Just how did NHIF spend Sh6bn in reserve funds?

Wednesday March 18 2020

National Health Insurance Fund (NHIF) officials announced earlier this week that they will adopt austerity measures to keep the insurer afloat, but insiders are wondering what happened to about Sh6 billion it held in reserve for turbulent times, such as these.

A reliable source, a member of the insurer’s senior management who met with the Nation, estimated that more than Sh5 billion may have been used on printing the AfyaCare cards used in the four counties where the Universal Health Care (UHC) project was piloted. But the management has denied these allegations.

The Health ministry is also said to have defied counsel not to create a parallel system to NHIF, as UHC was sold as a “health system strengthening initiative”.

According to the financial Act, a project of that magnitude, financially, needed policy backing and Cabinet approval, but neither took place.

The insurer already has systems to register and print member cards, but the ministry introduced AfyaCare cards that were part of the launch by President Uhuru Kenyatta on December 13, 2018, in Kisumu.

Speaking to the Nation, however, NHIF acting chief executive Nicodemus Odongo scoffed at the accusations and asked us to read the Auditor-General’s reports.


UHC activities were not in NHIF’s budget. In response to an email inquiry about the source of the money used to print the cards, the Health ministry said “this is information best sourced from NHIF”. Calls and short text messages to the ministry’s designated spokesperson went unanswered.

Interestingly, the four counties are yet to get the cards. At Nyeri Referral Hospital, clinicians did not get the cards on time and have to log into the M-Tiba system to see whether a patient is registered. In Kisumu, some of the money did not reach the hospitals that have been implementing the programme.

Mr Odongo said that there was a lot of misinformation on the insurer’s financial situation, and clarified that the Health Financing Reforms Expert Panel’s (Hefrep) report did not say the insurer was in the red.

“The report said that the contributions have increased three-fold but the benefit pay-outs have also increased five-fold over the same period, meaning if nothing is done to level that, it would affect the insurer.”

The Hefrep report revealed that out of Sh45 billion NHIF collected in 2018, Sh8.3 billion went to administration costs.

According to the report that Mr Odongo directed us to, NHIF has a surplus of Sh2 billion. But its 2018-2022 strategic plan shows that its should have a surplus of Sh7.7 billion.

On Monday, the NHIF board admitted that the insurer has been struggling and there is unnecessary loss of funds that needs to be nipped in the bud.

Apart from the runaway administration costs, other major expenses included advertising and publicity (24 per cent of expenses), travel and accommodation (10 per cent), medical expenses (10 per cent), and transport expenses (6 per cent).

The board announced plans to cut administrative costs by Sh1.1 billion, which seems like a drop in the ocean for the struggling insurer.