Kemsa defends Sh3.7 billion mosquito nets deal amid irregularities claim

Kenya Medical Supplies Authority (Kemsa) CEO Terry Ramadhani. [Elvis Ogina, Standard]

The Kenya Medical Supplies Authority (Kemsa) has rubbished Global Fund's findings that there were irregularities in the procurement of Sh3.7 billion mosquito nets by the agency.

Kemsa CEO Terry Ramadhani defended the alleged bungled procurement tender, as claimed in the Global Fund's audit, and insisted that the authority's technical evaluation report was factual.

Ms Ramadhani, who was flanked by Kemsa chairman Daniel Rono when they appeared in an interview on a local TV station on Wednesday, defended the Kemsa tender evaluation committee saying it comprises professionals, who did their job well above board.

The Global Fund accused Kemsa of engaging in irregularities during the procurement of the long-lasting insecticide mosquito nets valued at Sh3.7 billion.

The organisation's audit raised an issue with Kemsa's technical evaluation committee report, citing multiple procurement gaps, including lack of pagination, contention on request for a manufacturing certificate from a manufacturer, and lack of uniformity in identifying the winning and losing bids.

In the report where Kemsa had identified Partecea East Africa as the winning bidder, the Global Fund audit found that none of the bids was responsive.

Ramadhani said the two companies; Shobikaa Impex and Partec East Africa Ltd, were the most qualified suppliers.

The two had been pre-qualified for the Sh3.7 billion tender but were disqualified by the Global Fund, which is supposed to finance the process, on the grounds that they had failed to meet the documentation requirements.

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During the extensive interview on Wednesday, May 11, 2023, Ramadhani defended the authority's position stating no funds have been lost in the process.

This is contrary to previous reports indicating that whenever authority undertakes such services on behalf of strategic partners, they stand to earn fees on various processes. For example, for this particular tender, the authority was to earn two, three and five per cent, which translates to Sh74 million, Sh111 million and Sh185 million, respectively.

The two per cent is the money earned for the procurement process, while the three and five per cent is meant for warehouse and distribution fees.

During the interview, Rono said these were minor errors and defended Partecea East Africa saying it was the winning bidder since they had only minor errors compared to the rest.

"The Global Fund indicated to us that we will get the route of manufacturers because of timelines," said Mr Rono.

There were a total of 17 bidders, who applied for the mosquito nets tender. A total of 10 million mosquito nets were to be distributed.

If the authority was to undertake the process, they stood to get two per cent of this, three per cent of this and five per cent - translating to a total of Sh370 million, exclusive of the Sh3.7 billion, for the mosquito nets.

However, the Kemsa CEO who spoke on a local TV station, maintained that this was just a mere Sh3.7 billion out of the 30 billion tender processes they handle, hence not very significant value compared to the huge business that they handle, on behalf of other donors.

"The process as it stands was a normal process because it is important to contextualize. The mosquito nets are valued at Sh3 billion, and the business we do with the donor is Sh30 billion," said Ramadhani during the interview, adding; "We are saying these are the things we do on a regular basis."

"There was no outside pressure to ensure a particular company or companies get the tender. These are companies that have been working in that area," Ramadhani said.

Kemsa had been given from November last year, to undertake the process, but dilly-dallied initiating it, including attempts to change specifications which angered the donor. A case in point was on February 23, a day when the tender was to be closed. However, Kemsa proceeded to extend the contract to March 10, further delaying the process, without consulting Global Fund, further delaying the process.

The Global Fund wrote back to Kemsa on February 24, directing the authority not to temper with the specifications.

Although the CEO received a list of four names from the Ministry of Health (MoH), of people who should have sat on the evaluation committee, Ramadhani only picked two and added her own team from Kemsa to undertake the process. The process was done with the inclusion of a public health officer which is a requirement, of the procurement process.

Information reaching The Standard indicates that the acting procurement manager, Anthony Chege, was included in the technical evaluation committee as a secretary, which is against Standard Operating Procedures because the role of a manager is to review the document.

Through this action, Kemsa lost huge revenue amounting to Sh370 million, which could help reduce the suppliers' debt, amounting to Sh3.8 billion.

Procurement of the Sh10 million has now been moved to Wambo.org based in Geneva, causing Kenya to lose crucial foreign exchange currency, at the time the country is struggling economically, which has forced the government to increase taxation on basic commodities.

But in an interview with The Standard, Ramadhani maintained that nobody has been awarded the tender to supply the mosquito nets, or contracted to supply the mosquito nets.

Ramadhani said they had agreed the donor would procure the commodities that would then be distributed by Kemsa.

"Global Fund just gave us feedback the other day saying the timelines were key to having the commodities supplied," said the Kemsa boss.

Due to delays in payment of suppliers, there has been a stockout of critical essential medicines in the authority, a situation that is worrying Health CS Susan Nakhumicha.

In a previous interview, Nakhumicha said she was to re-look into the issue.

At the moment, counties are complaining about the low order fillet of Health Products and Technologies (HPTs) at the Kemsa warehouses. This is affecting the implementation of Universal Health Coverage across the country, among other programmes.

According to an insider at Global Fund, a senior officer in the Ministry of Health is directly linked to interference in the procurement process.

Ramadhani stated that the donor decided to buy the nets directly from manufacturers, to meet distribution timelines, and Kemsa agreed to have them distributed.

"Global Fund has not accused Kemsa of irregularities in the tendering process, simply because they are the ones who decided to have mosquito nets procured directly from manufacturers," said Ramadhani.

The nets are part of a malaria prevention initiative, with malaria being the second-highest killer disease affecting Kenyans, according to a 2023 Economic Survey report.

Malaria accounts for the highest caseload in Kenya, with 11.7 per cent of the population affected as of 2022, resulting in 3.5 million new clinical cases and 10,700 deaths per year.