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Controller of Budget (COB) flags KSh5.7bn salaries paid outside payroll

Controller of Budget (COB) flags KSh5.7bn salaries paid outside payroll during the Kenya Kwanza administration.

In the first nine months of the Kenya Kwanza government, the Controller of Budget (COB) has raised concerns about spending Sh5.66 billion on salary payments outside of authorized payroll systems.

The findings of the review of salaries paid by ministries, departments, and agencies in the nine months leading up to March 2023 cast doubt on the government’s resolve to make pay bill spending transparent.

Challenges associated with manual payroll administration has in the past seen billions of shillings in taxpayer funds spent on ghost workers annually.

“A review of recurrent expenditure shows that Sh399.96 billion was spent on compensation to employees, representing 40.3 percent of the gross recurrent expenditures by MDAs. Further analysis revealed that Sh363.66 billion was processed through the Integrated Personnel and Payroll Database and other approved payroll management systems. Sh5.66 billion was paid outside the prescribed payroll management system,” the COB observed.

There were delays in paying some civil officials’ salaries in March of this year due to liquidity concerns in the government that coincided with the State agencies’ payment of salaries outside the payroll system.

The national government’s pay cost increased by about Sh16.55 billion from March to the third quarter of the fiscal year 2022–2023.

This indicated the strain on spending brought on by new appointments made by President William Ruto’s government. 

The new administration, for instance, nominated 50 chief administrative secretaries and expanded the number of State departments from 44 to 51.

An executive order issued by President Ruto in January this year on the organization of the government increased the number of State departments, government agencies, and other State offices.

“In the annual national government budget implementation review report, we will annex MDAs with payments outside the prescribed payroll system and reasons thereof,” Controller of Budget Dr. Margaret Nyakang’o said.

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MDAs are required to process salaries via approved payroll systems, including the integrated personnel payroll database (IPPD) which was designed in the 1996/97 fiscal year.

The system was introduced to address the challenges of manual payroll administration which had been described as cumbersome, causing salary delays, inaccuracy in determining staffing levels, and poor accountability of funds.

The system’s main objective is to maintain accurate and consistent personnel data in public service.

The State Department of Public Service, the Ministry of Defence, the Independent Electoral and Boundaries Commission, the Office of the Registrar of Political Parties, and the Director of Public Prosecutions recorded the steepest climb in spending on wages.

However, according to the COB, the classification of employer contributions to the National Health Insurance Fund (NHIF) and the National Social Security Fund (NSSF) as part of the compensation to employees led to a more than 10-fold rise in wages under the State Department of Public Service from Sh499.75 million in the previous nine-month review to Sh6 billion.

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