SHA System is Privately Owned - Auditor General Says Owners Are Making Billions from Contributions & Claims

In Summary:

• Kenya’s Ksh104.8bn SHA project is under scrutiny after Auditor General Nancy Gathungu revealed the government doesn’t own or control the system – all Intellectual Property rights remain with a private company. 
• Kenya’s government plans to remove the Auditor General as head of the National Audit Office, sparking concerns over public financial oversight. 
• USAID contracts and grants worth Ksh108.34bn (approx. $839.47m) in Kenya have been terminated under President Trump’s "America First" agenda.
• Government agency imports in Kenya reached a record Ksh110.9bn in the 12 months to December, up from Ksh62.07bn last year. 
• Unit trusts in Kenya boosted their assets under management by 23%, rising from Ksh316.4bn to Ksh389.2bn in Q4 2024. Growth was fueled by new fund entries, stronger marketing, and increased investor interest in money market funds, even as yields fell.
• The Kenya Revenue Authority has waived Ksh140bn in interest, penalties, and fines under a tax amnesty program aimed at clearing past tax issues. Debts up to Dec 31, 2023, can be settled by June 30, 2025.
• An Auditor General report reveals counties in Kenya have incurred Ksh21bn in legal fees by outsourcing cases to private law firms—even when in-house legal teams are available. In Nairobi alone, four advocates are owed Ksh6bn, raising concerns over wasteful spending.
• Controller of Budget Margaret Nyakang’o is calling for a sinking fund to help manage Kenya’s rising debt, which hit Ksh10.93 trillion in December 2024—a 3% increase since June 2024. The proposed fund aims to ease loan repayments and reduce reliance on new debt, as domestic borrowing now makes up 54% of total debt.
   

According to Citizen TV, Kenya’s ambitious Ksh104.8 billion Social Health Authority (SHA) project is under intense scrutiny after Auditor General Nancy Gathungu revealed that, despite massive public investment, the government neither owns nor controls the system—with all intellectual property rights owned by a private company. The OAG flagged the project’s procurement process for bypassing competitive bidding, in clear violation of constitutional and statutory requirements. The audit report notes that the contract with the owners of the SHA system is against public interest. For every hundred shillings Kenyans contribute to SHA, Ksh2 (2%) goes to the owners of the system. In addition for every Ksh100 claimed by a hospital, Ksh5 also goes to the private entity. The private company further charges 1.5% for tracking services. The audit report notes that the high fees result in diversion of billions that ought to be used in paying medical bills. The private company, reported to be a consortium of several companies, is estimated to get in Ksh111 billion in revenue over the next ten years through member contributions, health facility claims, and track-and-trace charges. The contract appears to favour the owners, with contract clauses preventing the government from developing competing systems. Any disputes on the contract are to be resolved at the London Court of International Arbitration. 

In a report by Nation, the Kenyan government is planning to remove the Auditor General as head of the National Audit Office, a move that has sparked widespread concern over the independence and integrity of public financial oversight. A bill sponsored by Kikuyu MP Kimani Ichung’wa proposes to create the office of the Audit Advisory Board which will be the accounting office for the national government. The office will include the Auditor General and members of staff in the Office of the Auditor General (OAG). It will also include representatives of the Attorney General, a nominee of the Institute of Certified Public Accountants of Kenya (ICPAK), and two representatives from the two houses of Parliament - the National Assembly and the Senate. The proposed law further seeks to amend the current requirement for an Auditor General to be a Kenyan. Government officials claim the change is part of broader reforms aimed at improving efficiency and accountability in public financial management, while critics argue it could pave the way for political interference and undermine checks and balances. 

