THE JOINT EFFECT OF BUDGETING PRACTICES, PUBLIC PARTICIPATION AND AUTOMATED REVENUE COLLECTION SYSTEM ON FINANCIAL PERFORMANCE OF COUNTY GOVERMENTS IN KENYA
Abstract
Purpose of the study: The purpose of this study was to examine the combined effect of budgeting practices, public participation and automated revenue collection systems on the financial performance of county governments in Kenya.
Methodology: The study employed a pragmatic research philosophy and an ex-post facto research design. The target population consistent of 47 county go governments in Kenya. A questionnaire was used to survey the controllers of budget from 45 county governments in Kenya. The research employed both inferential and descriptive statistics, performing both regression and correlation analyses.
Findings: The findings revealed that the joint effect of budget practices, public participation, and automated revenue collection systems on the financial performance of county governments in Kenya was significantly greater than the individual effect of budget practices (R2 = 0.566, F= 37.384, p<0.05), with an R squared greater than that of the relationship between budget practices and financial performance alone (0.437).
Conclusion: Based on these findings, the study concludes that a comprehensive approach incorporating budget practices, public participation, and automated revenue collection can significantly improve the financial performance of county governments.
Recommendation: The study recommended that the adoption of suitable budgeting practices, the encouragement of public participation, and the implementation of automated revenue collection systems in county governments.
Keywords: Budgeting Practices, Public Participation, Automated Revenue Collection System, Financial Performance, County Governments in Kenya
References
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Alshubiri, F., Jamil, S. A., & Elheddad, M. (2019). The impact of ICT on financial development: Empirical evidence from the Gulf Cooperation Council countries. International Journal of engineering business management, 11, 1847979019870670. https://doi.org/10.1177/1847979019870670
Ambetsa, N. (2020). Effects of uncertainty on domestic private investments in Kenya (Doctoral dissertation, University of Nairobi).
Asimiyu, A. G., & Kizito, E. U. (2014). Analysis of internally generated revenue and its implications on fiscal viability of state governments in Nigeria. Journal of empirical economics, 2(4), 216-228.
Audi, M., Ali, A., & Roussel, Y. (2021). Measuring the Tax Buoyancy: Empirics from South Asian Association for Regional Cooperation (SAARC).
Bertalanffy, L.v. (1969). General System Theory. New York: George Brazillier
Beuermann, D. W., & Amelina, M. (2014). Does participatory budgeting improve decentralized public service delivery? (No. IDB-WP-547). IDB Working Paper Series.
Birskyte, L. (2019). Determinants of budget transparency in Lithuanian municipalities. Public Performance & Management Review, 42(3), 707-731. https://doi.org/10.1080/15309576.2018.1507915
Cantador, I., Cortés-Cediel, M. E., & Fernández, M. (2020). Exploiting Open Data to analyze discussion and controversy in online citizen participation. Information Processing & Management, 57(5), 102301. https://doi.org/10.1016/j.ipm.2020.102301
Chepkorir, M., Rugut, W., & Langat, P. (2021). Relationship Between Budgetary Monitoring and Financial Performance of County Government of Kericho, Kenya. East African Journal of Business and Economics, 4(1), 76-84. https://doi.org/10.37284/eajbe.4.1.497
Chih, E. & Sapphire, R. (2017). System Theory. The International Encyclopaedia of Organizational Communication. Craig R. Scott and Laurie Lewis (Editors-in-Chief),\James R. Barker, Joann
Cooper, D. R., & Schindler, P. S. (2006). Business research methods (Vol. 9, pp. 1-744). New York: Mcgraw-hill.
Dubat, I. (2020). Effect of financial management practices on performance of county governments in kenya. A Case of Garissa County Government, Kenya. https://doi.org/10.24940/theijhss/2020/v8/i11/HS2011-032
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Field, A. (2009). Discovering statistics using SPSS, third edition.
Gachithi, E. W. (2010). The Challenges of budget implementation in Public Institutions: A case study of University of Nairobi (Doctoral dissertation).
Ghimire, B., & Abo, R. (2013). An empirical investigation of Ivorian SMEs access to bank finance: Constraining factors at demand-level. Journal of finance and investment analysis, 2(4), 29-55.
Gibran, J. M., & Sekwat, A. (2009). Continuing the search for a theory of public budgeting. Journal of public budgeting, accounting & financial management. https://doi.org/10.1108/JPBAFM-21-04-2009-B005
Gituma, H. K. (2017). Determinants of effective revenue collection by Embu County, Kenya (Doctoral dissertation, University of Embu).
