Volume : II, Issue : III, March - 2013

The Contribution of Financial Management Practices to Financial Challenges Facing Local Authorities in Service Delivery in Kenya

John Ntoiti, Prof. Gakure, Dr. Waititu, Dr. Mouni

Abstract :

The paper assesses the contribution of financial management practices to the financial distress faced by local authorities in Kenya. The presence of financial challenges in local authorities leads to poor service delivery and makes a local authority not to meet its mandate as stipulated in Cap 265 of our laws. Poor service delivery has its consequences which include a growing dissatisfaction of the community, suppliers, employees and all internal and external stakeholders. Financial challenges in local authorities exist in various forms. For instance local authorities are often unable to pay current liabilities such as salaries and short term obligation to creditors. In order to meet their short term financial obligations they are forced to operate on overdrafts with high interest rates hence compounding the problem. The study draws attention to financial management practices that may contribute to financial challenges in local authorities in Kenya. The population of the study comprises of 175 local authorities. A sample of 20 Local Authorities was selected using a stratified systematic sampling technique. A questionnaire was used to collect data from both the LAs officers and customers to these local authorities. The collected data was analyzed using descriptive statistics such as frequencies, mean, standard deviation. Ordinary Least Squares (OLS) was employed to study the causal relationships among all the variables in the model. In order to identify whether significant difference exist among the three categories of financially distressed local authorities, Analysis of Variance (ANOVA) was used. Qualitative responses were analyzed using content analysis. Results indicated that the local authorities were financially distressed. In addition, financial management practices of local authorities were found to be poor and this may have led to the state of financial distress. The study recommended that best practices in the area of financial management such as proper internal controls, institution and adherence to budgets, regular and accurate financial reporting are crucial in averting or reversing the trend of fiscal distress in local authorities.

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Article: Download PDF   DOI : 10.36106/ijsr  

Cite This Article:

John Ntoiti, Prof. Gakure, Dr. Waititu, Dr. Mouni The Contribution of Financial Management Practices to Financial Challenges Facing Local Authorities in Service Delivery in Kenya International Journal of Scientific Research, Vol.II, Issue.III March 2013

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