The Kenya Medical Supplies Authority (KEMSA) reported a KSh 2.0 billion surplus for the financial year ending June 2025, reversing a KSh 779.1 million deficit recorded the previous year. The turnaround followed a 9% rise in revenue to KSh 9.49 billion, alongside a 20% drop in total expenses to KSh 7.43 billion.
The improvement was largely supported by direct government intervention. During the year, the authority received KSh 1.5 billion in recapitalisation funding from the National Treasury, alongside KSh 2.94 billion from the Ministry of Health earmarked for the procurement of health products and technologies.
Even with the stronger headline numbers, the financial results still reveal deeper operational pressures. The Auditor-General issued a qualified opinion, flagging several material concerns including inconsistencies in receivables, discrepancies in property, plant and equipment records, and the disclosure of KSh 7.61 billion worth of donor-owned inventory that the agency does not legally own or control. The audit also cited KSh 21.4 million in damaged third-party stock that had not been recognised as a liability.
In addition, the auditor noted that 41 audit issues raised in FY2022/23 and FY2023/24 remain unresolved, though management indicated plans to clear the outstanding matters by December 31, 2025.
Operational indicators also paint a mixed picture. The authority recorded a capital order fill rate of just 41% for essential medicines, significantly below the government’s 90% target, highlighting persistent supply chain challenges despite the improved financial outcome.
Key Financial and Operational Metrics
| Metric | FY2024/25 | FY2023/24 | YoY Change |
|---|---|---|---|
| Total Revenue | 9.493Bn | 8.693Bn | ▲ +9.2% |
| Total Expenses | 7.433Bn | 9.200Bn | ▼ -19.2% |
| Surplus / (Deficit) | 2.006Bn | (779.1Mn) | ▲ +357.5% |
| GoK Recapitalisation Received | 1.500Bn | — | N/A |
| MoH HPT Procurement Funds | 2.947Bn | 1.188Bn | ▲ +148.1% |
| HPT Distributed (Value) | 24.698Bn | 25.738Bn | ▼ -4.0% |
| Receivables (Exchange) | 6.284Bn | 6.749Bn | ▼ -6.9% |
| Average Collection Period | 487 Days | — | N/A |
| Trade and Other Payables | 5.708Bn | 6.907Bn | ▼ -17.4% |
| Capital Order Fill Rate | 41% | 52% | ▼ -11pp |
| Programme Order Fill Rate | 79% | 72% | ▲ +7pp |
| Order Turnaround (Hospitals) | 19.5 Days | 19.5 Days | — |
| Order Turnaround (PHFs) | 24.2 Days | 20.1 Days | ▼ +4.1 Days |
| Expired Commodity Losses | 547.1Mn | 371.4Mn | ▼ +47.3% |
| Cash and Cash Equivalents | 3.079Bn | 1.730Bn | ▲ +78.0% |
Cash Position and Receivables
KEMSA’s cash and cash equivalents increased by 78% to KSh 3.08 billion at the end of the financial year, up from KSh 1.73 billion previously.
The authority’s deposits were spread across several lenders. National Bank of Kenya (NBK) held the largest share at KSh 1.057 billion, followed by Equity Bank with KSh 951.6 million and Co-operative Bank with KSh 774.4 million. Sidian Bank appeared in the authority’s accounts for the first time, holding KSh 341 million, equivalent to roughly 11% of total balances.
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Receivables from exchange transactions stood at KSh 6.28 billion, with county governments accounting for KSh 2.7 billion of the total. However, confirmations received from 43 counties recognised only KSh 1.15 billion, leaving an unexplained discrepancy of KSh 1.54 billion.
A further KSh 2.99 billion had been outstanding for more than one year, with no payment plans agreed and no provisions made for bad debts. As a result, the authority’s average collection period stretched to 487 days.
Meanwhile, KEMSA owed suppliers KSh 5.71 billion, including KSh 1.73 billion that had remained unpaid for more than 90 days without any approved repayment arrangement.
Supply Chain Gaps Persist
During the year, the authority distributed health commodities worth KSh 24.7 billion to more than 11,500 public health facilities nationwide.
Despite this scale of distribution, key supply chain indicators fell short of targets. The capital order fill rate for essential medicines declined to 41%, well below the 90% benchmark, while the programme order fill rate for donor-supported commodities such as HIV, TB, malaria, and family planning supplies stood at 79%.
Delivery times also lagged. Orders for hospitals took 19.5 days on average, nearly three times longer than the seven-day target, while deliveries to primary health facilities averaged 24.2 days, exceeding the 10-day benchmark.
The audit further found that six of KEMSA’s seven regional warehouses function only as storage sites without distribution capacity, forcing the authority to route most deliveries through its central Nairobi warehouse.
Expired medical commodities resulted in losses of KSh 547.1 million, an increase from KSh 371.4 million in the previous year.
Governance and Infrastructure Challenges
Several governance and infrastructure concerns were also highlighted.
A KSh 499.7 million SAP-based ERP system contracted in November 2023 and scheduled for completion by May 2024 was only 70% complete at the time of the audit.
Separately, a KSh 3.08 billion warehouse project awarded in 2018, with an initial completion deadline of September 2021, remains unfinished after a subcontractor abandoned mechanical works for more than seven years.
KEMSA’s strategic plan expired in December 2024, and no replacement had been approved, putting the authority in breach of a government directive requiring new strategic plans by June 30, 2024.
The audit also revealed that no governance audit was conducted during the year, while the authority’s credit policy has not been reviewed for a decade, raising further questions about internal oversight and financial controls.
