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Why is medics fund idle 30 years on?

medics

I had hoped that Health cabinet Secretary Mutahi Kagwe would revive the Kenya Hospital Authority Trust Fund before the end of the tenure of President Uhuru Kenyatta’s administration. With the General Election only weeks away, the indications are that the can has been kicked down the road.

The revival of the fund has been put in abeyance and the responsibility for the revival of the fund pushed to the next administration.

Is it not a public outrage that hundreds of millions of shillings in a fund that is supposed to be used in financing the training of doctors and nurses has been lying idle in bank accounts for in excess of 30 years?

Last year, in January Mr Kagwe, appointed an advisory committee comprising representatives of relevant ministries and private sector experts to study the fund and make recommendations on how to revive it. From what I gather, that committee submitted its recommendations way back in June last year.

The major findings of the committee included the following.

First, hundreds of millions of assets of the fund lying either in banks or stocks and shares had not accrued interest in the fund for the past 30 years. Second, under the trust deed of the fund, the Cabinet secretary for health has full powers to appoint new trustees and to task them to operationalise the fund.

Nothing has been done since that committee submitted its report and recommendations.

I am still amazed by the foresight displayed by the civil servants who established a healthcare sovereign wealth fund for training doctors and nurses way back in 1968. When did we lose the capacity to innovate and think big? Clearly, our civil service was run by people with cutting-edge knowledge. The capacity within the bureaucracy was equal to the very best in emerging markets.

The rain started beating us when successive ministers and PSs at Afya House completely forgot about the fund. They did not appoint trustees. As a matter of fact, this fund has not had trustees for the past 30 years. The last chair of the trustees of the fund was former vice-chancellor of the University of Nairobi, Prof Joseph Maina Mungai, who passed on in 2003.

But is it a miracle that corrupt elites have not been unable to steal this money for all those years? The answer is simple — the money is protected by the rules and regulations its founding fathers designed to govern the withdrawal of money from this fund.

It is humbling indeed to know that long before the Retirement Benefits Authority (RBA) came to town and introduced principles of managing funds such as separation of powers and responsibilities, the founding of the fund were smart enough to think ahead and to design ways of protecting the fund from being stolen by corrupt elites.

Long before the RBA came up with rules requiring the appointment of fund managers and custodians and the principle of oversight of funds by independent trustees, the founding fathers of the laws governing the fund designed transparent systems of running such funds.

That is how the fund became insulated from greedy elites. Part of the money was put in fixed deposit accounts to earn interest. Some more was invested in shares and bonds for long-term capital appreciation.

The rest — cash in current accounts for short-term liquidity — was held across three banks. Company secretaries — the entity Livingstone Registrars — played the role of fund managers. Mark you, the fund was started with an injection of a mere Sh1.5 million. Here is a bit of the history of this fund.

What was its main purpose? The money was to fund grants and book loans for students studying medicine in foreign universities. The last grant was disbursed in 1987. The last time the fund’s accounts were audited was 1982.

In that year, the trustees were the late Prof Mungai, the late Dr W.K. Koinange and Mr A. Githinji. After many years of inactivity, some of the money was surrendered to the Unclaimed Assets Authority. All Mr Kagwe needed to do was operationalise the fund by appointing new trustees. He has not.