Hammond, D. (2013). 16 Systems Theory and Practice in Organizational Change and Development. Traditions of systems theory: Major figures and contemporary developments, 326.
He, A. J., & Ma, L. (2021). Citizen participation, perceived public service performance, and trust in government: Evidence from health policy reforms in Hong Kong. Public Performance & Management Review, 44(3), 471-493. https://doi.org/10.1080/15309576.2020.1780138
Hoos, I. R. (2018). Systems analysis in Public Policy: a critique. University of California Press.
Inkoom, D. K. B. (2011). Ghana's Decentralization: Two decades and still crawling? Development, 54(3), 393-399. https://doi.org/10.1057/dev.2011.68
Kaguri, E. (2015). Vitamin B12 levels in type two diabetes patients on metformin at Moi Teaching and Referral Hospital (Doctoral dissertation, MOI UNIVERSITY).
Karanja, S. C., Muathe, S. M. A., & Thuo, J. K. (2014). Marketing capability and the performance of mobile service provider intermediary organizations in Nairobi County, Kenya. International Journal of Education and Research, 2(5), 499-512. https://doi.org/10.5296/bms.v5i1.5723
Kasymova, J. T., (2014). Bringing participatory tools to a different level: A case study of local participatory practices in Kyrgyzstan. Public Performance & Management Review, 37(3), 441-464. https://doi.org/10.2753/PMR1530-9576370305
Kessy, S. S. (2020). Electronic Payment and Revenue Collection in Local Government Authorities in Tanzania: Evidence from Kinondoni Municipality. Tanzania Economic Review, 9(2), 89-106. https://doi.org/10.56279/ter.v9i2.47
Kibunja, E. W. (2017). Budgetary Process and Financial Performance Of Murang’a County Government, Kenya.
Kim, S., Lee, J., & Lee, J. (2018). Citizen participation and public trust in local government: The Republic of Korea case. OECD Journal on Budgeting, 18(2), 73-92. https://doi.org/10.1787/budget-18-5j8fz1kqp8d8
Kimunguyi, S., Memba, F., & Njeru, A. (2015). Effect of corporate governance on financial performance of NGOs in heath sector in Kenya. International Journal of Economics, Commerce & Management, III, 12, 390-407.
Kipyego, E. and Wanjare, J. (2017). Public Participation and the budgeting Process within the County Government of Nandi, Kenya. European Journal of Management and Marketing Studies, 2(4), 34-51.
Kirimi, P. W. (2015). Influence of automation of revenue collection processes on Organizational performance: a case of county government of Meru, Kenya (Doctoral dissertation, University of Nairobi).
Klotz, P. (2022). The Beginning of a Beautiful Friendship? Participatory Budgeting in Hungary. In International Trends in Participatory Budgeting (pp. 149-162). Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-79930-4_8
Lilly, L., & Juma, D. (2014). Influence of strategic innovation on performance of commercial banks in Kenya: The case of Kenya Commercial Bank in Nairobi County. European Journal of Business Management, 2(1), 336-341.
Magani, G., A. (2018). Influence of Public Participation on Budget Implementation by Kenyan City Counties. International Journal of Law and Society, 1(2), 46-63. https://doi.org/10.11648/j.ijls.20180102.11
Mandala, N., O., Odhiambo, V., & Wanga, C., H. (2020). Revenue Management: Automation, Challenges, & Legal Perspectives of County Governments in Kenya, European Scientific Journal, 16(25), 196-224. https://doi.org/10.19044/esj.2020.v16n25p196
Muhura, S. W. (2012). Organizational capabilities as a source of competitive advantage at Airtel Kenya (Doctoral dissertation).
Muthoni, N. E. (2016). Strategy Implementation As A Competitive Tool In Enhancing Performance Of Small And Medium Enterprises In Nairobi Central Business District (Doctoral dissertation, University Of Nairobi).
Ng’wasa, N. J. (2017). The Link Between Budgetary Control and Financial Performance in Financial Institutions. A Case Of National Microfinance Bank (Nmb) Zonal Office (Central Zone) Dodoma (Doctoral dissertation, Mzumbe University).
Okotchi, C. J., Makokha, E. N., & Namusonge, G. (2020). Effect of Budgetary Process on Performance of County Governments in Kenya. International Journal of Recent Research in Social Sciences and Humanities. 7(2), 11-21.
Omondi-Ochieng, P. (2020). Financial performance of the United Kingdom's national non-profit sport federations: A binary logistic regression approach. Managerial Finance. https://doi.org/10.1108/MF-03-2020-0126
Pere, A., & Osain, O. (2015). Functional impact of public accounts committee on public accountability over financial crimes in Nigeria. Journal of poverty, investment and development, 8(1), 53-82.
