Kenya: Kemsa Stuck With Stock No One Needs

(file photo).
13 September 2020

Some companies provided goods to the Kenya Medical Supplies Authority (Kemsa) even before the agency could tender for them, even as top officials warned against buying equipment the counties did not need.

Consequently, the agency has supplies worth Sh2.3 billion in its stores, for which it had not budgeted .

Internal documents show that some officers questioned the wisdom of the procurement spree using money not in the 2020/21 budget.

On July 14, suspended chief executive Jonah Manjari wrote to Commercial Services director Eliud Mureithi, who has since also been suspended, directing him to raise requisitions and procurement plans for goods that had already been delivered to the Kemsa stores.

On July 17, Mr Mureithi wrote to Procurement director Charles Juma on the same issue, seeking to know under which budgetary provision he was expected to raise requisitions and procurement plans for.

But even before the goods were supplied, Mr Mureithi had queried the propensity to stock goods while Kemsa clients -- counties and other ministries --did not even require them.

In a March 31, 2020 e-mail to Mr Juma, a copy of which the Nation has seen, Mr Mureithi wrote about alcohol hand rub: "I refer to the many enquiries being made on the above product. The current suppliers are meeting our demand. I would advise against having multiple brands of the product. The suppliers whose products have been passed by the QA (Quality and Assurance) department should be kept as fall-back should the current three suppliers fail to meet demand."

On April 24, 2020, Mr Mureithi also questioned the high prices Kemsa was levying on its clients.

"Kindly note that the prices of Covid-19 products are improving and our customers are lamenting about the high prices. Due to increased availability, including local manufacturing of some of the products including surgical masks, we must review buying prices for the sake of good order," he noted.

The suppliers

Six companies delivered goods at a time when there was no procurement plan or budget.

Abyssinia Group delivered 30,000 pieces of N95 face masks with respirator, each going for Sh900, earning Sh27 million.

Medilife Biologicals Limited supplied 200,000 K95 face masks, each going for Sh700. Now Kemsa owes them Sh140 million. They also supplied 20,000 surgical masks for Sh 90 million.

Light up Africa Limited supplied 50,000 instant hand sanitisers packaged in 500ml containers each costing Sh500 and are now owed Sh25 million.

Shop 'N Buy Limited supplied about 100,000 PPE for Sh90 million, with each going for sh900. They further supplied 100,000 KN95 face masks for Sh70 million with each going for Sh700.

A firm that since obtained gag orders against the Nation is owed Sh765 million for supplying 85,000 PPE, each going for Sh9,000.

It also delivered 50,000 KN95 face masks at a price of Sh700 each, for which it is claiming Sh35 million. The company is owed a further Sh165 million for supplying 55 SV 300 patient ventilators at Sh3 million each.

Miguela Holdings supplied 20,000 PPE kits at Sh9,000 and is owed Sh180 million.

It would later emerge that Kemsa was issuing commitment letters to the new Covid millionaires whom the available cash could not pay.

Big blunders

This was one of the biggest blunders that threw the country into the coronavirus millionaires scandal.

And it was not the only one. When Kemsa exhausted its budget and the ministry was dilly-dallying, refusing to allow the agency to use the billions of shillings under its watch for the universal health programme, Dr Manjari took matters in his own hands and wrote to the National Treasury, seeking additional Sh5 billion.

When Treasury brought the request to the attention of the Ministry of Health Dr Manjari, Mr Juma and Mr Mureithi were suspended shortly thereafter.

When he appeared before the National Assembly Health Committee, suspended Kemsa director of procurement Charles Juma said the agency deployed retrospective procurement.

"There was a threat to public health. We had to reach out to suppliers who had the commodities in the market and ensure we get commodities in the shortest time and then formalise the process," Juma told the committee.

The Public Procurement and Asset Disposal Act, 2015 in section 69(2) states "No procurement approval shall be made to operate retrospectively to any date earlier than the date on which it is made except on procurements in response to an urgent need."

Section 69 (3) further states "In approving procurements relating to an urgent need, the accounting officer shall be furnished with adequate evidence to verify the emergency."

Investigators will now ascertain if Kemsa flouted the law when it committed to pay public money without having had budgetary or procurement plans.

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