Audit of Global Fund Grants in South Africa highlights systemic issues needing attention

6. NEWS AND COMMENTARY
8 Jun 2022
More urgency is needed to tackle cost inefficiencies

Background

This Office of the Inspector General (OIG) audit report on the Global Fund Grants in South Africa was published on 8 March 2022.  Since 2003, the Global Fund has disbursed $1.3 billion to South Africa, of which $315 million was for the 2019-2021 funding cycle.  The Global Fund supports only HV and TB interventions, due to the country’s low malaria incidence.

South Africa has the largest global HIV burden:

  • 7.8 million people living with HIV (PLHIV), of whom 92% know their status.
  • Prevalence among the general population is high at 20%, and especially high among men who have sex with men (MSM), sex workers (SWs), transgender (TG) people, and people who inject drugs.
  • The country has the world’s largest antiretroviral treatment (ART) program and was the first sub-Saharan Africa country to fully approve pre-exposure prophylaxis (PrEP), which is now available to people at high risk of infection.
  • Among identified PLHIV, 72% were on treatment and 66% were virally suppressed in 2020.
  • Annual infections have decreased since 2002 by more than 50%, from 502,000 to 230,000 in 2020.
  • ART coverage increased from 20% in 2010 to over 70% in 2020.
  • AIDS-related deaths have decreased from some 270,000 in 2010 to about 83,000 in 2020.

 

In 2020, South Africa was one of eight countries accounting for two-thirds of the global TB burden:

  • It has 3.3% of all TB cases worldwide.
  • TB is the leading cause of death in South Africa (2018 data, pre-COVID-19).
  • The TB/HIV co-infection rate is 59% (2019), the highest TB/HIV infection in the world as per World Health Organization (WHO) estimates.
  • TB case notification increased by 12% from 322,000 in 2017 to 360,000 in 2019.
  • TB treatment success rate was 71% for new cases (2019) increasing to 79% in 2020.
  • TB treatment coverage decreased from 68% in 2017 to 58% in 2019, and about 40% of TB cases are missing.

 

Audit objectives, ratings and scope

The table in the report, reproduced below, summarizes the audit objectives, ratings and scope.

Objective

Rating

Scope

Global Fund support, including grant flexibilities and C19RM funds utilization, to maintain or scale up disease program achievements in the face of COVID-19 challenges.

Partially effective

The audit covered the Principal Recipients and Sub-Recipients of Global Fund supported programs in South Africa.

The audit covered grants from April 2019 to March 2021, as well as the design of future arrangements for the implementation of grants in South Africa. 

The OIG team was supported by staff from the Office of the Auditor General of South Africa during the audit. 

Grants design and implementation arrangements, including programmatic, governance and financial management systems, to ensure efficient and sustainable achievement of grant impact.

Needs significant improvement

Procurement and supply chain processes and systems to ensure timely availability of quality medicines, health, and non-health products. 

Partially effective

 

Key achievements and good practice

The report notes three areas of achievement/good practice:

  • Prompt funding and swiftly developed guidance helped combat pandemic disruptions.  Principal Recipients (PRs) were provided with the flexibility to use grant savings amounting to $12.3 million, and $52.2 million under the COVID-19 Response Mechanism (C19RM) was awarded in 2020, which helped support community COVID-19 responses, perform screening and contact tracing, and provide HIV prevention services and TB screening.  Overall absorption of the grant flexibilities and C19RM funds was 87% as of July 2021; and an additional $161 million in C19RM funds was awarded in September 2021.  PRs developed specific policies to guide COVID-19 commodity procurement and supply chain activities.  Personal Protection Equipment (PPE) product specifications were issued in August 2020, and all PPE suppliers needed accreditation.  The National Treasury published a “price ceiling” for PPE in July 2020, which helped to guide PRs on price targets for their PPE procurements.
  • Good progress was made on HIV and TB programs. Measures, including PrEP and HIV self-testing (HIVST), helped minimize COVID-19’s impact on the HIV program.  Staff at safe spaces and key population (KP) clinics helped retain clients and promote prevention practices.  The use of Ambassadors to spread PrEP awareness also helped recruit program beneficiaries.  The country’s first TB prevalence survey was conducted in 2018, with findings and recommendations published in 2021.  The TB program has updated its strategy and interventions with lessons learnt from the survey.  Regular screening of patients for TB and COVID-19 resulted in improved case detection.
  • Good procurement and supply chain practices: procurement and supply chain management policies and procedures are available for HIV and TB commodities, and quality assurance measures have been instituted.  As one of the world’s largest buyers of HIV and TB medicines, local prices are competitive compared to international price indices.

