How a Multi-Billion Health System is Bleeding SHA Billions While Kenyans Die

Nairobi, March 4 – A damning audit report has laid bare staggering corruption and systemic failures within the Social Health Authority’s (SHA) 104.8 billion shilling healthcare digitization system. Instead of streamlining services and improving healthcare access, the system has become a conduit for massive financial hemorrhage. Auditor General Dr. Nancy Gathungu’s findings expose blatant procurement violations, dubious contracts, and unchecked financial mismanagement—raising urgent questions about system control, accountability, transparency, and whether Kenyans will ever see the benefits of this colossal investment.

At the center of the scandal in the making is a consortium led by Safaricom PLC, in partnership with Apeiro Ltd and Konvergenz Network Solutions Ltd. The consortium secured the multi-billion contract with a commitment to invest 104.8 billion shillings over ten years to implement, maintain, and support the Integrated Healthcare Information Technology System (IHTS), which was rolled out in October last year. Marketed as a revolutionary step in digitizing Kenya’s healthcare sector—enhancing patient data management, claims processing, and facility administration—the system is now under scrutiny for facilitating massive financial irregularities instead of delivering meaningful reforms.

The audit’s findings reveal shocking violations of procurement laws, exposing a trail of irregularities that raise serious concerns about the deal’s long-term financial viability. Among the most glaring issues is the absence of a procurement plan and a medium-term budgetary expenditure framework, which is a direct violation of Section 53(7) of the Public Procurement and Asset Disposal Act of 2015. There was no documented strategy to justify the system’s necessity, feasibility, or financial sustainability, which also raises serious questions about the deal’s legitimacy.

Further, the contract was single-sourced, circumventing competitive bidding procedures meant to uphold transparency and ensure value for money. This blatant violation of Article 227(1) of the Kenyan Constitution directly contradicts the mandate for fair, equitable, and cost-effective procurement. Even more alarming, the agreement failed to define the scope of work. The exact number of health facilities where the technology would be installed was never specified, nor was there clear documentation on how healthcare workers would be trained, despite a 7-billion-shilling allocation for training.

“This process was contrary to Article 227(1) of the Constitution, which requires a fair, equitable, transparent, competitive and cost-effective way of acquiring goods and services,” Gathungu stated.

The lack of documentation means there was no evaluation to determine whether the chosen system was the best option or whether its cost was justified. Government critics are now demanding answers, arguing that these revelations highlight not just systemic failures but a blatant disregard for accountability and the misuse of public funds. “How can such a massive investment lack basic oversight and transparency?” asked one critic on his X space handle. “This is a betrayal of public trust, and those responsible must be held accountable.”

Dr. Gathungu’s report raises even deeper concerns about funding and payment arrangements. The financial proposal outlines a controversial funding model, where payments for the system would be drawn from 2.5% of Social Health Authority member contributions, 5% of claims from health facilities, and 1.5% from the track-and-trace solution. The Auditor General estimates this scheme would yield 111 billion Kenyan shillings over 10 years, with funds transferred daily to an escrow account—a financial arrangement that puts the burden squarely on the taxpayers.

Notably, this creates a long-term financial liability for the government, as the contract effectively locks Kenya into an expensive payment structure, irrespective of whether the system delivers the intended benefits. The funding structure also raises concerns about possible conflicts of interest, as it remains unclear who controls the escrow account and who benefits from these remittances.

“The ownership of the system, system components, and all intellectual property rights shall remain in the ownership of the consortium,” Gathungu noted in the report. This arrangement, she warned, significantly undermines the government’s authority and oversight, leaving it with little control over a system funded by public resources.

The Comptroller of Budget (COB), Dr. Margaret Nyakang’o, also weighed in on the matter, expressing concerns before the National Assembly’s Delegated Legislation Committee about how public funds are being handled outside the Consolidated Fund Services.

“There is a lot of money that does not pass through the COB. The Housing Fund, the Social Health Authority contributions, the Railway Development Fund, and the Petroleum Levy—all these funds are operated outside the consolidated fund and therefore not part of what I approve,” said Dr. Nyakang’o.

This revelation highlights the lack of transparency in managing public finances, with billions of shillings being collected and disbursed without proper oversight. This is particularly concerning given the widespread allegations of corruption and mismanagement within state institutions.

Beyond financial mismanagement, the Auditor General’s report exposes restrictive contract clauses that effectively monopolize the system. The contract explicitly prohibits the government or any other agency from developing a similar system, ensuring that the Ministry of Health remains entirely dependent on the current provider.

This restrictive clause shields the vendor from competition, meaning Kenya has no alternative but to continue paying exorbitant fees for system upgrades and maintenance. Such contractual terms are highly irregular in public procurement, as they prevent the government from seeking cost-effective alternatives in the future.

Employment Violations and Non-Compliance with Disability Staffing Quotas

Additionally, the audit uncovered blatant violations of employment regulations, including non-compliance with the one-third rule on basic salary deductions and failure to meet legal quotas for hiring persons with disabilities. Despite the Ministry of Health reporting 8.3 billion Kenyan shillings in employee compensation, an analysis of staff records revealed that out of 1,394 employees, only 32 were persons with disabilities—falling far below the legally required 5% threshold. This raises serious concerns about discriminatory hiring practices within the Ministry.

“Review of the payroll indicated that three hundred and eighty-six employees earned a net salary of less than a third of their basic salary, contrary to Section 19(3) of the Employment Act, 2007,” Gathungu revealed.

She further criticized the government’s failure to meet disability staffing requirements, stating, “Only 2.3% of the staff are people with disabilities, far below the 5% mandated by public service policies.”

Public Outrage as System Failures Lock Kenyans Out of Medical Care

The shocking revelations come just a day after President William Ruto finally broke his silence on the failures of his administration’s healthcare program. Speaking in response to growing public outrage over rising out-of-pocket healthcare costs, the president struck an assuring tone, promising reforms to address the growing crisis.

However, his remarks have done little to calm the frustration of ordinary Kenyans, who are already struggling to access medical care due to system failures. The audit report confirms widespread complaints that the digitization system has been plagued by frequent downtime, preventing hospitals from processing claims efficiently.

With many hospitals now requiring cash payments due to system malfunctions, thousands of Kenyans—particularly those in rural areas—are being locked out of essential medical services. This has exacerbated Kenya’s healthcare crisis, with many unable to afford treatment despite being contributors to the Social Health Authority.

With the spotlight now firmly on the Ministry of Health, pressure is growing to explain how a multi-billion-shilling system was procured in blatant violation of financial regulations—and whether Kenyans will ever see any real benefits from this massive investment.

Civil society groups and anti-corruption watchdogs are calling for a full forensic audit, demanding accountability for those behind the mismanagement of public funds.

Critics question how much longer citizens must suffer while billions vanish in opaque, irregular deals. The report lays bare the devastating cost of graft, leaving many wondering whether the government will act decisively or let the culprits walk free.