Thesis:

Influence of revenue streams on financial performance of county governments in Kenya

County Governments have a basic role to provide services to members of the public using the taxes collected at national and county level that need to be put in proper use. Measuring financial performance is an indicator to evaluate County performance. The office of Controller of Budget has reported unmet revenue collections by Counties and delayed disbursement of funds by the treasury as the biggest challenges affecting Counties financial performance. The two cited concerns have led to increased pending bills, unexecuted budgets and low service rating by v members of the public on County Government’s financial performance. High financial performance expectation by members of the public since devolution has necessitated Research to be carried to establish influence of revenue streams on financial performance of County Governments in Kenya. The study based on four theories; accounting theory, public management theory, optimal theory of taxation and agency theory. The study employed descriptive research study within the boundary of Kakamega County with a target population of staff in finance and planning, revenue collection, members of budget & finance committee, Executive committee members and respective Chief Officers. The Research targeted a population of 704 County staffs with a sample size of 30%. The research used questionnaires and structured interview as primary data collection tools and authenticated Kakamega County financial documents. Concurrent validity was used to test validity and a test and retest employed to test the reliability of the data collection instruments. Regression analysis was used to established how revenues streams had influenced County financial performance. Uncooperative respondent, vast geographical coverage of Kakamega County and lack of research material limited the research findings. The data collected was analyzed using tables, graphs and diagrams. The research findings aimed to assist the County Governments to improve on fund management, streamline formulation of policies on County financial management, a guide for fiscal policy formulation among actors in devolution and open up space for scholars to carryout studies on financial performance in Counties. The research had 91% response rate. From the research findings, it was established that Counties in Kenya had had not met own source revenue targets since the start of devolution in Kenya due to unexploited revenue channels and that there was delayed equitable share allocation disbursement in Counties. The findings further revealed that the public was not aware of conditional grant as a source of County financing and that despite Counties borrowings, it had not helped in 100% budget absorption. Counties had a total of 160 billion pending bills. This had resulted to Counties borrowing between 500 million and I billion at high interest. It was concluded that unmet County revenue collection and delayed disbursement of equitable share allocation had led to Counties accumulating huge pending bills, incomplete projects, unmet 100% County budget absorption rate and expensive County borrowings. The research recommends Counties to venture into unexploited revenues and national Government to streamline policies on fund disbursements to Counties. The research suggests further studies on administration of Conditional Grants to Counties.