eBusiness Weekly
Tawanda Musarurwa
Medical aid provider, Cimas, says currency depreciation has adversely affected the standards of service in Zimbabwe’s health sector.
Last year Zimbabwe’s fiscal and monetary authorities undertook a number of currency reforms that culminated in the re-introduction of the Zimbabwe dollar in June.
But the decline in the value of the Zimbabwe dollar relative to the United States dollar has had negative consequences on the citizenry as well as businesses.
Cimas chief executive Vulindlela Ndlovu told Business Weekly this week that the impact of the devaluation on the sector was wide.
“If you look at diagnostic services, like laboratory services, radiology services, all these have imported inputs and equipment. Therefore, to some extent those costs are following the currency (depreciation).
“The prices of dental, optical services have shot up. So currency depreciation has affected us. It’s also important to remember that the doctors themselves have cost pressures that in some cases are related to the currency depreciation, hence the instability in those costs,” he said.
Last February Zimbabwe’s monetary authorities responded to calls for a free floating exchange rate system and set up the foreign currency interbank market.
And in June the Government effectively ended the long-standing multi-currency system and re-introduced the Zimbabwe dollar through Statutory Instrument 142 of 2019.
Between February 2019 and February 2020, the Zimbabwe dollar has moved from trading at a rate of 2,5 to the United States dollar, to around 17,6 to the US dollar on the interbank market.
On the parallel market, the rate is trending at around 26 to the US dollar, while the Old Mutual Implied Rate (OMIR) is above 40.
Although most sectors of the economy have been affected, it is arguable that the health sectors is worst affected due to the gravity of the social impacts and this has serious effects on productivity in companies as workers always are off sick.
The country’s health delivery system is based on the constitutional right to health care in Section 76 (1-4) of the Zimbabwe Constitution, which states that:
“Every citizen and permanent resident of Zimbabwe has the right to have access to basic health care services, including reproductive health; Every person living with a chronic illness has the right to have access to basic healthcare services for the illness; No person may be refused emergency medical treatment in any healthcare institution.”
The prevailing currency and economic challenges pose serious threats to the sustainability of these constitutional rights.
The Cimas boss, however, said his organisation managed to retain clients notwithstanding negative selective tendencies that can occur in the medical aid sector during economic depression.
“Obviously there is pressure where someone would evaluate, is it worth it to keep paying premiums if my medical aid is only going to cover 10 percent of what the cost of the service is. That is a problem,” he said.
“But as medical aid and as we try to catch up with these costs and the actual contributions, sometimes we go beyond what our customers can afford.
“But the trend last year was that many people tried to maintain their medical cover because it’s probably a worse-off situation when you have to face the cost totally on your own.”
Cimas is arguably Zimbabwe’s largest private medical aid providers. It was established in 1945.
