Zambia’s health procurement system paralysed

Zambia’s health procurement system paralysed

By MakanDay Centre for Investigative Journalism 

Zambia’s health procurement system is paralysed by a stand-off between officials in the ministry of health. Those wanting to clean up corruption and stop the rot are clashing with others fighting to secure contracts for companies that pay. The result? The billions available to buy medicine are not being spent and the country’s hospitals are battling critical shortages of drugs and equipment.

These shortages highlight a major health problem in the country and reveal challenges facing the new government to deal with corruption in the procurement system.

The government hoped to address the shortages by making more than K2.7 billion available to the Zambia Medicines and Medical Supplies Agency (ZAMSA) to buy medicine and equipment. But spending this money and getting critical stock into hospitals is proving difficult. This is because the process of selecting companies to supply the much-needed drugs and supplies is a fiercely contested ground.

Sources in the health ministry close to the procurement process, told MakanDay that corrupt officials have set their eyes on kickbacks and other benefits that may accrue to them from the K2.7 billion earmarked for the purchase of medicine.

The new government has promised to close loopholes for corruption in the tender system, especially the opportunities presented by the more relaxed procurement rules during Covid-19. But it has become apparent that not all officials are buying into the clean-up campaign.

One pharmaceutical contract that is proving controversial is worth US$65 million. MakanDay has heard from those close to the deal how some top government officials are pushing for the Egyptian Group for Pharmaceutical and Cosmetics Producers (EGYCOPP) to get this contract to supply the government with medicine. This is fuelling tension in the ministry among those who believe the bid to award EGYCOPP is not above board.

According to the Middle East News Agency, EGYCOPP had plans to open a branch in Zambia in 2020, as part of the vision to double Egyptian exports in the coming years.

But the Patent and Company Registration Agency (PACRA) records show that although EGYCOPP Zambia was actually registered on 26 June 2020, it has not been active in Zambia.

Its business address is listed in Roan Road, Plot No. 17, Kabulonga – Lusaka. But a visit to the address revealed another company operates there.

The shareholders are Egyptian, Sudanese and Zambian and the two companies are led by Musonda Chibwe, Salah Ahmed El Hagmana and Magued Georges Amin Youssef, Sudanese and Egyptians, respectively.

MakanDay has also established that one of the companies that has shares in EGYCOPP is owned by a person who is also a director in EGYCOPP in his individual capacity.

According to the PACRA, EGYCOPP is owned by Amin Youssef, Mbongeni Nkosiyethu Ngwenya and Sala Mana – Zimbabweans and Sudanese, respectively.

The company has not responded to a set of questions from MakanDay which set out the allegations being made against the company. When the company failed to respond, MakanDay checked and confirmed that the addresses obtained for directors were correct and resent the questions. No response has been received.

Shortages persists

Meanwhile, drug shortages in Zambian hospitals, which started in October, have worsened in recent months, with some hospitals completely running out of essential medicine and consumables. Medical consumables include syringes, needles, sutures, staples, medical gloves, adhesives and sealants for wound dressing.

Some of the medicine in short supply are Flagyl (metronidazole 200mg), used in the management of diarrhoea, and Panadol. 

In addition to medicines and intravenous fluids, most hospitals do not have consumables, such as cannulas used to insert blood transfusions during an emergency, gloves, and Plaster of Paris used to correct bone fracture.

The ministry is yet to respond to MakanDay’s request for comment.

Clean-up: All on board?

In another case, which highlights a similar stand-off in the ministry and also points to the complexity of implementing the new government’s clean-up plan, President Hakainde Hichilema suddenly announced in August that he was sacking his health permanent secretary. While this decision took Zambians by surprise, a carefully-worded, terse statement issued by presidential spokesperson, Anthony Bwalya announced that Hichilema “has with immediate effect, terminated the contract of Dr George Magwende as permanent secretary (administration), in the ministry of health”. 

