Delays to recapitalise Central Medical Stores Trust (CMST) coupled with financial burden inherited from its predecessor institution have crippled it and negatively impacted on its operations.
In an e-mail response on Friday, CMST spokesperson Herbert Chandilanga said out of a requested K30 billion for recapitalisation in equal payments of K10 billion per year for a three-year period beginning 2019/20, only K5 billion was paid in April this year.
He said CMST was yet to be considered on the balance of K5 billion from the previous financial year and the K10 billion payment for the current 2020/21 financial year.
Said Chandilanga: “Since turning into a public trust, CMST has faced a cash flow problem because of inherited financial challenges.
“At the beginning of the 2019/20 financial year, CMST requested government to recapitalise CMST with K30 billion in equal tranches of K10 billion each, over three financial years.”
The financial challenges have in turn left CMST facing lawsuits from frustrated manufacturers and suppliers of medicines and medical equipment seeking their dues.
Currently, CMST has appealed against a High Court of Malawi Commercial Division award of K3.2 billion in compound interest and legal fees to SADM Pharmaceuticals, one of its suppliers.
Chandilanga said CMST appealed the award in the Malawi Supreme Court of Appeal because it was not satisfied with the ruling by the lower court.
He said CMST found itself in the current predicament following the inherited debts with drug suppliers and delays in recapitalisation.
Efforts to speak to Minister of Finance Felix Mlusu proved futile as he could not pick up our phone calls while Ministry of Finance spokesperson Williams Banda was yet to respond to our questionnaire by press time.
In January this year when then minister of Health Jappie Mhango toured CMST’s facility in Mzuzu, director of pharmaceutical operations Joe Khalani said CMST has a stock level of 76 percent with a supply fill rate of 63 percent.
“CMST has not been financially capitalised up to date. Thus, it sells and distributes medicines and medical supplies to the public and other health facilities with an 18 percent mark-up. This, plus 15 percent support of the Buy Malawi Strategy, results in expiries, currently at 7.1 percent,” he said.
CMST was initially established by government in 2010 to replace the Central Medical Stores which was an operational arm of the Ministry of Health since 1968. CMST became operational in 2012.