Swaziland – an impoverished country with the world’s highest incidence of HIV and TB – faces the dilemma of finding donors and assets to replace expected grants from the Global Fund to Fight AIDS, Tuberculosis and Malaria. The Global Fund’s suspension of new grants comes in the wake of an audit undertaken by the Global Fund Office of the Inspector General (OIG) that criticises Swaziland’s grant use.⁽²⁾ Local HIV & AIDS groups have deemed the report as a potential encumbrance to realising future HIV & AIDS, malaria and TB goals. This has led Prime Minister Barnabas Sibusiso Dlamini to call upon the international donor community to come to Swaziland’s assistance in this “hour of our need.”⁽³⁾

The principal recipient (PR) of Global Fund monies in Swaziland, the National Emergency Council on HIV & AIDS (NERCHA), fear that if such a report is left unchallenged it could endanger the nation’s efforts to woo essential donors. NERCHA hired the auditing firm KPMG to conduct an independent audit. This prompted a dialogue between NERCHA and the OIG that has been characterised by mutual respect.

This CAI discussion paper aims to analyse the situation by considering the results of both reports. It therefore examines the Global Fund’s audit of its grants to Swaziland, therein presenting the responses of the Swazi recipients. The paper will provide a background on the health situation and the Global Fund in Swaziland, summarise the Global Fund audit, and review the PR response. It will then briefly provide a historical perspective for the challenges observed and indicate directions for future progress in order to avoid misunderstandings.

Health challenges and strides in a donor-dependent country

Like many AIDS-impacted Southern African nations, Swaziland is dependent on the humanitarian concern of foreign donors to provide financial assistance to lessen poverty and disease. This is particularly the case with HIV & AIDS, the devastating impact of which far outstrips the Government’s financial ability and the health system’s resources to cope. It has been reported that amongst adults in Swaziland, 31% of women and 20% of men are HIV positive. The highest prevalence for women is in the age group 25-49 years, where 49% are HIV-positive and for men, 35-39 years, where 45% are HIV-positive.⁽⁵⁾ The United Nations Population Fund (UNFPA) reported that “life expectancy at birth declined from 60 years in 1997 to 43 years in 2007, mainly due to the effects of HIV & AIDS.”⁽⁶⁾

A government financial crisis that saw the curtailment of basic social services in 2011 has compromised an effective local response to the HIV & AIDS emergency.⁽⁷⁾ Hospitals have reported shortages of basic medicines and sanitary supplies while shortages of ARVs have disturbed the treatment of people living with HIV & AIDS.⁽⁸⁾ The government’s inability to service the health sector strengthens the need for outside donor assistance from the Global Fund and other sources.

The intention of the Global Fund grant that was awarded to Swaziland in 2003 was to boost Swaziland’s burgeoning health and development response movement by providing much needed finance that was unavailable from a cash-strapped Government. The intervention was welcome by public health organisations and health and HIV & AIDS NGOs. Although TB remains a nettlesome problem as the primary opportunistic disease for Swazis living with HIV & AIDS, the receipt of the Global Fund grant enabled much progress. For example, Malaria is on its way to eradication - the incidence rate has declined 60%. Similarly, ARVS once unavailable to persons living with HIV & AIDS are slowly but inexorably being made available to those in need.⁽⁷⁾ Nevertheless, in Swaziland the pesky nuisance has proved accounting numbers, pitting the donor against the recipient.

The Global Fund audit

The Global Fund audit released on 31 October 2011 examined Global Fund grant use in Swaziland over the period of 2003 to 2010. The report reflects auditor’s on-site inspections of HIV & AIDS initiatives and their reconciliation of (or failure to reconcile) grants delivered with the results achieved. In the light of Global Fund audits of countries like Nigeria and India that have found millions of Global Fund dollars misappropriated through theft and nefarious schemes,⁽⁸⁾ Swaziland recipients of Global Fund grants fear that they may fall under the same accusations.

The auditors reported that while much progress has been made, there has been an improper implementation of Global Fund programmes in Swaziland for a variety of reasons. These included “budget overruns and unbudgeted expenses, adequate and complete supporting documents not being provided, ineligible expenses and reporting variances, assets not identified during the audit exercises, weak monitoring and errors in procurement and supplies management.”⁽¹⁰⁾ Weak monitoring and management of supplies was in reference to the procurement of pharmaceuticals where auditors reported stock outs, rationing of supplies and expired stock. Likewise, unbudgeted expenses included unbudgeted vehicles, staff salary, and the construction of day care centres in rural areas for orphans and vulnerable children, which exceeded the set budget.

The lengthy audit report concluded that “based on the outcome of the audit, the OIG is not able to give reasonable assurance that grant funds disbursed to Swaziland are always used appropriately and that value for money is assured in Global Fund investments.”⁽¹¹⁾ Consequently, the auditors have requested that ZAR 46.4 million (US$ 5.8 million) must be paid back to the fund by Swaziland.

