Businessman Richard Ngatia has become the latest casualty of the ongoing purge against billionaires linked to retired president Uhuru Kenyatta by the Kenya Kwanza government. Ngatia’s company Megascope Limited is among five that have been informed that the government will not continue with the Medical Equipment Scheme (MES) following the expiry of its contract.
Ngatia is also the current president of the Kenya National Chamber of Commerce and Industry (KNCCI). The lobby group is set to hold elections for new officials next month. Interestingly, Ngatia’s top competitor for the KNCCI presidentship is his assistant Eric Rutto who is being fronted by the state.
But as he fights to retain his leadership at KNCCI, Ngatia’s other headache is how to get a new contract in the MES scheme . Widely touted as a game changer in the provision of medical services, the MES scheme was just as good as it was controversial.
According to Ministry of Health figures about 628,821 Kenyans have received care from the project’s start until December 2021. Dialysis was given to 385,587 people, and 7,472 of them required ICU care.
A total of 1.8 million Kenyans have used ultrasound, 3.9 million have had an X-ray, 40,840 have had a mammogram, 91,083 have had an orthopantomagram, and 19,866 have had a jaw X-ray to date.
“The country is staring at a crisis, with services in more than 125 hospitals grinding to a halt due to lack of maintenance of the equipment occasioned by the expiry of MES contracts,” Council of Governors chairperson Anne Waiguru told the Sunday Nation.
“If the MES is phased out, we need a solution. Health services should not take a break. We are not bothered by what equipment provides the service, but the service itself,” said Tharaka Nithi governor Muthomi Njuki.
Hailed by the World Bank as a way the private sector can contribute to public health care, MES was in many ways a good idea which like all major projects in Kenya ended up being riddled with controversy.
In 2015, the Kenyan Government selected GE Healthcare as one of its main partners to deliver a seven-year Managed Equipment Services Partnership (MES) to provide Kenya’s 46 million strong population with access to teleradiology services across 98 Ministry of Health hospitals in Kenya’s 47 counties.
An MES is a form of PPP that enables customers to adopt a ‘pay for service’ expenditure plan and affords a number of financial benefits including funding to cover equipment, maintenance and other project costs such as training.
The model was supposed to allow the Kenyan government to budget healthcare expenditures over several years by deferring upfront capital outlay. This meant the Ministry of Health could assign critical funds to address the country’s most pressing healthcare challenges while also addressing the bigger picture and improving the wider healthcare system.
The idea was so ambitious and revolutionary that the World Bank had by its second year of operations taken note of how huge its impact was.
“Local availability of previously non-existent specialized diagnostic devices has led to higher efficiency in the patient continuum and a significant reduction in average scan time from analogue to digital, with the monthly number of digital exams soaring more than tenfold across the first 44 modernized hospitals,” noted the World Bank.
“These early positive project outcomes have already triggered engagement and regional integration with other government ministries in East Africa (Tanzania and Uganda) and other African countries (Namibia, Cote D’Ivoire, Nigeria, Mozambique) for best practices on large-scale healthcare infrastructure development programs,” said the World Bank.
Everything went on well until sometime in 2019 when questions about the scheme, particularly on how it was procured began popping up. While the questions may have been genuine, it is worth noting that former president Uhuru Kenyatta and his then-deputy William Ruto had fallen out.
As politicians, civil society and the media allied to Uhuru continued to praise MES as a revolutionary idea, those allied to Ruto demanded an audit saying the project was a fraud meant to benefit a few well-connected individuals.
Most of the questions were about why international medical equipment companies subcontracted local ones to do the job when they could have done it themselves. Another issue was that some counties were unable to use the equipment they received due to lack of medical personnel trained to use them. Then there was the matter that pops up on all government contracts that MES was overpriced.
To explain this in simple terms, a total of five international companies were awarded tenders in the scheme. The contracts involved supply, installation, testing, maintenance, repair, replacement, and associated training on equipment for theatre, Central Sterile Supply Department (CSSD), laboratory (Category 1), laboratory (Category 2), renal, ICU, and radiology to 94 county and sub-county referral health establishments in all 47 counties.
The first lot went to Shenzhen Mindray Biomedical Electronics Co. (China) and subcontractor, Megascope Healthcare Ltd (Kenya). The second lot went to Esteem Industries Inc. (India) and subcontractor, Debra Ltd (Kenya).
Bellco SRL from Italy who had Angelica Medical Supplies as a subcontractor got the next lot. Next was Philips Medical Systems Nederland BV, which got another lot working with Philips East Africa Ltd as its subcontractor, while the final lot went to GE East Africa Services Ltd.
While five local companies benefited from the tender, Ngatia became the face of the scheme because of his closeness to Uhuru. He had in 2013 and 2017 been part of a technical committee dubbed ‘Friends of Jubilee Foundation’ that was in charge of fundraising for the Jubilee Party in those two elections. Additionally, his position at KNCCI as president made him conspicuous.
Eventually, the matter made its way to the Senate in 2019. An investigation committee chaired by Isiolo Senator Fatuma Dulo was formed. And after a year of investigations and spending more than Sh30 million of taxpayers’ money on the investigation, the committee presented its findings on the floor of the house.
The report described the MES project as a ‘criminal enterprise’ that was hatched to benefit well-connected government officials and business moguls for the seven-year lease period.
“This was criminal action by persons who are known, CSs and PSs, they signed the contracts and lawyers were involved… When it comes to lawyers and in particular page 96 and 97, something very strange happened,” said Makueni Senator Mutula Kilonzo while contributing to a heated debate about the report on October 1, 2020.
He added, “The contractors contributed donations for legal fees. It’s unheard of.. Part of the law firms were lawyers for some of the contractors…a direct conflict.”
The report by the committee was shot down. The MES scheme continued. By then the country was already in an election mode and no one asked any questions until December last year when the current governors who had just been elected began making noise.
By this time the MES contract was nearing the completion of its life. It was however eligible for a three-year extension.
“It would have been wise to give the counties the resources and the leeway to purchase the equipment instead of leasing them in the first place,” said Tharaka Nithi governor Muthomi Njuki who has since changed his mind according to his interview with the Sunday Nation.
“All the counties regardless of how big or small they are were made to pay Sh200 million per annum for the equipment despite some lying idle and unused which is not fair,” he noted.
As it is the government has resolved to purchase the MES upon the termination of the contracts.
“The procuring entity shall at its option be entitled to purchase the equipment (including any early works equipment) by service of written notice by the Principal Secretary to the contractor’s representative at a nominal value of $1 upon the expiry of this contract in accordance with its terms, including payment of the money due,” Health Principal Secretary Peter Tum told the contractors in a May 5 letter.
The contracts with India’s Esteem expired on December 31, 2018, while those with Mindray’s Biomedical of China concluded on December 2, 2022. On April 1, 2023, General Electric of the United States, Philips of the Netherlands, and Bellco SRLs of Italy all came to an end.