Why Nigerians cannot feel impact of CBN’s N100b intervention fund for health sector until 2022, by PSN
•Promises to publish names of tertiary hospitals owing pharmaceutical companies over N30b for drug revolving fund
The Pharmaceutical Society of Nigeria (PSN) has given reasons why Nigerians cannot feel the impact of Central Bank of Nigeria’s (CBN’s) N100 billion intervention fund for the pharmaceutical sector until next year.
President, PSN, Mazi Sam Ohuabunwa, in a chat with journalists in Lagos also said the Society will name and shame tertiary health institutions owing pharmaceutical companies over N30 billion for medicines supplied under the Drug Revolving Fund (DRF) scheme.
Ohuabunwa, who is also a former Chairman of the Nigerian Economic Summit Group (NESG), Convener New Nigeria Group (NNG) and Presidential hopeful, said: “Yes, we are accessing the N100 billion. From the CBN point of view, they said the money has been fully allocated. Whether the companies influenced it, is doubtful because you have processes. Number one is if you are allocated the money, let us say the money is N2 billion, you are told you have N2 billion, and then secondly, to access it, you have to provide the requirements. So, some people take time to get those requirements. Thirdly, when people now get the money and I believe that majority of them have got the money.
“The greatest challenge they are having is converting the money into foreign exchange especially to be able to plant our machineries because most of the money is for capacity enhancement. I know that many companies including the one I am related to are using it to either finish factories they are building or start building new ones. And that is the intention, to be able to expand capacity, to give us the opportunity to increase our offerings in terms of dosage forms, in terms of therapeutic activities. And the final step is after you have got the imported materials, to build the plant. The fifth is to commission the plant after regulatory reviews and approval before it begins to produce.
“So, aside from the part of money that was used for all materials, that is what has impacted now. It has improved raw materials supply. But in terms of capacity improvement, I do not believe any company has as at today. Maybe in the next year, yes, we will see the impact.”
Ohuabunwa added: “In terms of supply of products today, they are some impact because I am aware that they gave some people N2 billion and they have added N400 million as working capital. That working capital may have been used to import goods faster than turning the N2 billion around. Some have gotten this facility for about one year and they have not begun to produce anything. Yet the loan repayment is only affixed on a year. Interest is already going, especially working capital.
“So, we are hoping that when this is done, CBN will do a postmortem because it is not good to give loans and then put pressure on the people. Many of them applied for the loan when dollar was about N360. Now, a dollar is about N500 and we do not know what it will be, when they will pay it back and it is from this domestic market they will pay. For many of them, inflation has eroded the value of the money itself and that is why we proposed that in the second and third tranches, CBN should make life simpler. You do not give a child one thing with one hand, and take another hand to collect it. So, what CBN should do is, we write a business plan based on when CBN gives a loan. We tell you the raw materials we are going to import and the machinery improvement we are going to import. So, all you need to ask us, open your Letter of Credit (LC), for the raw materials of this. CBN will provide foreign exchange backing to the banks and export, and then they give naira for the domestic component. That is how it is suppose to work if we are really very serious and coordinated to achieve a goal. You cannot give somebody one year and still allow him or her to buy foreign exchange. Those are the things that help to depreciate the naira because the demand was little and people were worried that dollar will continue to go up. Some panic buy, I think we need to organise these things. There are better ways of doing these things without wiping out the benefits.
“ I cannot give the exact figure but I can guess that up to 80 percent of the N100 billion has been drawn down by the pharmaceutical companies. But have they translated it to finished goods? No. Have they translated it into equipment and benefit? Maybe some. The raw materials and equipment should be in the ports now and impact in terms of capacity improvement will appear perhaps in the next year. But drugs supply has improved through the working capital component in increasing raw materials purchase.”
On DRF fund face off with tertiary hospitals, Ohuabunwa said: “Well, we have confronted DRF in the last one year. I think those are some of the little successes we have achieved. We have brought DRF back to the consciousness of government. In fact, recently, the Federal Ministry of Health issued a letter to all hospitals to re-sustain DRF. We have also taken the issue of over N30 billion tertiary hospitals owe pharmaceutical companies to Federal Ministry of Health, National Assembly and even up to CBN. So, the National Assembly has helped with organizing some public hearing and investigative work on it. They are still working on it, the names and the amount there. We are also getting correspondence from the Economic Intelligence Unit of the CBN, which has also intervened. But they have also asked for details for them to know what to do. So, both the creditors and the debtors are going to be asking questions. So, we are going to make sure we keep them validated. When we try, and these things are not yielding, we will come back to the media and give you their names so that we can shame them. Nigerians! I do not know how many of them still have shame.”
Ohuabunwa had in January raised the alarm over what he described as “gross mismanagement” of DRF by most institutions especially the tertiary health institutions.
The PSN had said the debts have left the pharmaceutical companies without drugs because the N30 billion Drug Revolving Fund owed the pharmaceutical industry by federal and state agencies, teaching hospitals, Federal Medical Centres, parastatals, among other institutions, are over two to three years overdue.
Ohuabunwa said the huge debt has further encumbered their operations and left the pharmacy shelves empty. To ensure the availability of drugs in health institutions, the PSN is proposing a bill to institutionalise and regulate DRF.
He said the DRF was one of the fallouts of the Bamako Initiative, towards better health of the people through the Primary health care model.
“DRF is programmed to provide quality and affordable medicines through a fund set aside to procure medicines and dispense same to patients at a minimal cost.
“Unfortunately, this has been grossly mismanaged by most institutions especially the tertiary health institutions, where pharmaceutical companies are owed huge sums of monies.
“We know that these debtor institutions receive regular subventions from the government, and they have sold the items to patients for cash.
“We could not understand why they are using the government space and reputation to incur debts and embarrass the nation as a difficult place to invest in and do business.
“One hospital, National Orthopaedic Hospital Igbobi, was running this system perfectly they were able to raise additional capital to build a house of about 200 million, but in some hospitals, they have diverted the money to other things and so the money is no longer available and they are owing pharmaceutical companies about N30 billion the last time we checked because the drug revolving fund is no longer revolving.
“We are appealing to government especially the tertiary health institution where they owe a huge amount of money and left the pharmacy store empty to ensure quick payment. It is the easiest way for the government to maintain a certain level of drug availability.”
“The DRF has been grossly mismanaged by most institutions especially the tertiary health institutions, where pharmaceutical companies are owed huge sums of monies that have further encumbered their operations and left the pharmacy shelves empty.”
To ensure the availability of drugs in health institutions, Ohuabunwa disclosed that the PSN is proposing a bill to institutionalise and regulate DRF, adding that letters have been sent to the House of Assembly, Ministry of health and other government agencies in that regard.