Public financial management reform strategies and performance of selected county governments in Kenya

Abstract

Over the past few decades, the world has witnessed spectacular transformations of public financial management systems. Locally, Kenya has undertaken critical public financial management reforms over the recent past with the aim of ensuring transparency, accountability, fiscal discipline and prudent use of public resources for improved service delivery. However, the relationship between these reforms and the performance of the devolved units is yet to be established. The purpose of the study was to establish the relationship between public financial management reforms strategy and the performance of selected County Governments in Kenya. The study was motivated by the challenges facing the County Governments in Kenya as per the County Budget Implementation Review Report (2017/2018). The study was guided by the following objectives: to establish the relationship between legal framework reforms, budgetary reforms, IFMIS reforms, financial reporting reforms and audit reforms and the performance of selected County Governments in Kenya. The study was guided by the New Public Management Theory and the Agency Theory. It was anchored on positivism research philosophy. Correlational research design was employed in the study with a target population of 184 treasury staff from Bomet, Kericho, Nakuru and Narok County Governments. The study used purposive sampling to select research participants in each of the four selected County Governments in Kenya. Data were collected using structured, self-administered questionnaires. Reliability of the instrument was established using Cronbach’s alpha coefficient of internal consistency. Data was analyzed using descriptive data analysis techniques; mean, mode and standard deviation as well as the inferential statistics; the correlation analysis, regression analysis and ANOVA test analysis. The findings were presented using tables. The results of the study indicated a positive correlation between legal framework reforms and the performance of selected County Governments in Kenya (r=0.736). There was also a positive relationship between budgetary reforms and the performance of selected County Governments in Kenya (r=0.671). It was further shown that IFMIS reforms is significantly related (r = 0.799) with the performance of the County Governments in Kenya. The findings revealed that financial reporting reforms showed statistically significant correlation (r=0.673) with the performance of selected County Governments in Kenya. Finally, the outcome of the study showed that audit reforms had a positively significant relationship (r=0.794) with the performance of selected County Governments in Kenya. Therefore, it was concluded that public financial management reforms strategy has a statistically significant positive relationship with the performance of selected County Governments in Kenya. It is recommended that the National and County Governments should review the existing legal framework reforms to ensure effective compliance and full implementation. It is also recommended that County Governments should align their budgets to their strategic objectives. Further, it is recommended that IFMIS connectivity should be improved and that staff capacity building should be carried out. Ultimately, it is recommended that adoption of International Public Sector Accounting Standards in financial reporting should be strengthened to ensure optimal performance. The results of the study were considered critical to the National and County Governments as they would be used to steer public financial management reforms towards the enhancement of public financial management practices, further it will facilitate the formulation of a robust policy framework as well as act as a source of information for future academic researchers.