Kemsa to lose procurement function in planned changes

The national drug distributor may lose its procurement function should the Ministry of Health implement a raft of proposed reforms.

Health Cabinet Secretary (CS) Susan Nakhumicha told Nation yesterday that plans are underway to transfer the procurement mandate to other entities.

In efforts to improve how the entity operates, she said, the Kenya Medical Supplies Authority (Kemsa) will only be in charge of warehousing and distribution.

The CS said the agency has been on reforms for a very long time and should work on moving forward and giving Kenyans and counties the services they need.

“If Kemsa is unable to do procurement, then we will have to [delegate the role] to experts, leaving Kemsa with warehousing and distribution,” she said.

The official noted that Kemsa has the capacity for warehousing and distribution, which strengths the ministry will leverage on while freeing the agency from functions it is unable to handle.

“We promised affordability of commodities and healthcare and this is purely the responsibility of Kemsa. We are rethinking what strategies to use in terms of procurement to meet the basic needs of Kenyans,” she said.

Ms Nakhumicha revealed that the ministry has developed guidelines for collaboration between Kemsa and all health institutions — private, public and faith-based — to achieve economies of scale.

“In procurement, once you consolidate and the quantities are large, you buy less frequently and this will reduce the cost of health care. We are analysing the national requirements of all the commodities and procuring them at once at the lowest price possible,” she said

Last year, Kemsa was at the centre of a Sh7.8 billion procurement scandal involving Covid-19 pandemic supplies, where lost Sh1.5 billion in shady deals.

The Ethics and Anti-Commission cited irregular expenditure accruing from tenders awarded to politically connected individuals and businesses.

There was also a dead stock worth billions of shillings from a procurement scam that saw a few individuals pocket billions for supplying the agency with equipment and other items well above market rates. Kemsa is also accused of overstating the value of medicines by Sh640 million, with some types of drugs having been inflated 100 times, says an audit by Global Fund. Some of the drugs, which were bought with cash from Global Fund, expired amid a biting shortage in government hospitals.

In an attempt to clear the mess, the agency has been on reform mission for the last two years. The agency is now banking on technology to automate its procurement and payment processes.

Kemsa CEO Terry Ramadhani in an earlier interview said the agency has adopted the use of the Enterprise Resource Planning (ERP) system that ensures orders, budgets and supply chains are easily monitored.

Supply chain

As part of ongoing reforms at the government agency, she explained that the system links all other systems and departments together, creating end-to-end visibility and strengthening accountability and reporting at all levels of the supply chain.

“Before approving an LPO [Local Purchase Order], there must be a budget line and money approved so that we don’t end up in a situation where we commit our suppliers to bring in supplies that we don’t have money to pay for yet they have delivered,” she said.