County governments owe workers Sh44.29 billion in unpaid salaries, unremitted statutory deductions and staff claims accumulated over more than three years, exposing thousands of employees to uncertainty over their retirement benefits and increasing the risk of costly legal claims.
The latest Controller of Budget (COB) report shows counties have yet to settle Sh43.64 billion in unpaid salaries and statutory deductions, alongside Sh648.8 million in outstanding staff claims dating back to 2022.
The prolonged delays have left many workers uncertain about their financial future, particularly those nearing retirement, whose pension processing could be delayed despite years of deductions from their monthly salaries.
The headquarters of the Nairobi City County Government offices on City Hall Way.
Nairobi accounts for the largest share of the backlog after accumulating Sh41.28 billion in unpaid salaries and statutory deductions, representing more than 93 per cent of all payroll-related arrears reported by the country’s 47 counties.
Murang’a reported the second-highest salary backlog at Sh710.75 million, followed by Kisumu with Sh618.7 million and Bungoma at Sh593.8 million.
The findings heap fresh pressure on county governments over persistent payroll management challenges more than a decade after the advent of devolution.
Oversight agencies have repeatedly identified mounting pending bills as a key indicator of weak public financial management in county governments.
County administrations have consistently blamed delayed disbursement of funds from the National Treasury for cash flow constraints that have slowed payment of salaries, statutory deductions and other pending bills.
Governors have also argued that rising wage bills and expanding service delivery obligations have stretched county finances beyond available resources.
The National Treasury has, however, maintained that counties should strengthen local revenue collection and contain recurrent expenditure to reduce reliance on transfers from the Exchequer.
The National Treasury Building in Nairobi.
The Auditor-General has, in successive audit reports, warned that growing unpaid obligations expose counties to litigation, penalties and interest charges that ultimately increase the burden on taxpayers.
Unlike supplier invoices, payroll arrears directly affect employees who continue reporting to work while statutory deductions made from their salaries remain unremitted.
Financial experts have maintained that settling older obligations first would reduce counties’ legal exposure while restoring confidence among employees and other creditors awaiting payment.
Failure to clear the historical payroll arrears, they argue, undermines counties’ credibility with workers whose livelihoods depend on regular salaries and timely remittance of statutory deductions.
The disclosures come as county governments continue grappling with mounting financial obligations amid growing pressure to finance healthcare, agriculture, roads and other devolved services with limited resources.
Personnel costs remain among the largest recurrent expenditure items across county governments, leaving little fiscal room for development spending in several devolved units.
County governments have maintained that delayed transfers from the National Treasury remain a major obstacle to meeting payroll obligations, while the Treasury continues to insist that prudent financial management and enhanced own-source revenue are critical to improving counties’ fiscal position.
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