Kemi Adeosun has stopped the National Health Insurance Scheme (NHIS) from investing about N25billion.
Based on what he inherited from his predecessor, Acting Executive Secretary Attahiru Ibrahim, the Executive Secretary/ Chief Executive Officer of the NHIS Prof. Usman Yusuf, has proposed an investment of N25billion to N30billion from the scheme’s funds.
Yusuf presented the investment plan to the NHIS Governing Council, which is yet to be convinced.
But with over N138billion NHIS cash trapped in 17 banks and financial companies as well as in individuals’ pockets from January 2011 to date, the Federal Government is not disposed to such an investment.
The minister also said investing the cash will amount to a violation of the Treasury Single Account (TSA) policy.
There have been issues between the Governing Council and the NHIS boss on the planned investments.
The NHIS boss presented an approval given to his predecessor to invest the cash but the boss was in possession of a follow-up memo from the minister stopping the investment.
A source said: “Both the Governing Council and the NHIS Executive Secretary are yet to agree on the investment of the funds.
“The Council is insisting on compliance with the directives of the ministers of Finance and Health.
“Our activities are almost being grounded. There is urgent need for intervention by the Federal Government to resolve the challenge at hand.
“We also have about N138billion invested funds trapped. The crisis of confidence between the council and the NHIS must be urgently addressed. We got to this sorry state because the Minister of Health has been ignored by the NHIS management.”
Although the investment was initially approved for the former Acting Executive Secretary, Attahiru Ibrahim, by the Minister of Health, Prof. Isaac Adewole, in line with Part IV, Section 11.4 of the National Health Insurance Act, it was reversed.
Following advice from the Minister of Finance, the decision to stop the investment was communicated to the NHIS by the Minister of Health.
In a memo, the Minister of Finance said the Central Bank of Nigeria (CBN) had been advised to pay Treasury Bill rates on any residual funds in the TSA with the apex bank.
The letter drew the NHIS’s chief’s attention to the Health Minister’s correspondence dated 18th August 2017 in which you gave approval to invest in Federal Government Securities (copy attached)”
“This approval is in direct violation of the Government’s Treasury Single Account (TSA) policy and therefore should not be implemented.
“The Central Bank Nigeria (CBN) has been advised to pay Treasury Bill rates on any residual balance held in TSA with CBN for Investment Trusts.”
In a follow-up letter to NHIS, the Minister of Health said: “This is to inform you that the Honorable Minster of Finance has advised against the proposal to invest NHIS residual funds in securities. The approval of such investment, she stated, will be an indirect violation of the Government’s Treasury Single Accounts (TSA) policy.
“ In view of the above, the Central Bank of Nigeria (CBN) has been advised to pay Treasury Bill rates on any residual balance held in the TSA with CBN for Investment Trusts.
“You are therefore directed to stop all actions and processes on the investment of NHlS residual funds in securities with immediate effect and approach CBN to facilitate the payment of interest on residual funds.”
The NHIS Executive Secretary (ES) is banking on the initial approval given to the former Acting ES, Attahiru Ibrahim, by the Minister of Health.
He is also relying on Section 11(3) of the NHIS Act to push for the investment of the funds.
The initial approval reads in part: “I refer you to the National Health Insurance Act (Part IV, Section 11.4 attached) reproduced below:
“The Scheme shall invest any money not immediately required by it in Federal Government securities or in such other securities as the Council may, with the approval of the Minister, from time to time, determine.”
It has come to my notice that the NHIS kept residual balance not immediately required for day-to-day operations idle in Treasury Single Account with the CBN. The sum has accumulated over the years and has become somewhat sterilised as you continue to hold it in cash thereby leading to erosion in value due to inflationary trends which currently stands at 16.1%.
“Following from above and in order to arrest this value erosion of the NHIS funds, l hereby approve as follows:
- Commence effective immediately; starting with the sum of N10 billion naira up to the tune of N50 billion naira investments in Federal Government Securities at prevailing market determined yields.
- Engage the services of any of the regulatory bodies certified investment counter parties; Cowry Asset Management Limited, Finmal Securities Limited or Elixir Investment Partners Limited to advise on the investment options and seamlessly execute same.
- The investment actions and the expected returns should be captured in your 2017 budget estimates
“lt is my expectation that the returns on these investments will be used to fund part or all of the proposed interventions in the tertiary health institutions without depleting NHIS actual funds balance. I have taken the liberty to notify the Honourable Minister of Finance, Chairman Senate Committee on Health and Chairman House Committee on Health Services.
Section 11(3) of the NHIS Act says: “The Scheme shall from time to time, apply the funds at its disposal
(a) to the cost of the administration of the scheme;
(1)) to the payment fees, allowances and benefits of members of the Council;
(c) to the payment of salaries, allowances and benefits of officers and employees of the Scheme;
(d) for the maintenance of any property vested in the Scheme or under its administration; and
(e) for and in connection with the objectives of the Scheme under this Act
“The Scheme shall invest any money not immediately required by it in Federal Government securities or in such other securities as the Council may, with the approval of the Minister from time to time, determine.”