Unit trusts in Kenya defied declining interest rates to boost their assets under management by 23%, rising from Ksh316.4 billion in September to Ksh389.2 billion in the three months to December 2024, according to the Capital Markets Authority (CMA). According to the BusinessDaily, this growth, driven by the entry of new funds, intensified marketing efforts, and increased investor interest in money market funds, comes despite lower yields on government securities and fixed deposits following successive CBK rate cuts. With 54 approved collective investment schemes offering 232 funds—of which 37 are active—the number of investors grew from 1.2 million in June to nearly 1.5 million by year-end. Notably, the CIC Unit Trust Scheme remains the largest with an AUM of Ksh82.4 billion, while the Stanbic Unit Trust Scheme recorded the fastest growth at 621%, underscoring the sustained appeal of money market funds, which now hold 63% of the market share.

The Kenya Revenue Authority (KRA) has waived Ksh140 billion in interest, penalties, and fines under a tax amnesty programme reintroduced in the Tax Procedures (Amendment) Act, 2024, aimed at helping taxpayers resolve past tax issues. According to the People Daily, the relief applies to debts accrued up to December 31, 2023, provided that the underlying principal taxes are settled via the iTax system with a structured payment plan by June 30, 2025, while debts incurred from January 1, 2024, remain unaffected. Since its launch on December 27, 2024, the programme has already attracted Ksh4 billion in principal tax payments, contributing to KRA’s revenue target of Ksh2.7 trillion for the fiscal year ending June 2025, as the authority seeks to alleviate fiscal pressure and reduce tax disputes amid challenging economic conditions.

In a report by the Business Daily, USAID contracts and grants in Kenya have been terminated, totaling Ksh108.34 billion (approximately $839.47 million), as part of a purge under President Trump’s "America First" agenda. The cancellations—affecting deals with DAI Global, International Development Group Advisory Services, the Boston Consulting Group, Research Triangle Institute, and the Education Development Centre, among others—were triggered by a 90-day programme-by-programme review ordered on January 20, 2025, by the US Department of Government Efficiency. These drastic cuts have disrupted numerous aid projects, led to job losses, and sparked potential lawsuits, leaving thousands of Kenyan beneficiaries facing uncertainty as critical development initiatives are abruptly halted.

In a report by the People Daily Controller of Budget (CoB) Margaret Nyakang’o is urging the establishment of a sinking fund to help cushion Kenya from rising debt risks, as the country's total debt climbed to Ksh10.93 trillion by December 31, 2024—a 3% increase from June. The proposed fund would set aside systematic savings for loan repayments, reduce reliance on new debt for refinancing, and strengthen fiscal discipline amid mounting domestic borrowing, which now accounts for 54% of the total debt. Although external debt has slightly fallen due to a stronger shilling, high domestic interest rates continue to strain financing for development projects, underscoring the urgent need to reassess debt sustainability and prevent a severe debt trap.

Government agency imports in Kenya reached a record high of Ksh110.9 billion in the 12 months to last December, up from Ksh62.07 billion the previous year, according to CBK data. According to the Business Daily, the surge, driven partly by a weakened shilling—trading as high as Ksh157.20 per dollar at the start of 2024—and a sustained demand for foreign goods, has come despite the Buy Kenya-Build Kenya initiative. Typical imports include furniture, stationery, machinery, motor vehicles, textiles, and arms, with October 2024 recording a single-month high of Ksh24.8 billion. Under President William Ruto’s administration, state imports have significantly outpaced those of previous regimes, while overall government and commercial imports rose from Ksh2.59 trillion in 2023 to a record Ksh2.7 trillion last year.

A recent Auditor General report reveals that counties in Kenya have incurred exorbitant, and often avoidable, legal expenses by outsourcing cases to private law firms despite having in-house legal teams. For instance, in Nairobi alone, four advocates are owed a combined Ksh6 billion—29% of the total pending legal fees of Ksh21 billion. The report highlights irregular and unsupported legal expenditures across several counties, including Nandi, Homa Bay, Kisumu, Kilifi, and Mombasa, where payments were made without proper documentation or approval. These findings raise serious concerns over wasteful spending, poor contract management, and a lack of accountability in the handling of county legal affairs as reported in the People Daily.