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Lessons Learned from Financial and Operational Management Training for Drug Shop Owners in Madagascar

The United States Agency for International Development (USAID)-funded Improving Market Partnerships and Access to Commodities Together (IMPACT) program partnered with the Government of Madagascar’s Ministry of Public Health (MoPH) to engage the private sector in order to strengthen the health supply chain and serve new health markets.  Drug shops, especially those in remote areas, are a crucial link in the health supply chain in Madagascar, albeit a somewhat forgotten and unregulated one. Officially, the number of drug shops in Madagascar is 1,600, but the national president of the Association of Drug Depots of Madagascar claims that there are more than 3,000 drug shops in operation. These illicit drug shops can pose a threat to the health of the Malagasy population for several reasons: 

  1. Illicit drug shops may not report the data of their stock and sales to national systems like District Health Information System 2 (DHIS2). The low rate of reporting makes it difficult to quantify the essential medicines that a territory or region may need. 
  2. Illicit drug shops may not always be compliant with authorized practices or sale activities.
  3. Illicit drug shops may not be connected with official drug wholesalers and therefore may purchase products from unlicensed drug dispatchers.
  4. Illicit drug shops may not store medicine correctly as they have not taken the internship required for licensed drug shops. Overall, drug shops which are not operating with the proper MoPH license have more difficulties in selling health commodities in a safe and professional manner, leading to inefficiencies in ensuring the supply of quality medications for the population. 
The IMPACT A2F team facilitates a financial and operational management training for drug shops in Mahajanga. | Credit: IMPACT

To remedy this, the IMPACT access to finance (A2F) team, led by Banyan Global, worked with the MoPH to provide half-day information sessions for drug shop owners on the laws and regulations governing drug shop licensure. These sessions are followed by optional training to strengthen shop owners’ capacities in financial and operational management of their shops. Following the training, the IMPACT A2F team provides coaching for owners wishing to benefit from a deeper understanding of and more tailored approach to the management of their shops. So far, the A2F team has coached five drug shop owners following trainings in the Atsinanana region (November 2019) and the Boeny region (February 2020), teaching them the management methods and tools that should be used and how to adapt and integrate these methods and tools into their shops.

Mr. Jeremy Patrick, a drug shop owner in Toamasina (Atsinanana region), talked about his experience after using the tools for a month and a half following his training and coaching sessions: “Before, I only used a registry where everything was intertwined and not systematic. After the training I wanted to apply the tools, and they have allowed me to understand the financial situation of my shop.” Thanks to the training and subsequent coaching, Mr. Patrick told the IMPACT team that he observed the following benefits:

Mr. Jeremy Patrick works in his drug shop
in Antsampanana. | Credit: IMPACT
  1. A significant reduction in debtors: By keeping a debtor book, Mr. Patrick has recorded and been able to follow up with people when repayment is due. 
  2. Improved inventory management: Each product is inventoried appropriately and considers the standard requirements for storage, inventory, sale, and purchase.
  3. Better records and clearer understanding of his shop’s profitability: Using a daily operations journal, Mr. Patrick has a clearer understanding of his shop’s financial status.

Now that Mr. Patrick is convinced of the importance and relevance of management tools, he is starting to realize that running a drug shop is not a one-man job.   For a drug shop to be most successful, there should be one person who provides financial and administrative management and another person whose focus is on dispensing medicine and building customer relations. Unfortunately, because he could not both manage finances and customers, Mr. Patrick was forced to return his main focus to the sale and dispensation of drugs for the foreseeable future.

Even though Mr. Patrick has not succeeded in maintaining everything he learned in training, he has provided some crucial lessons that can be adapted for future implementation by IMPACT. One lesson learned from recent participants is that it may not be feasible for a single person to run both the financial and dispensary portions of their drug shop businesses. However, due to the Ministerial Decree N° 11092/2016, it may not be possible for drug shops to obtain that extra needed support. The decree stipulates: “The owner is obliged to manage the drug shop for which he/she received authorization under the penalty of permanent closure and the repeal authorizing the drug shop.”[1] This decree means that for drug shops to truly improve their management and in that way improve the pharmaceutical supply chain in their area, it may be required for IMPACT and the Government of Madagascar to collaborate on how to revise this portion of the decree.  Overall, the lessons drawn from Mr. Patrick’s experience are:   

  1. With support from IMPACT, the Government of Madagascar should find a way to implement a program similar to that of the Accredited Drug Dispensing Outlets Program in Tanzania, which recommends that a drug shop should be managed by two people, the manager (often the owner) and the provider. Also, each staff member of the drug shop should participate in a training linked to his/her role within the drug shop
  2. The IMPACT Program should create a computer/tablet tool for drug shop management adapted to the general level of education and field conditions of drug shops in Madagascar to ensure its professionalization and the systematic collection of data from the private sector. This data would lead to the national quantification of essential medicines.

[1] Determining the Conditions Under which Medicinal Products Intended for Humans are Used and Determining the Allowed Number of Drug Shops by Locality. Ministerial Decree 11092/2016, (2016): Chapter IV, Article 20. Issued by Ministry of Public Health, Madagascar.