Counties buckling under the weight of health sector wage bill - budget controller

County governments devoted almost half of their wage bill to paying salaries and allowances for health sector alone as the devolved units struggle to bear the weight of devolved health services.

A new report by the Controller of Budget (CoB) shows that for the 2024-25 financial year counties spent Sh220.64 billion on employee compensation, which is about 64 per cent of total recurrent expenditure.

Of the wage bill, the health sector absorbed the largest portion of 44 per cent, equivalent to nearly Sh97 billion.

This even as community health workers across the devolved units continue to gobble up hundreds of millions using manual payrolls.

The total wage bill is nearly double the constitutionally accepted threshold by the Public Finance Management (PFM) regulations, which require counties to spend no more than 35 per cent of their revenues on wages.

With only eight out of 47 governments having complied, Controller of Budget is now raising issue with the trend warning that such high personnel spending is squeezing funds meant for development and the settlement of pending bills.

“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,” Controller of Budget Margaret Nyakang’o noted in the report.

Nairobi which runs the largest workforce, topped as one of the biggest spenders on compensation, alongside Kiambu, Machakos and Nakuru.

Nairobi’s huge health workforce, inherited from the now-defunct Nairobi Metropolitan Service and previous administrations, continues to exert pressure on its budget.

The controller of budget data shows that Sh353 million was paid using manual payroll, with Community Health Workers talking home Sh195.5 million of this.

West Pokot County ranked second with Sh72.69 million, followed by Uasin Gishu at Sh59.35 million, Siaya at Sh51.05 million and Kirinyaga at Sh31.97 million.

The allocations however, reflect growing recognition of CHWs as an essential link between households and the formal health system.

Their roles include disease surveillance, preventive care, maternal and child health support, and easing the burden on overstretched hospitals.

In Machakos, employee costs crowded out development spending, with the county recording one of the lowest development absorption rates at 41 per cent.

Similarly, Kiambu County reported high salary obligations while still carrying a heavy load of pending bills worth Sh7.89 billion.

The disproportionate health wage bill was attributed to the devolved nature of the sector, which brought tens of thousands of nurses, doctors, and support staff under county payrolls.

Counties like Meru, Kericho, and Narok spent heavily on healthcare staff, with health wages consuming well over 40 per cent of their total personnel budgets.

On the other end, counties such as Nandi, Trans Nzoia, and West Pokot managed to keep their personnel expenditure in check relative to their revenues.

Nandi, which recorded the highest budget absorption rate at 98 per cent, balanced its books more prudently by prioritising development and containing recurrent expenses.

According to the CoB Elgeyo Marakwet also kept a relatively lean wage bill, despite challenges in revenue mobilisation.

Overall, county governments spent Sh346.98 billion on recurrent expenditure, nearly three times the Sh123.76 billion allocated to development.

As a result, 23 counties failed to meet the legal requirement of allocating at least 30 per cent of their budgets to development.

The CoB cautioned that unless wage bill growth is tamed, counties risk becoming payroll-centred institutions rather than engines of development.

Pending bills remain another casualty, with Nyakang’o pointing out that as of June 2025, counties collectively owed suppliers and contractors Sh176.8 billion.

To ease the pressure, the CoB recommends measures such as staff rationalisation, strict adherence to the 35 per cent wage ceiling, and the adoption of innovative financing for health services.

“Counties must align their wage bills with legal requirements and prioritise sustainable spending. Without reforms, service delivery and development will continue to stagnate,” the report stated.