NAIROBI, Kenya — The Central Bank of Kenya (CBK) has been cited for breaching key human resource regulations, including hiring unqualified managers, disregarding pay-setting laws, and mishandling staff secondments, according to the latest report by Auditor General Nancy Gathungu.
The audit, covering the financial year ending June 2025, warns that the lapses expose the regulator to “constitutional, legal and financial risks” that could undermine its governance standards.
“There were instances during recruitment where shortlisted or successful candidates did not fully meet the mandatory experience or service period requirements, even though they were previously acting in the positions they were subsequently appointed to,” Gathungu said.
Hiring and Pay Irregularities
The report found that CBK bypassed the Salaries and Remuneration Commission (SRC) in determining salary structures and allowances — a violation of legal requirements.
It also flagged cases where staff promotions ignored internal HR policies, including improper placement on salary scales and promotions to grades that were not in succession plans.
“Non-adherence to internal human resources policies was noted in staff promotions, specifically concerning placement on salary scales and promotions to non-succeeding grades,” Gathungu added.
Mishandled Secondments and Governance Gaps
The Auditor General further faulted CBK for failing to manage staff secondments and temporary attachments properly.
The bank reportedly did not seek reimbursements for employees seconded to other public agencies and allowed secondments to exceed legal limits — blurring employment status and accountability.
“These matters collectively present a risk of constitutional and legal breaches, potential financial losses due to unrecovered costs, and weaknesses in the control environment governing human resources,” the report said.
Governance challenges were compounded by the absence of a full board of directors for over a year.
Between December 2024 and May 2025, CBK operated without non-executive directors, paralyzing key committees such as the Human Capital Committee responsible for HR oversight.
Five new board members were appointed by President William Ruto in May, but three positions remain vacant.
Diversity and Payroll Concerns
The report also questioned CBK’s inclusivity record, noting that two ethnic communities — Kikuyu and Kalenjin — account for 44 per cent of the bank’s 1,311 employees.
As of May 2025, about 34.7 per cent of staff (455 employees) were aged between 51 and 60 years, nearing retirement. The bank has been recruiting actively to close staffing gaps and strengthen its human capital base.
CBK remains one of the highest-paying public institutions, with an average monthly salary of Sh349,605. Its payroll rose by 5.9 per cent to Sh5.5 billion in the year to June 2025, up from Sh5.2 billion the previous year.
Financial Turnaround but No Dividend
Despite the HR lapses, CBK posted a dramatic turnaround — moving from a Sh24.8 billion deficit in 2024 to a Sh65.8 billion surplus in 2025.
However, for the first time in seven years, the bank will not remit dividends to the National Treasury, choosing instead to retain the profits to shore up its capital to Sh100 billion.
The decision comes as the Treasury grapples with widening revenue shortfalls and plans to sell assets to bridge its fiscal gap.
