REFERRAL HOSPITAL ESTIMATED COSTS INCREASE FROM E765M TO E6BN

MBABANE – If the action plan is to be implemented unrevised, the National Referral Hospital’s construction costs will increase from E765 million to E6 billion.

The estimated total budget cost for this project in this current financial year ending March 31, 2025 stands at E765 million. However, the Eswatini Government Programme of Action (POA) fixed the estimated budget cost for the construction of the hospital at E6 billion.

Since the project marked H362 was deferred in the previous financial years, there have been no allocation for it until this financial year when government set aside E5 million for conducting a feasibility analysis of undertaking a project of this magnitude.

Enabling

Notably, the Ministry of Health has not been listed among the enabling ministries and agencies to spearhead the project. Instead, the Ministry of Economic Planning and Development, Ministry of Finance, Ministry of Tourism and Environmental Affairs and Ministry of Public Works and Transport are listed as enabling ministries for the construction of the National Referral Hospital.

It must be said that the Ministry of Economic Planning and Development undertakes millennium projects and other works for the Government of the Kingdom of Eswatini. Currently, the construction of the National Referral Hospital falls under capital projects for the Ministry of Economic Planning and Development.

Ideally, the Ministry of Economic Planning and Development was established to assist in planning and implementing economic policies to accomplish government development objectives. It analyses and appraises the economic situation in Eswatini and abroad; advising government on economic policies and measures, including those proposed by other ministries.

The ministry also analyses and appraises individual development projects, monitors and reports on the implementation of plans, programmes and projects; administration and coordination of technical assistance. Meanwhile, according to the action plan, the hospital to cost the taxpayer a sum of E6 billion will be developed based on a comprehensive feasibility study - world-class, future-proofed architectural impressions.

Maintenance

It is suggested that appropriate funding model, strategic partnerships and maintenance programme will be developed to realise the national dream. In its motivation, government states that the objective of the National Referral Hospital project is to reduce its health bills for foreign treatment, reduce mortality rate from NCDs (Non-Communicable Diseases) and retain local medical practitioners.

Remarkably, it is said that Eswatini has established as a centre of excellence for NCDs treatment, also improved medical and surgical care. Government answers the question on why the Ministry of Tourism and Environmental Affairs is involved in the project.

The POA refers to a medical tourism industry which has been established. It is envisaged that the National Referral Hospital will then increase foreign exchange earnings from medical tourism. It is proposed that the project takes off the ground from 2026-2029. The funding model is centred around government budget and development partners.
In 2016, Eswatini was loaned a sum of E259 million for the same project.

Government published the National Referral Hospital Loan Act No.4 of 2017 (Kuwait Fund for Arab Economic Development Project). In its financial records (Projects for Kingdom of Eswatini up to 04-08-2020), the Kuwait Fund for Arab Economic Development stated that it loaned the Kingdom of Eswatini a sum of KWD 4.5 million, the equivalent of E262 million in the current foreign exchange.

According to KFAED’s financials, a grant of E8.8 million was first approved for designs in 2010, but government, in this current financial year, allocated E5 million from local funds for the same exercise. On the other hand, the OPEC Fund for International Development reported in its own financials that it co-financed a loan of E81 million (US$4.5 million) for the same project (National Referral Hospital Project).  

OPEC’s E76.5 million was approved on June 3, 2016. It signed a loan agreement with Eswatini on October 13, 2017. According to OPEC, it was made to understand that the hospital was expected to serve around 1.3 million people and will be the first of its kind in delivering comprehensive and specialised medical services throughout the country.

Treatment

This in turn will reduce the need to send patients abroad for treatment. Government is planning to build a 250-bed state-of-the-art medical institution that will have specialists and advanced technology to drive people from overseas to undergo medical examination in Eswatini.

Queried on the availability of the money from Kuwait, the Ministry of Finance previously told this publication that the loan agreement was a direct disbursement that was to take effect after certificates for the National Referral Hospital project had been submitted. Disbursement means the payment of money from a fund.

