eBusiness Weekly
Mulls diverting all forex to Natpharm
Tawanda Musarurwa
Players in the pharmaceutical industry insisting on charging medical drugs and other consumables in foreign currency despite receiving support from the central bank are set to lose their routine foreign currency allocations from the Reserve Bank of Zimbabwe, according to secretary for Finance and Economic Development Permanent George Guvamatanga.This comes amid reports that businesses in the health sector, including those that are receiving foreign currency from the apex bank amounting to US$20 million monthly to import drugs and medicines, have been turning down patients under medical insurance, demanding that they pay for drugs and other services exclusively in United States (US) dollars.
Government had appealed to the pharmaceutical industry to accept all forms of payment at the official 1:1 rate — including accepting medical aid cards — but this appears to have fallen on deaf ears in some instances.
Guvamatanga said as a last resort measure, Treasury was contemplating stopping foreign currency allocations to private pharmaceutical firms and channel the money towards the re-capitalisation of State-Owned National Pharmaceutical Company (Pvt) Limited (Natpharm) and consequently make it sole supplier of imported drugs in the country.
The country is experiencing acute shortage of foreign currency due to weak economic performance, including exports, against growing import dependency, which consumes foreign currency .
“As Government, we want those pharmaceutical distributors, the manufacturers and the retailers to continue to function. But it does not mean that there is no other solution that Government can actually use.
“At the moment Government has been using moral suasion but if it fails, it means there is what we call a market failure and if there is a market failure then the Government will have to intervene. The intervention will not be by way of price controls.
“The intervention will be by way of making sure that we allocate all the foreign currency resources to Natpharm and we bring all the medicines through Natpharm, which will then be sold into the market using the Real Time Gross Settlement (RTGS) system,” said Guvamatanga.
“Unfortunately that will have the impact of pushing the distributors out of business, and we don’t want to do that, but we can do it.
“So tomorrow (today) we can have conversations with the Reserve Bank of Zimbabwe and the Minister of Health saying can we allocate all the foreign currency to Natpharm, but at the moment it’s not the direction we want to take.”
Natpharm is the sole purchaser of pharmaceutical products from manufacturers for the
public sector, but some private pharmacies also procure medicines from Natpharm.
Govt moves to revamp Natpharm?
Earlier this week, Government announced the disbanding of Natpharm’s board.
The outgoing seven-member board, which was chaired by medical practitioner Dr George Washaya, was appointed in 2015 by former Health and Child Care Minister Dr David Parirenyatwa. Commenting on the development, Health and Child Care Minister Dr Obadiah Moyo indicated the need to urgently deal with the problem around the provision of pharmaceutical products.
“As you know, the issue of medicine availability and affordability has been very topical in recent months and it is upon these challenges that we really need to up our game and give a new impetus to tackling these issues,” said Dr Moyo.
No price controls
Finance and Economic Development Minister Mthuli Ncube has emphasized that prices controls are not an option that Government will consider, but warned that errant pharmaceuticals could lose their operating licences.
“The same pharmaceuticals are queuing up at the RBZ for foreign currency, then they turnaround and sell medicines to the citizenry at inflated prices in foreign currency.
“The threat that some of their licences could be withdrawn is real. Some of the companies have heeded the call and are responding so there is some progress.
“We cannot start imposing prices controls as these can cause more problems for us in the future,” said Minister Ncube.
Earlier this week, Pharmaceutical Society of Zimbabwe (PSZ) president Portifa Mwendera said the move to charge in US dollars was a “supply chain issue.”
“It’s a supply chain issue and government had the critical role to allocate forex to that supply chain, which it has regrettably failed to do consistently. This led to the industry incurring a debt of $27 million for credit supplies, which are now overdue,” said Mwendera.
The PSZ president however highlighted that some pharmaceutical companies has begun to comply.
