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Medical Stores sweats to recover K5.1 billion

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Maziko Matemba

The government owes the Central Medical Stores Trust (CMST) up to K5.1 billion after procuring drugs and medical supplies for public health facilities on credit.

The trust’s chief executive officer (CEO) Chikaiko Chadzunda told The Daily Times that debt spans over a period of four years on average.

Out of the amount, K2.67 billion is owed by central hospitals and K2.58 by district hospitals.

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“The money dates back to 2019 for district hospitals and 2020 for central hospitals. We engaged the Treasury to settle debts for district hospitals.

“Some debts were, upon certification by the National Audit Office, settled just last month,” he said.

The debt that was settled last month amounts to K2.8 billion and was settled through promissory notes while the trust continues to engage central hospitals. Chadzunda then raised concern that such debts may sometimes limit CMST’s working capital.

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He added that the trust continues to face challenges such as the lack of forex and the recapitalisation deficit, which stands at K7.5 billion.

Chadzunda, however, said management has focused on several strategies to ensure financial sustainability, citing the 2021-25 turnaround strategy as a key reform agenda.

“Debts may sometimes limit working capital for inventory restocking since CMST may not be able to pay suppliers on time [and] that could be holding supplies.

“However, efforts are in place to improve supply. We are working on our increased ability to procure sufficient quantities and shift in bargaining power,” he said.

Asked how the government intends to square the debt for district hospitals, National Local Government Finance Committee communications expert Hamilton Chimala referred us to the Treasury; so did spokesperson for the Ministry of Health Adrian Chikumbe, who said, as a beneficiary of the Treasury’s transactions, they do not influence any payments as they are on the receiving end.

When contacted, Secretary to the Treasury McDonald Mafuta Mwale said the government prioritises the procurement of medicines and medical supplies for the country’s healthcare service facilities.

He, however, asked for more time to ask his team on what is happening with the CMST debt.

“Government has so many arrears; some of them date back to as far as 2013. I don’t know what was happening that time, it’s an issue that I have to ask my team, but we always prioritise the buying of drugs,” Mwale said.

Meanwhile, Health rights advocate Maziko Matemba has called on the government to clear the debt as a matter of urgency, adding that, in the long term, mechanisms have to be put in place to avoid the accumulation of arrears.

“The issue of CMST debt is critical to the operation of the trust and also assurance of medical supplies in Malawi’s public hospitals. The CMST debt should be cleared as it has put the trust at a disadvantage, in terms of accessing affordable supplies. Authorities should look at it seriously. And also lessons need to be learned on why the debt has been there for this long,” he said.

CMST was created in November 2010 and became operational in 2012 to, among other things, address some of the governance and operational challenges that rocked the defunct Central Medical Stores.

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