The Kenya Medical Supplies Authority (Kemsa) has a Sh600 million funding hole after the United States Agency for International Development withdrew its funding of the State agency.
The Health Ministry told Parliament that the exit of United States Agency for International Development (Usaid) will eat into Kemsa’s internally generated funds,which the agency relies on to fund operations that include payment of personnel emoluments and maintenance.
Kemsa last year lost a Sh70 billion five-year contract to procure, warehouse and distribute essential drugs on behalf of the Usaid in the wake of graft allegations at the state firm.
“The projected appropriations in aid (A-I-A) for the financial year 2021/22 will result in a shortfall of Sh600 million due to exit of Usaid-Kemsa Medical Commodities Programme,” the ministry said in submissions on the Supplementary Budget I.
The Sh70 billion contract expired in 2020 but had been extended a few times on a month-to-month basis until full renewal before the US dropped the bombshell that it was not ready to work with Kemsa any longer.
The Sh7.8 billion procurement scandal at Kemsa triggered the loss of the lucrative contract, with Usaid and the Global Fund raising concerns.
The two institutions have given Kemsa at least Sh100 billion in the past five years. The development partners heavily depended on Kemsa for procurement, warehousing and distribution of health commodities.
The standoff between the Ministry of Health and the American agency put at risk the fight against malaria, tuberculosis and HIV.
The ministry said apart from the Usaid exit, its internally generated revenues will be affected by low sales volumes.