The effect of E-payment system on revenue collection by the Nairobi city county government

Abstract

A sound revenue system for devolved governments sets the pace for the success of fiscal decentralization, since it is the avenue for administrative accountability by empowering communities. Nowadays, modern e-payment services provide convenience in revenue that highly improve revenue collection performance and gain a competitive edge. The county governments therefore needs to improve targeting revenue collection mechanisms and systems to reach collection targets aimed at expanding the revenue base and increasing tax compliance through integration of proper technology in revenue collection. However, there is a rising challenge as far as adoption of e-payment adoption by County Governments in Kenya is concerned. Since this is a new technology in Kenya and there are limited studies and information about e-payment in Kenya. However, studies have not significantly addressed the factors of e-payment system affecting revenue collection by the Nairobi City County Government, a knowledge gap. It is in this light that this study sought to addresses; level of compliance to budget estimates, and absorption of the e-payment by the payers, resulting from the e-payments system as factor influencing performance of revenue collection by the County Government, as it fills the existing knowledge gap, in an effort to recommend on ways to ensuring optimal revenue collection. The objective of the study was to determine the effect of e-payment system on revenue collection by the Nairobi City County Government. This study used a descriptive research in soliciting information in the area of research and its target population was selected 18 Nairobi government departments, which were operational between 2013 and 2015. Data was collected from secondary sources and analyzed, with respect to the study objectives using both descriptive and inferential statistics. The study found that revealed that the revenue collection performance in Nairobi City County increased considerably after introduction of e-payment system in revenue collection. The study concludes that the adoption e-payment system positively influences the revenue collection performance in Nairobi City County. There was a significant relationship between level of compliance to budget estimates in before adoption e-payment (p-value= .000) and level of compliance to budget estimates after adoption of e-payment (p-value = .041) and revenue collection performance in Nairobi City County government, since the p value for each predictor variable was less than 0.05. It was found that 92.20% of variation in revenue collection performance in Nairobi City County government is explained by the adoption of e-payment and before adopt e-payment. The study recommends that the Government of Nairobi City County should ensure that all its wards, departments and other related units are compelled by regulations to adopt e-payment and other ensure management of revenue collection system to lead to assurance total compliance to the budgets and there should be awareness campaigns to ensure that the consumers get the right information as pertains to e-payment revenue collection.