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

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).

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.