HEALTH HEIST

Kemsa's request for Sh5bn bailout ludicrous

it is the taxpayer who bears the cost of graft. And the cost is too high.

In Summary

• Audit reports show the parastatal bought medical items worth an estimated Sh3 billion at an inflated price of double that amount.

•  USAID and the Global Fund, are alarmed at how Kemsa has been spending their donor funding.

Kemsa warehouse in Embakasi, Nairobi.
Kemsa warehouse in Embakasi, Nairobi.
Image: FILE

 

This one is familiar. We have read about it many times in the past. A parastatal claiming bankruptcy asking for bail out from the government. Or claiming it has gone broke and needs capital injection to facilitate continued operations.

Let us look into why they become insolvent to start with. The reason is normally rampant graft, incompetent management. Basically those hired to run and manage these parastatals loot and run these public entities to the ground. Then they cry bankruptcy, insolvency –“sirkal saidia”.

 

The latest to go down this bail out road is The Kenya Medical Supplies Authority. Kemsa claims it is broke and is asking the government for a bailout amounting to Sh5 billion. This is in the face of reports that it cannot account for a whooping Sh17 billion allotted to it in the last fiscal year.

Kemsa is also reportedly in possession of medical supplies amounting to Sh6 billion that has become dead stock, as these supplies were purchased at inflated prices, and are now impossible to move. Its mandate is to procure, warehouse and distribute medical commodities to public health facilities.

This is amid threats from two major foreign donors at the Ministry of Health to withdraw their funding, claiming rampart corruption at Kemsa. These donors, the US Agency for International Development (USAID) and the Global Fund, are alarmed at how Kemsa has been spending their donor funding.

Audit reports show the parastatal bought medical items worth an estimated Sh3 billion at an inflated price of double that amount. In efforts to attain liquidity, Kemsa now intends to sell these items at a lower price of approximately Sh4 billion, as it awaits government bailout. This is ludicrous!

There’s more. In the initial phase in the fight against the coronavirus, this agency was directed by the parent Ministry of Health to keep its budget at an approximate Sh750 million. But it went ahead and ignored this cost management directive, reporting an expenditure close to Sh4.6 billion, which subsequently rose to an estimated Sh9 billion. These are some of the irregularities red flagged by the two donors.

Investigations by the Ethics and Anti-Corruption Commission, as well as audit investigations by Price Water House Coopers, are underway to determine just how Kemsa expenditure surpassed the initial approved figure by this absurd margin.

These woes have resulted in the suspension of its top bosses — CEO Dr Jonah Manjari, director of Commercial Eliud Muriithi and his Procurement counterpart  Charles Juma.

 

Nonetheless, Kemsa needs to be brought to account. It cannot go on operating with impunity at the expense of tax payers. At the end of the day, it is the taxpayer who bears the cost of graft. And the cost is too high.

Chesang is a commentator on socio-political issues and founder of the Allan Chesang Foundation