SHA Audits and Financial Transparency

Introduction

The Social Health Authority (SHA), established under the Social Health Insurance Act of 2023 and operational since October 1, 2024, marks a pivotal reform in Kenya’s healthcare financing, replacing the scandal-plagued National Health Insurance Fund (NHIF) to achieve Universal Health Coverage (UHC) by 2030. Amid NHIF’s legacy of KSh 30.9 billion in debts and widespread fraud, SHA promises enhanced transparency through digital systems, biometric verification, and direct facility payments, aiming to protect public funds while serving 53 million Kenyans. By September 2025, SHA has registered 26.7 million members, disbursed KSh 8 billion to frontline services, and covered 4.5 million treatments without out-of-pocket costs. However, early audits reveal persistent challenges: a KSh 104.8 billion investment in a digital system neither owned nor controlled by the state, irregular procurement, and a KSh 4 billion monthly funding deficit (claims KSh 9.7 billion vs. collections KSh 6 billion). This article examines SHA’s audit mechanisms and financial transparency, drawing on Auditor General reports, government disclosures, civil society critiques, and public discourse to assess progress, risks, and reforms in Kenya’s medical context.

Background: From NHIF Scandals to SHA Reforms

Kenya’s health financing has long been undermined by opacity and corruption. NHIF, covering only 17% of the population pre-2024, faced Auditor General reports flagging ghost claims, overbilling, and unremitted deductions totaling billions. The 2023/24 Auditor General’s Report on National Government Ministries highlighted NHIF’s failure to reconcile KSh 12.5 billion in contributions, eroding public trust and contributing to 40% out-of-pocket spending (KDHS 2022). SHA addresses this through three pooled funds—Primary Health Care Fund (PHCF, tax-funded for levels 1–4), Social Health Insurance Fund (SHIF, contribution-funded for levels 4–6), and Emergency, Chronic, and Critical Illness Fund (ECCIF, government-subsidized for high-cost care)—with mandatory registration and tiered premiums (KSh 300/month for indigent to 2.75% of salary).

SHA’s transparency pillars include biometric verification (rejecting KSh 10.7 billion in false claims), e-GPS integration for drug tracking, and direct bi-weekly payments to 8,813 contracted facilities (56% of 17,755 nationwide). Yet, as Health CS Aden Duale emphasized in July 2025, upholding “financial discipline” and “robust audit mechanisms” remains critical to prevent fraud. The Benefits Package and Tariffs Advisory Panel (BPTAP), launched January 2025, oversees biennial reviews, while internal audits align with International Public Sector Accounting Standards (IPSAS).

Audit Mechanisms Under SHA

SHA’s audits blend internal oversight with external scrutiny, mandated by the Public Finance Management Act (2012) and Social Health Insurance Act (2023). The Office of the Auditor General (OAG) conducts annual external audits, while SHA’s internal audit unit—bolstered by September 2025 job postings for senior auditors—focuses on compliance and risk mitigation.

Internal Audits

• Structure: Led by a Chief Internal Auditor (requiring CPA Kenya Part III or CIA Part III), the unit plans audits, reviews processes for IPSAS compliance, and follows up on recommendations. Responsibilities include fraud detection, financial reporting, and risk advisory, with a cap of 5% on administrative costs to curb overheads.
• Scope: Covers beneficiary registration, provider claims, and fund pooling. In 2025, internal audits identified irregularities in 45 facilities, leading to suspensions for non-compliance.
• Digital Tools: Biometrics and Practice 360 app enable real-time audits, flagging anomalies like duplicate claims.

External Audits

• OAG Oversight: The 2023/24 OAG Report on National Government (released February 2025) scrutinized SHA’s inception, flagging unbudgeted expenditures and procurement breaches. Annual audits evaluate financial statements, with public summaries ensuring accountability.
• Frequency and Reporting: External audits occur yearly, with findings tabled in Parliament. The 2025 summary report emphasized SHA’s role in monitoring public resources for developmental impact.

Data from OAG and SHA guidelines (2025).

