World Bank: Use civil servants allowances to upgrade Naivasha

The World Bank wants the government to slash allowances for civil servants conferencing in Naivasha, which would deal a blow to the town, whose thriving hospitality industry is heavily reliant on the public sector for revenues. 

On the flip side, however, the global lender has made a pitch for the town and proposed the reinvestment of the funds that the government would save through reducing allowances to improve infrastructure in the town.

This would then derisk the town for private sector players to pump money into facilities going beyond conferencing to include leisure tourism. 

The proposal to get Naivasha’s hotel industry to move away from reliance on government conferences is among other proposals that the World Bank has made aimed at helping the government reduce the public wage.

Overall, the bank wants the government to reduce all allowances to civil servants by 50 per cent. Allowances, it notes, are often excessive, poorly targeted and widely viewed as a symbol of government waste.

In a new report, the Bretton Woods institution wants the government to repurpose Naivasha such that it can complement Nairobi as a tourism destination, not only for conferences but also for leisure tourism.

It notes that the town is in close proximity to Nairobi and can play a role in easing pressure from the capital by pulling both local and international tourists.

It also has the advantage of having wildlife, a key attraction for many tourists coming to Kenya, hosting the Hell’s Gate and Mt Longonot parks as well as a host of privately run sanctuaries.

Other than conferencing, Naivasha has key attractions, including wildlife. The town is also adjacent to the geothermal fields of Olkaria and Menengai, which have the potential to offer tourists such attractions as geothermal spas, which remain unexplored.

In the report titled Beyond Budget – Fiscal Policy for Growth and Jobs, the World Bank proposes to cut allowances for government employees going to conferences in Naivasha and instead redirect the money to developing the town into a destination that attracts more of the private sector’s tourism, both leisure and conferencing.

It recommends repurposing allowances to shift from public to private tourism in Naivasha, noting that cutting allowances would not harm public service delivery but would improve fiscal discipline and public trust.

“Reducing facilitative allowances like the Daily Subsistence Allowance, or the public sector travel budget more generally, presents a meaningful opportunity to reallocate public funds toward more productive and publicly supported uses,” says the World Bank, adding that allowances are often excessive, poorly targeted and widely viewed as a symbol of government waste.

“Naivasha, a popular destination for government retreats, is well-positioned to benefit from redirected public travel spending. As a key meetings, incentives, conferences, and exhibitions (MICE) destination, Naivasha attracts significant public sector traffic, but the town has much greater private sector potential.

“Developing it into a tourism hub and gateway destination would leverage its natural beauty, unique wildlife experiences, proximity to Nairobi and prominence in high-profile events like the East African Safari Rally. Pulling more international tourists out of Nairobi to stop overnight in  Naivasha would also reduce traffic congestion in the capital and enhance Kenya’s overall tourism competitiveness.”

Government employees are paid between Sh3,500 and Sh18,000 depending on job grade for each day they spend in conferences and meetings in Naivasha.

Hoteliers in the town have in the past pushed for it to be considered alongside other cities, including Nakuru, where senior civil servants are paid up to Sh22,000 per day in per diems.

The World Bank adds that if the government halves the amount it spends on travel annually, some of the savings could be directed into putting up infrastructure that would then derisk the town and attract more private sector firms to invest in more facilities.

The government spent Sh19.6 billion on travel-related expenditure in the 2022-23 financial year on allowances.

Halving this can free up nearly Sh10 billion, with the World Bank noting the government can spare Sh2.5 billion or 25 per cent of the savings in putting up necessary infrastructure in Naivasha.

The lender further estimates that such investments by the government in the town could “crowd in up to Sh25 billion in private capital and generate tens of thousands of jobs.” 

“Redirected travel savings could leverage Sh25 billion to catalyse Naivasha’s private sector-led transformation, while easing pressure on Nairobi,” says the World Bank.

“A strategic investment approach—including stakeholder engagement, eco-tourism promotion and integrated infrastructure planning supported by geothermal energy—would lay the foundation for the sustainable growth of the town and its surroundings. Using just one-quarter of the proposed travel savings could yield Sh2.5 billion, which could seed and derisk a private sector lending facility through local banks, specifically for tourism, SMEs, and green upgrades to conference facilities.

“Redirecting both government activity and international tourism toward Naivasha—by positioning it as a modern, tourism-friendly town and a central pillar of Kenya’s tourism economy—would also help decongest Nairobi. Equivalent arguments could be made for other Kenyan cities and towns like Naivasha,” said the World Bank.

The World Bank noted that “reduction of public sector allowances could promote productivity growth in Nairobi and Naivasha, two cities that are in close proximity and whose interdependence could be better leveraged to serve Kenya’s development”.

Generally, the World Bank feels that there is a need for the government to reduce allowances to civil servants, noting that they are abused and rarely yield desired results.

“The overuse of facilitative allowances in the public sector leads to significant inefficiencies in both the wage bill and the civil service. These allowances have been used to supplement basic pay rather than as rewards for specific jobs or work performance. 

“This undermines productivity as staff are frequently absent from their duty stations since the system creates incentives to seek per diems. In the fiscal year 2022/23, spending on the Daily Subsistence Allowance (DSA) amounted to 6.2 billion Kenyan shillings, about 32 percent of the total 19.6 billion Kenyan shillings directed to travel-related expenditures.

“The per diem practice has led to the proliferation of committees, meetings and delays in administrative processes and decision-making. Additionally, technical outputs that would ordinarily be produced by a consultant and validated by government teams end up being produced at very high costs by large numbers of staff through numerous workshops away from the duty station and over extended periods of time.”

It is pushing the regulation of travel frequency and in-country workshop locations through measures such as putting in place budget ceilings for travel and conference expenses as well as the standardisation of allowances across all job groups.