three directors general, including some in an acting capacity, preceded him. Earlier that year, in February, the Zammsa board had placed the entire management on compulsory leave.

This action was prompted by ongoing investigations into a series of significant irregularities that had plagued the institution, particularly concerning the distribution of defective medications sourced from Honeybee Pharmacy.

During an interview with MakanDay in July 2022, Mweetwa said “the government-to-government procurement will be governed by a memorandum of understanding (MOU) and involves collaborative manufacturing, with the unified procurement authority (UPA) in Egypt being the counterpart government institution.

“UPA has contracts with various suppliers or manufacturers in Egypt, while Zammsa’s role is to ensure regulatory compliance, quality, safety, and efficacy of the products through regulatory mechanisms,” Mweetwa said.

His successor, Nyasulu, told News Digger recently that signing the Egyptian deal was “the biggest thing that made me a darling to the minister and the President”.

“I cannot sabotage the very thing that made me a star,” he said.

Procurement controversies

Nyasulu did not address why Zammsa was procuring intravenous fluids (IVF) despite the country already having sufficient stock. During the cholera outbreak in January this year, Zammsa procured  IVF from Yash Pharmaceuticals due to the emergency.

IV fluids are liquids injected into a person’s veins through an IV (intravenous) tube. They prevent or treat dehydration and electrolyte imbalances.

“Both sets of IV fluids have the same expiry date in 2026. This means we have over-procured IV fluids, both locally through Yash and internationally through the Egyptian order,” a well-placed source at Zammsa revealed. “Even if everyone in the country contracted cholera today, we would still not consume all the IV fluids we have.”

Additionally, the source revealed that health facilities are overstocked with IV fluids.

“In places like Central Province, these fluids will expire next month, resulting in significant financial waste,” he said.

Nyasulu’s time at Zammsa

Nyasulu first attempted to join Zammsa by applying for the position of director general at the same time as Mweetwa in 2022, the successful candidate, but he was not selected.

Later, he joined as director of finance, and when Mweetwa was fired, he rose to the position of director general.

He also has a background in politics, having run for the position of Lusaka mayor on the UPND ticket during the 2021 elections, losing to Chilando Chitangala of the Patriotic Front.