The untruths in David Ndii’s wage bill article

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BY ANNE WAIGURU

The provocative and inaccurate comments by David Ndii in his Saturday Nation article of March 29, 2014, on the presentation I made at the launch of the national debate on the public wage bill sustainability on March 10, 2014, cannot go unchallenged.

Apart from the many unsubstantiated insinuations about lies on the part the Ministry of Devolution and Planning and the Kenya Government as a whole, the article contains many factual inaccuracies and outright distortions that Kenyans must be made aware of, so that we can proceed rationally with the national debate on this important subject. This statement is concerned with refuting such untruths rather than the anti-government propaganda warfare which the author seems so keen to wage.

To start with, Ndii’s article states that contrary to my presentation, the Kenya government wage bill cannot be 13 percent of GDP and 51 percent of revenue as projected by the government or the 2013/14 financial year. This, he argues, is because “we know that our revenue is just under 24 percent of GDP.” I wish to clarify that total revenue and grants as a percentage of GDP averaged 26.6 percent (not 24 percent) between 2008/09 and 2012/13 financial years as can be seen from the “2013 Economic Survey”.

Revised estimates for 2013/14 put the expected figure at that level or a little higher. As I explained, on the basis of the government’s revised estimates, the public sector wage bill is likely to consume 51 percent of revenue and 13 percent of GDP this financial year and this is by no means as far-fetched as the author states. The ministry’s position is supported independently by the Kenya Parliamentary Budget Office Policy Paper of November last year, indicating a more widely-shared view than the article indicates.

In view of this, to say that one percent of GDP collected in revenue has disappeared (or the figures cooked) should be seen as pure mischief.

Ndii proceeds to state that spending 35 percent of all public expenditure (and 29 percent of all recurrent expenditure) in the country on salaries and benefits this financial year should not be an issue because “these ratios are excellent”.

The Kenya government is concerned because a wage bill of that proportion crowds out development spending and procurement of goods and services that the public service, at national and county levels, needs in order to serve Kenyans better. South Africa (at 34pc) for example have been concerned about their wage bill out of total expenditure ratio which is lower than ourselves, since 2010. Ghana (at 38.4pc) which has similar economic conditions has also been very concerned about their wage bill expenditure ratios.

Even more alarming, as I pointed out in my presentation, Kenya now has the dubious distinction of having the highest wage bill out of GDP spending in Eastern Africa. IMF estimates, which only capture the central government wage (excluding parastatals, Teacher’s Service Commission and other independent commissions, County governments and security agencies) put the 2012/13 wage bill to GDP ratio in Uganda at 3.9 percent, Tanzania at 6.3 percent, and Kenya at 7 percent. When we add the wage numbers of these institutions, it brings the Kenyan Wage to GDP ratio to 13 percent as was stated previously. These figures may appear excellent to Ndii, but they are unacceptable to the Kenyan government given its long-term commitments to creating jobs, modernizing our education and health services and making them more widely accessible, building more infrastructure and generating more energy, among other commitments. I believe this is the promise, of the government, to provide services to its people, not to spend on itself.

The largest part of Ndii’s article is taken from a policy paper he co-authored with Harris Mule and Prof Terry Ryan more than a decade ago.

Between 1971 and 2003, he claims, top civil servants increased their salaries at two and a half times in inflation adjusted terms. Those at the bottom lost 25percent of their wages to inflation, while those in the middle public service ranks may have lost 70percent of their earnings in real terms. This resulted in gross disparities between the highest and lowest paid public servants.

In my presentation during the wage bill conference, I made mention of the same disparity, indicating that the government has recognised the problem and is seeking a solution.

The Ministry of Devolution and Planning is just as concerned about rationalizing the public service, matching total wage packages to productivity, and reducing the gap between the top and the bottom cadres of our public service. KIPPRA is part of the Ministry of Devolution and Planning and its report indicates that the lowest paid public officers now earn just one percent of the income of the highest paid. This is hardly the case of a ministry concealing disparities in order to benefit the well-paid ranks in public service.

