Revenue Diversification In Counties With A Focus On Own Source Revenues

ABSTRACT

With the devolved system of governance in Kenya, financial autonomy is a key tenet of the County Governments sustainability. The general objective was to identify strategies through which County Governments Own Source Revenue (OSR) can be diversified to promote enhanced local revenues. The specific objectives were to establish the factors which contribute to the current revenue collection trends by County Governments in Kenya and to establish the performance of counties in Kenya on revenue generation. The Resource Dependency Theory was utilized in the study. The research design applied was an ex post facto descriptive research design using quantitative data. The study employed non-probability sampling approach of purposive sampling. The 47 counties were lumped into eight regions based on the former provincial administrative units, thus a county in each of the eight administrative units served as a sample therefore constituting a sample of eight counties. A combination of primary and secondary sources of data were employed in the study. Questionnaires were administered to fulfill the overall objective and the first specific objective. Secondary data was collected in order to satisfy the second specific objective. Descriptive and factor analysis was applied for the general objective and the first specific objective. Descriptive statistics was used to fulfill the second specific objective. The study established that; there are seven factors being utilized in the counties to diversify revenue, there are five factors which are the main challenges existing in county governments resulting in the current revenue generation trends, and the overall revenue generation of the counties is quite low. Policy recommendations were that policy makers in the sector could use the strategies established in the study to recommend them on enhancing sub-national governments OSR and also try to address the challenges identified in the study. Individual Counties’ are also recommended to isolate those strategies used by other counties to diversify their revenues. They can also be aware of the challenges weighing in on OSR and try to address them in order to improve local revenue collection. Various practitioners carrying out other studies can fill the gaps left out in this study for the purposes of providing sustainable solutions towards revenue mobilization.