Since its rollout in October 2024, the Social Health Authority (SHA) has collected over Sh31 billion from Kenyans. However, the scheme’s revenue is overwhelmingly being financed by salaried Kenyans while contributions from the informal sector which makes up the majority of Kenya’s workforce remain significantly low.
Kenyan workers in the formal sector have found themselves shouldering the financial burden of the scheme while the informal sector, comprising the majority of the population, largely defaults on payments.
Data presented to the Senate this week revealed that only four million Kenyans are actively contributing their monthly payments to SHA. Out of these, 3.5 million are salaried employees whose contributions are automatically deducted.
This means that the informal sector accounting for over 80 per cent of Kenya’s workforce, according to the data from the Kenya National Bureau of Statistics (KNBS) is largely defaulting on payments.
According to the KNBS data, a majority of Kenyans belong to the informal group. This number represents about nine in every ten Kenyans who are employed, or 19.9 million. On the other hand, salaried Kenyans as of 2023, were about 3.1 million.
Mr Reagan Omondi, an employee at one of the leading consultancy firms in the country, is among the 3.5 million salaried Kenyans feeling the pinch of mandatory SHA deductions.
An analysis of his February 2025 payslip reveals that he earned a gross salary of Sh250,600 but saw a significant portion deducted for various statutory contributions, including SHA.
Among the deductions, Sh6,875 went to SHA, a figure that continues to raise concerns among formal workers who feel overburdened. In addition to this, she was also deducted Sh4,320 for NSSF, Sh3,750 for the housing levy, and Sh60,582 in PAYE tax, among other deductions. In total, her paycheck saw Sh187,495 deducted, leaving her with a net salary of Sh63,104.72.
Elderly persons register for the Social Health Authority (SHA) at Arujo Location Chiefs Camp in Homa Bay Town on March 5,2025.
Photo credit: George Odiwuor | Nation Media Group
While formal sector workers like Mr Omondi are contributing every month without fail, the government has admitted that out of the 4 million Kenyans actively remitting their monthly SHA payments, a staggering 3.5 million are salaried employees.
This means that the bulk of the informal sector, over 19 million Kenyans, according to the data from KNBS are either defaulting or not contributing at all.
“This is frustrating. Every month, my payslip shrinks, yet I see no real benefits. If the deductions were shared equally across all workers, both formal and informal, the weight on us would be reduced,” Mr Omondi said.
The government had envisioned SHA as a game-changer in achieving Universal Health Coverage (UHC), ensuring that every Kenyan could access affordable healthcare services. However, the uneven distribution of financial responsibility has cast doubt on its sustainability and fairness.
The government projects to collect more than Sh60 billion in the financial year 2025/2026 from salaried Kenyans to contribute to the Social Health Insurance Fund budget. This amount is three times more than that which the government plans to collect from the informal sector.
While more than 20 million Kenyans have registered to be part of the Social Health Authority, only a fraction of them have been remitting money to the Authority.
If SHA contributions were equitably shared across all working Kenyans, the burden on salaried employees would be significantly reduced. Currently, with only 3.5 million formal workers contributing while millions in the informal sector fail to remit payments, the programme is already showing cracks.
Cabinet Secretary for Health Deborah Barasa addresses journalists at Afya House in Nairobi on January 15, 2024.
Photo credit: Billy Ogada | Nation Media Group
The Authority, working with the Health Ministry, has now come up with ways to get more people from the informal sector to pay their SHA premiums.
The government has since upgraded the tool but fewer Kenyans have used it to test how much premiums they should remit based on their income. Even so, more salaried Kenyans are still taking the heavier burden of paying for SHA leaving out the self-employed.
Principal Secretary Harry Kimtai explained to the Nation that Kenyans in the informal sector who can pay their premiums are a testament that the means testing tool is working.
“Every other system must be improved. We are now working to ensure that the tool is foolproof to avoid manipulation because we know that some Kenyans have found a way to manipulate it,” he said.
“We are improving the tool by giving Kenyans an opportunity to do a self-assessment based on their income and consumption. We want a tool that Kenyans can consent to share their data willingly so that people can know how much to pay,” he explained.
While the law requires that people pay annually, PS Kimtai explains that it is easier for salaried Kenyans to remit the payments monthly and the government has put a cap on every 9th day of the month.
“If the employer has remitted and has not paid to SHA by the 9th of every month, if you go to a facility on the 10th, you will not get service,” he said.
The Social Health Authority building in Nairobi.
Photo credit: File | Nation Media Group
He said that while the informal sector was also supposed to pay annually, there was an agreement to allow them to pay monthly.
“We know that there are those who come, register, pay, access the service and run away. We will catch up with them. People must pay their dues for a particular year,” he said.
The government is in the process of coming up with an Insurance Premium Financing facility to help Kenyans have a place to get money upfront and pay to SHA and then pay back to the facility later.
We are developing the insurance premium financing facility since we understand that some people may not have money all the time to pay for their SHA contribution.
“It is difficult for us to enforce without the Insurance Premium Facility. We already have a case in court that suspended the case on enforcement for SHA payments. That was our strategy. For now, we appeal to Kenyans to pay,” he said.
The government also plans to partner with the Informal sector associations, come up with flexible payment and contribution models, use influencers, lobby for sponsors, especially to the most vulnerable, and have incentives among other strategies that will ensure non-salaried Kenyans also contribute to SHA.
Health policy expert Dr Brian Lishenga argues that SHA’s reliance on salaried workers is unsustainable. “We cannot continue to overtax one segment of the population while allowing another to bypass contributions. If the government does not develop a solid mechanism to collect from informal workers, the system will collapse under financial strain,” he warns.
The Rural Private Hospitals Association of Kenya chairman Brian Lishenga.
Photo credit: File | Nation Media Group
The government has acknowledged the challenge but has yet to develop a clear strategy to ensure compliance from informal workers. Instead, authorities have resorted to appeals, urging them to make voluntary contributions. Unfortunately, without a strict enforcement mechanism, there is little incentive for informal workers to pay into the system.
One critical question remains: is it fair for salaried Kenyans to shoulder the bulk of the contributions while the informal sector remains largely untapped? Unless the government addresses this glaring disparity, SHA risks becoming a financial nightmare for the few who continue to pay while others benefit without contributing.
In January this year, Members of Parliament called for a review of the 2.75 per cent deduction of the worker's gross salary towards the scheme citing poor services and an unreliable system of the new scheme that has exposed Kenyans to untold suffering.
The lawmakers pointed out that despite the salaried Kenyans being deducted a lot of money, the services they get in return are not commensurate with the amount they are paying compared to the now-defunct National Health Insurance Fund.
“Having tested the system, we need to reduce the 2.75 per cent monthly deductions because we have seen what it can do. The people with payslips are suffering. We cannot continue like this, we need to do something,” Kabondo Kasipul MP, Eva Obara proposed.
“It’s time to review it, it is not worth the 2.75 per cent that is being deducted. Why should the government overtax its people just because they are employed,” Kitui Rural MP David Mwalika while supporting the review said.
