Ruto’s government has no control over Sh104bn SHA system it procured - Audit

The government violated five major procurement laws when setting up the Sh104 billion Social Health Authority (SHA) system, leading to concerns over contract terms and financial accountability.

A report by Auditor General Nancy Gathungu for the financial year 2023-2024 details major legal violations in the system procurement, including unbudgeted and non-competitive procurement, an undefined scope of work, lack of payment agreements, and unfavourable contract clauses.

In her report, Gathungu revealed that the procurement of the Healthcare Information Technology Digitisation system at a cost of Sh104.9 billion was initiated without adhering to proper procurement guidelines.

She raised concerns over the absence of a thorough review of contractual clauses, which has significant implications for government control and ownership of the system.

One clause, for instance, explicitly restricts the government from accessing or controlling the system.

"The State Department procured the Healthcare Information Technology Digitisation system of Sh104 billion. However, a review of tender documents, contract agreements, and financial proposals indicated the following unsatisfactory matters," reads the report.

"The procuring entity shall ensure neither the procuring entity nor the government health agencies nor the procuring entity authorised users shall access all or any part of the system to build a product or service which competes with the system or undertake similar functionalities to the system or attempt to do so," Gathungu cited from the contract.

Additionally, state officials were faulted for ceding all intellectual property rights of the system to a private entity. The contract further stipulates that any dispute must be settled under the London Court of International Arbitration, rather than Kenya's Public Procurement Administrative Review Board, as required by law.

"Since the procurement was done under the Public Procurement and Asset Disposal Act of 2015, disputes should be referred to the Public Procurement Administrative Review Board," Gathungu said.

The report also disclosed that the Sh104 billion system purchase was not part of the approved procurement plan or the medium-term budgetary expenditure framework.

“This was contrary to Section 53 (7) of the Public Procurement and Asset Disposal Act, 2015, which states that multi-year procurement plans must align with the medium-term budgetary expenditure framework,” reads the report.

Further, Gathungu said the procurement was not subjected to a competitive process, violating Article 227(1) of the Constitution, which mandates that public procurement be fair, equitable, transparent, competitive, and cost-effective.

The government allocated Sh7 billion for installing the SHA system in public health facilities and training healthcare workers. However, the Auditor General found that the number of healthcare workers and health facilities involved was not specified in the contract.

"In addition, the contract price includes training, support, and customer education costs of Sh7.02 billion, but the number of healthcare workers to be trained and the mode of training were not disclosed in the contract agreement," reads the report.

The report further revealed that before rolling out SHA and imposing membership fees, no public participation was conducted.

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Health Principal Secretary Harry Kimtai reported that as of February 2025, about 18 million Kenyans had registered on SHA, but only 4 million were actively contributing.

Despite officially commencing operations in October 2024, SHA has faced widespread criticism from citizens, healthcare facilities, and workers over its implementation and funding structure.

On Tuesday, the Kenya Medical Practitioners, Pharmacists and Dentists Union (KMPDU) and the Union of Kenya Civil Servants (UKCS) demanded a total overhaul of SHA, citing the untold suffering of patients seeking medical care in facilities across the country.

The two unions issued a two-week ultimatum, threatening nationwide protests by civil servants from county and national governments if their concerns are not addressed.

The unions, led by KMPDU Secretary General Davji Atellah and UKCS Secretary General Tom Odege, criticised SHA's inefficiency and accused the government of failing to follow through on its promises regarding the scheme.

According to union leaders, more than five million Kenyans are at risk of missing critical medical services due to the ineffective systems in place at SHA.

"The current leadership at SHA is weak, and for its success, leadership must be changed. Public servants are contributing twice to the medical scheme, yet they are not receiving services commensurate with the deductions. We cannot sit and watch our members continue fundraising for medical expenses while their contributions are being mismanaged,” Atellah said.

The unions also accused President William Ruto's administration of promoting a system that benefits a select few at the expense of the nation's workers.

They called for an immediate refund of deductions made from civil servants, arguing that they have not been receiving the promised healthcare services.

Nyandarua Senator John Methu joined UHC staff outside Parliament, echoing the unions’ frustrations.

He criticised President Ruto's administration for misplaced priorities, citing the president's recent Sh20 million donation to a Roysambu church and a further promise of Sh100 million, while critical sectors such as healthcare remain underfunded.

"We are giving the government two weeks to address these issues. If no action is taken, it will not be business as usual — we will call for nationwide protests to demand the change our members deserve," Atellah said.