The Kenyan government is focused on improving its population's access to healthcare. However, inefficiencies such as the lack of suitable infrastructure and delayed completion of health facility upgrades, the lack of human resources such as nurses and doctors and a slower-than-anticipated uptake of national health insurance programmes could inhibit spending on healthcare and the success of initiatives like the waiving of maternity fees (as of June 1 2013).
Headline Expenditure Projections
- Pharmaceuticals: KES47.56bn (US$563mn) in 2012 to KES56.52bn (US$653mn) in 2013; 18.8% growth in local currency terms and 16.0% in US dollar terms.
- Healthcare: KES154.77bn (US$1.83bn) in 2012 to KES177.21bn (US$2.05bn) in 2013; 14.5% growth in local currency terms and 11.7% in US dollar terms.
Risk/Reward Rating: In BMI's Q413 Pharmaceutical and Healthcare Risk/Reward Ratings (RRRs), Kenya is 20th in the Middle East and Africa (MEA), above Uganda, Nigeria and Zambia. A large counterfeiting industry, poor healthcare funding, corruption, regulatory deficiencies and a number of other issues will conspire to keep Kenya in a low position in the MEA matrix. Nevertheless, in comparison with many other African markets, most of which are not surveyed by BMI, Kenya offers more commercial promise and a more stable overall business environment.
Key Trends And Developments
Newly appointed Kenyan finance minister Henry Rotich delivered the first budget of President Uhuru Kenyatta's administration on June 13 2013. A total of KES95bn (US$1.11bn) has been allocated to the healthcare sector - KES35bn (US$408mn) to the National Government and KES60bn (US$699mn) to the County Governments. While this in an increase from the KES85bn (US$990mn) allocated to the healthcare sector in the 2012/2013 budget, we note that the proportion of Kenya's total budget allocated to healthcare has declined from 5.9% in the 2012/13 period to 5.7% in the 2013/14 period. Furthermore, the sum is still short of the Abuja declaration commitment by African governments to allocate at least 15% of the budget to health sectors to improve health outcomes.
The Kenyan Medical Supplies Authority (KEMSA) and Fintech Kenya are to roll out a mobile-based medicine tracking system that will aid the monitoring of the drugs supply for health programmes in the country. The mobile-based service will enable public healthcare workers and county health management teams to report the consumption of medical supplies, place orders for medicines and track drug deliveries. BMI Economic View: Having grown by a robust 5.2% y-o-y during the first quarter of 2013, the Kenyan economy is set to expand by 5.7% for the whole year, as private and public investment and consumption are expected to perform strongly. We are expecting growth to accelerate to over 6.0% in 2014 provided that there are no external shocks such as a recurrence of drought.
BMI Political View: While the peaceful election outcome bodes well for investor confidence on a two-year view, new resentments planted by the institutional oversight of the 2013 presidential poll could germinate into a significant risk factor in the second half of Kenyatta's five-year term.