Economy

America, Kenya tax row freeze Sh1 billion HIV drugs

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HIV drugs. FILE PHOTO | NMG

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Summary

  • Life-saving HIV and tuberculosis drugs worth Sh1.1billion are stuck at the port of Mombasa following a tax tussle between the Kenyan government and the US Agency for International Development (USAid).
  • The consignment of medication has been lying at the port since January 18 after the State handed a Sh90 million tax bill to a privately owned American firm, Chemonics which had imported it on behalf of USAid.

Life-saving HIV and tuberculosis drugs worth Sh1.1billion are stuck at the port of Mombasa following a tax tussle between the Kenyan government and the US Agency for International Development (USAid).

The consignment of medication has been lying at the port since January 18 after the State handed a Sh90 million tax bill to a privately owned American firm, Chemonics which had imported it on behalf of USAid.

Kenya argued that the import arrangement flouted the tax waiver policies on government-to-government donations and that Chemonics had to pay duty as a private entity before the cargo could be released.

“USAid kindly requests your urgent intervention and assistance in clearing these obstacles with Pharmacy and Poisons Board (PPB) Import declaration Form(IDF)/import permit applications and tax and duty waivers,” says a letter to the Ministry of Health (MoH) signed by USAid mission director Mark Meassick dated January 29.

The Sh1.1 billion consignment is part of a Sh7.6 billion worth of antiretrovirus donation by the USAid to the Health ministry.

Drug donations are normally expected to list government agencies and ministries as consignees in order to qualify for duty and tax waivers. This means that the consignment would have been consigned to the Kenyan government.

Any importations through private firms do not qualify for special exemptions and are subject to the normal clearance procedure, which involves inspection at the port by the Kenya Bureau of Standards (Kebs) and imposition of taxes, including the railway development levy (RDL).

USAid in its letter to the Health ministry notes it had encountered challenges in obtaining import permits from the PPB that are preventing “us from proceeding with importation and customs clearance for a number of urgently required commodities”.

Items withheld at the port include HIV testing, treatment and prevention commodities such as ARVs, laboratory reagents as well as TB diagnostic and prevention medications.

The commodities include those for early infant diagnoisis (EID), viral load (VL) monitoring and key antiretroviral medicine Tenofovir/Lamivudine/and Dolutegravir (TLD).

Sources told the Business Daily that USAid was meant to import the medical commodities in October 2020 but went mum despite requests from the Ministry of Health asking on the status of the consignment.

In January, USAidwrote to the ministry announcing that the commodities were within Kenya, introducing a third party as consignee and requesting for tax waiver.

It is now emerging that the Health ministry had advised USAid to change the listed consignee from the private company to Kenyan government.

But as the standoff persisted, stocks of the life-saving medication continued to run low at government facilities amid calls for a speedy resolution of the row.

A lobby, the National Empowerment Network of People Living with HIV and Aids in Kenya (NEPHAK), urged the Health ministry to facilitate the entry of the consignment into the market to avert suffering for thousands of patients.

“We understand a shipment of ART (antiretroviral therapy) from the US government is sitting at the port under unclear circumstances, ”NEPHAK director Nelson Otwoma said in a letter to Health ministry.

About 1.3 million adults in Kenya are living with HIV/Aids, an estimated 4.9 percent of those aged between 15 to 64, according to the Kenya Population-based HIV Impact Assessment 2018.

The HIV prevalence was found to be highest among women, at 6.6 percent, compared to men at 3.1 percent. The Covid-19 pandemic has meant that HIV positive patients who have a compromised immune system should be extra cautious to prevent infection.