 

Key issues and risks

The report raises four key issues/risks:

  • The Adolescent Girls and Young Women (AGYW) program faces significant data quality and value-for-money issues.  The MyHope biometric registration and reporting system, a key data source supposed to be ready by February 2020, had not been fully implemented by October 2021.  Varying requirements on nurses’ ability to initiate patients on ART and sub-optimal implementation arrangements are materially impacting the linkage of HIV patients to care.  Sub-optimal coverage of hot spots for SWs and AGYW mapping has contributed to low positive case finding, despite these groups’ high HIV prevalence.
  • Late recruitment of SRs and engagement with provinces, as well as COVID-19 lockdown regulations and labour strikes, significantly delayed the implementation of key TB interventions which are affecting the detection of TB cases and linkage to treatment.
  • Prices for locally procured HIVST kits, methadone, and viral load (VL) kits are high compared to international prices.
  • Many procurement-related activities materially exceeded their budgets, while key non-procurement activities have not been implemented.  There is non-compliance with commodity procurement and supply chain controls, contributing to occasional inefficiencies and limited visibility of whether commodities are reaching their intended beneficiaries.  Gaps in the performance management of the third-party logistics service provider were also noted, making it difficult to measure service quality.

 

COVID-19 situation

The report notes that the Government reacted early to the pandemic, imposing a countrywide lockdown and curfews, as well as a comprehensive public health response.  This had significant impact on program implementation, especially outreach and AGYW programs as well as access to TB diagnosis and treatment.  However, no further information on the impact is given.

Portfolio performance

Global Fund grants in South Africa have generally performed well against targets, particularly given the challenges of the COVID-19 pandemic.  Grant performance as of September 2021 is summarised below:

Principal Recipient

Total Grant Budget

$m

Disbursed to 30 Sep 2021

$m

% of Grant Disbursed

Grant Expenditure to 31 Aug ‘21

$m

% of Grant Budget Absorbed at 31 Aug 2021

National Department of Health

211.9

171.3

81%

111.6

53%

Networking HIV & AIDS Community of Southern Africa

  86.1

  55.4

64%

  51.2

59%

AIDS Foundation South Africa

  65.6

  47.0

72%

  38.6

59%

Beyond Zero

     57.9

     40.7

70%

     38.5

66%

Total:

421.5

314.4

72%

239.9

59%

Note: All grants started April 2019 and end March 2022.

The report provides no comment on this table.

The report lists the PRs and their performance ratings:

Date

PR:

AIDS Foundation South Africa

Beyond Zero

Networking HIV & AIDS Community of Southern Africa

National Department of Health

31 Mar 2021

Average Performance Coverage Indicators

83%

106%

105%

84%

Final Grant Rating

B1

B1

A1

B1

30 Sep 2020

Average Performance Coverage Indicators

97%

89%

94%

79%

Final Grant Rating

B1

B1

B1

B1

31 Mar 2020

Average Performance Coverage Indicators

53%

73%

88%

71%

Final Grant Rating

B1

B1

B1

B1

30 Sep 2019

Average Performance Coverage Indicators

18%

28%

70%

78%

Final Grant Rating

C

C

B1

B1

 

Risk assessment

The OIG compared the Secretariat’s aggregated assessed risk levels of the key risk categories covered in the audit objectives for the South Africa portfolio with the residual risk that exists based on OIG’s assessment, mapping risks to specific audit findings:

