SHIF: World Bank Wants Govt to Remove Monthly Contributions for Low-Wage Kenyans
- The government rolled out the Social Health Authority (SHA) in October 2025 to spearhead the implementation of the Social Health Insurance Fund (SHIF)
- SHIF faced several challenges, ranging from financing to the benefit packages extended to members
- World Bank advised the government to fund SHIF contributions for informal, low-wage formal workers and the marginalised population
Wycliffe Musalia has over six years of experience in financial, business, technology, climate, and health reporting, providing deep insights into Kenyan and global economic trends. He currently works as a business editor at TUKO.co.ke.
Low-wage formal workers and informal workers could be exempted from the Social Health Insurance Fund (SHIF) monthly contributions.
Source: Facebook
The World Bank urged President William Ruto's administration to revise the funding model for the social health cover, which is transitioning from the National Hospital Insurance Fund (NHIF).
Who should pay SHIF contributions?
According to the World Bank Public Finance Review, the Kenyan government should consider financing SHIF contributions for informal, low-wage formal workers and the marginalised population.
Search option is now available at TUKO! Feel free to search the content on topics/people you enjoy reading about in the top right corner ;)
"The government should focus SHIF collections on formal sector workers and finance contributions for informal workers and poor populations.
"It should consider removing SHIF contributions for low-wage formal workers to encourage formalisation and reduce labour market distortions, as well as cover SHIF services for poor and informal workers and low-wage formal workers, funding the gap through the budget," the report recommended.
The Bretton Woods institution noted that health infrastructure in the country has expanded, yet government health spending remains low, about 2% of GDP.
Why govt should pay SHIF for poor Kenyans
Out-of-pocket spending among Kenyans remained at 24% of total costs, limiting access to health.
SHIF is a contributory scheme financed through mandatory payroll deductions at 2.75% for formal employees and 2.75% of household income for informal workers.
The World Bank report noted that the majority of informal workers, who account for up to 80% of the national workforce, do not contribute to the scheme.
Low contribution to the scheme has seen the SHIF projected yearly collection fall to KSh 67 billion from the targeted KSh 157 billion.
"The government plans to subsidise contributions only for indigent households, leaving a large unfunded population. Moreover, the payroll tax design discourages formalisation, particularly for low-wage workers and small employers who face higher costs when joining the formal sector. This creates a structural contradiction: SHIF depends on formalisation to succeed yet actively undermines it," the report continued in part.
Should government review SHIF benefits?
Source: Twitter
The report also called for a review of SHIF benefits, noting that the current package is ambitious and unlikely to be affordable.
World Bank said the scheme needs stronger public financing and better administrative systems to realise its full benefits.
The international lender recommended rationalisation of the SHIF benefit package to better reflect available resources.
Meanwhile, the government established a panel to review the benefit package accrued to over 20 million Kenyans registered to the scheme.
Health Cabinet Secretary Aden Duale mandated the panel to offer expert advice on new benefit packages.
Proofreading by Asher Omondi, copy editor at TUKO.co.ke.
Source: TUKO.co.ke
