Nairobi County spent Sh14.16 billion on salaries and employee benefits in the nine months to March, marking a Sh1.32 billion increase from the Sh12.84 billion paid during the corresponding period last year.
Controller of Budget Margaret Nyakango,
Photo credit: File | Nation Media Group
Fresh data from Controller of Budget (COB) Margaret Nyakang’o shows that the county’s spending on staff compensation consumed 51 per cent of all revenue collected during the period, down from 53.9 per cent in the corresponding period a year earlier.
The increase comes at a time when county governments are under growing pressure to channel more resources towards development projects and service delivery.
According to the COB, the rise in personnel expenditure was largely driven by Nairobi County’s adoption of accrual accounting in financial reporting, a change that altered how employee-related obligations are recognised.
Of the total wage bill, Sh6.28 billion was spent on workers in the health sector, accounting for 44 per cent of all staff compensation paid by the county.
Health services are among the most resource-intensive functions devolved to county governments and have consistently accounted for a significant share of personnel spending across the counties.
The Public Finance Management (PFM) framework recommends that county governments keep spending on salaries and employee benefits below 35 per cent of total revenue.
Many counties, however, continue to exceed the threshold, with employee compensation remaining one of the largest expenditure items in devolved budgets. High wage bills have repeatedly been cited by the COB and the Commission on Revenue Allocation as a key factor limiting the funds available for development projects.
Nairobi, the country’s largest county economy and the biggest employer among devolved units, has historically carried one of the heaviest payroll burdens. The county inherited thousands of employees from the defunct City Council of Nairobi and has over the years absorbed additional personnel, particularly in the health and emergency services sectors.
Nairobi County Governor Johnson Sakaja.
Photo credit: Bonface Bogita | Nation Media Group
The payroll data further shows that Sh311.95 million was processed manually outside the electronic payroll system.
The amount accounted for two per cent of the county’s total wage bill and covered payments to community health workers, casual employees, security officers receiving top-up allowances and pension-related contributions.
According to the COB report, county officials attributed the continued use of manual payrolls to the engagement of short-term and casual employees who have not been integrated into the electronic payroll system.
“Sh311.95 million was processed through manual payrolls, which accounted for two per cent of the total PE cost. The justification for the continued use of manual payroll was that the affected staff are casuals and are engaged on a short-term basis,” Nyakang’o wrote in her report.
The continued use of manual payrolls has previously attracted scrutiny from oversight agencies over concerns that the practice could weaken internal controls and increase the risk of irregular payments.
Auditors have also raised concerns over counties maintaining parallel payroll systems, arguing that the practice complicates efforts to verify staff numbers and personnel costs.
