27 November 2017
An OIG audit found that Global Fund grants have contributed to major progress towards ending the three epidemics in Ethiopia. The country has reduced both malaria incidence and mortality, tuberculosis incidence has declined by 50%, and the number of people on antiretroviral therapy has increased by 27%. However, the auditors also identified that health systems strengthening activities need significant improvement and that the country has difficulties absorbing funds.
The Global Fund has disbursed US$1.9 billion to Ethiopia since 2003. The country has made considerable headway in achieving the Millennium Development Goals, including against the three diseases, despite political unrest and severe drought in the last few years. The country’s Health Extension Workers Program, which uses trained non-medical staff to provide primary health care in areas where access is limited, is held up as a good example of community health care delivery.
Approximately 70% of Global Fund grants to Ethiopia are spent on procuring medicine and health products. The supply chain is able to distribute drugs to health facilities and the auditors did not note any major stock-outs. However, there are weaknesses in inventory management systems which result in inefficiencies. Multiple manual and automated systems limit the visibility and traceability of medicines. For example, in the audit sample, around 20% and 54% of anti-malarial and tuberculosis medicines respectively could not be traced through the system.
The auditors found gaps in the design and management of the Global Fund-supported health systems strengthening grant. Overall, business needs assessments for 56% of the grant had not been adequately defined at the time it was signed. Many of the planned activities were revised during the implementation period but without approval from the appropriate committee to ensure that the grant remains on track to achieve its core objectives. The auditors concluded that 60% of the new grant activities would not be completed by the end of the grant on 31 December 2017. Currently, the Secretariat is improving its monitoring of grant revisions at the corporate level which should provide more clarity on future revisions.
The auditors noted significant delays in using grant funds generally. Low fund absorption is not materially affecting programmatic impact currently. This is because the country has been allowed to carry forward remaining cash balances from previous grants to the current implementation period. However, only 56% of funds had been spent at the time of the audit, with seven months left until the end of the grant implementation period. The country’s ongoing efforts to absorb funds is beginning achieve some results with undisbursed funds reduced from US$133 million in May 2017 to US$68 million in October 2017. In-country challenges still require attention as the country risks losing approximately US$90 million from the current grant, which could significantly affect programs in the next implementation period.
The Global Fund Secretariat has plans to address the above issues through a number of corrective actions including the development of an oversight and implementation plan to improve inventory management systems; the design of a new health systems strengthening grant aligned to investments from other partners in the next funding cycle; and the development of tools to strengthen processes to ensure key activities are agreed and approved before funds are disbursed. The Global Fund is also aligning the next grant cycle to the country’s fiscal calendar which should improve the use of resources in the next implementation period.
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