Treasury waives Ksh.45.8M taxes on ARV drugs stuck at the port of Mombasa

The National Treasury has waived taxes amounting to Ksh.45.8 million to facilitate the clearance of ARV drugs being held at the port of Mombasa.

Treasury has also consigned the drugs to the American embassy as a stop gap measure in order to save the situation pending the conclusion of the formal engagement framework between the government and the USAID

Appearing before the Senate Standing Committee on Health on Monday, National Treasury Cabinet Secretary Ukur Yattani was put to task to respond to the standoff over  HIV/AIDS commodities with the United States Agency for International Development (USAID).

To address the stalemate which has persisted since January, the CS submitted that the government had put in intervention measures including foregoing Ksh.45.8 million duty.

Yattani posited that the Treasury consultations with USAID established that the drugs were imported to Kenya without a formal engagement framework.

According to USAID, the delay in the formalization of the framework was partly occasioned by the elections in the United States. The previous agreement between the Kenya Medical Supplies Agency (KEMSA) and USAID medical commodities programme (MCP) which was signed in September, 2015 amounting to USD649,997,960 for a period of five had lapsed on September 30, 2020.

“In the absence of a formal engagement framework, the Ministry of Health requested the National Treasury to facilitate the clearance of the drugs. This was promptly done vide our letter ref. No. Dfn 415/232/011 dated 6th April, 2021 having taken into account the importance of the drugs in the enhancement of service delivery in the health sector, particularly during this time of covid-19 pandemic. In this regard, I would like to emphasize that both the Ministry of Health and USAID have acknowledged the support from the National Treasury in facilitating the clearance of the drugs,” said Yattani.

Further, USAID had contracted a private-based company Chemonics to distribute the drugs citing corruption with KEMSA as a major stumbling block. But this according to Yattani will be resolved once USAID concludes a public financial management risk assessment it is conducting at various government departments.

The HIV response in Kenya is largely dependent on external resources. HIV health commodities are mainly funded by three agencies, the government of Kenya, the Global Fund and USAID. The funding from Global Fund and USAID are grants and together they fund more than 80% of theHIV commodities.

The total USAID contribution is estimated at USD500 million per year, both on and off budget combined. The government of Kenya, through the National Treasury also  provides co-financing funds for the fight against HIV, TB and Malaria. This is a requirement to access the Global Fund allocation.

In the 2018 -2021 allocation period, the Global Fund grant amounted to  approximately USD310 million.

To reduce donor dependency, Treasury points out increased Kenyan ownership is critical through the universal health coverage.