RELATIONSHIP BETWEEN BUDGETARY PLANNING AND FINANCIAL PERFORMANCE OF COUNTY GOVERNMENT OF KERICHO, KENYA

Abstract

Budgeting has become a fundamental issue for many organizations and business entities across the globe. Despite the availability of legal framework on budgetary planning in the public sector, County Governments are still facing challenges such as delays in payment to suppliers, budget deficit, stalled projects and poor development records. It is on this basis that this study sought to investigate the relationship between budgetary planning and financial performance of County Government of Kericho, Kenya. The study was guided by allocation of resources theory, institutional theory and expenditure theory. The study adopted a correlation survey research design. The target population for the study was 3,848 employees from 12 departments of the County Government of Kericho. Proportion method and simple random sampling technique were used to ascertain sample size for the study. Both secondary and primary data were used for data collection where secondary data was collected from records in the County Government offices and primary data collected through structured questionnaires. Validity was ensured by discussing the content of the questionnaire with the supervisors and subject experts before going to the field. Cronbach’s alpha coefficient was used to determine the reliability of the research instrument which was found to be 0.873 which was considered ideal. Data was analyzed using descriptive and inferential statistics. Descriptive statistics was presented by frequency tables, charts and graphs while inferential statistics were presented by correlation and regression models. The findings established that there was significant statistical relationship between budgetary planning (β =1.096, P<0.05). The study concluded that the independent variables understudy contributed 60.5 variation on financial performance (R2 =0.605). The study recommends that for efficient budgetary planning the county government should set realistic revenue targets so as to ensure that expected expenditure matches expected incomes and also acquire and train staff involved in budget planning for efficient planning process. KEY WORDS: Budgetary Process, Budgetary Planning, Financial Performance, County Governments in Kenya