NAIROBI, Kenya – Billions of shillings meant for development and essential services remain at risk as counties continue to rely on manual payroll systems, exposing public funds to abuse and inefficiencies, oversight bodies have warned.
New data from the Parliamentary Budget Office (PBO) shows that six per cent of all county salary payments in the year to June 2025 were processed manually — a practice the office says weakens financial controls and limits counties’ ability to fund services.
The warning comes amid fresh revelations by the Controller of Budget (CoB), Margaret Nyakang’o, that counties paid out Sh12.88 billion in salaries outside automated payroll systems during the period under review.
According to the PBO, manual payroll processing heightens the risk of ghost workers — fictitious employees who inflate wage bills and drain public resources.
“Except for Baringo and Nyamira, all the other 45 counties had a component of their personnel emolument costs processed through the manual payroll,” the PBO noted in its latest review.
Turkana County topped the list, having paid Sh1.4 billion manually, followed by Nyeri (Sh725.5 million), Kiambu (Sh713 million) and Wajir (Sh682 million).
Counties have defended the practice, arguing that manual payments are sometimes used to pay casual workers, Community Health Promoters (CHPs), staff not yet captured in the official payroll, and top-up allowances for security personnel.
However, oversight offices warn that these justifications do little to address the risk of abuse.
“The use of manual payroll by counties poses various challenges, including potential abuse which may result in the loss of public funds through inflated wage bills,” the PBO cautioned.
To stem losses, the office has recommended comprehensive audits of county human resource records to identify and remove ghost workers.
The National Treasury has also stepped in, rolling out a plan to integrate all public entities into a central payroll system.
Treasury Cabinet Secretary John Mbadi said the move aims to eliminate ghost workers while keeping the wage bill stable without resorting to layoffs.
“We can make our public sector more efficient and manage our payroll so that it can efficiently let us eliminate ghost workers,” Mbadi said, adding that the entire national government executive will be integrated by the end of 2025, with counties expected to join the system by June 2026.
The push to tighten payroll controls comes as county wage bills continue to rise sharply.
Total personnel costs have increased from Sh195 billion to Sh220 billion over the two years to June 2025, consuming nearly half — 48 per cent — of counties’ revenues.
Nyakang’o noted that most counties are spending well above the legally recommended wage bill ceiling of 35 per cent of revenues, with some using more than half of their income on salaries and allowances.
At a national wage bill conference held in April 2024, counties were urged to reduce their wage bill-to-revenue ratio to 35 per cent by June 2024.
Yet in the first quarter of the current financial year alone, counties spent Sh43.7 billion on salaries and allowances.
As governors juggle rising payroll costs, weak payroll systems and delayed Treasury disbursements, concerns are growing that development spending will continue to be crowded out — even as counties make modest gains in boosting their own-source revenues.