Audit

Areas

Risk Category

Secretariat Aggregated

Assessed Risk Level

Assessed Residual Risk, Based on Audit Results

Relevant Audit Issues

Grant flexibilities and C19RM funds utilisation

Procurement

High

High

Findings 3 and 4

Grant design and implementation arrangements

HIV – Program Quality

High

High

Finding 1

TB – Program Quality

High

High

Finding 2

In-Country Governance

Moderate

Moderate

Findings 1, 2 and 3

Procurement and supply chain processes and systems

In-Country Supply Chain

High

High

Findings 3 and 4

 

Findings

The report has four findings. 

  1. Improvement is needed in the design and implementation of HIV prevention programs.  The pandemic-related closure of facilities and offices restricted movement and the lockdowns resulted in a significant decrease in the number of patients visiting facilities, largely impacting numbers tested and initiated on ART and PrEP.  Despite these challenges, PrEP and HIVST were rolled out and human resources support financed through the grants helped district-level community COVID responses.  Dignity packs, COVID care packs and food vouchers were provided to beneficiaries.  Staff at safe spaces and KP clinics helped retain clients and encourage them to adopt better prevention practices.  PrEP Ambassadors for AGYW, MSM, and TG clients were successful in recruiting beneficiaries.  The Key and Vulnerable Populations Analytics Platform helped managers and monitoring and evaluation (M&E) teams to analyse and use data.

Despite the progress made, the HIV program faces challenges:

  • Significant delays in implementing the MyHope biometric registration impacted AGYW data quality.  AGYW investments represent 43% ($95 million) of Global Fund HIV grants in South Africa for the NFM2 (2019- 2021) allocation period.  The new biometric system is a key element to support AGYW investments by collecting data in real time for four indicators (reach, testing, PrEP, and linkage to care) and other management indicators.  Although supposed to be completed by February 2020, it was still being refined in October 2021.  This was due to it being impacted by bugs, system rule errors, low connectivity, and inconsistent functionality compounded by change management issues, complex contractual arrangements and inconsistent oversight, and non-compliance with the e-software tender process.  Delays in finalising MyHope have resulted in increased M&E costs of $0.5 million.
  • The low linkage of HIV-positive patients to care is limiting ART treatment.  Contributing factors for the low linkage to care include:
    • Despite the high HIV prevalence among the targeted KPs, inconsistent service coverage has led to low finding of new HIV-positive cases within those populations.
    • The limited number of nurse-initiated and managed ART (NIMART) nurses within the different SR sub-grants to link HIV-positive patients onto ART.  Four of the grant’s eight provinces do not allow NIMART nurses to initiate ART, contributing to the number of lost cases before they reach the ART initiation centre; and
    • Sub-optimally structured implementation arrangements.
  1. Significant delays in recruiting SRs, the COVID-19 pandemic, and labour strikes delayed the delivery of key TB strategies and interventions.

Following the first TB prevalence survey in 2018, key strategies and interventions to detect and link drug-sensitive and multidrug-resistant TB cases to treatment were designed.  However:

  • There were significant delays in implementing key TB interventions which resulted in low case detection:
    • Reported TB programmatic results do not provide an accurate indication of actual performance at the country level.  This is because, in the absence of national targets, during grant negotiation the Global Fund agreed to use estimated targets in the Global Fund’s Performance Framework (PF), which are lower than the targets adopted by the national partners implementing the grant.  The use of lower targets while reporting the same results creates the impression that the NDOH grant as a whole is “adequate”, while in fact key TB indicators have not been performing well over the period.  This partially explains the NDOH grant’s good performance despite the low fund utilization.  The absence of nationally approved targets resulted in misalignment between the PF and implementer targets, making it difficult to monitor implementation challenges and address them.
    • Procuring mobile digital X-rays to detect asymptomatic cases was delayed by nine months, meaning mobile X-ray had only achieved 10% (60,000 out of 600,000 presumptive cases) of its target by November 2021.
    • Prioritized Above Allocation Request activities amounting to $26.6 million (10% of the TB grant) were finalized and approved four months after SR applications.
    • The deployment of community health workers/nursing assistants to facilitate TB screening and linkage to treatment was delayed by four to 12 months; and the unavailability of nursing assistants contributed to 30% of diagnosed TB patients being lost to follow-up.
    • The PR faced challenges in recruiting field staff to support implementation, contributing to low grant absorption (54%).
    • Delays in commencing the TB grant due to administrative and contractual processes ranged from three to nine months.