Key Audit Findings and Financial Irregularities

The OAG’s March 2025 report exposed significant red flags in SHA’s digital backbone, a KSh 104.8 billion healthcare IT system procured via single-sourcing—a breach of Article 227 of the Constitution mandating competitive, transparent processes. Key issues:

• Ownership and Control: Despite public funding, the state neither owns nor controls the system, with an undisclosed escrow account for revenues (projected KSh 111 billion over 10 years from contributions and claims). Contract clauses prohibit government development of competing systems, risking vendor lock-in.
• Procurement Breaches: Uncompetitive tendering violated Public Procurement and Asset Disposal Act (PPADA), with no financial viability assessment pre-launch. KELIN Kenya decried this as “corruption in the health sector is murder,” urging suspension of 2.5% member deductions and 5% claim fees until transparency improves.
• Fraud Risks: Inherited NHIF debts and ghost claims persist; SHA rejected KSh 10.7 billion in false claims via biometrics, but X posts highlight ongoing issues, like KSh 41 million for “10,860 births” by one patient. In September 2025, SHA launched an anti-fraud initiative with the Kenya Healthcare Federation (KHF) and private hospitals for unified, transparent claims.
• Funding Gaps: Only 900,000 of 16.7 million informal workers contribute (5.4% uptake), creating deficits that audits link to delayed reimbursements and service denials.

President Ruto dismissed the OAG report in March 2025, insisting SHA operates on a “fee-for-service” model to pay only for rendered services, not “free money” as under NHIF. Civil society, including KELIN, demands accountability, including public participation in reforms.

Measures for Financial Transparency

SHA embeds transparency in operations:

• Digital Oversight: e-GPS tracks drugs and claims, with Practice 360 app enabling public access to eligibility and payments. Biometrics ensure “money follows the patient,” reducing middlemen.
• Reporting Standards: Adheres to IPSAS for financial statements; quarterly internal reports to the Board, with public dashboards on sha.go.ke for registrations and disbursements.
• Stakeholder Engagement: July 2025 meeting with SHA Board emphasized 5% admin cap and fraud prevention. Partnerships with KHF combat fraud via unified protocols.
• Subsidies and Equity: 3.3 million means-tested for subsidies, with indigent coverage (1.5 million) audited for targeting accuracy.

GeoPoll’s February 2025 survey (n=961) shows 95% awareness but only 13% trust in transparency, with 22% viewing SHA as “free” rather than contributory.

Public Perceptions and X Discourse

Public sentiment on X (formerly Twitter) is polarized, with 70% negative posts citing audits as evidence of “looting.” Users like @omar_dakane decry SHA’s “ICU” state, blaming debt and fraud for service suspensions, while @mjmathu highlights the “KSh 104B black hole” and calls for shutdowns. Senator Omtatah echoed demands for accountability. Conversely, pro-government accounts (#RutoDeliversSHA) praise digital transparency and biometric fraud reduction, with @Shaccari254 noting SHA’s modernization of hospital systems. Posts from @Eastleighvoice report SHA-KHF partnerships to boost coverage and tackle fraud, reflecting cautious optimism amid 26.7 million registrations.

Challenges and Reforms

Challenges include procurement opacity, vendor dependencies, and low informal uptake, risking UHC sustainability. Reforms underway:

• Anti-Fraud Initiative: September 2025 launch with KHF for transparent claims.
• KRA Integration: Auto-deductions to boost collections to KSh 54 billion annually.
• Audit Enhancements: SHA’s 507 vacancies (deadline October 2, 2025) target auditors for stronger internal controls.
• Public Participation: KELIN’s call for open forums to shape policies.

Recommendations from OAG and ICPAK: Full escrow disclosure, competitive retendering, and ESG-aligned reporting for long-term transparency.

Conclusion

SHA’s audits and transparency measures—biometrics, direct payments, and OAG oversight—signal a shift from NHIF’s opacity, enabling 4.5 million zero-cost treatments amid KSh 8 billion disbursements. Yet, the KSh 104.8 billion system scandal and procurement breaches underscore risks, with X discourse amplifying calls for accountability. As CS Duale rallied in July 2025, transparency is SHA’s “pillar” for public trust. With reforms like anti-fraud initiatives and audit hiring, SHA can mitigate deficits and fraud, ensuring UHC’s promise of equitable care. For Kenya’s health future, robust audits are not optional—they are essential to turning public funds into lives saved, demanding unwavering commitment to integrity by 2030.

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