Effect of Governance Structures on Revenue Collection Among County Governments in Kenya

Abstract

Revenue collection is critical for the financial sustainability and service delivery of county governments. However, disparities in revenue collection efficiency among counties in Kenya highlight governance challenges that hinder optimal performance. This study sought to determine the effect of governance structures on revenue collection among county governments in Kenya. Grounded in agency theory and supported by public choice theory and institutional theory, the study examined fiscal autonomy, transparency, accountability, and human resource capacity as key governance structures, with population size as a control variable. The research adopted a descriptive design, targeting all 47 county governments through a census approach. Data was collected using structured questionnaires for primary data and county financial reports for secondary data. Statistical analysis, including descriptive statistics, correlation analysis, and multiple regression, was conducted. Descriptive results indicated generally positive perceptions of governance structures, with accountability having the highest overall mean score (3.92). Correlation analysis revealed strong and significant relationships between revenue collection and fiscal autonomy (r = 0.708, p = 0.000), transparency (r = 0.920, p = 0.000), accountability (r = 0.938, p = 0.000), and human resource capacity (r = 0.550, p = 0.000). Regression analysis showed that the independent variables collectively explained 93.3% of the variation in revenue collection (R² = 0.933). Accountability had the largest standardized effect on revenue collection (β = 0.675, p = 0.000), followed by human resource capacity (β = 0.428, p = 0.001), fiscal autonomy (β = 0.393, p = 0.005), and transparency (β = 0.278, p = 0.018). Population size had no significant effect (β = 0.005, p = 0.917), indicating that governance structures, rather than demographic factors, are the key drivers of revenue performance. The study concluded that robust governance structures significantly enhance revenue collection, with accountability being the most influential factor. Strengthening mechanisms such as regular audits, addressing audit queries, and citizen engagement is critical for improving financial management. Recommendations include empowering counties with greater fiscal autonomy, standardizing transparency practices, institutionalizing accountability frameworks, and investing in human resource development. Policymakers are urged to adopt reforms that emphasize these governance structures to optimize revenue performance and reduce reliance on national transfers. For future research, the study suggests adopting longitudinal designs to explore the long-term impacts of governance reforms on revenue collection. Comparative studies across counties with different socio-economic contexts and regional analyses with other devolved systems could provide additional insights. Further research could also examine the role of political interference, intergovernmental relations, and public-private partnerships in governance and revenue collection.