 

  1. While 87% of COVID funding was promptly used, mainly to procure protective equipment and diagnostics, some key activities had not been implemented and non-compliance with COVID-19 commodity procurement and monitoring controls is contributing to inefficiencies and limited accountability.

The audit noted the following areas for improvement:

  • Management of C19RM and grant flexibility funds: Some important activities listed in the C19RM 2020 funding request were not implemented.  These include strengthening: mental health and psycho-social support amidst COVID-19; Department of Basic Education and Department of Social Development COVID-19 response; the National Emergency Operations Centre; and specimen transportation to National Health Laboratory Services (NHLS).  A lack of clarity on how some activities were to be implemented and competing priorities contributed to the delayed implementation, as did the lack of supporting activities such as a multimedia campaign framework, late signing of the service level agreement between NHLS and the service provider, and labour strikes at the NDOH.  The audit also noted non-compliance with some payment controls.
    • Procurement and monitoring of COVID-19 commodities:
    • There were delays in quality assurance of COVID-19 commodities and the delayed quality testing and limited monitoring contributed to stock-outs in some warehouses.
    • The NDOH has no system to account for funded COVID-19 commodities distributed by provincial warehouses, making it difficult to monitor distribution and ensure commodities are reaching their intended beneficiaries.
    • The audit stock count of N-95 masks at one warehouse found 26,300 fewer masks than in the stock records.
    • 38% of the 4,103 health facilities had not submitted stock-on-hand data to the National Surveillance Centre (NSC) by October 2021, affecting stock availability analysis by the NSC.
    • The audit noted many instances where COVID-19 related procurement evaluation policies were not complied with and there was a lack of segregation of duties for a $3.3 million procurement.
  1. Prices for HIVST kits, methadone and viral load kits are high and gaps in the supply chain management process are impacting the monitoring of commodities.

There have been improvements to the supply chain since the OIG’s 2017 audit. The PR is procuring antiretrovirals and TB medicines at competitive prices compared to international price indices. Policies and guidelines are available for supply chain activities, and in-country quality control testing is being conducted for HIV and TB commodities. However:

  • Local procurements of key HIV commodities are high priced.  Between 2020 and 2021, PRs locally procured HIVST kits at prices 45% higher than available through the Global Fund’s online procurement platform (Wambo.org), even when costs such as freight and insurance are considered.  A $0.6 million saving could have been made if a more competitive price had been sourced, enough to procure an additional 200,000 tests.  Locally procured methadone and VL kits were similarly high-priced.
  • The audit noted: (a) non-compliance with inventory management controls at the HIVST kit warehouse.  Since the first order was received in November 2020, the warehouse service provider had not conducted a stock count to monitor stock levels and mitigate the risk of damage, loss and theft; (b) gaps in proof of delivery documentation were also noted; and (c) limited performance measurement of the warehouse service provider by the PRs.

 

Agreed Management Actions (AMAs)

