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38 Diagnosing Corruption in Ethiopia
primarily the responsibility of the government or of the GFATM’s local
financing agent.
Supervision of the Global Fund to Fight AIDS, Tuberculosis and
Malaria (GFATM) funds appears to have changed significantly in the past
five years, with an increasing number of regular supervisory visits to subrecipients
that started in 2006, and a change in the local financing agent
from KPMG to UNOPS. Before these changes, audits for the GFATM
found a large number of irregularities in the use of funds, and our own
interviews uncovered allegations that funds were improperly diverted
and used. We could not establish that large foreign aid programs were
being held to adequate standards.
Mixed assessment. In sum, Ethiopia has appropriate financial systems in
place and is making efforts to improve their implementation. However,
compliance is still weak in critical areas such as record keeping and follow-up
on external audits. Of particular concern were how few performance
audits we could obtain and the high share of these that reported
funds had not been spent as intended. It is unclear whether these irregularities
are due to corruption, simple record-keeping errors, poor management
and training, or even well-intentioned coping efforts by staff and
officials to provide services under extremely difficult circumstances.
Procurement. It is often difficult to ensure the integrity of procurement
in the health sector because it involves such a diverse range of specialized
goods and services. Ethiopia’s national drug formulary runs to 572 pages,
listing hundreds of drugs, each with its own quality indicators and dosages.
Supplies ranging from protective gloves to catheters, equipment
ranging from diagnostic blood tests to x-ray imagery, and infrastructure
ranging from health posts to hospitals are all objects of procurement that
must be properly specified, put out for bids, verified upon delivery, and
used properly.
Until 2003, salaries accounted for more than 60 percent of public
health spending, but today pharmaceuticals and commodities are the
largest and fastest-growing share of public and foreign expenditures in
health. All of these factors make procurement a special area of concern.
Reformed standards and procedures. In Ethiopia’s public health sector,
procurement must follow rules of the PPA, an autonomous federal government
agency created in 2005 to set standards, monitor compliance,
and build procurement capacity. Although the regional governments are