By Peter John

A dangerous convergence of payroll fraud and entrenched corruption is exposing a deepening governance crisis in Kenya’s counties, raising fears over the sustainability of devolution.

A special audit by Auditor-General Nancy Gathungu has uncovered hundreds of suspected ghost workers across 26 counties, pointing to massive financial leakages through inflated payrolls. At the same time, a new report by the Ethics and Anti-Corruption Commission (EACC) paints a grim picture of systemic corruption crippling service delivery at the grassroots.

Together, the findings reveal a troubling pattern: counties are spending billions on employees who may not exist, while citizens are forced to pay bribes to access basic services.

Payroll fraud draining billions

The Auditor-General’s report found that 596 out of 2,354 sampled county employees—about 25.3 percent—could not be physically verified, despite earning a combined KSh978 million over three years.

The audit warns this could be only a fraction of the problem. If replicated across the entire county workforce, losses could reach an estimated KSh33.5 billion in the 2024/25 financial year.

Counties such as Machakos, Mandera, Nairobi, Samburu and Nandi recorded some of the highest numbers of untraceable staff, suggesting the issue is systemic rather than isolated.

Funds that should be financing hospitals, schools and critical infrastructure are instead being channelled into salaries for non-existent workers.

Corruption choking public services

The EACC’s Kenya Gender & Corruption Survey 2025 underscores the scale of the crisis, highlighting corruption as a major barrier to development and service delivery.

“Corruption remains one of the most significant impediments to sustainable development, undermining institutions and eroding public trust,” the report notes.

At the county level, key sectors such as health, civil registration and policing are perceived as the most corrupt, with bribery deeply entrenched.

Alarmingly, 84.3 percent of bribes are paid before services are delivered, effectively turning public services into a pay-to-access system.

A growing human capital crisis

The intersection of ghost workers and corruption is now fuelling a broader human capital crisis.

Despite ballooning wage bills, essential services remain understaffed. Hospitals lack adequate personnel, classrooms are overcrowded, and critical public functions are stretched thin.

This paradox is driven by payroll fraud, where funds intended to hire qualified professionals are siphoned off through ghost workers. Meanwhile, genuine employees face overwhelming workloads and, in some cases, are pushed towards corrupt practices to cope.

“Corruption not only diverts resources but also deteriorates the quality of public services and deepens inequality,” the EACC report states.

Devolution under pressure

Devolution was intended to decentralise power and bring services closer to citizens. However, rising recurrent expenditure—particularly on salaries—now threatens to undermine that promise.

With counties spending over KSh132 billion on wages, the presence of ghost workers suggests a significant portion of public funds is being wasted.

This has squeezed development budgets, leaving roads unbuilt, hospitals under-equipped and youth unemployment unaddressed.

Instead, resources are increasingly trapped in patronage networks that prioritise political loyalty over service delivery.

Culture of silence

Perhaps most concerning is the widespread reluctance to report corruption.

According to the EACC, 98.6 percent of Kenyans who paid bribes did not report the incidents, citing fear of retaliation or lack of faith in the system.

This culture of silence allows both payroll fraud and everyday corruption to persist unchecked, eroding accountability and weakening institutions.

A warning for the future

The findings signal a critical moment for Kenya’s devolved system. Without urgent reforms and stronger oversight, counties risk becoming wage-heavy, service-poor entities unable to deliver meaningful development.

If left unchecked, the twin crises of ghost workers and systemic corruption could not only drain public resources but also undermine public trust and derail the very foundations of devolution.