Pervan, M., & Višić, J. (2012). Influence of firm size on its business success. Croatian Operational Research Review, 3(1), 213-223.
Pimpong, S., & Laryea, H. (2016). Budgeting and its impact on financial performance: The case of non-bank financial institutions in Ghana. International Journal of Academic Research and Reflection, 4(5), 12-22.
Reed, A. V. (2015). Connecting supply, short-sellers and stock returns: Research challenges. Journal of Accounting and Economics, 60(2-3), 97-103. https://doi.org/10.1016/j.jacceco.2015.08.002
Robert, L., Watzlawick, P., Weakland, J. H., & Fisch, R. (1978). The rise of systems theory. New York: John Wiley & Sons.
Scott, D. W. (1985). Averaged shifted histograms: effective nonparametric density estimators in several dimensions. The Annals of Statistics, 1024-1040. https://doi.org/10.1214/aos/1176349654
Secinaro, S., Brescia, V., Iannaci, D., & Jonathan, G. M. (2022). Does citizen involvement feed on digital platforms? International Journal of Public Administration, 45(9), 708-725. https://doi.org/10.1080/01900692.2021.1887216
Serem, K. (2013). Effect of Budgetary Control on Performance of Non-governmentalGovernmental Organizations in Kenya, Unpublished MBA, University of Nairobi.
Siyanbola, T. T., & Remo, I. (2013). The impact of budgeting and budgetary control on the performance of manufacturing company in Nigeria. J Bus Manag Soc Sci Res, 2(12), 8-16.
Speer, J. (2012). Participatory governance reform: a good strategy for increasing government responsiveness and improving public services? World development, 40(12), 2379-2398. https://doi.org/10.1016/j.worlddev.2012.05.034
Waikenda, M., Lewa, P. M., & Muchara, M. (2019). Influence of Inclusiveness of Employees on Performance of County Governments in Kenya. https://doi.org/10.32424/jorim.v2i4.86
Wilson, A., Tewdwr-Jones, M., & Comber, R. (2019). Urban planning, public participation and digital technology: App development as a method of generating citizen involvement in local planning processes. Environment and Planning B: Urban Analytics and City Science, 46(2), 286-302. https://doi.org/10.1177/2399808317712515
Acharya, K. K. (2018). Local governance restructuring in Nepal: From government to governmentality. Dhaulagiri Journal of Sociology and Anthropology, 12, 37-49. https://doi.org/10.3126/dsaj.v12i0.22178
Alshubiri, F., Jamil, S. A., & Elheddad, M. (2019). The impact of ICT on financial development: Empirical evidence from the Gulf Cooperation Council countries. International Journal of engineering business management, 11, 1847979019870670. https://doi.org/10.1177/1847979019870670
Ambetsa, N. (2020). Effects of uncertainty on domestic private investments in Kenya (Doctoral dissertation, University of Nairobi).
Asimiyu, A. G., & Kizito, E. U. (2014). Analysis of internally generated revenue and its implications on fiscal viability of state governments in Nigeria. Journal of empirical economics, 2(4), 216-228.
Audi, M., Ali, A., & Roussel, Y. (2021). Measuring the Tax Buoyancy: Empirics from South Asian Association for Regional Cooperation (SAARC).
Bertalanffy, L.v. (1969). General System Theory. New York: George Brazillier
Beuermann, D. W., & Amelina, M. (2014). Does participatory budgeting improve decentralized public service delivery? (No. IDB-WP-547). IDB Working Paper Series.
Birskyte, L. (2019). Determinants of budget transparency in Lithuanian municipalities. Public Performance & Management Review, 42(3), 707-731. https://doi.org/10.1080/15309576.2018.1507915
Cantador, I., Cortés-Cediel, M. E., & Fernández, M. (2020). Exploiting Open Data to analyze discussion and controversy in online citizen participation. Information Processing & Management, 57(5), 102301. https://doi.org/10.1016/j.ipm.2020.102301
Chepkorir, M., Rugut, W., & Langat, P. (2021). Relationship Between Budgetary Monitoring and Financial Performance of County Government of Kericho, Kenya. East African Journal of Business and Economics, 4(1), 76-84. https://doi.org/10.37284/eajbe.4.1.497
Chih, E. & Sapphire, R. (2017). System Theory. The International Encyclopaedia of Organizational Communication. Craig R. Scott and Laurie Lewis (Editors-in-Chief),\James R. Barker, Joann
Cooper, D. R., & Schindler, P. S. (2006). Business research methods (Vol. 9, pp. 1-744). New York: Mcgraw-hill.
