Fiscal Decentralisation and Perceived Service Performance of Selected County Governments in Kenya
Rutto, Andrew Kimutai
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Globally, the public has been dissatisfied with the centralized approaches to service delivery at local levels; coupled with underperformance in development aspects. Therefore, fiscal decentralisation is widely recognized as an approach that seeks to improve public service delivery at the local government levels. However, despite the fiscal decentralization framework, the service performance at the county level is still wanting. Thus, the study sought to examine how fiscal decentralization affects service performance at selected county governments in Kenya. The study objectives include: examining the effect of locally generated revenue (LGR), expenditure decentralisation, intergovernmental fiscal transfers (IGFT) and county government borrowing on the service performance of selected county governments in Kenya. Further, the study assessed the mediating effects of accountability practices on service performance of selected county governments in Kenya. The study was anchored on fiscal decentralisation, agency and New Public Management (NPM) theories and adopted an interpretivism philosophical approach and employed a descriptive design with a target population of 400 opinion leaders from Kiambu, Vihiga and Baringo Counties. The study sampled 103 using a random sampling technique and interviewed nine selected directors from budget, finance and planning departments. The data were collected using questionnaires and document review. The questionnaire was validated through panel review, piloting and exploratory factor analysis and was then subjected to an inter-consistency test using a Cronbach's coefficient statistic ≥ 0.70 indicating that the instrument was reliable. Data was analysed using descriptively and subjected to an inferential statistics at 0.05 significance levels. The diagnostic tests were conducted ensure that all the assumptions regarding the linear regression were not violated. The study achieved a 91% response rate from the opinion leaders and 66.7% from directors. The correlational analysis indicated that service performance positively correlated with LGR; expenditure decentralization, IGFT and accountability practices and negatively correlated with county government borrowing. Regression analysis indicated that all fiscal decentralization components were statistically significant, (F(5, 88) = 15.38, p <0.00) in explaining 47% change in service performance with locally generated revenue, β = 0.2072 (t = 2.75, p< 0.05); expenditure decentralization, β = 0.2903(t= 3.55, p< 0.05); intergovernmental fiscal transfers, β = 0.3108, (t = 3.43, p< 0.05); and county government borrowing, β = -0.1389(t = -2.61, p< 0.05). The mediating effect of accountability practices was statistically significant (F (5, 88) = 19.56, p <0.05), in explaining 53% change in service performance. Based on the findings, the study rejected all the null hypotheses and concluded that LGR, expenditure decentralization, IGFT and county government borrowing have a significant effect on service performance. Accountability practices mediate the relationship between fiscal decentralization and service performance. The study recommendation includes; the county governments should seek and integrate new revenue bases, involve citizens in the annual fiscal budgeting process, ensure timely fiscal transfers from the national government and establish a policy framework to support borrowing by the county governments. Regarding policy implications, the county government should adhere to the public finance management Act during the fiscal budgeting process and deepen their revenue bases. The study contributes to the existing knowledge by delving into the elements of fiscal decentralization under the new constitutional dispensation in Kenya. Recommendations for further studies include studies on how decentralization impacts the capacity of the county governments, how decentralization improves the quality of governance at the local level and how the East African Community could affect governance and service delivery at the sub-national levels.