The number of counties that met public finance rules on wage spending as a percentage of revenue jumped to 12 in the year to June 2025 from three in 2024, indicating improving fiscal discipline in the devolved units and higher own source revenue collection.
The Public Finance Management (County Government) Regulations, 2015 requires that expenditure on wages and benefits for public officers shall not exceed 35 percent of the total revenues. The measure was put in place to protect ability of counties to offer critical services to the public such as healthcare.
The lowest wage expenditure relative to revenue was seen in Kilifi County at 22.9 percent, followed by Siaya and Tana River at 26.9 percent each, and Nakuru at 28.3 percent.
Other counties that met the 35 percent threshold were Kwale, Nandi, Nyandarua, Migori, Isiolo, Busia, Turkana and Narok. On the other hand, the highest wage ratio was reported by Tharaka Nithi (53.2 percent), Machakos (51.2 percent) and Kajiado (51.2 percent).
In the previous fiscal year, only Tana River (34 percent), Narok (32 percent) and Kilifi (30 percent) had kept their wage spend below the legal requirement.
In the 2024/2025 fiscal year, the 47 counties spent Sh220.6 billion in wages, which was the equivalent of 43.1 percent of their revenue, as per the National Treasury’s draft 2025 budget review and outlook paper (BROP).
Although the average wage spending for the devolved governments was above the 35 percent threshold, it represented an improvement from the ratio of 47.6 percent in the 2023/2024 year, when they paid Sh209.8 billion in wages.
“Total expenditure on wages and salaries by county governments amounted to Sh220.6 billion, while total revenue over the same period was Sh511.9 billion," said the Treasury in the BROP document.
"This translates to an average wage bill ratio of 43.1 percent that exceeds the 35 percent ceiling prescribed by the PFMA, Cap 412A. This trend points to persistent fiscal pressures arising from growing personnel costs in most counties.”
At the same time, the fiscal responsibility principles require the counties to allocate and spend at least 30 percent of their budgets on development programmes. In the year to June 2025, 18 counties met this threshold, up from nine in the previous year. The improved compliance on both wages and development spending was backed by higher revenue, both from Treasury transfers and own source revenue sources.
