The Effect of Donor Funding on the Organizational Performance of Government Ministries in Kenya

Abstract

The study sought to find out the effect of donor funding on the performance of government ministries in Kenya. It was interested in the analysis of this relationship because the country receives a considerable amount of foreign aid yet the country has not achieved the desired or expected results, the country still experiences considerable poverty levels. Performance score based on government annual ranking was used to determine the performance of the government ministries. 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 Ministries. Thus, the objective of the study was to establish the relationship between donor funding and performance of government Ministries in Kenya. The descriptive study targeted a population of 42 government ministries that existed during the coalition government. The study used secondary data sources from the Treasury and Ministry of Devolution and Planning for 2008/2009 to 2012/13. Simple linear regression analysis was conducted. The findings show that, at 95% confidence level, there were significant negative linear association between donor funding and performance. The study concludes that on average, there is a negative linear relationship between donor funding, total debt (control variable) and performance score based on annual government ranking.