Nairobi County's payroll system remains vulnerable to abuse, graft - CoB

Nairobi County continues to rely on a manual payroll system that remains vulnerable to abuse and corruption, despite efforts to implement a fully automated system.

This revelation comes from the Controller of Budget's (COB) report for the first quarter of the Financial Year 2024-2025, covering the period from July to September 2024.

According to the report, while the majority of the payroll is processed through the Integrated Personnel and Payroll Database (IPPD) system, millions of public funds were still processed manually.

The manual system, noted for its susceptibility to manipulation, processed Sh159.41 million in salaries, amounting to 5.9 per cent of the total personnel emolument cost.

The Controller of Budget, Margaret Nyakang'o, pointed out the issue in her report: "Further analysis indicates that personnel emolument costs amounting to Sh2.56 billion were processed through the Integrated Personnel and Payroll Database (IPPD) system, while Sh159.41 million was processed through manual payrolls."

The report indicates that the Sh159.41 million paid via the manual system highlights a significant vulnerability within the county's financial systems, which could be exploited for fraudulent activities.

In response, Governor Johnson Sakaja's administration assured that it is working towards the full automation of the payroll system to prevent such issues in the future.

Employee compensation

Despite the payroll challenges, the report also sheds light on the city-county's finances. Of the Sh5.45 billion in revenue available during the period, Sh2.72 billion, or 50 per cent, was allocated to employee compensation.

The healthcare sector, which accounted for Sh1.08 billion of the wage bill, remains the highest single consumer of the county's budget.

"In the first quarter of FY 2024-25, expenditure on employee compensation was Sh2.72 billion, or 50 per cent of the available revenue of Sh5.45 billion," the report stated.

This represents a slight increase compared to Sh2.70 billion spent in the same period last year.

The report also noted that the county allocated no funds to development projects during the first quarter.

All the available funds were used for recurrent expenses, a situation that raises concerns over Nairobi's ability to fund long-term development goals.

"There was no expenditure on the development budget during the period," the report read, further emphasising the county's focus on operational spending rather than capital development.

In the Nairobi County Assembly, Sh1.63 million was spent on committee sitting allowances for the 124 members of the County Assembly (MCAs) and the Speaker.

This is in line with the annual budget allocation of Sh27.56 million. Each MCA received an average sitting allowance of Sh4,382, with the assembly hosting 26 committees.

On a positive note, the report highlighted a rise in Nairobi's own source revenue. The first-quarter report showed a 31 per cent increase in revenue, amounting to Sh2.26 billion, compared to Sh1.72 billion during the same period last year.

This revenue represented 11 per cent of the annual target and 133 per cent of the equitable share disbursed by the national government.

"This amount was an increase of 31 per cent, compared to Sh1.72 billion realized in a similar period in FY 2023-24, and was 11 per cent of the annual target," the report stated.