16 February 2018
This latest OIG audit follows up on 2015 engagements that had identified significant deficiencies in portfolio management, implementation arrangements, financial controls, supply chain, and data quality. Two years on, the auditors found major improvements thanks to corrective measures put in place by the Secretariat after the 2015 audit. Some of the measures have mitigated the risks while others still need more time to take effect. There are also gaps in some of the measures which need to be addressed. The government has refunded US$5.8 million identified as recoverable amounts in previous OIG audits and investigations.
Nigeria has the highest malaria burden in the world; the second highest HIV burden; and it is in the top ten countries with the highest tuberculosis burden. With disbursements of over US$1.8 billion since 2003, the country is critical to the Global Fund’s mission to end the three epidemics. The operating environment is challenging with high levels of corruption and security threats in the northern states, which affect the implementation of grant activities.
Since the 2015 audit, the Global Fund now differentiates staffing resources according to the importance of the country. As a result, the Nigeria team has increased from nine to 19. The Global Fund has improved implementation arrangements for the HIV program by appointing a new Principal Recipient already experienced in managing HIV programs. In line with the federal structure of the country, the Secretariat is also piloting a state level grant with Lagos State as a Principal Recipient for an HIV grant.
However, the auditors noted gaps in the management and implementation of the malaria grant, and the oversight provided by the Country Coordinating Mechanism. The Principal Recipient has limited experience and capacity to manage a malaria grant of the scale needed for Nigeria. This delayed bed net distribution in the last grant period. As a result, the Secretariat and in-country partners engaged a local non-governmental organization to support the Principal Recipient. In the end, all the nets were distributed. However, some investments in mobile technology could not be used at the time due to the Principal Recipient’s capacity constraints. The Secretariat is yet to set specific expectations of the Country Coordinating Mechanism on the portfolio.
The Secretariat has improved how fiduciary risks are managed and generally found the right balance between prevention and detection controls. This has enabled grant activities to take place despite the high fiduciary risks in the country. The Secretariat has also improved coordination between a Fiscal Agent and other assurance providers, as well as putting in place anti-fraud measures. Notwithstanding the above, the auditors noted gaps in the Fiscal Agent’s oversight. The reviews performed by the agent are not consistently effective and efficient due to gaps in its processes and the Secretariat’s oversight.
In terms of supply chain, the Global Fund has instituted measures which have improved storage, inventory management and accountability for medicines at the central warehouses, managed by a private service provider. All medicines and health products received from the Global Fund Pooled Procurement Mechanism can be reconciled in the inventory management system at the central level. However, there are still challenges in underlying data, roles and responsibility between the service provider and the Principal Recipient.
Finally, data quality remains a significant outstanding issue from the previous audit. There are still gaps in the internal controls over data quality. The OIG acknowledges that this is a national challenge requiring effort from all stakeholders. Progress in this area is also highly contingent on the Government of Nigeria and its willingness to increase the level of its investments in health systems.
Following this latest audit, the Secretariat is already putting in place corrective measures including improving the Fiscal Agent’s efficiency; and clarifying roles and responsibilities in the distribution process.