CoB Margaret Nyakang’o warns health payrolls devouring county budgets

County governments are facing growing pressure as health sector salaries consume a huge portion of their budgets, leaving limited resources for development projects and clearing pending bills.

According to the Controller of Budget’s report for the 2024/25 financial year, counties spent Sh220.64 billion on employee compensation, which accounted for 64 per cent of their recurrent expenditure.

This is well above the 35 per cent limit set by the Public Finance Management regulations.

The report reveals that the health sector took the largest share of wages, absorbing 44 per cent of the total employee costs, nearly Sh97 billion. Controller of Budget Margaret Nyakang’o warned that such spending patterns are unsustainable.

“The expenditure landscape reveals excessive spending on employee compensation, with only eight Counties staying within the 35 per cent regulatory ceiling. Furthermore, the health sector’s wage bill accounts for 44 per cent of total expenditures, raising concerns about financial management,” Nyakang’o said.

Nairobi, with its large workforce inherited from previous administrations and the defunct Nairobi Metropolitan Service (NMS), remains the county with the highest personnel costs, alongside Kiambu, Machakos, and Nakuru.

The report shows that Sh353 million was paid via manual payroll, with Community Health Workers receiving Sh195.5 million. West Pokot followed with Sh72.69 million, Uasin Gishu at Sh59.35 million, Siaya at Sh51.05 million, and Kirinyaga at Sh31.97 million.

While the high allocation to Community Health Workers highlights their importance in preventive care, disease surveillance, and maternal and child health, manual payroll systems continue to strain county resources.

In Machakos, salary obligations have pushed development spending down to just 41 per cent, while Kiambu faces a Sh7.89 billion backlog in pending bills.

The high wage burden is partly a result of devolved health services, which brought tens of thousands of nurses, doctors, and support staff under county payrolls.

Counties such as Meru, Kericho, and Narok dedicated more than 40 per cent of their personnel budgets to health wages.

On the other hand, counties like Nandi, Trans Nzoia, and West Pokot managed to maintain a more balanced approach, controlling personnel costs relative to their revenues.

Nandi, for example, recorded the highest budget absorption rate at 98 per cent, prioritising development without overspending on salaries. Elgeyo Marakwet also kept a leaner wage bill despite revenue constraints.

Overall, counties spent Sh346.98 billion on recurrent expenditure, almost three times the Sh123.76 billion allocated to development.

As a result, 23 counties failed to meet the legal requirement of allocating at least 30 per cent of their budgets to development. The Controller cautioned that unchecked wage growth could turn counties into institutions dominated by payroll obligations rather than engines of growth.

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Pending bills remain a serious concern, with counties collectively owing Sh176.8 billion to suppliers and contractors as of June 2025.