APRM • SECOND COUNTRY REVIEW REPORT OF THE REPUBLIC OF KENYA 350. 351. Some of the proximate determinants of the wage bill are identified. They are: • Public sector is a major employer of labour; • The creation of additional structures arising from the devolution of functions to the county governments; • The rising average annual earnings per worker in the public sector (partly explained by payment of allowances) relative to the private sector of the economy, thereby widening wage gap between the two sectors; and • Over-bloated staff. During the consultative forums, the CRM was told that some counties inherited a substantial number of workers from the defunct local authorities. During the consultative forum with the officials of the national government, the CRM was informed that the government acknowledges the existence of a huge wage bill and it is concerned about it. That already, the government had started the process of staff rationalization. The IMF had earlier advised the government to streamline allowances and also ensure that the eligibility for the allowances is tightened to reduce wage bill. Payroll System of National and County Governments 352. The PEFA review in the CSAR is comprehensive and revealing. However, there was no specific description of how the payroll system works at the national (though, payroll controls were reported to have improved) and county government levels. This is very important because the wage bill is a substantial component of total expenditure of the government. A huge wage bill is inclined to weak financial control. Public Procurement at the National and County Levels 353. The CSAR hardly discusses procurement in the management of public finances, both at the national and county levels, adequately. The CRM learnt that procurement manual and guidelines were introduced, however this is not sufficient to gain insight into the contract award process and the control mechanisms. When the procurement system works well, there is value for money, implying that services are delivered efficiently. Openness, competitive bidding and transparency in the award of contracts are basic requirements of good PFM. It is said that procurement accounts for 46% of all corrupt cases in Kenya (see EACC, 2016). For this singular reason, a brief description of the effectiveness of the procurement procedures at the national and county levels is de rigueur. The high percentage of corruption cases that is procurement-related is suggestive of the weak regulatory framework governing the award of contracts. | 163 |