A comparative analysis of financial management practices at a district level in South Africa

Abstract

Background: Effective financial management is required across developed and developing countries which face the dilemma of curbing health expenditure yet ensuring the delivery of quality health services. The health system in South Africa (SA) is no exception, and is described as facing a number of challenges ranging from service delivery to budgetary issues. Prior literature indicates that decentralisation in the country has been marred with numerous financial management challenges associated with health districts e.g. insufficient control/ authority delegated to the districts and a lack of skilled staff. Much literature has documented difficulties related to decentralised financial management both in SA and globally, yet these challenges continue to persist. The primary aim of this study is to provide a comparative analysis of financial management realities between two districts in province x of SA. It differs to previous studies, in that it has examined financial management through an organisational approach, drawing on a multitude of theoretical underpinnings including the sociocultural perspective, structures (rules, resources enacted through routines) and agency – actions of individuals (staff) going against and manoeuvring constraints. The organisational perspective extends to understanding hardware which refers to tangible aspects in the health system e.g. information technology (IT) or resources and software elements such as communication or interrelationships. The study draws out actual financial management routines linked to key processes (planning, resource allocation and budgeting and evaluation) as well as its associated challenges and successes at a district level. Finally, the thesis has set out to address gaps in decentralisation literature, by considering contextual influences such as history, politics and centralised bodies, particularly the Provincial Department of Health (PDoH). Methods: A qualitative research approach including a multiple case-study design was used. Primary data collection commenced in March 2014 and was completed in April 2015. A total of 58 participants were included in the study. Purposive sampling techniques were useful in identifying key participants involved in financial management at a district level. Key respondents at a sub-district and provincial level (PDoH) linked to district financial management, other support functions and external stakeholders from Non-Governmental

Organisations (NGOs) were included. An in-depth interview was carried out with each participant and follow-up interviews were done when necessary. This was followed by non-participant and participant observations being conducted in each study site, which allowed for data triangulation. Ethical approval was granted by the relevant university, provincial and district boards. Rigorous thematic content analysis was carried out. Findings: The study begins by describing and providing a brief overview of key financial processes carried out in each district, for example District Health Planning (DHP) or the District Health Expenditure Review (DHER). Essentially these were the everyday routinised tasks or realities examined. In both districts, namely Indawo and Isikhala, weaknesses included expenditure tracking difficulties or financial management challenges such as payment delays or difficulties linked to centralised processes carried out by PDoH. Despite similarities, there were notable differences in the way most of these processes were carried out. For example in Indawo, poor planning and budget motivation processes as well as a ‘culture of compliance’ to meet prescribed processes were reported. In Isikhala, there was better coordination, oversight and engagement of these tasks e.g. province considering the district’s annual budget motivation to be one of the best. However, the findings reveal that even though prescribed financial tasks are carried out, effective financial management was still not achieved in both districts –difficulties with expenditure tracking. Procurement procedures require approval based on availability of financial resources; however requests were approved in both districts irrespective of budget availability. The thesis then shifted a step further to understanding these realities, particularly why dysfunctional routines such as poor planning or compliance to tasks persist and where the mechanisms for improvement/ strengthening lie. Findings revealed why the two districts differ in relation to carrying out these tasks. Structuration theory developed by Giddens (1984) considers the relationship between structure and agency in society (defined above). This thesis further expanded structuration theory to the notion of a structuration nexus–consisting of four key components of financial management, namely; structure, agency, hardware and software. The theory argues that in this case structure (rules and resources) similar to hardware are enacted through routine financial tasks necessary to shape human behaviour and organisational functioning. However, poorly coordinated routines were reported to exist and

constantly enforced in system, especially in the case of Indawo. Agency within the nexus refers to individual actors and their actions to either reinforce such practices or transform them i.e. question, change and implement effective financial management. Health system concepts which refer to resources or equipment, such as IT / hardware elements were found to affect routines from being effectively carried out in both districts. While software, particularly communication including teamwork, motivation and personal development, was found to propel agency to deal with constraints, find solutions and shift some of the dysfunctional financial practices reported in Isikhala. Findings further revealed strategies for nurturing software, particularly informal learning through strategies such as delegation in Isikhala finance unit. However, while weaknesses and successes were noted in districts, they were inherently linked to the centralised level. Provincial participants provided insight into the rationale for centralisation of some financial functions. One of the primary reasons cited was the lack of district capacity and high levels of over expenditure in the province x making centralisation of some functions a perceived necessity. Although benefits of centralisation and expected gains were not realised as the central level itself was reported to have several weaknesses such as a loss of institutional memory (loss of skills in post-apartheid SA) or poor communication between units (software). Agency and system change at both levels were further compounded by political factors, post-apartheid restructuring and trade unionism which also affected routinised finance practices in both districts – poorly performing staff not being held accountable of political influences over vendor selection which increased financial costs. Conclusion and Recommendations: The country’s National Health Insurance (NHI) policy re-emphasises the importance of decentralisation and effective financial management. However, the NHI policy offers few recommendations or details around actually strengthening this core district function. This thesis offers a comprehensive account of district financial management and strategies for its improvement particularly linked to its adopted organisational perspectives and nurturing software factors (teamwork, communication, better relationships). The study moves beyond describing challenges associated with key financial routines, to offering a novel understanding in the SA context around why these practices exist and what are the factors necessary to transform practices which do not render effective financial management.

Findings reveal that the four crucial elements of the structuration nexus (hardware, software, structure and agency) are particularly important in shaping financial management. It further argues and shows that these elements, if present, can contribute to organisational functioning within the health system, yet these elements are not necessarily considered during policy processes. Findings from the Isikhala finance unit points to specific practical strategies to nurture software in organisations - informal learning and delegation strategies linked to staff motivation and development. Lastly, financial management offered a lens to understanding decentralisation processes, specifically cognisant of its interlinkages and interdependent to functioning centralised levels and the complexities associated with contextual factors (history/ apartheid). Racial redress through key policies and legislation are undoubtedly important in addressing SA’s past injustices, however has further complicated the decentralisation process, compounded by the role of politics and trade unionism which also need consideration. In essence, this thesis has shown what elements are necessary and need to be nurtured not just for financial management but for health systems functioning. Key words: Decentralisation, District Financial Management, South Africa