County governments could have deliberately created a major loophole to pay ghost workers, syphoning billions of shillings from public coffers.
A new report by the Controller of Budget has revealed 46 county governments are paying salaries manually.
The CoB did not talk about Nyamira county.
In the first six months of the current financial year (2023-24) alone, the devolved units paid out more than Sh7.06 billion through the manual system.
The amount is seven per cent of the total wage bill.
Nairobi accounted for the highest stock of the payments in the period under review at Sh1 billion, followed by Homa Bay that paid some workers Sh490 million using manual sheets.
Siaya county, the report shows, paid Sh370 million, while Laikipia paid Sh302mn, followed by Marsabit at Sh276mn and Wajir, which expended Sh254mn.
COB Margaret Nyakang’o said the payments contradict the government policy that requires salaries to be processed through the Integrated Personnel Payroll Database (IPPD) system.
“The manual payroll is prone to abuse and may lead to the loss of public funds where there is a lack of proper controls,” the COB warned.
Nyakang’o, in the report of the first half of the year, asked county boards to ensure their payroll is processed through the prescribed government system.
“County Public Service Boards are advised to fast-track the acquisition of Unified Personnel Numbers for their staff,” the Budget boss said.
Data from the COB office shows Machakos paid Sh250 million manually, Mombasa (Sh244mn), Garissa (Sh238.7mn), and Bomet (Sh189mn).
Other significant manual payouts were in Murang’a (Sh180.6mn), Uasin Gishu (Sh180.1mn), Narok (Sh174.7mn), Kilifi (Sh165.mn), Kitui (Sh149.1mn), Nandi (Sh142.6mn), Kericho (Sh139mn), and Elgeyo Marakwet (Sh138.8mn).
Similarly, Makueni paid Sh133 million, Kajiado (Sh131.8 mn), Mandera (Sh126.9mn), Samburu (Sh123.4mn) and Kakamega (Sh121mn).
For Kakamega, the manual payroll was made up of stipends paid to Community Health Volunteers, County Youth Service and the Women’s Empowerment Programme and compensation for unfair dismissal.
The report reveals that unscrupulous officers could be taking advantage of the unregulated hiring of contract and casual workers.
Several audits by governors, especially those who inherited counties after the 2022 elections, have exposed the menace of ghost workers in counties.
These ghost workers have been used by some county bigwigs to syphon millions.
An audit by PricewaterhouseCoopers (PwC) in August 2023, for instance, revealed 1,786 ghost workers on the Homa Bay county payroll.
The Siaya county government lost more than Sh100 million due to irregularities in the computer-based and manual payroll systems.
An audit commissioned by Governor James Orengo revealed unsupported payments from the salaries control account.
In Elgeyo Marakwet, a report released in July said 12 ‘people’ who were earning at the county were doing nothing or were non-existent.
Another 935 were smoked out in Kitui and 470 from the Trans Nzoia county government's official payments system.
The budget controller said counties should heed the government requirement that salaries be processed through the IPPD system.
Nyakang’o asked counties to fast-track the acquisition of Unified Personnel Numbers for their staff.
“The County Public Service Board should regulate staff engagement on contract and casual workers as provided under Section 74 of the County Governments Act 2012,” she said.
Governors, county assemblies and their officers responsible for hiring of staff have also been asked to observe strict compliance with the approved staff establishment.
“County Public Service Boards should regulate staff engagement on contract and casual workers as provided under Section 74 of the County Governments Act of 2012,” the COB said.
Nyakang’o has further reprimanded counties for spending on salaries beyond the set threshold of 35 per cent of county revenue.
County governments spent Sh98.13 billion on salaries (58.2 per cent of the total expenditure of Sh168.52 billion) and 47.8 per cent of the realized revenue of Sh205.32 billion.
“County governments should ensure that expenditure on personnel emoluments is contained at sustainable levels and in compliance with the Public Finance Management (County Governments) Regulations, 2015,” the Budget boss said.
The report also highlighted, among other challenges, underperformance in own-source revenue, delayed Exchequer disbursements, and huge pending bills.
As of December 31, 2023, county governments were yet to pay suppliers and contractors Sh156.34 billion.
This was amidst findings that the bare minimum required funding for development was rare.
During the period under review, development expenditure for the 47 devolved units amounted to Sh24.8 billion, about 12 per cent of the Sh203 billion budget.