County governments are struggling to meet their obligations as health sector wages consume almost half of their payroll costs, leaving little room for development and pending bill payments.
A report by the Controller of Budget for the 2024/25 financial year shows that counties spent Sh220.64 billion on employee compensation, amounting to 64 per cent of their recurrent expenditure, far above the legal threshold.
The health sector alone took up Sh97 billion, equivalent to 44 per cent of the total wage bill, making it the most costly devolved function. Controller of Budget Margaret Nyakang’o warned that this trend is undermining fiscal responsibility.
“The expenditure landscape reveals excessive spending on employee compensation, with only eight Counties staying within the 35 per cent regulatory ceiling. Furthermore, the health sector’s wage bill accounts for 44 per cent of total expenditures, raising concerns about financial management,” Nyakang’o said.
Nairobi, with the country’s largest workforce inherited from the defunct Nairobi Metropolitan Service and earlier administrations, was among the highest spenders. The capital, together with Kiambu, Machakos and Nakuru, featured prominently on the list of counties where personnel costs continue to outpace revenues.
Data from the report shows that Sh353 million was still paid through manual payrolls, with Community Health Workers taking home Sh195.5 million. West Pokot followed with Sh72.69 million, Uasin Gishu at Sh59.35 million, Siaya at Sh51.05 million and Kirinyaga at Sh31.97 million.
While the allocations highlight the essential role of Community Health Workers in linking households with the formal health system through disease surveillance, preventive care and maternal support, the reliance on manual payrolls remains a financial risk.
The Controller noted that inflated wage bills are crowding out key development programmes in counties such as Machakos, which recorded a development absorption rate of just 41 per cent. Kiambu, meanwhile, faces heavy salary obligations alongside pending bills of Sh7.89 billion.
The burden is widespread across counties that absorbed large numbers of nurses, doctors and support staff after health services were devolved. Meru, Kericho and Narok devoted more than 40 per cent of their wage bills to health staff salaries.
In contrast, counties such as Nandi, Trans Nzoia and West Pokot maintained tighter controls on personnel costs relative to their revenues.
Nandi posted the highest budget absorption rate at 98 per cent, striking a balance between recurrent and development spending. Elgeyo Marakwet also managed to sustain a leaner payroll despite revenue challenges.
Overall, counties spent Sh346.98 billion on recurrent costs, almost three times the Sh123.76 billion allocated to development.
This imbalance meant that 23 counties failed to meet the legal requirement of directing at least 30 per cent of their budgets to development projects.
Nyakang’o cautioned that unless counties rein in wage bills, devolved units risk being reduced to payroll-driven administrations instead of being engines of growth.
The report also revealed that pending bills remain a pressing challenge, with counties owing suppliers and contractors Sh176.8 billion by the end of June 2025.
