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Terry Ramadhani on tough reforms at scandal-hit Kemsa – Business Daily

Not many people would take up a job as the CEO of Kenya Medical Supplies Authority (Kemsa) following the multi-billion shilling Covid-19 scandal that rocked the State agency at the height of the pandemic and forced out a number of top executives.
But in May 2022, Terry Ramadhani switched roles from a board member to the agency’s CEO amid calls for reforms. The Business Daily spoke to her about the big task of reforming Kemsa. Excerpts:
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How much do you owe suppliers and which options do you have in settling these debts?
In the last financial year, Kemsa has made commendable progress in reducing debt obligations to its suppliers. As a commercial trading agency, the receivables and payables amount keep on going up and down. The ideal situation is to balance the receivables and payable amounts.
As of June 30, 2022, our total liabilities stood at Sh3.2 billion, including Covid-19 and accrued expenditures. On the receivables, we have total receipts of Sh5.1 billion within the same period, and we continue to service the supplier debts every month.
We are optimistic that the authority will sufficiently settle all audited and approved-for-payment pending bills in the coming months.
Operations-wise, in the last financial year, Kemsa dispatched more than Sh27 billion worth of essential medicines and medical supplies, and National Health Strategic Programmes (NHSP) supplies countrywide.
How much are you owed for the supplies of drugs and are there any new collection measures you have initiated in the recent few months to enhance a speedy collection?
Many of the county governments have tremendously improved their payment cycles to Kemsa. In recent months we have collected more than Sh2.7 billion overdue pending bills owed by county governments through a stakeholder engagement-focused credit management strategy.
Under the new Kemsa credit management strategy, the authority has set a target to collect at least Sh500 million monthly in outstanding dues from county governments to boost our service delivery capacity.
The new credit management strategy follows a recent restructuring of the authority’s sales and credit management functions to enhance efficiency. The enhancement of the credit management functions is also geared at ensuring the financial sustainability of the Kemsa revolving fund.
What plans do you have in place to foster a better working relationship with development partners?
Development partners, among other stakeholders, have all been very vocal on the need to address systemic challenges in the national supply chain, specifically by establishing end-to-end visibility of health products and strengthening accountability and reporting at all levels of the supply chain.
Therefore, we have formulated a strategic plan to achieve such visibility through specific reforms and adopt a new organisational structure. Strengthening stakeholder relations is one of the key result areas outlined in the new strategy.
The strategy focuses on building momentum for organisational productivity; to guarantee efficient last-mile delivery of health commodities countrywide. The strategy will be underpinned by three pillars focusing on driving operational excellence, enhancing customer experience and repositioning the organisation.
Before the end of the year, we are sparing no effort to win back the trust of our development partners such as USAID and ensure that we fully operationalise the new Kemsa National Supply Chain Centre.
Which measures have you initiated to plug the current budget shortfall at Kemsa?
Where necessary, we have drawn up bankable plans for the consideration of donor agencies, mainly focusing on establishing sound supply chain management systems that enhance integrity through end-to-end visibility of the supply chain.
All other capital expenditure projects have been rationalised. The authority will only undertake funded projects under the strategic plan in the short to medium term.
Apart from staff restructuring, what are the other components of the ongoing turnaround plans at Kemsa?
The new organisational structure with a staff establishment ceiling of 378 and featuring eight operating directorates is designed to improve the authority’s performance and boost operating efficiencies, as it features redefined roles and functions aligned with its statutory mandate.
The redefinition of functions has been undertaken to ensure operational agility due to the merger of some departments and the functional repurposing of roles to align them to its strategic plan.
Besides the organisational establishment restructuring, the three-pronged strategy focuses on driving operational excellence, enhancing customer experience and repositioning the organisation to meet its statutory mandate.
Several other pillars to re-engineer our operating parameters have also been successfully undertaken. For example, Kemsa completed the annual stock take process well ahead of schedule and adopted some new operational policies to enhance integrity.
The authority has also integrated several information technology systems and operating procedures, including the recent adoption of the Kemsa procurement strategy, which has significantly raised its capacity to establish end-to-end visibility.
Integrating all logistics management information systems into one makes it easy for our health facilities to place and track their Kemsa orders efficiently.
We have also developed an electronic proof of delivery (ePOD) to track and ensure that medicines and health products are received and verified at health facilities.
How did Kemsa settle on the 378 vacant positions that are set to be advertised afresh in its new organisational structure?
The approved staff establishment framework guides the new organisational structure by the State Corporations Advisory Council (SCAC). Failure to adhere to the approved staff establishment level has been a nagging audit query necessitating correction under the reform agenda for many past financial years.
Each of the eight directorates will structure their staff complement per approved staff establishment provisions. All the positions mapped in the new organisation structure will be competitively filled and some of the roles have already been publicly advertised.
What will happen if a ruling that favours workers who petitioned the ongoing staff restructuring exercise comes out in the middle of this exercise?
Kemsa is a public, commercial agency whose operations are guided by the rule of law. The High Court last May pronounced itself and allowed the restructuring to proceed. Without an alternative legal pronouncement, the restructuring is moving to ensure that Kemsa is transformed to meet its mandate.
The reforms at Kemsa are not a witch-hunt exercise, many stakeholders have loudly expressed concern that Kemsa has not been fulfilling its mandate, yet it handles a life and death mission.
You cannot postpone medical needs, and failure to procure and deliver quality health commodities’ due to operating inefficiencies can lead to loss of life. If Kemsa worked within the envisaged ethical and integrity boundaries, including the approved staff establishment level, the reforms would not be needed.
How much in total is Kemsa setting aside for the redundancy package and when will it be paid out?
As previously confirmed, the government has provided sufficient resources to facilitate the reform agenda at Kemsa. The resources to be applied in this exercise will depend on the number of current staff members who will not be absorbed in the new structure.
It is impossible to confirm this number until the recruitment exercise is concluded. Impacted staff will receive a package that includes 15 days of basic pay as severance dues for each year of service, any leave accrued but not obtained, any outstanding dues for days worked, one month’s notice pay and a two months’ ex-gratia payment.
As the organisational restructuring progresses, there will be continued pay until the current jobs fall off.
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