Cabinet approves reforms to tackle payroll fraud

The Cabinet has approved sweeping reforms to dismantle what it described as decades-old payroll fraud across government after an audit uncovered suspected irregularities worth Sh6.2 billion.

The reforms, approved at a Cabinet meeting chaired by President William Ruto at State House, Nairobi, include a government-wide payroll audit, criminal investigations and the migration of all public institutions to a revamped payroll management system.

A sample audit of 12 out of 53 State departments uncovered unauthorised alterations to payroll records, irregular payments, weak controls over statutory deductions, fragmented payroll management and major oversight gaps.

The Directorate of Criminal Investigations was directed to investigate the fraud, verify personnel numbers used in payroll processing, recover lost public funds and prosecute those found responsible.

All ministries, departments, agencies and State corporations will be required to migrate to a revamped Integrated Human Resource and Payroll System, backed by stronger cybersecurity, payroll data cleansing, a disaster recovery site and integration with other public financial management systems.

In a separate cost-cutting measure, Cabinet froze the leasing of additional government office space pending an audit of existing offices and their utilisation, alongside a programme to renovate public buildings.

Cabinet also established a Standing Cabinet Committee on Artificial Intelligence to coordinate Kenya’s national AI strategy, promote responsible adoption of artificial intelligence and support innovation, productivity, public service delivery and job creation.

To boost the digital economy, it approved the National Business Process Outsourcing Policy, aimed at positioning Kenya as a leading global outsourcing destination.

On the Judiciary, Cabinet approved the Sh26 billion Judicial Performance Improvement Project Phase II, supported by the World Bank, to finance a new Supreme Court complex, a dedicated Court of Appeal building, a consolidated Tribunals and Judiciary Administration complex and a modern Kenya Judiciary Academy.

Ahead of the expected El Nino season, Cabinet established an ad hoc committee chaired by Deputy President Kithure Kindiki to coordinate national preparedness, including flood mitigation, evacuation planning, drainage clearance, reinforcement of vulnerable roads and bridges, pre-positioning of emergency supplies and a contingency fund.

Cabinet further approved an additional Sh16.6 billion for the Mwache Multipurpose Dam Project in Kwale County. Once completed, the dam is expected to supply 186,000 cubic metres of water daily to Mombasa and Kwale counties, easing chronic water shortages and supporting irrigation, industry and climate resilience.

In the health sector, Cabinet endorsed the Kenya–United States Health Cooperation Framework to sustain collaboration in combating HIV, tuberculosis, malaria and emerging infectious diseases while strengthening Kenya’s transition towards a more self-reliant health system.

It also approved the Sh4.5 billion Mother-and-Child Lifeline Initiative, a partnership with Amsons Group to construct 10 Level Four and Level Five maternal hospitals across the country, complementing the Sh7.8 billion second phase of the Kenya-Austria Mother and Child – Our Future Project.

To strengthen social protection, Cabinet adopted the Kenya Children Policy 2025, approved the Protection Against Domestic Violence (Amendment) Bill, 2026, and endorsed recommendations of the Presidential Technical Working Group on Gender-Based Violence and Femicide.

On manufacturing, Cabinet approved the Sh5.8 billion Leather Value Chain Development Support Project, adopted the National Cotton, Textile and Apparel Policy, established the Kenya Leather Development Authority and approved a revised MSME Policy aimed at supporting small businesses.

Cabinet also approved Kenya’s hosting of the Secretariat of the Alliance of African Multilateral Financial Institutions and authorised negotiations on a long-term Economic Partnership for Shared Development with China to expand trade and investment.

Additional financing was approved for the 67-kilometre Modogashe–Samatar and 76-kilometre Rhamu–Mandera road sections under the 750-kilometre Isiolo–Mandera corridor.

It also endorsed petroleum cooperation agreements with Rwanda and South Sudan, allowing the two countries to import refined petroleum products through Kenya’s infrastructure, a move expected to increase fuel transit through the Port of Mombasa, the Kenya Pipeline network and the Northern Corridor while boosting revenue from transport, storage and logistics services.