The end of the financial year 2023/24 presents the South African Health Products Regulatory Authority (SAHPRA) an opportunity to account on its performance for the year 2023/24. The Annual Report does not only highlight the Authority’s performance and successes, but also indicates its challenges encountered during the year under review. The Regulator’s activities are guided by key government policies and plans including but not limited to the National Development Plan: Vision 2030.
In terms of performance against the 2023/24 Annual Performance Plan (APP), SAHPRA committed to achieve 25 annual targets during the reporting period. The Authority achieved 17 targets (68%) of its annual targets, while spending 100% of its budget allocation. The difference between the performance achieved and the budget spent is due to the spending on the business and operational plans as well as the monthly administrative commitments of the Authority. Over the medium-term, SAHPRA will continue implementing programmes that ensure the attainment of its vision of being “An agile and responsive African health products regulator that is globally recognised as an enabler of access to safe, effective and quality health products in South Africa”.
The collection of retention of license fees has been a challenge over the past few financial years. To overcome this challenge SAHPRA appointed a debt collecting agent to assist with collection of long outstanding balances. SAHPRA’s total revenue amounted to R435.4 million against a budget of R381 million. The variance of R54.4 million was mainly due to additional external funding support received during the year and additional fee revenue of R15.4 million recognised. SAHPRA spent R424 million against the initial approved budget of R381 million. The additional expenditure was allowed due to unbudgeted for external financial support received as well as above budgeted for fee income generated during the year. The overall result was an accounting surplus amounting to R11 million and exceeding the annual cash flow ration target of 1:1. The focus was on improving previous audit outcomes as well as positioning SAHPRA for financial sustainability.
Better than anticipated revenue collection occurred due to higher-than-expected application numbers received for evaluation of clinical trials, medical device licensing, improvement of retention fee collection and an increased output rate on new medicine applications. Revenue recognition will improve as SAHPRA fills funded vacancies over the MTEF period.
SAHPRA is a Public Finance Management Act (PFMA, 1999, as amended) Schedule 3A public entity under the National Department of Health (NDoH). SAHPRA manages its assets in line with its Asset Management Policy and has not embarked on any infrastructure projects and did not close or downgrade any facilities during the year.
No maintenance activities were undertaken during the year as the entity did not own significant infrastructure or moveable assets that required continuous maintenance. SAHPRA has current office accommodation lease arrangements for its head and regional offices, and the rental expenses associated with the new operating lease agreement was appropriately disclosed in the notes of annual financial statements.
A significant portion of SAHPRA’s assets for the 2023/24 financial year comprises newly-acquired assets. These acquisitions amounted to R13 million on 31 March 2024. The new material acquisitions, motor vehicles (R2 million) and intangible assets (R8.6 million). The disposals for the year comprised of old furniture and computer equipment that were no longer in use or had been replaced, which were either sold or donated. A significant portion of these assets was fully depreciated.
Supply chain management systems are well established and maintained throughout the financial year. Management did not identify any new irregular; fruitless and wasteful expenditure and all historical transgressions have been addressed in line with the National Treasury guidelines.
The programme had a final budget of R134.9 million and expenditure amounted to R185.8 million or (43.8%) in the current financial year of 2023/24, compared to R140.5 million expenditure in the 2022/23 financial year.
The programme had a final budget of R36.2 million and expenditure amounted to R34.0 million or (8.02%) in the current financial year of 2023/24, compared to R46.9 million expenditure in the 2022/23 financial year.
The programme had a final budget of R53.1 million and expenditure amounted to R49.2 million or (11.6%) in the current financial year of 2023/24, compared to R42.3 million expenditure in the 2022/23 financial year.
The programme had a final budget of R125.6 million and expenditure amounted to R119.4 million or (28.14%) in the current financial year of 2023/24, compared to R109.2 million expenditure in the 2022/23 financial year.
The programme had a final budget of R44.8 million and expenditure amounted to R35.4 million or (8.34%) in the current financial year of 2023/24, compared to R33.1 million expenditure in the 2022/23 financial year.