Dubat, I. (2020). Effect of financial management practices on performance of county governments in kenya. A Case of Garissa County Government, Kenya. https://doi.org/10.24940/theijhss/2020/v8/i11/HS2011-032
Egbide, B. C., Otekunrin, A., Adenike, O., & Oludare, F. (2022). Responsiveness of rural development to budget management attributes: Evidence from Ogun State, Nigeria. Problems and Perspectives in Management, 20(1), 1. https://doi.org/10.21511/ppm.20(1).2022.01
Ewa, E. U., & Udoayang, J. O. (2012). The impact of internal control design on banks‟ ability to investigate staff fraud, and life style and fraud detection in Nigeria. International Journal of Research in Economics & Social Sciences, 2(2), 32-43.
Field, A. (2009). Discovering statistics using SPSS, third edition.
Gachithi, E. W. (2010). The Challenges of budget implementation in Public Institutions: A case study of University of Nairobi (Doctoral dissertation).
Ghimire, B., & Abo, R. (2013). An empirical investigation of Ivorian SMEs access to bank finance: Constraining factors at demand-level. Journal of finance and investment analysis, 2(4), 29-55.
Gibran, J. M., & Sekwat, A. (2009). Continuing the search for a theory of public budgeting. Journal of public budgeting, accounting & financial management. https://doi.org/10.1108/JPBAFM-21-04-2009-B005
Gituma, H. K. (2017). Determinants of effective revenue collection by Embu County, Kenya (Doctoral dissertation, University of Embu).
Hammond, D. (2013). 16 Systems Theory and Practice in Organizational Change and Development. Traditions of systems theory: Major figures and contemporary developments, 326.
He, A. J., & Ma, L. (2021). Citizen participation, perceived public service performance, and trust in government: Evidence from health policy reforms in Hong Kong. Public Performance & Management Review, 44(3), 471-493. https://doi.org/10.1080/15309576.2020.1780138
Hoos, I. R. (2018). Systems analysis in Public Policy: a critique. University of California Press.
Inkoom, D. K. B. (2011). Ghana's Decentralization: Two decades and still crawling? Development, 54(3), 393-399. https://doi.org/10.1057/dev.2011.68
Kaguri, E. (2015). Vitamin B12 levels in type two diabetes patients on metformin at Moi Teaching and Referral Hospital (Doctoral dissertation, MOI UNIVERSITY).
Karanja, S. C., Muathe, S. M. A., & Thuo, J. K. (2014). Marketing capability and the performance of mobile service provider intermediary organizations in Nairobi County, Kenya. International Journal of Education and Research, 2(5), 499-512. https://doi.org/10.5296/bms.v5i1.5723
Kasymova, J. T., (2014). Bringing participatory tools to a different level: A case study of local participatory practices in Kyrgyzstan. Public Performance & Management Review, 37(3), 441-464. https://doi.org/10.2753/PMR1530-9576370305
Kessy, S. S. (2020). Electronic Payment and Revenue Collection in Local Government Authorities in Tanzania: Evidence from Kinondoni Municipality. Tanzania Economic Review, 9(2), 89-106. https://doi.org/10.56279/ter.v9i2.47
Kibunja, E. W. (2017). Budgetary Process and Financial Performance Of Murang’a County Government, Kenya.
Kim, S., Lee, J., & Lee, J. (2018). Citizen participation and public trust in local government: The Republic of Korea case. OECD Journal on Budgeting, 18(2), 73-92. https://doi.org/10.1787/budget-18-5j8fz1kqp8d8
Kimunguyi, S., Memba, F., & Njeru, A. (2015). Effect of corporate governance on financial performance of NGOs in heath sector in Kenya. International Journal of Economics, Commerce & Management, III, 12, 390-407.
Kipyego, E. and Wanjare, J. (2017). Public Participation and the budgeting Process within the County Government of Nandi, Kenya. European Journal of Management and Marketing Studies, 2(4), 34-51.
Kirimi, P. W. (2015). Influence of automation of revenue collection processes on Organizational performance: a case of county government of Meru, Kenya (Doctoral dissertation, University of Nairobi).
Klotz, P. (2022). The Beginning of a Beautiful Friendship? Participatory Budgeting in Hungary. In International Trends in Participatory Budgeting (pp. 149-162). Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-79930-4_8
Lilly, L., & Juma, D. (2014). Influence of strategic innovation on performance of commercial banks in Kenya: The case of Kenya Commercial Bank in Nairobi County. European Journal of Business Management, 2(1), 336-341.
