The fate of the Sh104.8 billion Social Health Authority (SHA) contract remains in the hands of Parliament following an audit that revealed major irregularities. Auditor-General Nancy Gathungu, appearing before the Senate County Public Accounts Committee, made it clear that her mandate is limited to auditing and reporting, and that it is now up to Parliament to act on the findings.
During the session, senators expressed frustration at the lack of direct consequences outlined in the audit report. Nairobi Senator Edwin Sifuna criticized Gathungu for not recommending the cancellation of the contract or the prosecution of those responsible. He argued that allowing such a contract to continue unchecked would be a violation of public trust and called for its immediate termination. Homa Bay Senator Moses Kajwang’ echoed these sentiments, describing the SHA system as a tool for looting public resources. He stressed that corruption at lower levels should not be ignored, stating that accountability should not only apply to top government officials but to all involved.
The audit report has raised significant concerns over the lack of government control over the SHA system despite the enormous financial investment. The contract stipulates that the consortium providing the system retains full ownership of the software and all intellectual property rights, leaving the government with only limited access. As per the contract terms, the government is merely allowed to connect to the system without hosting or installing it on its own infrastructure. Additionally, a clause in the agreement prohibits the government from developing a similar system, restricting Kenya’s ability to build its own healthcare technology in the future.
Financial concerns surrounding the SHA system have also come to light. The agreement projects a revenue of over Sh111 billion over the next decade through member contributions, health facility claims, and track-and-trace solution fees. These funds are required to be transferred into an Escrow account on a daily or weekly basis. However, the report notes that there is a lack of clarity regarding the signatories and control over these funds, raising serious transparency concerns. Furthermore, a five per cent deduction on hospital claims means that patients will ultimately bear higher costs, contradicting the government’s promise of making healthcare more affordable.
Another alarming aspect of the contract is its dispute resolution mechanism. The agreement stipulates that any disputes will be settled through the London Court of International Arbitration rather than through Kenyan legal channels. This clause effectively places the contract outside the jurisdiction of local courts, further complicating the government’s ability to intervene. Gathungu questioned why a contract procured under the Public Procurement and Asset Disposal Act (PPAD), 2015, does not adhere to Kenyan legal frameworks.
The revelations in the audit report have sparked outrage, with many calling for immediate action to rectify the situation and hold those responsible accountable. Lawmakers now face the critical task of deciding whether to terminate the contract, renegotiate its terms, or take legal action against those who facilitated the agreement. With billions of taxpayer funds at stake, the pressure is mounting on Parliament to act decisively and prevent further financial mismanagement in Kenya’s healthcare sector.
