Influence Of Financial Management Reforms On Public Expenditures In The County Governments Of The Western Region Of Kenya

Abstract

The Office of Auditor General reports indicate inefficient public expenditures in most County Governments in Kenya, despite existence of public financial management reforms. This study endeavors to examine influence of public financial management reforms (budget reforms, financial reporting reforms, fiscal decentralization reforms and public procurement reforms) on public expenditures in the County Governments of the Western Region of Kenya ; Kakamega, Vihiga, Busia and Bungoma County Governments. The study was guided by Resource allocation theory, Theory of Budgeting, Agency theory, Fiscal Decentralization Theory and Public Expenditure Management Model. The study utilized a descriptive survey design. The study targeted 65 Chief Officers from the four Counties in the Western Region. A total of 65 respondents were used as the sample size using census sampling technique Respondents' primary data was obtained directly from them using self-administered structured questionnaires. A pilot study was conducted in the County Government of Kisumu, which borders the study area. The Cronbach alpha test, which is a measure of internal consistency, was used to evaluate instrument validity, while the Cronbach alpha test, which is a measure of internal consistency, was used to assess the dependability of the research instruments. The obtained data was edited, cleaned, and coded before being analyzed using SPSS version 24. Inferential statistics, such as Pearson correlation coefficient and multiple regression analysis, was computed to test if there is a correlation, linear, or multiple relationships between the independent and dependent variables. Descriptive statistical analysis was used to summarize data using frequencies, percentages, and means, while inferential statistics, such as Pearson correlation coefficient and multiple regression analysis, will be computed to test if there is a correlation, linear, or multiple relationships between the independent and dependent variables. Tables and charts were used to display the outcomes of the analysis. Multiple linear regression results indicated that budget reforms had positive and significant effect on public expenditures. Financial reporting reforms, fiscal decentralization and public procurement reforms also had a positive and significant effect on public expenditures. On the other hand, the regression analysis revealed that the public financial management reforms explained up to 78.0% change in public expenditures in five counties from western region of Kenya. The study concluded that public financial management reforms significantly influence public expenditures in five counties from western region of Kenya. The study recommended that there is need to establish budget stabilization fund through an Act of Parliament. This fund will go a long way to enhance the practicability of exchequer release to the spending units. Budget stabilization fund can be used to make sure that there are no delays in budget execution and programme implementation. Further, more reforms should focus on disclosure of public sector financial information and fair reporting of service concession agreements in order to improve transparency in public expenditure.