Treasury to deduct county employee dues at source, ends years of non-remittance

The National Treasury will, from the end of this month, begin deducting statutory payments for county government employees directly at source, in a move aimed at ending years of non-remittance by devolved units, Treasury Cabinet Secretary John Mbadi has revealed.

According to the CS, the integrated financial management system will channel deductions to bodies such as the Kenya Revenue Authority (KRA), SACCOs and pension schemes before funds reach counties.

Mbadi said the system, which will also be applied to Ministries, Departments, and Agencies (MDAs), is designed to enforce compliance with statutory remittances, enhance accountability, and curb financial indiscipline.

“These people who approve and pay for things that haven’t been authorised are deliberately violating financial procedures. It’s a blatant abuse,” Mbadi told the Senate County Public Accounts Committee chaired by Homa Bay Senator Moses Kajwang’.

He disclosed that he had rejected a request from county executives to postpone the rollout for a year.

“I was told they need a year to prepare, but I refused. We must implement it now. The biggest culprits in financial malpractice are county executives. We will start deducting all these statutory payments at source,” he said.

He further noted that counties have been running “parallel payrolls, some manual, some automated and we’re even hearing of ghost workers.”

Mbadi also condemned the practice of paying employees partially without remitting deductions.

“If you give me my salary, it should be paid in full. What counties have been doing is paying only part of the salary and failing to remit statutory deductions. That must stop,” he said.

Senator Kajwang’ likened the practice of diverting approved payments to fraud in the insurance sector.

“In insurance, if a claim is approved, you cannot pay another claimant. But that is what is happening in county governments. It is completely unacceptable,” he said, adding: “We must stop making counties places where people go to enrich themselves. They should be spaces for public service, not self-service.”

Senators Fatuma Dullo (Isiolo) and Samson Cherargei (Nandi) also expressed concern over rampant “voiding” redirecting approved payments to other purposes, which they said had worsened pending bills.

“Some counties don’t even submit their expenditure reports. I wonder whether the new system will be able to capture such cases,” Cherargei said.

In response, Mbadi assured the committee that the Treasury had addressed the issue.

“This is a twin system of approval and payment, meaning whatever is approved is what gets paid. This will prevent voiding — where you requisition to pay X but end up paying Y,” he said.

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• ends years of non-remittance

Oversight reports indicate counties owe statutory bodies, including KRA, NSSF, SACCOs, and pension schemes, more than Sh200 billion. The Auditor General has linked the arrears to poor revenue collection, delayed disbursement of funds by the National Treasury, political interference, diversion of funds, payment of other pending bills and refusal by successive county administrations to honour obligations.

Section 53(8) of the Public Procurement and Asset Disposal Act (PPDA) bars accounting officers from commencing procurement without confirming that sufficient funds are available in the approved budget.

A Senate County Public Investment and Special Funds Committee report tabled in 2023 revealed that non-remittance of pension deductions had led to delayed or unpaid pensions for retirees.

The Controller of Budget has further noted that delays in supplementary budget approvals and underperformance in revenue collection have worsened the problem.