NAIROBI, Kenya – The National Treasury will from the end of this month begin deducting statutory payments for county government employees directly at source, in a sweeping reform aimed at ending years of non-remittance by devolved units.
Treasury Cabinet Secretary John Mbadi told the Senate County Public Accounts Committee on Monday that the move will ensure bodies such as the Kenya Revenue Authority (KRA), SACCOs and pension schemes receive payments before funds are transferred to counties.
The integrated financial management system will also apply to ministries, departments, and agencies (MDAs), and is designed to enforce compliance, enhance accountability and curb financial indiscipline.
“The biggest culprits in financial malpractice are county executives. We will start deducting all these statutory payments at source,” Mbadi said. “Some of them have been approving and paying for things that haven’t been authorised — that is a blatant abuse.”
The CS disclosed that he had rejected a request from governors to postpone the rollout for a year, insisting the reform must take effect immediately.
Ghost workers and parallel payrolls
Mbadi accused counties of running parallel payrolls — some manual, some automated — and inflating wage bills with ghost workers.
He also condemned the practice of paying employees partially while failing to remit statutory 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 keeping deductions. That must stop,” he said.
Senate committee chair Moses Kajwang’ likened the diversion of approved payments to insurance fraud, warning that counties risk becoming “spaces for self-service” rather than public service.
Senators Fatuma Dullo (Isiolo) and Samson Cherargei (Nandi) decried rampant “voiding” — redirecting funds approved for one payment to another — a practice they said had worsened pending bills.
Sh200 billion in arrears
Oversight reports indicate counties owe statutory bodies, including KRA, NSSF, SACCOs, and pension schemes, more than Sh200 billion.
The Auditor General has blamed the arrears on poor revenue collection, delayed disbursement of funds by the Treasury, political interference, diversion of funds, payment of other pending bills, and refusal by successive administrations to honour obligations.
The Controller of Budget has also flagged delays in supplementary budget approvals and underperformance in revenue collection as aggravating factors.
Mbadi assured senators that the new system will end the voiding loophole through a twin approval-and-payment process.
“Whatever is approved is what gets paid. You can’t requisition to pay X and end up paying Y,” he said.
A 2023 Senate report revealed that non-remittance of pension deductions had led to delayed or unpaid benefits for retirees, breaching Section 53(8) of the Public Procurement and Asset Disposal Act, which bars procurement without confirmed funding.