For the year under review, SAHPRA had the following targets to bolster its capacity.
SAHPRA’s recruitment, selection and retention difficulties persisted. Forty-six (46) positions were funded to be filled for the 2023/24 financial year, however, only 67,4% (31/46) of those positions were filled as at 31 March 2024. Delays in the filling of the positions were caused by the completion of compulsory candidate pre-suitability checks (verification processes), re-advertising of positions because no suitable candidates were found during the selection processes and offers being declined by candidates to mention a few issues. This resulted in serious capacity constraints within SAHPRA and also placed additional strain on the remaining employees who had to carry the additional workloads.
I would like to take this occasion to thank the Chairperson of the Board and the Members for their strategic leadership and guidance they provided throughout the financial year. I also acknowledge and appreciate the SAHPRA’s employees and the executive team for their determined dedication and commitment during the period under review. Finally, my congratulations to the Board for their direction on good governance, accountability and instilling sound financial management and, most importantly, congratulations to all SAHPRA employees who worked unwaveringly in the background on ensuring SAHPRA achieves a noteworthy milestone, a clean audit for the 2023/24 financial year.
The staff turnover rate for the 2023/24 FY was at 9,4%, a decrease by 0,39% compared to last year. SAHPRA continued to experience a turnover on critical and scarce positions resulting in instability and a lack of continuity at management and operational levels. The turnover is attributable to terminations with reasons related to job security, career growth, work-life balance, remuneration and benefits, retirement and contract expiry were reasons why employees leave the services.
During the period 2023/24 FY, SAHPRA was under enormous constraints due to reduced funding from National Treasury Therefore, the organisation had to embark on strategies to cut operational costs and increase revenue collection, which included the reduction in advertisements of some of the funded positions. As a result, Business Units had to prioritise activities and utilise some of the external experts in achieving its mandate.
None
To be decided at the Authority’s Strategic Planning Session, taking into consideration the upcoming 7th Administration of the new government following South Africa’s general elections.
Previous requests for retention of surpluses have been approved by National Treasury and SAHPRA intends to submit a request for retention of surpluses in line with the National Treasury guidelines by 30 September 2024 for approval.
None.
The main challenge on financial systems and procedures relate to the manual processes utilised to track and recognise revenue from applications received. SAHPRA has embarked on a digitisation process to mitigate some of the risks relating to manual processing.
Various matters were raised on receivables that had control deficiencies and misstatements, which management addressed by updating the applicable policies, expediting relevant processes and developing action plans. Management resolved to appoint additional resources, while awaiting implementation of an electronic system to ensure revenue is correctly recognised and amended the policy to include deviations that may be encountered upon processing of new applications.
Further engagements were held with AGSA post the audit to audit to establish operational and technical
alignment and agreed way to process transactions, where there was difference in interpretation on expenditure recorded in incorrect financial years.
The main financial challenge relates to available funding to fill vacancies. SAHPRA has obtained external funding and has revised its fee regulation which was submitted for approval and expects gazetting in the 2024/25 financial year to address this matter.
SAHPRA signed a Memorandum of Understanding (MoU) with the Rwanda Food and Drug Authority (Rwanda FDA) on 12 April 2024. The MOU between SAHPRA and Rwanda FDA will allow the regulators to develop a cooperative partnership towards ensuring access to safe, quality, and effective health products in the respective countries.
The annual financial statements have been prepared on the basis of accounting policies applicable to a
going concern. Following an assessment on our current financial position and projected future cashflows, there is an indication that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.
SAHPRA has made considerable progress in ensuring that its employee profile is highly representative of the demographic profile of South Africa. In achieving EE targets, as set in the EE Plan, during the year (2023/24) 61% (19/31) of new appointments were women. The entity had the highest representation of Africans of 84% (259/309), followed by Indians at 6% (19/309), Whites at 5,5% (17/309) and the Coloureds with just 4,5% (14/309). The overall female representation is at 62% and 52,6% females occupying senior and executive positions. Disability representativity is currently standing at 2%, maintained from the previous reporting year of 2022/23 financial year.
