World Bank recommends 2-year hiring freeze, 50% slash on Kenyan public officials travel budget

World Bank Group President Ajay Banga speaks during the IMF/World Bank Spring Meetings in Washington, DC, on April 22, 2025. (Photo by AFP)

The World Bank is
proposing a two-year hiring freeze in Kenya’s public service to save money and
tame the burgeoning national wage bill.

In its latest public finance review for
Kenya, the multilateral lender suggests automation across national and county
government offices to reduce the number of staff in routine administrative
roles.

“This can allow for staff numbers to be
increased in service delivery roles in health, education, or better water
management in a context of growing climate impacts, enabling service delivery
improvements in a fiscally neutral way,” the report says.

The World Bank recommends a skills audit
and redeployment of existing staff across the public service to reduce
institutional fragmentation, rather than prioritizing new hires.

But it says certain “priority sectors” with
growing staffing needs such as education would need to be exempted from the
freeze.

The number of Kenya’s public servants stood
at 968,452 in 2024 and county governments accounted for about 22 percent of
total public sector employment.

However, only six out of 47 counties met the target 35 percent
wage-bill-to-revenue ratio during the last fiscal year, according to Salaries
and Remuneration Commission (SRC) data.

While the national
government’s proportion of personnel emoluments is within the legal
ceiling, combined with the counties, it is unsustainable, the World Bank
argues.

Lowering it to meet the threshold could
create fiscal space equivalent to approximately 0.4 percent of GDP, World Bank says.

The lender has flagged systemic
inefficiencies in human resource management and payroll control as a major
contributor to the high public wage bill.

“The extensive use of manual payrolls,
prone to manipulation, and ineffective succession management, delaying the
retirement of eligible civil servants, further exacerbate the problem,” the
report says.

The bank suggests a unified human resource
information system to manage the entire hire-to-retire process across the
public sector and an audit and cleaning of payroll registers at both government
levels to weed out ghost workers.

If Kenya addressed payroll system
weaknesses between 2019 and 2023, the report says the government could have
saved up to Ksh.5.382 billion by flushing out ghost workers, Ksh.3.354 billion
from irregular domestic travel and foreign travel allowances, and Ksh.2.051
billion from unexplained instances and salary overpayments.

Similarly, the World Bank says irregular
allowances cost the taxpayer Ksh.1.712 billion during this time, alongside
unapproved remuneration structure (Ksh.932 million) and noncompliance with
SRC’s allowance guidelines (Ksh.507 million).

‘INCOHERENT’ ALLOWANCE POLICIES

At the same time, the World Bank wants the
government to slash its travel-related budget, currently estimated to be
Ksh.19.6 billion, by 50 percent.

This is alongside streamlining its
allowance policies which it says lack “coherence” and are wasting taxpayers’
money through overuse.

About 40 percent of the total wage
expenditure on permanent employees and elected or appointed officials goes to
remunerative and facilitative allowances, the lender says.

It says currently, public officials are
overusing allowances and that there is a potential risk of double compensation.

“These allowances have been used to
supplement basic pay rather than as rewards for specific jobs or work
performance. This undermines productivity as staff are frequently absent from
their duty stations since the system creates incentives to seek per diems,” the
World Bank notes.

Another issue is the Daily Subsistence
Allowances (DSAs), commonly known as per diems, paid to public officials for
travel outside their duty stations.

The World Bank says they need to be
harmonized across all job groups and government levels.

Kenya spent Ksh.6.2 billion on DSAs in the
2022/23 financial year, which was about 32 percent of the Ksh.19.6 billion
directed to travel-related expenditures.

But the multilateral lender says the per
diem practice has led to “the proliferation of committees, meetings, and delays
in administrative processes and decision-making.”

“Technical outputs that would ordinarily be
produced by a consultant and validated by government teams end up being
produced at very high costs by large numbers of staff through numerous
workshops away from the duty station and over extended periods of time,” the
report adds.

The World Bank is proposing regulation of
travel frequency and in-country workshop locations, a review of travel budget
ceilings and conference expenses, together with standardisation of DSA rates
across job grades.

Further, the lender wants per diems of
public officials on foreign trips standardised with international rates, such
as those of the United Nations Development Programme (UNDP).

Per the World Bank’s analysis, a Kenyan
civil servant is paid an average of $513 (about Ksh.66,353) daily per diem
while on a trip to the U.S., which could be brought down with standardisation
across Ministries, Departments, and Agencies (MDAs) or UNDP rates.

“If the per diem and accommodation rates
are standardized across all job groups using rates from MDAs, the average daily
cost per officer drops to US$326 (Ksh.42,119), a saving of US$187 per day,” the lender says.

“Alternatively, if the rates are
standardized across all job groups using the UNDP rate, the average daily cost
per officer is US$460 (Ksh.59,498), a saving of US$53 per day relative to the
current average expenditure.”

The report comes as Parliament considers
the 2025 Finance Bill and the 2025/26 budget estimates ahead of the budget statement
reading next month.

Treasury hopes to raise up to Ksh.30
billion in extra revenues from the bill.

However, the government has not introduced new taxes, following last year’s deadly
protests against tax hikes in the 2024 Finance Bill.

Cabinet Secretary John Mbadi’s ministry
targets reduced budget proposals by Ksh.130 billion from the original Ksh.4.3
trillion 2025/26 budget.

This is a deficit of 4.5 percent of GDP,
down from 5.1 percent in the 2024/25 fiscal year.

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