Illicit Financing in the Public Health Sector in Zimbabwe

Executive Summary

The health of Zimbabwe’s young population is a primary determinant of economic well-being and poverty reduction in the country. Along with other social sectors such as education, investment in the health sector has been a stated national priority since independence and access to basic healthcare is now enshrined as a constitutional right for all citizens and permanent residents. Despite nearly universal recognition of the critical importance of an effective and equitable healthcare system, the sector faces both long standing and new challenges that impact the quality of and access to health services and programs.

The sector is plagued by chronic under funding of health priorities, a problem which is exacerbated by the evolving currency crisis. Many of the challenges facing the health sector worsened by misappropriation of public funds for private gain in the form of illicit finance. Illicit economic activities contribute to the loss of wealth for the Government of Zimbabwe (GOZ) and citizens, depleting resources that could otherwise be invested in the public health system for healthcare worker salaries, procurement of medical supplies, and the rehabilitation and development of health infrastructure. For a country that needs to grow at an average 7% GDP over the next decade to achieve its sustainable development goal (SDG) targets, including goals focused explicitly on health outcomes, reducing losses from the incidence of illicit finance should be a national imperative. The cost of illicit finance in the health sector is especially stark in the pandemic.

Zimbabwe’s health system is linked to a complex and challenging political and economic context which serves to divert attention away from addressing critical health challenges, limit the availability of financial and material resources, and shape incentives regarding how health sector resources are used. The country is faced with what the WFP Zimbabwe Country Director and Representative, Niels Balzer, has described as a “triple threat of climate induced drought, economic crisis, and the COVID-19 pandemic.”

The study investigated the shape and structure of financial flows within the health sector, with the aim of identifying the risks and vulnerabilities that give rise to illicit finance. The findings help explain why illicit finance is an important feature of the health sector, what drives these dynamics and presents a basic typology of what types of illicit finance occur within the health sector.

The study found eight types of illicit finance in the health sector which fall into four categories. The study focuses on four types which are most prominent, corrupt procurement, petty corruption, smuggling and theft. Smuggling and theft stand out as key illegal activities that give rise to the flow of illicit finance. These illegal activities, like petty corruption, take place in a dispersed manner and take advantage of a myriad of loopholes in legislation, weaknesses in enforcement and economic pressures for the availability of cheap medical supplies.

Illicit finance has an overall negative impact on the health sector which manifests in various forms, public funds are wasted, citizens are under served, public sector workers and donors are demoralized, lives are put at risk, private businesses become unsustainable and the capacity of public institutions is hollowed out.

Illicit finance in the health sector is enabled by myriad interests and institutional weaknesses, manifesting in many forms. It therefore requires action on multiple fronts to meaningfully reduce its occurrence. There are a broad set of regional and global experiences that can inform practice within Zimbabwe, and such approaches must be customized to the unique political realities of the local context.

Read the full report here (5MB PDF)

Source: Transparency International Zimbabwe