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Economy

Ministers to walk away with Sh14m sendoff pay

From left, SRC chairperson Sarah Serem, vice chair Daniel Ogutu and commissioner Sellistine Kiuluku during a press briefing on July 10, 2017. PHOTO | SALATON NJAU | NMG
From left, SRC chairperson Sarah Serem, vice chair Daniel Ogutu and commissioner Sellistine Kiuluku during a press briefing on July 10, 2017. PHOTO | SALATON NJAU | NMG 

Cabinet secretaries who have served in President Uhuru Kenyatta’s government since 2013 are set to walk away with Sh14.6 million each in gratuity payment when a new government is formed.

Principal secretaries (PSs) – who are the administrative heads at each State department – have also earned handsome exit packages of Sh11.8 million each.

Taxpayers will fork out Sh208.2 million to finance the sendoff packages for the 19- member Cabinet, and a further Sh365.5 million for the 41 PSs - highlighting the heavy burden of Kenya’s gratuity scheme for elected leaders and top public servants.

Members of Mr Kenyatta’s first Cabinet that was sworn in mid-May 2013, including Henry Rotich, Raychelle Omamo, James Macharia, Amina Mohamed, Fred Matiang’i, Jacob Kaimenyi and Phylis Kandie, are set to pocket Sh14.6 million each in gratuity.

Those who took office in December 2015 following a shuffle such as Charles Keter, Willy Bett, Sicily Kariuki, Joe Mucheru, Dan Kazungu, Cleopa Mailu, and Mwangi Kiunjuri will get a farewell package of Sh5.7 million each.

Water and Irrigation secretary Eugene Wamalwa will take home more than Sh6.9 million in gratuity having taken oath of office in July 2015.

PSs who have served consistently since July 2013, including Belio Kipsang (Education), Joseph Njoroge (Energy), Mariamu El Maawy (Land) and Mwanamaka Amani Mabruki, look forward to walking away with Sh11.8 million cheques each.

Their colleagues who came in via the December 2015 shake-up that expanded the number of State departments from 26 to 41, such as Betty Maina, Victor Kyalo, Chris Kiptoo and Susan Mochache, will get Sh4.7 million in gratuity.

Not entitled to pension

This golden parachute to ministers and PSs is premised on the fact that they are not entitled to pension, but gratuity equivalent to 31 per cent of annual basic pay for every year served.

The Cabinet secretaries and PSs will pocket the sendoff perks regardless of whether they will be re-appointed to serve again, the Salaries and Remuneration Commission (SRC) guidelines show, with taxpayers picking up the tab.

“A State officer serving on fixed term shall serve on contract and be paid a service gratuity at the end of the term at the rate of 31 per cent of annual basic pay for every year served,” The SRC said in gazette notice dated February 2013, which set the pay details for the current administration.

Public finance experts are now calling for a review of the gratuity model, and its replacement with a scheme where public office holders and taxpayers jointly contribute to a pension scheme, accessible at the end of one’s term in office.

The list of public officers who will earn handsome exit pay in the form of gratuity following the August 8 General Election includes the Speakers of parliament and county assemblies, 416 legislators, 47 governors and their deputies, 2,222 ward representatives, county executive committee members, chief officers, and county secretaries.

Re-look gratuity rules

Bobby Mkangi, a member of the Committee of Experts that drafted the 2010 Constitution, said the SRC needs to re-look the gratuity rules to either make it a contributory scheme or reduce the percentage rate.

“The spirit of coming up with SRC was to try and make public office as cost-effective as possible. This is a heavy burden on taxpayers,” Mr Mkangi told the Business Daily in an interview.

“We should consider gratuity being pegged on the performance of the economy. It’s a debate that we should hold.”

Kenya’s total wage bill stood at Sh675.8 billion against tax collections of Sh1.365 trillion in the period to June 2017, official data shows.

Cabinet secretaries are currently taking home Sh1.056 million in basic pay per month.

Their pay has grown by a third given that they were pocketing Sh792,000 per month in the first year of service, which ballooned to Sh990,000 monthly in the fourth year, before rising to the current levels.

PSs currently earn Sh874,500 in basic pay monthly, a 33.3 per cent jump from the Sh655,875 they took home in the first year of service.

New ministers and PSs join at the lowest band and go up the ladder over the years, according to the SRC rules.

The incoming Cabinet members and PSs will earn a flat basic pay of Sh924,000 and Sh765,188 per month respectively, a marginal pay cut announced by the SRC in July. 

Ministers and PSs also get additional benefits, including accommodation and subsistence allowance, airtime stipend, chauffeur-driven cars, medical scheme with an inpatient cover of Sh10 million, and a life insurance cover equivalent to three times the annual basic salary.

Kamotho Waiganjo, who was a member of the now defunct Commission on the Implementation of Constitution, said the taxpayer-funded gratuity model is not economically viable.

“We need to find a way that is self-contributory, otherwise we’ll get into a hole. The wage bill is already high,” Mr Waiganjo, a lawyer, said in an earlier interview.

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