It is claimed that government did not submit the certificates to Kuwait to be able to access the funds. Our investigations have not been able to establish why the certificates to access the money, as claimed by government, were not submitted to Kuwait.

When the Ministry of Health was fully involved in the project, it said there was a sum of E1 billion, which it would have gotten but the signatures from other ministries were not available to authorise the release of the money. The ministry had said the disbursement was the most stringent process as there were a lot of processes that needed to be done fulfilled by others, which included signing agreements.

In 2018, the E1 billion loan issue was also on the table. That is the amount of money the Ministry of Health hoped to get to speed up the project.  Pertaining to the Kuwait loan, its agreement was signed on February 2, 2016. The loan’s interest rate was fixed at two per cent while the financier and borrower reached consensus on a repayment period of 25 years.

It was agreed that the loan’s grace period should be five years while the grant element was fixed at 57.30 per cent.
World Bank defines the grant element as the difference between the loan’s nominal value (face value) and the sum of the discounted future debt-service payments to be made by the borrower (present value), expressed as a percentage of the loan’s face value.

In Kuwait, the National Referral Hospital loan was included on a list of other credits advanced to Eswatini, which, in total, now amounted to E1.1 billion. It is still not clear why the Government of the Kingdom of Eswatini has understandably not withdrawn the money to build the hospital.

Consulting

The project will comprise the construction element, furnishing and equipping of the 250-bed referral hospital. It also included consulting services for detailed design and supervision of construction and equipment of the hospital.
In his Speech from the Throne for the financial year 2024-2025, His Majesty the King urged government to expedite the commencement of the process of mobilising resources for the construction of the referral hospital as promised by the friends of the Kingdom. He issued a directive that the mobilisation of funds should be done in the next financial year. He said no liSwati should die from lack of proper health services.

He also talked about this project in his speech in 2020. This newspaper got hold of government officials to explain circumstances that have necessitated cost escalation. The first technocrat to speak to us was Victor Nxumalo, the Secretary to Cabinet and former Director of the Public Enterprise Unit (PEU), said the Eswatini Government Programme of Action is forward looking.

He said the governments financial books highlighting the estimated cost of E765 million were prepared when the Eswatini Government Programme of Action was being crafted. Nxumalo, who also doubles as the head of principal secretaries, explained that it is possible that the E765 million is relevant in the current financial year ending March 31, 2023. The secretary to Cabinet said the implementation of the POA (Programme of Action) begins in the next financial year.

“It will start now in 2025,” he said. He said the projects would be undertaken this year and taken beyond 2026 to around 2028-2029. He appealed for calm and observance of the budget for the next financial year. “Let us see what happens after the budget for the next financial year is tabled in Parliament,” he said, pointing out that figures for the POA and those appearing in the budget estimates may not be identical.

Since the project has not started, he said there may be other infrastructural considerations that may incorporated into the plan. However, he assured this newspaper that he would consult with other technocrats to get their views on the two figures.  “In a nutshell, the figure you quote may not necessarily for this financial year, but it covers other financial years to come,” he emphasised. Alpheous Nxumalo, the Government Press Secretary, said the action plan, basically, is futuristic in its outlook.

Completeness

The government spokesperson mentioned that the difference between the E765 million and the E6 Billion is accounted in this way – “what has to be done immediately (today) and what needs be done in completeness ideally into the future.” He said the variations in financial figures should not be an obsession - really for anyone at this stage.

Alpheous said the financial estimates of a project to be undertaken today can never ever remain the same by the next financial year. An independent auditor said since the project started around 2010, there would be a need for Parliament to set up a Select Committee to look into reasons and circumstances that caused the delay in its commencement.

Secondly, he said there is a need to check and liaise with development partners like KUWAIT over the current status of the loan approved in 2016. This is not to suggest that money was deposited into the government bank in 2016. However, the Select Committee must check with the funders.

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