  1. The Secretariat will work with the relevant PRs to (by 31 March 2023):
    • Develop a timebound (and costed, where relevant) plan to monitor the progress of the unresolved MyHope biometric registration and reporting system issues.
    • Develop an advocacy plan to advocate for NIMART nurses to initiate ART in Western Cape, Free State, Mpumalanga and Gauteng Provinces.
    • Develop a strategy to improve linkage to care including defining SR roles and responsibilities and develop an implementation plan for linking HIV-positive clients to care and ensuring a full basket of core and layered services are provided to AGYW.
    • Improve the provision of core and layered services to AGYW, and HIV prevention and biomedical services in the community.
  2.  The Secretariat will work with the NDOH to establish a timebound action plan to address delays in implementing key TB interventions (by 31 July 2022).
  3. The Secretariat will work with the relevant PRs to conduct an independent review (by 31 July 2022) of the transactions made without sufficient documents ($1.3m) or without sufficient controls ($2.1m) to determine whether services were provided in line with the respective terms of reference.
  4. The Secretariat will work with the relevant PRs to develop a mechanism (by 31 March 2023) to:
    • Update relevant procurement manuals and procedures to improve clarity of procurement and supply chain processes for commodities procure using grant funds.
    • Strengthen the oversight of third-party logistics services providers including establishment of clear key performance indicators.
    • Improve the price competitiveness for HIVST kits, VL kits and methadone as well as completing the process of including methadone on the list of essential medicines for South Africa.

 

Commentary

This report reveals the depth of the work undertaken by the audit team and provides a wealth of information.  However, it does not do justice to that work.

First, the report contains some inconsistencies.  The first is reference to HIV ‘program’ in one sentence and ‘programs’ in another.  The possible inconsistencies are repeated in the foregoing text of this article.  Where one ‘program’ is mentioned – and assuming that it is a single program – the reader does not know which program.  Then, under ‘Key Achievements’, a heading informs the reader that “Good progress made on HIV and TB programs”, yet the report states that these programs’ “Grant design and implementation arrangements, including programmatic systems, need significant improvement.”  The explanation under Finding 4 of this report begins by stating that “There have been improvements to the supply chain since the OIG’s 2017 audit.”  However, the 2017 audit report did not include a review of the supply chain so it is difficult to understand what changed between 2017 and 2021 and what difference that has made.

This report lists a raft of delays in both the HIV and TB programmes.  The costs of those delays are incalculable and are not only financial.  The report also provides examples of additional costs incurred due to purchasing commodities at prices above what were available more cheaply elsewhere.  While the report lists the corrective management actions, there is a lack of urgency and determination.  This is really important at a time when more needs to be invested in health to make real progress towards eliminating HIV, TB and malaria, achieving universal health coverage and ensuring pandemic preparedness and response mechanisms are in place.  However, raising more financing in the aftermath of the economic effects of COVID-19 and current conflicts is going to be a hard task; and that means making maximum use of the available financial resources.  Cost efficiency is therefore key.

Here are two examples of the lack of urgency and determination.  First, the MyHope biometric registration and reporting system was supposed to have been fully installed and operational by February 2020.  Having assessed the situation in October 2021, the OIG is, under AMA 1 (a), only expecting the Secretariat to work with the relevant PRs to “develop a timebound … plan to monitor progress of the unresolved … issues” by 31 March 2023.  So, when will this system be up and running?  Why allow this time – 18 months – just to prepare a plan instead of ensuring that the issues are resolved and the system is fully operational?

Second, the report has shown the calculated cost (some $0.8 million) of paying for some over-priced commodities.  Under AMA 4 (c), the Secretariat will work with the relevant PR to develop (by 31 March 2023) a mechanism to “Improve the price competitiveness for HIVST kits, VL kits and methadone as well as completing the process of including methadone on the list of essential medicines for South Africa.”  Why take 18 months to ‘develop a mechanism’?  Why, if it is possible, not adopt immediate action whereby PRs should purchase all commodities through Wambo unless: (a) they are not available through Wambo; or (b) they can show that the same item – or another of the same quality – can be purchased and delivered more cheaply than doing so through Wambo?  If there are legal/administrative obstacles to the online use of Wambo, then the Global Fund team should negotiate a way of making use of Wambo or having much tighter price review and reporting requirements.    If timing is an issue, then paying a higher price should only apply for items that can be delivered and used before those to be delivered through Wambo.

More attention must be given to the costs of delays – including now the delays in taking corrective action. However, it must also be acknowledged that there are many systemic issues requiring action and that this will take the Secretariat some time to address.


Share |

Leave a comment

Leave a comment