TSC Payroll Systems Under IMF Probe in Government-Backed Anti-Corruption Review.
The International Monetary Fund (IMF) has started a comprehensive review of Kenya’s public finance systems with focus on Teachers Service Commission (TSC) payroll and education sector capitation funds. This is part of a broader anti-corruption assessment requested by the Government of Kenya targeting key expenditure areas in education, health, procurement and infrastructure.
The review was confirmed by Cabinet Secretary for National Treasury and Economic Planning, John Mbadi who said the education sector—TSC in particular which administers over Ksh400 billion annually—had been identified as a priority area for the IMF diagnostic mission.
“The government requested this assessment to strengthen systems and eliminate inefficiencies. TSC payroll which is a huge expenditure item must be ghost free, salary inflation and other forms of fiscal leakages,” CS Mbadi said.
IMF Mission Scope and Duration
The IMF diagnostic mission was conducted between June 16 and June 30, 2025 and was led by Rebecca Sparkman and had technical experts from multiple IMF departments including Fiscal Affairs, Legal, Finance and Monetary and Capital Markets. World Bank was also part of the mission as an institutional partner.
The mandate of the mission was to look into structural weaknesses and corruption vulnerabilities in Kenya’s public financial management architecture. In the education sector the focus areas were:
- Verification of TSC payroll integrity
- Salary disbursements for potential inflation or duplication
- Audit of capitation fund allocations relative to actual school enrolment records
- Examination of internal controls governing fund disbursement and payroll processing
Capitation and Payroll Integrity Concerns
According to National Treasury, capitation funds meant to support learner education costs are now under the spotlight with concerns that allocations may be based on fictitious or duplicated enrolments. CS Mbadi said education being the largest budgetary item requires thorough evaluation to ensure public funds are used transparently and efficiently.
“Capitation: Are we paying for students who are in school or are we paying for students who exist on paper?” the Cabinet Secretary asked during the IMF briefing session.
He added that the government gave the IMF focused areas based on internal risk assessments, “We know the system better. We knew where to direct them.”The IMF diagnostic goes beyond education. Other sectors being reviewed are health services, procurement systems and infrastructure projects—areas that have been identified by oversight agencies and development partners as prone to abuse.
The decision to put the public payroll system including TSC under international scrutiny was seen by Treasury as a proactive governance measure in line with Kenya’s commitments under its Extended Fund Facility (EFF) and Extended Credit Facility (ECF) with IMF.
The government has said it will cooperate fully with IMF and other institutions during the diagnostic and implementation phases.
The final IMF report is expected to be completed and submitted in October 2025. Publication of the report will require Cabinet approval but CS Mbadi seemed to be in favour of transparency.
“From where I sit I don’t see why it shouldn’t be published. But that will be a Cabinet decision,” he said.
During the mission the IMF team met with state and non-state actors including civil society organisations to get a comprehensive picture of governance and accountability challenges.
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If the report finds irregularities in the TSC payroll or capitation processes then reforms may include biometric verification for employees and students, digitisation of enrolment records and enhanced audit protocols for education expenditure.
The findings will inform both short term fixes and long term institutional reforms to protect public resources.
TSC Payroll Systems Under IMF Probe in Government-Backed Anti-Corruption Review.