Kenya faces Sh8.3 billion loss over undelivered Covid-19 vaccines

Kenyans are staring at a potential loss of Sh8.3 billion after the Ministry of Health committed funds to Covid-19 vaccines that were never fully delivered.

A new audit report by Auditor General Nancy Gathungu has revealed that the government made payments for doses that were not shipped, raising fresh concerns about accountability in public spending.

The report highlights that in 2021, the Ministry of Health entered into an agreement with the Africa Vaccine Acquisition Trust (AVAT) and the Export-Import Bank (AFREXIMBANK) to procure 13.33 million Covid-19 vaccine doses at a cost of Sh7.46 billion.

However, only 1.80 million doses were delivered, leaving a pending balance of 11.52 million doses.

Despite the government later indicating that it no longer required the remaining doses, the contract terms obligated Kenya to pay for the full order.

As of August last year, 2.72 million doses had already been manufactured but were not shipped to the country.

“The unshipped component was indicated as no longer needed and was due for destruction,” the report reads in part.

The delayed payments have since accrued interest penalties amounting to Sh930.59 million, further inflating the financial burden.

"The statement of account from AVAT dated May 2024 indicated that Kenya had an outstanding obligation of $64.88 million or Sh8.38 billion equivalent," the report adds.

With the government now facing financial penalties for undelivered vaccines, questions have emerged over the failure of health officials to conduct proper assessments before making the bulk procurement.

"From the foregoing, the value may not have been realised from the agreement for the supply of Covid-19 doses while the government is at risk of accruing further interest with the continued delays in settlement of the accounts," the Auditor General warns.

This latest revelation rekindles memories of the Covid-19 procurement scandals that saw billions of taxpayer money lost in dubious deals at the Kenya Medical Supplies Authority (Kemsa).

In 2021, MPs recommended the prosecution of senior Kemsa officials over irregular procurement of Covid-19 medical supplies.

The Ethics and Anti-Corruption Commission (EACC) later established that inflated prices and overstocking had resulted in billions of shillings in losses.

Despite numerous investigations into Kemsa’s Covid-19 procurement, no high-ranking official has been held accountable.

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The National Assembly had directed suppliers who overcharged the government to refund the excess payments, but enforcement remains unclear.

Kenya recorded over 350,000 Covid-19 cases and more than 5,000 deaths during the pandemic.

The urgency to procure vaccines at the time was understandable, but the mismanagement of resources has now left the country dealing with costly consequences. While the government has requested AFREXIMBANK to waive the interest penalties, the request has yet to be approved.