With the amount spent reaching a record high of Sh195.09 billion, over 40 counties exceeded the limit on expenditures intended to pay wages and allowances, continuing a trend that has considerably reduced funding intended for development projects since 2013.
According to the most recent information from the Controller of Budget (CoB), 42 counties violated the constitutional threshold by spending 45.5% of their total revenue on salaries, perks, and allowances. According to the Public Finance Management Act of 2015, counties are permitted to provide up to 35% of their annual budget for salaries and benefits. The percentage of total revenue that counties spent on development projects fell to a record low of 22.8 percent, or Sh97.97 billion, according to an examination of expenditure trends.
One of the main goals of devolution—to promote grassroots development—was undermined by the heavy spending on benefits and salaries, which once more caused the counties to move slowly on their development initiatives. In the report, CoB Margaret Nyakango states, “The Controller of Budget notes that personnel expenditure by only five counties was within the 35 percent ceiling, namely; Turkana, Tana River, Mandera, Kwale, and Samburu.”
The devolved units have come under fire for spending billions of shillings on activities like international travel and seminars that boost top staff members’ take-home pay at county assembly and executive arms. The number of employees in the counties has also increased as succeeding governments move to reward political allies to strengthen their support. According to official data from the Salaries and Remuneration Commission (SRC), the number of employees in the counties increased by 23.8 percent, from 175,500 to 217,300, in the year ending in June 2022.
Counties spent Sh190.11 billion, or 47.7% of their total revenue, on salaries and benefits in the fiscal year that ended in June 2022, while Sh98.47 billion, or 24.6%, went toward development initiatives. Since devolution began, counties have consistently exceeded the cap outlined in the Public Finance Management (County Governments) Regulations, 2015, reducing the amount of money available for initiatives like roads and health.
The CoB has repeatedly called out the counties for failing to meet this revenue expenditure criterion, claiming that doing so continues to deny Kenyans their right to receive better services from the county governments.
The amount counties spent on employee emoluments in the fiscal year that ended in June 2023 was the most since devolution began, while the amount allocated to development projects fell to its lowest level in a comparable time frame.
The devolved units’ spending on salaries, allowances, and perks as a percentage of total revenue was greatest in the fiscal year ending in June 2015, at 39.9% or Sh103.1 billion. Along with the CoB, the SRC has also warned the devolved units about consistently exceeding the 35 percent ceiling on salaries and wages. High salaries and wages have damaged the counties’ ability to fund development projects while also making it impossible for them to pay the billions of shillings in debt they owe to the private sector.
The devolved pending bills increased by Sh11.74 billion to Sh164.76 billion in the fiscal year that ended in June as the private sector battled rising cash flow issues that eventually drove businesses to close, take out loans, or lay off workers.
