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40 Diagnosing Corruption in Ethiopia
equipment is costly and surpasses the PPA threshold for requiring open
bidding, so authorization to invite bids from the prequalified manufacturers
would have required a special exception (Carl Bro Intelligent
Solutions 2006).
In 2007, recognizing these particularities of health sector procurement,
the government created a new agency, the PFSA, to procure, store,
and distribute pharmaceuticals and commodities to all public facilities.
It is hoped that by centralizing these functions in one agency, the system
can be made more accountable and efficient. Furthermore, so that the
PFSA can attend to the specialized nature of health sector procurement,
the government gave it authority to promulgate its own procurement
manual, so long as it remains compatible with the PPA.
As with financial controls, the recently reformed procurement system
follows international standards in almost all respects. The government has
committed significant effort to minimizing vulnerabilities to corruption
in procurement by
• establishing the PFSA
• asking international agencies (such as UNICEF and UNFPA) to
conduct procurement processes on major contracts
• committing resources to train and deploy capable staff.
Appropriate reporting systems are in place, but implementation is
weak. It is unclear whether this weakness reflects the difficulty of getting
information reported out of the control system or whether materials are
actually being diverted at different stages. Evidence of stockouts at local
health facilities could indicate inadequate supplies, inefficient management,
diversion of materials to other legitimate public uses, or diversion
of materials for personal gain.
The creation of the PFSA will change this situation considerably.
Once it has completed its implementation, it will be responsible for
forecasting, distributing, and controlling pharmaceuticals and supplies
to all public facilities in the country. Its responsibilities will include
training and monitoring staff responsible for receiving stock and managing
stockrooms. By concentrating these functions in one institution,
Ethiopia may, as planned, be creating an efficient and effectively controlled
distribution agency that can minimize corruption. The risk of
this strategy is that if PFSA is not well implemented and adequately
supervised, it could itself become a locus for serious, large-scale
abuse.