Sources at the ministry have told MakanDay that the decision by Hichilema to sack Magwende was linked to a US$100 million Covid-19 project to build more than 370 hospitals across the country. The contract was awarded to TFM, a South African-registered company when former Zambian President Edgar Lungu’s party, the Patriotic Front was in power. Although the Patriotic Front had lost the election by the time Magwende signed off on the project, President Hichilema fired Magwende and cancelled the TFM contract.

MakanDay has seen correspondence that confirms how TFM approached the ministry under the previous administration with an offer to build prefabricated hospitals as a response to the Covid-19 pandemic.

According to a letter from then permanent secretary Kakulubelwa Mulalelo to former secretary to the treasury Fredson Yamba, in 2020, TFM approached the ministry of health with an offer to establish 150 prefabricated hospitals with 375-bed capacity in Zambia.

On 9 August, shortly after being fired, Magwende appeared before the anti-corruption commission for questioning. The commission said it had been carrying out investigations on allegations of corruption against him.  

As the stand-off in the health ministry continues over contracts, MakanDay has also learned that when the TFM contract was being mooted, questions were raised, but ignored, about whether it was indeed prudent for government to spend US$100 million on such a project. Questions were also raised within the ministry about the contract being awarded to TFM, a company with no track record in the construction of hospitals.

TFM is yet to respond to queries sent on 29 August, follow up emails and attempted telephone calls sent to its chief executive officer, Odwa Mhlwana, and his personal assistant.

Company history

According to the company website, TFM was established in 1966 by the Modlin family to specialise in truck customisation, maintenance and repair. It entered the armoured vehicle production industry in the late 1970s.

TFM is well known for its military products such as the Casspir, Nyala, Scout and RG31 military and riot control vehicles that were used by the UN and NATO as well as the South African police force.

The TFM group specialises in manufacturing, supply and support and importation of specialist truck bodies, primarily for the transport, construction, forestry, cargo body, waste and environmental transport industries.

The company also manufactures ambulances, armoured vehicles, including cash-in-transit vehicles, components for the automotive and engineering industries, fuel tanks, and trailers of all sizes as well as carrying out alterations to truck chassis and supply and fitment of hydraulic kits.

Track record

In 2020, the Gauteng High Court in South Africa found TFM guilty of unlawfully obtaining a contract to supply of 48 fire and rescue vehicles to the City of Johannesburg.

Judge Thina Siwendu stopped the contract after he found that it had been unconstitutionally awarded and was irregular.

Siwendu also directed the National Director of Public Prosecutions to investigate whether City of Johannesburg officials lied about aspects of the contract.

Haunted by corruption of the previous regime

Governance experts say, although Hichilema has acted by removing Magwende from his position, there’s a long way to go to deal with past corruption. One deeply-rooted problem, highlighted by the episode at the ministry, is officials’ failure to delink with decisions of the past regime.

In another case, on 12 August the anti-corruption commission arrested three Honey Bee Pharmacy directors, Abdurrauf Abdurahim Motala, Zakir H Motala, and Imran Runat, “on one count of uttering of a false document”.

The arrest was in connection to a contract awarded in August 2019 by the government through the Ministry of Health to Honey Bee Pharmacy for the supply of 22,500 health kits to health centres countrywide at a contract worth US$17 million.

The matter is ongoing in court.

This was despite government entering into a quantum meriut agreement to pay Honey Bee for what was supplied and consumed as opposed to contractual price at a meeting chaired by Marshal Muchende, the solicitor general. The 8 August meeting was attended by key government officials and Honey Bee representatives. 

Dr Sishuwa Sishuwa, lecturer in modern history at the University of Zambia, observes that Hichilema has shown political will to tackle massive corruption under Lungu by appointing the highly regarded former attorney general Musa Mwenye to chair the ACC. As a result, there have been arrests of high-profile former officials who were untouchable barely a year ago.

Assessing Hichilema’s first year in office, he suggests: “In order to clamp down on corruption, the government must enact laws that give the ACC adequate power to prosecute private entities.”

This story was produced by MakanDay Centre for Investigative Journalism and syndicated by the IJ Hub on behalf of its member centre network in Southern Africa.

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