Evaluating the Effectiveness of Financial Risk Management Policies in Public Procurement: A Case Study of Zambia Medicines and Medical Supplies Agency (ZAMMSA)

The aim of this study was to evaluate the effectiveness of financial risk management policies in public procurement at the Zambia Medicines and Medical Supplies Agency (ZAMMSA). The study employed a quantitative research approach to allow for objective measurement and statistical analysis of variables related to financial risk management policies. Out of the 109 distributed questionnaires, 105 were returned fully completed, representing a response rate of 96.3%. The study revealed that while ZAMMSA has made notable strides in instituting robust financial risk management mechanisms within its procurement processes, several critical gaps remain that require strategic attention. The study found that ZAMMSA’s financial risk management framework is grounded in formalized policies and practical tools such as supplier screening (79.0%), financial due diligence (77.1%), and risk policy manuals (74.3%), all of which contributed to mitigating key risks like overpricing (72.4%), budget overruns (67.6%), and supplier default (64.8%). Additionally, the effectiveness of ZAMMSA’s risk identification and mitigation strategies was affirmed through the use of risk assessment checklists (70.5%), supplier prequalification (mean = 4.62), and contract performance tracking (70.5%), which collectively reduced procurement-related financial losses. Furthermore, internal controls and audit mechanisms were found to be highly developed, with strong implementation of procurement thresholds (90.5%), segregation of duties (87.6%), and system-based workflows (84.8%)—aided by both internal (88.6%) and external audits (84.8%)—providing layered risk monitoring and enhancing financial accountability. However, the study also highlighted areas requiring enhancement, including inconsistent follow-ups on audit recommendations (mean = 3.08), limited training on internal control systems (mean = 3.02), and underutilization of insurance mechanisms (40.0%). Most notably, compliance with national procurement regulations such as ZPPA guidelines, while positively associated with financial performance through e-GP systems (100%) and procurement planning, faced challenges due to inadequate training (73.3%), delayed approvals (70.5%), and frequent regulatory changes (67.6%). These weaknesses were reflected in only moderate agreement on consistent adherence to ZPPA standards (mean = 3.12), indicating gaps between policy design and implementation. Despite these challenges, the strong agreement on the positive impact of compliance and internal control mechanisms on transparency (mean = 4.45), financial loss prevention (mean = 4.36), and institutional accountability suggests that ZAMMSA’s financial risk management policies are broadly effective. However, to fully realize their potential, the study concludes that more frequent policy reviews, enhanced staff training, consistent enforcement, and improved communication of risk tolerance levels are necessary to strengthen the resilience and financial integrity of public procurement processes at ZAMMSA.