David Ndii, the Chairperson of President William Ruto’s Council of Economic Advisors (CEA), has clarified that the government does not own the Social Health Authority (SHA) system.
In a statement on Tuesday, March 3, Ndii explained that the platform is fully outsourced, with no government expenditure made upfront for its development.
Ndii further elaborated that the sh104 billion cost currently being debated is not a direct government expenditure but rather a user fee spread over a 10-year contract period.
He emphasized that after the 10 years, the management of the system will be transferred to the Social Health Authority.
“There is no payment made in advance. The government is only charged when we use it, similar to M-Pesa,” Ndii said.
He also provided further details on the financial breakdown of the system, revealing that the SHA Software as a Service (SaaS) will cost sh2.3 billion over the 10-year period, amounting to sh230 million annually.
In addition, the service includes a Hospital Management Information System (HMIS) for more than 7,000 public health facilities, data transmission services from Safaricom, and necessary infrastructure to support the platform.
Ndii noted that Safaricom is one of the companies from which the government has outsourced the system.
For perspective, he compared it to the sh77 billion paid to Safaricom for M-Pesa fees last year.
The new platform, according to Ndii, will cost around sh10 billion annually equating to approximately Ksh50 per hospital visit.
He explained that each hospital visit typically involves at least five transactions, such as patient and provider authentication, data retrieval, and prescription processing, translating to about Ksh10 per transaction.
Ndii’s comments come amid growing concerns following a report from Auditor General Nancy Gathungu, who revealed that the state neither owns nor controls the system despite a significant public investment of sh104.8 billion.
Gathungu pointed out that the ownership of the system and all its components, including intellectual property rights, remains with the consortium that developed it.
Additionally, the procurement process for the system has raised eyebrows, as it did not follow competitive bidding procedures.
Instead, the contractor was sourced through a Specially Permitted Procurement Procedure, which Gathungu noted violated Article 227(1) of the Constitution, which mandates a fair, transparent, and competitive acquisition process.
Gathungu’s report also highlighted that the project was excluded from the procurement plan and the medium-term budgetary expenditure framework, breaching Section 53(7) of the Public Procurement and Asset Disposal Act of 2015.
Further concerns were raised about the lack of a supporting baseline survey, which questions the model’s long-term viability and potential impacts on citizens’ healthcare costs.
Gathungu pointed out that the projected revenues include a 5% deduction from claims made by health facilities, effectively increasing healthcare costs for citizens, with an additional 5% service charge for every healthcare service accessed.
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