ESWATINI MED RESERVES DROP FROM E356M TO E93M

MBABANE – As the drama and claims of mismanagement of funds unfold, a significant drop in reserves coupled with millions in overdrafts recorded in recent years by Eswatini Med have come to the fore.

Documents in the possession of this publication reflect that for the year 2024, Eswatini Medical Aid Fund’s (Eswatini Med) cash and cash equivalents stood at E180 557 650, while borrowings, (overdraft) amounted to E87 329 916. This means that the reserves or net cash position of the entity, which is the money invested minus the overdraft, is at E93 227 733. These figures are contained in estimates based on management accounts seen by this publication for June 2024.

An overdraft is a deficit in a bank account caused by drawing more money than the account holds. It has been gathered that the drop in the reserves has contributed immensely to the ongoing rift between some of the Eswatini Med Board members and senior leadership, as there are now suspicions of fraud and mismanagement of funds. In financial language, based on the nature of the organisation it is, and the reserves that it should have accumulated over the years from its thousands of members, Eswatini Med should be liquid.

Some of the concerned persons of interest in the matter have decried that the financial statements for recent years (since 2021) reflect a glaring exposure and gives the impression that the organisation has significantly depended on overdrafts to fund its operations.

Mismanagement

The argument is that besides the suspicions of mismanagement, there is a strong belief that had the Eswatini Med been properly regulated just like the rest of the local medical schemes, the situation would have been better. In particular, the argument is that with proper regulation, some of the mishaps would have been detected on time and mitigated. As if that is not enough, there is a concern that Eswatini Med being a members’ fund, should not hinder them from voicing our concerns through their representatives in the Board.

The argument is that when they voice out concerns over governance and administration of the fund, Board members are exercising the rights of the masses they represent. Recently, our sister publication, the Times of Eswatini reported that Eswatini Med continues to be a risk to its thousands of members in the country, because its regulation has for years only existed on paper and not in practice.

The Kingdom of Eswatini does not have a medical aid legislation and this ultimately means that all medical aid schemes must be regulated by the Financial Services Regulatory Authority (FSRA) as they collect premiums from members. Some of the registered and licensed medical aid funds operating locally include EmaSwati Care, Mphilwenhle, Lidwala Medical Aid, Oracle Health Medscheme Eswatini and SNAT Med.
With the exception of Eswatini Med, they all recognise the authority of the FSRA in the interests of members’ premiums.

Close sources have confided that insurance companies that are regulated by FSRA are not permitted to borrow any money against premiums.
Meanwhile, on Thursday, drama unfolded at the Hilton Garden Inn, when an evening press conference convened by members of the Eswatini Med Board members ended abruptly when police officers stepped in to stop it. On the same day, Eswatini Med issued a press statement whereby it not only announced that Sammy Dlamini still holds the position of Board Chairman, but went on to condemn what it termed unauthorised disclosure of internal Board discussions, including on social media.

Concerns

Meanwhile, the concerns over the non-regulation of Eswatini Med have been raised countless times in different quarters including in Parliament.
The argument is that Eswatini Med is not regulated despite the existence of FSRA, which is mandated with the regulation and supervision of insurers, medical aid schemes, retirement funds, intermediaries and fund administrators, among other non-bank financial services. In the regulation of the stated entities, the FSRA is guided by the Financial Services Regulatory Authority Act of 2010, the Retirement Funds Act 2005 together with the Insurance Act of 2005.

The belief is that Eswatini Med should fall under the class of insurance, retirement funds and medical schemes service providers. In recent years, Eswatini Med has been accused by other industry players of not submitting itself to the powers of the FSRA. The need for the entity to account keeps mounting and this is further motivated by the fact that it reportedly has over 40 000 members, with the fund’s 2019 annual report putting the figure at 45 700, as it is the medical aid scheme for a number of private companies, public enterprises, government ministries and the country’s politicians (Cabinet ministers, Members of Parliament (MPs) and members of advisory councils, Boards and committees).

On another note, other concerns in relation to Eswatini Med have been raised dating back to 2016, whereby the entity was accused of continued disregard of Circular No. 1 of 2016 that was issued by FSRA to try and stop the anti-competitive behaviour of some medical aid schemes to demand exclusivity from employers.

According to the circular, which was issued on June 10, 2016, the FSRA had noted undesirable business practices by some medical schemes, whereby they imposed undue and discriminatory restrictions on the provision of medical scheme services to members and employers. “Medical aid schemes are often offered on condition that the employer will undertake to exclusively utilise the services of that particular medical scheme. This has the resultant effect that member employees are deprived of the right to choose a medical aid scheme of choice as the chosen medical scheme may not necessarily meet the needs of the consumer,” said FSRA.

Competitiveness

This practice, the regulator said, also removed the competitiveness between legitimate medical schemes to provide improved medical services and deprived consumers of their right to choose a service provider of their choice. The FSRA, therefore, directed all medical aid schemes to remove restrictive provisions relating to medical services. Effective June 30, 2016, the regulator said employers with more than 30 members should no longer be requested to undertake to utilise the services of one particular medical scheme as a condition of enrolment.

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