SHIF and NSSF proof when dealing with government
Why Kenyan law makes SHIF and NSSF registration and contributions a condition for dealing with government, and how to keep the proof to hand.
By Achekam · · 5 min read · For Running a business businesses in Kenya
Most Kenyan business owners know that a tax compliance certificate is needed for a government tender. Fewer realise that health insurance and pension contributions sit in the same category. The laws behind the Social Health Insurance Fund (SHIF) and the National Social Security Fund (NSSF) both tie registration, and in SHIF's case contribution, to a business's ability to deal with government.
That turns payroll deductions from a back-office routine into something the sales team should care about. A county contract, a licence renewal or a permit can be held up by a gap in contributions that nobody in the bidding team knew about. This article sets out what the two Acts say, why arrears matter, and how to keep the evidence ready before you need it.
The SHIF precondition for public services
The Social Health Insurance Act, as published on Kenya Law, requires every Kenyan to register as a member of the Social Health Insurance Fund, and it allows non-Kenyans ordinarily resident in Kenya to register as well. Section 26(5) then goes further: it makes proof of registration and contribution a precondition for dealing with, or accessing public services from, national and county government entities.
Note the two words: registration and contribution. Being on the Fund's books is not enough on its own; the Act asks for proof that contributions have been made. The section does not list every service it covers, so the safe reading for a business is that any dealing with a ministry, a state agency or a county government may bring the question up.
The Social Health Insurance Act on Kenya Law gives the full text of section 26 and of the penalty provisions discussed below, and is worth reading in the original before relying on any summary.
NSSF registration as a precondition too
The National Social Security Fund Act, as published on Kenya Law, places a direct duty on employers. Every employer with one employee or more must register with the Fund as a contributing employer and register its employees as members. Failing to register is an offence, with a fine of up to Kenya shillings fifty thousand.
The same Act makes proof of registration a precondition for dealing with or accessing public services. So a business that has never registered with NSSF, perhaps because it started with a single employee and never got round to it, has both an offence on its hands and an obstacle in front of any government dealing.
For the registration steps themselves, see registering with NSSF as an employer.
Arrears and penalties that block access
The Social Health Insurance Act also deals with late payment. It charges a penalty of two percent of the amount due on contributions not paid by the due date. And it says that a person can only access services under the Act once contributions are up to date and any outstanding contributions and penalties have been paid.
Strictly, that second rule is about services under the Act itself, meaning health cover through the Fund. But it shows how the law treats arrears: a gap is not cleared by paying the current month, only by settling what is outstanding along with the penalty. Combine that with the proof of contribution that section 26(5) asks for, and a business with unpaid months will find the proof hard to produce until the arrears are cleared.
Late payment of other payroll deductions carries its own consequences, collected in penalties for late payroll payments in Kenya.
Tenders, permits and licences
Think about where your business meets government:
- bidding for national or county tenders;
- applying for or renewing business permits and trade licences;
- registering with a regulator for your industry;
- being paid by a government entity on an existing contract.
Each is a dealing with a government entity, which is the situation the two Acts describe. Treat SHIF and NSSF proof the way you already treat a tax compliance certificate, which is covered in Kenya's tax compliance certificate: something to keep current all year, not something to scramble for when a deadline is close.
Keeping filing references and receipts in Achekam
Achekam keeps Kenyan payroll schedules, but it does not file or pay Kenyan payroll returns. A person files on the authority's own portal, then records the filing in Achekam with the reference the portal gave. A second person confirms each payment, and a schedule is finalised by someone other than the person who prepared it. That separation means the record of what was filed and paid has two sets of eyes on it.
The proof itself, the registration certificates, the payment confirmations and any statements from SHIF or NSSF, belongs in Document Centre. It is a folder-based store, so you can keep a folder for statutory proof with sub-folders for SHIF and NSSF, tag each document by month, and search for it when a tender form asks. A fresh statement uploaded as a new version keeps the earlier ones, so you can show the history if asked how long you have been up to date.
A pre-tender compliance check
Run this check before the bid team commits to a government tender, and again before you sign any government contract:
- Is the business registered with NSSF as a contributing employer, and are all employees registered as members?
- Are SHIF registrations in place for the people the business is responsible for?
- Have contributions been paid for every month, with no gaps?
- If any month was late, has the penalty been paid along with the contribution?
- Is each filing recorded in Achekam with its portal reference, and has a second person confirmed each payment?
- Are the certificates, statements and receipts filed in Document Centre where the bid team can find them?
A "no" to any of these is better found by your payroll team in a quiet week than by an evaluation committee. Set a monthly reminder to file the latest confirmations, and you will have the proof ready whenever a government opportunity appears.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
