Nairobi County employees gobbled up Sh14.16 billion in salaries and employee benefits in the nine months to March, marking a Sh1.32 billion increase from the previous year’s expenditure.
According to a new report by the Controller of Budget Margaret Nyakang’o, the spending accounted for 51 per cent of all revenue collected by the county during the period, although it was lower than the 53.9 per cent recorded a year earlier.
The increase in personnel costs comes at a time when county governments are under pressure to allocate more resources towards development projects and improve service delivery.
The report shows that Nairobi County’s staff compensation increased from Sh12.84 billion spent during the same period last year. The Controller of Budget attributed the rise mainly to the county’s adoption of accrual accounting in financial reporting, which changed how employee-related obligations are recognised.
Health sector employees accounted for the largest share of the wage bill, with the county spending Sh6.28 billion on their salaries and benefits. The amount represented 44 per cent of the total staff compensation paid during the period.
Health services are among the functions that require the highest resources under the devolved system and have continued to take up a large share of county personnel spending.
The Public Finance Management framework recommends that county governments keep expenditure on salaries and employee benefits below 35 per cent of their total revenue. However, many counties continue to exceed the set limit, with staff compensation remaining one of the largest spending areas in county budgets.
High wage bills have been identified by the Controller of Budget and the Commission on Revenue Allocation as a challenge that limits funds available for development projects.
Nairobi, which is the country’s largest county economy and the biggest employer among devolved units, has, over the years, carried a heavy payroll burden. The county inherited thousands of employees from the former City Council of Nairobi and has continued to add more staff, especially in health and emergency services.
The report further indicates 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 for community health workers, casual employees, security officers receiving top-up allowances and pension-related contributions.
According to the report, county officials explained that the continued use of manual payroll was linked to 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 payroll has previously raised concerns among oversight agencies over the risk of weakened internal controls and possible irregular payments.
Auditors have also questioned the use of parallel payroll systems by counties, saying they make it difficult to confirm staff numbers and verify personnel costs.
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