Today, at the invitation of the Kenya Healthcare Federation (KHF), and on behalf of the Kenya Medical Association (KMA), I attended the Economic Outlook 2026 forum.
One slide in particular was striking: formal employment in Kenya has declined from 17% to 15% of the workforce in just one year. This statistic has profound implications for the sustainability of the Social Health Authority (SHA).
A Narrow and Shrinking Contribution Base
As has been consistently raised by stakeholders, the 2.75% SHA contribution (SHIF) is overwhelmingly borne by the formal sector. The forum reaffirmed a long-standing reality: direct taxation of the informal sector remains extremely difficult. The result is an ever-narrowing base of contributors financing an expanding system.
Previously, it was often stated that about 20% of the population carried the SHA contribution burden. With formal employment now at 15%, the burden has narrowed even further—effectively resting on about 16% of Kenyans.
Before the SHA Act came into force, stakeholders proposed a consumption tax asnopposed to an income tax. This was declined. At the next level a proposal was made to cap contributions at KES 5,000, a structure that had enabled National Health Insurance Fund to enroll a broader base of contributors. That proposal remains relevant today as we confront declining formal employment and rising system strain.
SHA Non-Payment: A Driver of Unemployment and Financial Sector Stress
As unemployment rises and the taxable population shrinks, it is critical to acknowledge a key but under-discussed contributor to job losses in Kenya – persistent non-payment of legacy NHIF debts and escalating unpaid SHA claims to health providers.
These arrears have forced many health facilities to:
• Scale down services
• Lay off staff
• Default on supplier payments
• Be sold off or auctioned
The ripple effects are severe—health workers go unpaid, suppliers collapse, and entire local economies are destabilized. This directly erodes formal employment, further shrinking the SHA contribution base and deepening fiscal risk.
During the forum, I also met the Chief Executive Officer of the Kenya Bankers Association (KBA), who made a critical observation:
health providers have outstanding loans with commercial banks, yet they are unable to service these facilities because SHA has failed to reimburse them for services already rendered.
This places not only health providers at risk, but also exposes the banking sector to rising non-performing loans, turning SHA arrears into a broader financial system risk.
From Narratives to Solutions
Sustaining SHA through fraud narratives and delayed reimbursements is neither economically sound nor institutionally sustainable. Providers cannot deliver care, retain staff, or honor financial obligations while unpaid.
A simple truth applies:
You can only milk a cow for so long without feeding it. Eventually the milk dries up, and the cow dies. SHA non-payment is therefore not just a healthcare crisis; it is an existential threat to formal employment, financial sector stability, and the SHA itself.
A Direct Appeal to Cabinet and Parliament
This is a moment for decisive leadership. Cabinet and Parliament must recognize that unpaid NHIF legacy debts and mounting SHA arrears are no longer administrative inconveniences. They are a clear and present economic risk. Every delayed reimbursement translates into lost jobs, weakened banks, reduced tax revenues, and a shrinking formal sector that is already overburdened.
A transparent, funded, and time-bound settlement plan for all outstanding health sector debts must be prioritized at the highest level of government.
Without this intervention, the very system meant to deliver universal health coverage will continue to undermine employment, financial stability, and public confidence. The cost of action is known and manageable; the cost of inaction will be far greater—and borne by the economy as a whole.
In Summary
The Government must urgently:
1. Put in place a clear, time-bound payment plan for all legacy NHIF debts
2. Settle current SHA arrears promptly and predictably
3. Restore confidence in the health financing system to protect jobs, stabilize the banking sector, and sustain the SHA contribution base
Paying health providers is not a concession—it is a strategic economic intervention. Without it, the cycle of unemployment, loan defaults, reduced revenues, and system fragility will only accelerate
Dr Simon Kigondu is an Obstetrician Gynaecologist and the President of Kenya Medical Association