Kenya launches automatic payroll deductions system — Nation Kenya

Kenya has launched an integration of its payroll system with the public financial management system, which is intended to automatically transfer taxes, pension contributions and other mandatory payments of county government employees. As Nation Kenya reports, the system has been operating since July 1.

Automatic payroll deductions

Controller of Budget Margaret Nyakang’o told a hearing of the Senate Labour Committee that the payroll system had been linked to the Integrated Financial Management System, IFMIS. When payments are made, net salaries go to employees, while PAYE tax, pension contributions and other statutory deductions are automatically sent to the relevant institutions.

According to her, counties had previously been able to pay employees their net salaries without remitting mandatory contributions, using the funds for other recurrent expenditures. The new system is intended to prevent the accumulation of new debts, but it will not cover liabilities accrued before its launch.

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County arrears

According to the Controller of Budget’s report, as of June 30, 2026, county governments’ arrears in salaries and mandatory deductions amounted to 100.24 billion Kenyan shillings. County executives accounted for 98.44 billion shillings, while county assemblies accounted for 1.80 billion shillings.

Nairobi had the largest volume of liabilities among county executives, at 44.36 billion shillings. It was followed by Machakos County with 1.95 billion shillings, Mombasa with 1.33 billion, and Murang’a with about 1.1 billion. According to the report, part of the debt arose even before the introduction of the devolved system of government.

Nyakang’o also noted that interest and penalties on unpaid amounts could increase the total debt. The Senate Labour Committee plans to summon representatives of counties with the largest unremitted deductions so they can explain the reasons for the arrears and measures to repay them.