The Relationship Between Donor Funding and Performance Contracting Score of State Owned Enterprises in Kenya

Abstract

One of the significant management reforms in the public service in recent times aimed at addressing the agency problem has been the introduction of performance contracts. Performance Contracting is part of broader public sector reforms aimed at improving efficiency and effectiveness in the management of the Public service. Part of the strategies of improving this is providing enough finances to run the agencies programs and donor funding has been very instrumental. However, little is known on how the donor funds affect the performance of government agencies. Thus, the objective of the study was to establish the relationship between donor funding and performance contracting score of state owned enterprises in Kenya. The descriptive study targeted a population of 170 state-owned corporations in Kenya from which 40 were chosen. The study used secondary data sources from the Treasury and Ministry of Devolution for 2009/10 to 2012/13. Simple linear regression analysis was conducted. The findings show that, at 95% confidence level, there were significant and good but negative linear association between donor funding and performance contracting (p < .05). The study concludes that on average, there is a negative linear relationship between donor funding and performance contracting score. Depicting that donor funding enhances the performance contracting score of state-owned corporations.