Counties cut Kemsa debt by 1.2 billion shillings as nine pay
Outstanding bills owed to the Kenya Medical Supplies Authority (Kemsa) by county governments for supplies have risen from 3.9 billion shillings to 2.7 billion shillings.
The 1.2 billion shillings drop comes after nine counties – Kilifi, Nakuru, Laikipia, Nyeri, Meru, West Pokot, Turkana, Kisii and Makueni – received a healthy bill of health after settling their unpaid bills.
Kemsa chief executive Terry Ramadhani said the counties’ debt has been outstanding since November 2021.
ALSO READ: Kemsa Appoints Former Board Member As CEO
But since then, the state agency has accelerated the collection of unpaid bills through a new collection strategy that has seen the restructuring and separation of sales and credit management functions, which were previously a single unit.
Under the new credit management strategy, the authority has set itself the goal of collecting at least 500 million shillings in defaults from each defaulting county.
“We have undertaken structural changes that enable a more efficient credit management process with our stakeholders at the heart. The recently adopted credit management strategy is bearing fruit,” said Ms. Ramadhani.
“The previous debt of 3.9 billion shillings has now fallen to 2.7 billion shillings as nine counties have settled their overdue accounts with Kemsa,” she added.
Strengthening credit management functions into an independent department, Kemsa’s new boss said, is also aimed at ensuring the financial sustainability of the agency’s working capital.
ALSO READ: Kemsa has an overdose of employees, says auditor general
Prompt settlement of pending bills at Kemsa, she pointed out, will in turn help the government agency expedite pending payments to its suppliers and strengthen the universal health coverage program nationwide.
The authority’s suppliers, which include local manufacturers, owe up to 2 billion shillings in overdue accounts.
At the same time, Ms Ramadhani said she had also stepped up deliveries to counties with an increase in collections from credit sales.
By mid-April 2022, Kemsa had successfully shipped 9.73 billion shillings of Essential Medicines and Medical Supplies (EMMS) and National Health Strategic Programs (NHSP) supplies to 47 counties.
Kemsa has also automated several of its functions and integrated the use of IT systems, which has enabled the agency to reduce order processing time from 46 days to the current 16 days.
ALSO READ: Kemsa faces a shortfall of 600 million shillings following the withdrawal of funding from the American agency
“Over 32,000 EMMS and NSPHP supplies have been sent to over 7,600 health facilities nationwide,” she said.