Magani, G., A. (2018). Influence of Public Participation on Budget Implementation by Kenyan City Counties. International Journal of Law and Society, 1(2), 46-63. https://doi.org/10.11648/j.ijls.20180102.11
Mandala, N., O., Odhiambo, V., & Wanga, C., H. (2020). Revenue Management: Automation, Challenges, & Legal Perspectives of County Governments in Kenya, European Scientific Journal, 16(25), 196-224. https://doi.org/10.19044/esj.2020.v16n25p196
Muhura, S. W. (2012). Organizational capabilities as a source of competitive advantage at Airtel Kenya (Doctoral dissertation).
Muthoni, N. E. (2016). Strategy Implementation As A Competitive Tool In Enhancing Performance Of Small And Medium Enterprises In Nairobi Central Business District (Doctoral dissertation, University Of Nairobi).
Ng’wasa, N. J. (2017). The Link Between Budgetary Control and Financial Performance in Financial Institutions. A Case Of National Microfinance Bank (Nmb) Zonal Office (Central Zone) Dodoma (Doctoral dissertation, Mzumbe University).
Okotchi, C. J., Makokha, E. N., & Namusonge, G. (2020). Effect of Budgetary Process on Performance of County Governments in Kenya. International Journal of Recent Research in Social Sciences and Humanities. 7(2), 11-21.
Omondi-Ochieng, P. (2020). Financial performance of the United Kingdom's national non-profit sport federations: A binary logistic regression approach. Managerial Finance. https://doi.org/10.1108/MF-03-2020-0126
Pere, A., & Osain, O. (2015). Functional impact of public accounts committee on public accountability over financial crimes in Nigeria. Journal of poverty, investment and development, 8(1), 53-82.
Pervan, M., & Višić, J. (2012). Influence of firm size on its business success. Croatian Operational Research Review, 3(1), 213-223.
Pimpong, S., & Laryea, H. (2016). Budgeting and its impact on financial performance: The case of non-bank financial institutions in Ghana. International Journal of Academic Research and Reflection, 4(5), 12-22.
Reed, A. V. (2015). Connecting supply, short-sellers and stock returns: Research challenges. Journal of Accounting and Economics, 60(2-3), 97-103. https://doi.org/10.1016/j.jacceco.2015.08.002
Robert, L., Watzlawick, P., Weakland, J. H., & Fisch, R. (1978). The rise of systems theory. New York: John Wiley & Sons.
Scott, D. W. (1985). Averaged shifted histograms: effective nonparametric density estimators in several dimensions. The Annals of Statistics, 1024-1040. https://doi.org/10.1214/aos/1176349654
Secinaro, S., Brescia, V., Iannaci, D., & Jonathan, G. M. (2022). Does citizen involvement feed on digital platforms? International Journal of Public Administration, 45(9), 708-725. https://doi.org/10.1080/01900692.2021.1887216
Serem, K. (2013). Effect of Budgetary Control on Performance of Non-governmentalGovernmental Organizations in Kenya, Unpublished MBA, University of Nairobi.
Siyanbola, T. T., & Remo, I. (2013). The impact of budgeting and budgetary control on the performance of manufacturing company in Nigeria. J Bus Manag Soc Sci Res, 2(12), 8-16.
Speer, J. (2012). Participatory governance reform: a good strategy for increasing government responsiveness and improving public services? World development, 40(12), 2379-2398. https://doi.org/10.1016/j.worlddev.2012.05.034
Waikenda, M., Lewa, P. M., & Muchara, M. (2019). Influence of Inclusiveness of Employees on Performance of County Governments in Kenya. https://doi.org/10.32424/jorim.v2i4.86
Wilson, A., Tewdwr-Jones, M., & Comber, R. (2019). Urban planning, public participation and digital technology: App development as a method of generating citizen involvement in local planning processes. Environment and Planning B: Urban Analytics and City Science, 46(2), 286-302. https://doi.org/10.1177/2399808317712515
Published
2023-07-30
How to Cite
Sande, D., Okiro, K., Wanjare, J., Omoro , N., & Ojera, P. B. (2023). THE JOINT EFFECT OF BUDGETING PRACTICES, PUBLIC PARTICIPATION AND AUTOMATED REVENUE COLLECTION SYSTEM ON FINANCIAL PERFORMANCE OF COUNTY GOVERMENTS IN KENYA. African Journal of Emerging Issues, 5(8), 67 - 86. Retrieved from https://ajoeijournals.org/sys/index.php/ajoei/article/view/431
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