CBK is accused of hiring unqualified managers and breaching HR regulations. Auditor General warns of “constitutional, legal and financial risks.”
The Central Bank of Kenya (CBK) has been cited for breaching key human resource laws and governance procedures, including hiring unqualified managers and ignoring pay-setting regulations.
According to Auditor General Nancy Gathungu’s report for the financial year ending June 2025, the lapses expose the institution to “constitutional, legal and financial risks” that could undermine its governance standards.
“There were instances during recruitment where shortlisted or successful candidates did not fully meet the mandatory experience or service period requirements, even though they were previously acting in the positions they were subsequently appointed to,” said Gathungu.
The report revealed that CBK bypassed the Salaries and Remuneration Commission (SRC) in determining salary structures and allowances, violating legal procedures.
Additionally, the audit found that staff promotions often ignored internal HR policies, with some employees promoted to grades outside the official succession plan.
“Non-adherence to internal human resources policies was noted in staff promotions, specifically concerning placement on salary scales and promotions to non-succeeding grades,” the Auditor General noted.
The Auditor General also faulted CBK for poor management of staff secondments and attachments, stating that the bank failed to seek reimbursements for seconded employees and allowed some to overstay beyond legal limits.
“These matters collectively present a risk of constitutional and legal breaches, potential financial losses due to unrecovered costs, and weaknesses in the control environment governing human resources,” the report warned.
Governance lapses were worsened by the absence of a full board of directors between December 2024 and May 2025, which left key committees like the Human Capital Committee inactive.
Although President William Ruto appointed five new board members in May 2025, three positions remain vacant.
The report also raised concerns about CBK’s ethnic diversity, noting that two communities, Kikuyu and Kalenjin, make up 44% of the bank’s 1,311 staff.
It also revealed that 34.7% of employees are aged between 51 and 60 years, nearing retirement age.
CBK remains among Kenya’s highest-paying public institutions, with an average monthly salary of Sh349,605. The total payroll increased by 5.9% to Sh5.5 billion in 2025, up from Sh5.2 billion the previous year.
Despite the HR and governance shortcomings, CBK recorded a financial turnaround, posting a Sh65.8 billion surplus in 2025 compared to a Sh24.8 billion deficit in 2024.
However, for the first time in seven years, the bank will not remit dividends to the National Treasury, opting to retain the earnings to raise its capital base to Sh100 billion.
The move comes as the Treasury faces revenue shortfalls and explores asset sales to address the fiscal deficit.
