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Health Sector Corruption in Ethiopia 37
syndrome); the Productive Safety Net Programme; the UN Development
Program; and the World Bank (Pankhurst 2008).
Donor funds. Donor resources are channeled into the country using several
different mechanisms. Bilateral agencies channel resources directly
into government budgets through the PBS program, the MDTF, and the
MDG fund. Funds channeled through these mechanisms flow through
the regular public financial management system and are therefore subject
to the regular financial accounting and audit processes.
Public sector financial management procedures are appropriate,
and our informants felt that the procedures, including keeping records
of transactions, are generally followed. In fact, several interviewees
were concerned that public officials may be too rigid in following
financial accounting rules and argued that such inflexibility can
obstruct efficient management of health services. They also conceded
that it may be difficult for the system to generate timely reports and
blamed these difficulties on lack of capacity and high turnover among
the health sector and local government financial personnel. We were
told that individuals who develop financial skills in the public sector
frequently move to higher-paying jobs for international agencies or
private sector firms.
Unfortunately, most of the audit reports that we reviewed detected
serious record-keeping deficiencies that belied some of our informants’
assurances. The audits that we reviewed regularly reported failures to
produce records for financial transactions, particularly when these
involved multiple governmental levels.
As one example, US$6 million was transferred from the FMOH to
regional governments for a GFATM program, of which only US$2 million
was accounted for in the statements of expenditures. The auditors could
not verify whether the regional authorities still held the remaining US$4
million because funds had been deposited into general accounts (Audit
Services Corporation 2008).
Many of the new multilateral global health initiatives—including the
GFATM, the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR),
and GAVI Alliance—rely upon other channels. Many of these programs
provide project funding with separate accounts or operate through
parallel financing control mechanisms. For example, PEPFAR reported
that it issued grants to more than 100 international and local institutions
in Ethiopia in 2007. Although the government is the main recipient
of GFATM funds, it was not clear whether financial controls were