Kenya: Yes, Kenyan President Right That Salaries and Wages Take Up 46 Percent of Revenue, but Made a Common Statistical Error

Kenya’s public finances have been in the spotlight this year, as the new government struggles to balance the books. William Ruto recently tried to quantify the challenge by looking at spending on salaries.

Claim

Three claims about Kenya’s ballooning wage bill

Verdict

Two correct, one incorrect.

Source

William Ruto, president of Kenya (July 2023)

Ruto’s claim that the government spends 46% of revenue on wages and wages appears to be correct based on the latest data available from Kenya’s wages commission, though we found some discrepancies in the numbers from the national statistics agency.

The president is also correct that statutory regulations say government salaries should not exceed 35% of revenue, but there is no internationally set “optimal level” or best practice for this figure.

However, this does not mean the Kenyan government is 11% above what is mandated by law – the difference between 35% and 46% is 11 percentage points. In absolute terms, spending is 31.7% higher.

Kenya is grappling with the headache of balancing its booksweighed down by public debt on one side and a high wage bill on the other.

Speaking at a state function on July 4, 2023 (at timestamp 2:50 in this video), Kenyan president William Ruto said that salaries and wages now account for almost half of the country’s revenue.

He called for a “balance” between the amount used to pay government workers and that used for development projects, and for greater productivity.

In the past, Kenya has used borrowed money to pay wages. But Ruto, who took office in September 2022, has vowed not to borrow for wages or other recurrent expenditure.

The president said: “At the moment, we are spending about 46% of our revenue on salaries and wages. The law and best practice demand that we spend 35%. So, we are 11% above what is recommended as the best practice and stipulated in the laws of Kenya.”

Do these claims add up? We checked.

Claim

“We are spending about 46% of our revenue on salaries.”

Verdict

Correct

Ruto did not provide any evidence for these figures. We therefore contacted State House spokesperson Hussein Mohammed and will update this report when we hear back.

Tea Kenya National Bureau of Statisticsthe country’s data agency, referred us to its latest annual economic survey for government spending on salaries and wages.

The survey used payroll data from government financial systems and other staff costs paid as part of remuneration, said Robert Nderituhead of production statistics at the data agency.

However, there was a discrepancy in the data. As the number of government employees pink from 842,900 in 2018 to 923,000 in 2021, and the wage bill for the counties also increasedthe data showed that less money was used to pay workers in 2021 than in 2018.

We have asked the data agency for clarification.

President’s claim backed up by latest available government wage bill

We then contacted the parliamentary budget officethe non-partisan professional office that advises Kenyan lawmakers on the economy, to identify the best source of wage bill data.

“The Salaries and Remuneration Commission should have the complete data set of the public sector wage bill,” Dr Martin Masinde, the director of the budget office, told Africa Check.

Tea salary commission sets the salaries of Kenya’s state officers and advises the government on how to pay its workers.

A commission official referred us to the agency’s March 2023 wage bill bulletin as the most recent. Published in May 2023, it said the wage bill as a share of revenue was 46.3% in 2022. We therefore missed the president’s claim correct.

Kenyan government spending on salaries and wages as a percentage of total revenue (KSh billion)

financial year

Total wages

Returned

percentage

2019/20

944.9

2,255

41.9

2020/21

998.6

2,268

44

2021/22

1,055.5

2.282*

46.3

Source: Salary and Remuneration Commission . *The 2021/22 revenue figure is a commission projection. The statistical agency has a lower figure of KSh2.152 billion. Using the latter figure yields a higher proportion of 49%, but does not negate the claim’s merits. We have queried this with the commission.

Claim

“The law and best practice demand that we spend 35% [of revenues on salaries and wages].”

Verdict

Correct

Again, the president did not cite the specific law. But public spending in Kenya is governed by the Public Finance and Management Act.

The law stipulates that the amount to be spent “on wages and benefits for its public officers shall not exceed a percentage of the national government revenues as prescribed in the regulations”.

In turn, the regulations state that “compensation of national and county government employees shall not exceed 35% of either level of government equitable revenue share”.

Prof XN Iraq teaches economics at the University of Nairobi inKenya. He told Africa Check that spending more than 35% of revenue would starve the country of development funds.

“We need money for roads, hospitals and schools, among others. It could also lead to a bloated workforce and waste,” he said.

What about best practice? According to the International Monetary Fund, “there is no optimal level of government spending on wages. In fact, there is wide variation across countries in the size of governments’ wage bill and employment levels”.

“These variations reflect national choices about the role of government, as well as the level of economic development and the resources available.”

In other words, there is no threshold or one-size-fits-all, as Ruto claimed. But the president was correct according to Kenyan government regulations.

Claim

“We are 11% above what is recommended as best practice and stipulated in the laws of Kenya.”

Verdict

Incorrect

Ruto said Kenya had breached a “recommended” threshold by 11%. This figure appears to be the difference between the 35% provided for by law, and the 46% in the data from the wages commission.

But Ruto made a common statistical error – the difference between 46% and 35% is 11 percentage points, not 11 % (percent). (Read our guide on how to avoid these errors.)

In absolute terms, the difference is KSh255 billion, calculated as 46% of KSh2.3 trillion revenue (KSh1.06 trillion) minus 35% of the same revenue, which is KSh805 billion.

Using these figures Kenya’s government spending is 11 percentage points above the 35% level set by law, but has exceeded the threshold by 31.7%.