The Principal Recipient audit

Swaziland’s HIV & AIDS organisations led by NERCHA, which as the principal recipient of the Global Fund, distributes the Global Fund monies to a network of nationwide HIV & AIDS groups, are challenging the OIG’s indictment. NERCHA countered discrepancies blamed on mismanagement or unauthorised expenditures. They are providing evidence that any Global Fund monies alleged to have been misused since 2003 were in fact spent legitimately. “We are completely transparent. There is a lack of understanding about the way things work in Swaziland. Flags are being raised and this gives a false impression about what is really going on in Swaziland,” Derek von Wissell, Director of the National Emergency Response Council on HIV & AIDS, said in an interview with Consultancy Africa Intelligence.⁽¹²⁾

NERCHA hired the accounting firm KPMG to do an independent audit – the results of which were not available when the Global Fund OIG auditing team was touring the country. The firm provided figures and a time line showing the history of grant use, including organisations that received grants, their beneficiaries and the status of projects undertaken. This data was incorporated in Swaziland’s Country Coordinating Mechanism (CCM) response that was included as an appendix at the end of the OIG report.⁽¹³⁾

What irks NERCHA and Swaziland’s Global Fund CCM is that all grant money was spent according to protocol and that it was inadequate accounting practices that were largely to blame for the appearance of financial discrepancies that they say do not in fact exist. They provide an example of an expenditure the OIG determined ineligible for funding. “We had to procure vehicles for food feeding schemes, which the World Food Programme was supporting, because we couldn’t get the food to the recipients. Vehicles were not in the original budget, so a dispersal request was approved by the Global Fund Secretariat and the money was given to us for that purpose. But the OIG says that the original work plan didn’t provide for this, so it’s ineligible,” said von Wissell.⁽¹⁴⁾ It is noted in the Global Fund audit report that NERCHA has been requested to provide evidence of the unbudgeted vehicles with proof that they were used to achieve Global Fund grants purposes. Despite showing the existence of the vehicles, NERCHA has yet to show that the vehicles were used in support of Global Fund-funded programmes.⁽¹⁵⁾

Similarly, the construction of “Grannies Centres” where women in rural communities take care of AIDS orphans exceeded the budget by US $1 million. The overrun was reported by NERCHA to the Global Fund and the Secretariat approved the expenditure. However, because the amount was not in the original budget, the Global Fund OIG disallowed it.⁽¹⁶⁾ As the Global Fund Secretariat approved these expenditures, it is questionable as to whom this money should be recovered from, as the OIG recommended it must be refunded. The OIG audit has noted that the situation encountered could have been avoided by better guidance from the Secretariat to the PR.⁽¹⁷⁾

Another area of distress for the OIG was unsupported expenditures or monies spent without documentation. Global Fund rules specify that purchases must be vouchsafed with original invoices and receipts. In this case, the fault appears to lie in the developing country’s inability to amass necessary paperwork. For example, Swaziland’s government-run Central Delivery Stores where ARV drugs are delivered are notorious for misplacing original invoices. NERCHA managed to obtain certified copies of invoices from suppliers, but these were rejected by the OIG. Additional evidence of the drugs’ existence in the supply chain was also rejected as deviating from Global Fund accounting rules.

In reference to the OIG’s concern that the procurement of supplies was improperly managed and monitored, a systemic reform in the way medicinal supplies are obtained in Swaziland is required. The PR noted in its response to the OIG criticism that the Clinton Health Access Initiative has assisted the Ministry of Health to design systems, streamline processes and train staff on proper procurement supply chain management (PSCM). The Health Ministry also commissioned a forensic audit of the Central Medical Stores, which obtains medicines for the public health sector, to identify weaknesses and reform procurement and management procedures.⁽¹⁸⁾

NERCHA has relied on researched data in order to support their counter arguments to the OIG. Based on the findings of the reports, there has possibly been miscommunication between the PR and the Global Fund units, and although there may not be any intentional wrongdoing, weaknesses seem present in the monitoring and accounting capacities of the Swazi grant recipients.

Looking back at the Global Fund: Bureaucracy replaces a spirit of urgency?

Some historical perspective on the subject of monitoring and accounting may be helpful. Originally, the Global Fund’s messages to Swazi grant recipients in 2003 were of an urgent need to dispense money quickly and get results to mitigate a dire health emergency. Swazi HIV & AIDS workers recall the flexibility of a few years ago, which was subsequently replaced by monitoring rules that, while necessary, proved insensitive to the on the ground realities of a developing country’s capacity to monitor and evaluate. “At the Global Fund such flexibility is gone. We started getting money in 2003 and the Global Fund was just starting up, so monitoring systems were just starting up for both of us. You can’t apply 2010 rules to what was done in 2003,” von Wissell said.⁽¹⁹⁾

In an appended statement to its audit, the OIG conceded the point that management controls and record keeping of grant implementation were weaker in the early years and have suggested the final audited figure will be amended. They note however, “according to the grant agreement, the PR has always been required to secure and keep adequate accounting records, books and documents to show, without limitation, all costs incurred and revenues earned.”⁽²⁰⁾ Therefore, NERCHA could have put in place and begun developing efficient monitoring and evaluation systems from 2003. To make this possible, the United Nations recommends that any nation’s PR of Global Fund monies, in Swaziland’s case, NERCHA, should use 14% of the annual grants received from the fund for the monitoring and evaluation of programmes. However, NERCHA has never received more than 1.7% of annual grants for evaluating Global Fund expenditures,⁽²¹⁾ perhaps making it difficult for NERCHA to build its monitoring and evaluation capacity.

