Kemsa is seeking Sh3.5 billion from the Treasury to buy essential products and cover its losses from the Covid-19-related overspending.
Acting CEO Andrew Mulwa said the money will help turn around the authority and make it self-reliant, following frivolous purchases during the pandemic.
He said the Cabinet has already approved Sh2 billion for recapitalisation.
“We have exhausted that because of Covid losses. We have about Sh1.3 billion more to lose. That’s why we need this capitalisation. We have settled at Sh3.5 billion in terms of the losses we anticipate to make,” he told the media in Mombasa.
During the Covid-19 pandemic time in 2020 and 2021, the Kenya Medical Supplies Authority (Kemsa) spent about Sh8.3 billion to buy unnecessarily huge quantities of some products at inflated costs.
“Our warehouses are full because we have slow-moving products procured around Covid but now the demand has gone down. We expect some of those products to expire, that’s a harsh reality,” he said.
Some of those products include face masks, hazmat suits, sanitisers and gloves.
Last month, Health CS Susan Nakhumicha confirmed the Cabinet had agreed to inject more money into the drug distributor.
Nakhumicha said she was already engaging her National Treasury counterpart, Prof Njuguna Ndung’u over the delayed funding.
“Equally, we have plans at the level of head of state in terms of recapitalising Kemsa, and the President has promised a recapitalisation amount of about Sh2 billion,” she said, explaining this amount will enable Kemsa focus on the essential and critical items.
Mulwa said they identified 66 classes of critical drugs and medical supplies known as Vitals, Tracers and Class A items (VTAs) which Kemsa must have in stock at all times.
Dr Mulwa was appointed acting Kemsa boss in May this year, alongside the new board headed by Irungu Nyakera, a former Principal Secretary.
“We have identified 66 items which we can say we have the vital drugs. When we came we only had 10 per cent of them. By the end of this month we’ll have 90 per cent of them,” he said.
Irungu announced they cancelled all past tenders and capped the maximum single tender awarded to one supplier at Sh300 million.
“We were issuing very large tenders, we asked the procurement to institute a lotting system so that someone isn’t coming to win Sh1 billion tender. Sh300 million will be the maximum. People are finding their way around it but we want to open up Kemsa to local Kenyans,” he said.
Kemsa also announced plans to increase the share of products bought locally.
Irungu said currently, the authority imports 60 per cent to 80 per cent of all drugs and medical products. He said that is unsustainable.
“The solution is supporting local manufacturers. If you look at the tenders, a huge number is now open for locally manufactured products only. This is something we will push on with,” he said.
He also said Kemsa is engaging some manufacturers to eliminate middlemen.
“We are asking why do we have to use Njoroge to import from China. Why can't Kemsa import directly? It will put some people out of business but it will make drugs cheaper. From next year many drugs will be bought by Kemsa directly at a fraction of the cost,” Irungu said.
Tharaka Nithi Governor Muthomi Njuki supported the recapitalisation of the drugs supplier.
“If we can capitalise Kenya Airways (KQ) every year, why not Kemsa? Between KQ and Kemsa which is more critical to us as Kenyan people. We are also bailing out sugar millers,” he said.
Njuki also supported the distributors' plan to decentralise warehouses. He said this would lower costs and improve delivery of drugs to counties that are far from Nairobi.