Governor Anne Kananu

Ann Kananu makes her first address after she was sworn in as Nairobi’s third and its first female Governor. 

| Jeff Angote | Nation Media Group

Inside City Hall's plan to rein in its bloated workforce

City Hall is betting on outsourcing cheap labour, payroll cleansing and machine labour to control its ballooning wage bill, now at Sh13 billion, about 44 percent of its annual budget against a ceiling of 35 percent.

The Nairobi County government has been grappling with a bloated workforce, spending Sh1.1 billion every month on salaries and wages.

Out of this financial year’s budget of Sh39.6 billion, Sh27 billion was allocated to recurrent expenditure with only Sh12.6 billion earmarked for development, revealing the severity of the problem.

The county’s Fiscal Strategy Paper for 2022-2023 shows that Ann Kananu’s administration will prioritise outsourcing cheap labour instead of employing new workers or undertaking capacity building.

Recruiting new employees, explained Finance and Economic Planning executive Allan Igambi, would cost the county more money than outsourcing.

“It is far much cheaper for the county to outsource certain technical skills rather than employing (workers),” said Mr Igambi.

The county government, he said, spent Sh13.09 billion on wages for employees in the last financial year against revenues of Sh29.6 billion.

City Hall collected a paltry Sh9.9 billion in own-source revenues in the fiscal year to June 30, 2021, against a target of Sh16.5 billion. Equitable share and conditional grants accounted for the balance.

Although the wage bill was a slight decrease from the Sh13.24 billion spent in the previous financial year, the cost remains way higher than the ceiling of 35 percent of county government revenue required under the 2015 PFMA Act.

The wage cost in the financial year to June 30, 2018 was also high at Sh12.89 billion.

The Finance boss said high wage costs continue to undermine the county’s fiscal responsibilities, fearing that the cost could increase further to Sh18.1 billion in the financial year ending on June 30, 2023.

Without counting the Nairobi Metropolitan Services (NMS) staff, City Hall spent Sh5.7 billion on salaries and wages in the financial year to June 30, 2020. This increased to Sh5.8 billion the following fiscal year.

The county government has 12,034, per the latest biometric count at the end of January 2019, with 6,852 seconded to NMS.

To rein in the wage bill, Mr Igambi said the county is preparing a send-off package to motivate early retirement of less productive staff.

City Hall will also embark on payroll cleansing to make sure dead and sacked employees are not being paid.

This is in addition to adopting technology to replace some aspects of human labour, like using tools and machinery to carry out environmental duties like slashing and maintaining lawns.

“This will save the county a lot of money, which could have been paid to casual workers,” Mr Igambi said.

“Automation of employees’ reporting time register is essential for it will curb the ghost workers menace hence reducing the wage bill,” he added.

City Hall has tried retiring its ageing workers by dangling voluntary early retirement but only 462 employees have exited through natural attrition.

However, Mr Igambi said the county is working to improve human resource efficiencies by training existing employees from time to time to equip them with new required skills.

City Hall has since 2018 tried to roll out voluntary early retirement schemes with little success as the staff union rejected the plans, demanding full settlement of retirement benefits and pension.

The union has maintained the county government must first clear pension money owed to those who retired naturally between 2018 and 2020 and those set to do so in 2021.

City Hall still owes those who left through natural attrition Sh175 million in the form of gratuities, coffin costs, terminal leave dues and other benefits. Pension dues stand at Sh19 billion to the Local Authority Pension Trust (Laptrust) and Sh23 billion to Local Authority Pension Fund (Lapfund).

A similar scheme in 2018 by former Governor Mike Sonko saw only 400 workers voluntarily leave between July 2018 and January 2019 despite plans to retire 731.

A biometric report released by the county government in November, 2019 revealed that about a half of City Hall employees are over 50 years.

The report revealed that out of the 11, 603 City Hall workers at that time, a whopping 5,709 were aged 50 years and above, with 19 above the retirement age of 60.

The report also revealed that only 792 of the employees were below the age of 35, representing only 14 percent of the workforce.

Some 2, 712 workers were aged between 55 and 59; 2, 978 between 50 and 54; and 2, 663 between 45 and 49.