Going forward

HIV & AIDS groups in Swaziland agree that one positive outcome from the current controversy is that better accounting practices should be learned and practiced. In its audit report, the Global Fund OIG repeatedly recommends a commitment of Global Fund money and expertise to improve the monitoring and evaluation capabilities of the fund’s recipients in Swaziland. This need will have increased urgency now that the founding director of NERCHA, Mr. von Wissell, who was once both the Swaziland minister of finance and minister of health, announced he will not fulfil the entirety of his contract. His replacement will therefore need to liaise with the Global Fund to strategise on reliable monitoring and evaluation practices.

Swaziland’s Country Coordinating Mechanism also stands in need of improved monitoring and evaluation capacity, even by its own admission. But all efforts to improve spending accountability will be hobbled by government inefficiency, such as the inability of purchasing departments to collect the invoices required by the Global Fund. Until government departments can improve their practices, accounting misunderstandings will continue, fuelling inevitable concerns about corrupt practices.

Concluding remarks

The impact of the Global Fund OIG report on Swaziland’s efforts to finance its HIV & AIDS programmes may prove beneficial if donors read the auditors’ assessments and Swaziland’s responses discerningly. The audits illustrate the divide between the exacting standards of the developed world, which enjoys the ability to not only set but also meet such standards, and the under-capacitated developing world for which such standards can be an ideal summit that proves difficult to surmount in practice.

It is encouraging that the OIG audit calls for monitoring and evaluation capacity building amongst Swaziland’s grant recipients and then commits the Global Fund to such an undertaking. Ultimately international donors and thus Swaziland’s efforts to meet its health and humanitarian goals will benefit from its ability to account for what it takes in, how grants received by the country are spent and what positive effects such expenditures reap.

NOTES:

(1) Contact James Hall through Consultancy Africa Intelligence’s HIV & AIDS Unit (hiv.aids@consultancyafrica.com).
(2) Office of the Inspector General, ‘Country audit of Global Fund grants to the Kingdom of Swaziland’, Global Fund for Malaria, Tuberculosis and AIDS, 31 October 2011, http://www.theglobalfund.org.
(3) Simelane, ‘Disaster looms, Says PM’, Times of Swaziland, 2 December 2011.
(4) ‘Swaziland Country Report 2010’, UNAIDS/NERCHA, March 2010.
(5) ‘Fifth Country Programme Action Plan: 2011-2015’, Government of Swaziland/UNFPA, 2011, p.8.
(6) Inter Regional Integrated News, ‘Swaziland: Will Social Services Continue?’, IRIN Africa Bureau, 17 October 2011, http://www.irinnews.org.
(7) Ibid.
(8) Ibid, p.8.
(9) Heilprin, J., ‘Global Health Fund probe uncovers $20m in losses’, Associated Press (featured in the Guardian), 2 November 2011, http://www.guardian.co.uk.
(10) Ibid.
( 1) Office of the Inspector General, ‘Country Audit of Global Fund Grants to the Kingdom of Swaziland’, Global Fund for Malaria, Tuberculosis and AIDS, 31 October 2011, http://www.theglobalfund.org, p.10.
( 2) Von Wissell, D., 2011, Discussion of OIG audit of Swaziland [interview] (personal communication, 11 November 2011).
( 3) Office of the Inspector General, ‘Country audit of Global Fund grants to the Kingdom of Swaziland’, Global Fund for Malaria, Tuberculosis and AIDS, 31 October 2011, http://www.theglobalfund.org, p.61.
( 4) Von Wissell, D., 2011, Discussion of OIG audit of Swaziland” [interview] (personal communication, 8 November 2011).
( 5) Office of the Inspector General, ‘Country audit of Global Fund grants to the Kingdom of Swaziland’, Global Fund for Malaria, Tuberculosis and AIDS, 31 October 2011, http://www.theglobalfund.org, p.82.
( 6) Ibid, pp.47-48 & 80.
( 7) Ibid, p.83.
( 8) Ibid, p.83.
( 9) Von Wissell, D., 2011, Discussion of OIG audit of Swaziland, [interview] (personal communication, 11 November 2011).
(20) Office of the Inspector General, ‘Country audit of Global Fund grants to the Kingdom of Swaziland’, Global Fund for Malaria, Tuberculosis and AIDS, 31 October 2011, http://www.theglobalfund.org, p.84.
(21) Von Wissell, D., 2011, Discussion of OIG audit of Swaziland, [interview] (personal communication, 11 November 2011).

Written by James Hall ⁽¹⁾