The article concludes by insinuating that the wage bill debate initiated by H.E The President “is a red herring” intended to send the SRC on a wild goose chase. This is grossly inaccurate, careless and in bad taste. Kenyans should be assured that the Ministry of Devolution and Planning, and the Government as a whole mean every word we say, and are committed to enhancing the public service delivery experience of every Kenyan by guaranteeing efficient, effective and citizen centric public service delivery.

(Waiguru is the Cabinet Secretary, Ministry of Devolution and Planning)

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  • Sam

    Thanks CS for an excellent rebuttal.You are always so thorough in your work and we sincerely believe you and know that you will take this country places. Anyway my point of concern is that it is too early in our development process to talk about huge wage bill in civil service since we are not there yet. As we move to the next phase of our development process, there is need to produce more to support the development process. Look at history especially the countries that have developed and see the trend in their wage bill. Comparing Kenya to Tanzania, Uganda and Ghana is comletely missing the point. My sincere believe as an Economist who is well versed in development issues is that we need to improve our productivity levels and redploy where necesary to areas where there are shortages and with high impact on development. Kenya can generate more revenue from taxes and other sources that can support the wage bill and development projects. let us come up with innovative ideas to grow the economy, create wealth and jobs to our people. Opportunities exist in various areas including PPPs, agriculture, service industry, manufacturing, jua kali, SMEs and value addtion activities, among others. Retrenchment will have far more adverse repercusions on the economy. Huge potential to the grow the economy is there so let us think outside the box and take advantage of available opportunities including encouring our people to establish businesses in the country and the region. But how can they do it when interest rates are high, taxes are unbelievable, electricity is costly and inadequate,i.e, local environment is not conducive

    • steve

      My concern is that the top government officials make pronouncements which are not based on any scientific research but from reports made by some “consultants”. They should establish the structure of the economy and the way it relates to the wage bill. The government should have a vision of the country and map out on how it wants country to get there. The government should simply think outside the box and expand the economy.

  • steve

    My concern is that the top government officials make pronouncements
    which are not based on any scientific research but from reports made by
    some “consultants”. They should establish the structure of the economy
    and the way it relates to the wage bill. The government should have a
    vision of the country and map out on how it wants country to get there.
    The government should simply think outside the box and expand the
    economy.

  • steve

    The statement by the CS is trying to skirt around some facts. There are a number of questions which need to be addressed. How much domestic revenue was collected from taxes and other sources including A-in-A from state corporations 2012/13? What was the recurrent and total expenditures including those in state corporations? How much was paid to public servants in salaries and wages including those in state corporations? The answer to those questions will give us the actual public wage bill for Kenya.

  • NEO_KENYAN

    I have read this article and Ndii appears to be right, sounds like latin mass and obfuscation.
    First, what is the total wage bill of the central government? and what is the central government’s total revenue? From this we can tell for ourselves what the ratio of central government wage bill to central government revenue is.
    Second, what is the consolidated public wage bill and what is the consolidated goverment revenue?
    The ratios are easy to compute, give us the actual numbers.

  • Sam

    Thanks all. It seems the CS and her highly trained and exposed technocrats are keen to drag us back with retrogressive policies which will reverse the gains already made rather than taking us foward to the next level. Believe me not, Mr. David Ndii is very right and to say that the public wage bill is unsustainablly too much thereby calling for drastic measures including retrenchment and countrywide consultations on how to address it is not only awful but reckless and unbelievable at this stage of our development. Can the Government pull all efforts to grow the economy, address corruption, increase revenue collection, attract more FDI, create jobs and wealth to the hardworking Kenyans and millions of jobless youths. Radical shift and policy changes are needed to create an enabling environment and policy framework to grow this economy. Innovative approaches are needed to raise development revenue and expand the economy not thru simplistic approaches being propagated by the CS and the GoK. I

  • Paul Macharia

    Even after reading the rebuttal by the cabinet Secretary, I still concur with David Ndii. The problem is not with the wage bill, but with consumption. The government pays way more for goods and services procured due to corruption and wastage!

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