COUNTY FINANCIAL MANAGEMENT PRACTICES AND LOCALLY GENERATED REVENUE IN THE COUNTY GOVERNMENT OF MARSABIT
Qabale Dida Malla - Postgraduate Student, Department of Accounting and Finance, Kenyatta University, Kenya
Dr. Francis Gitagia, Ph.D, CPA - Lecturer, Department of Accounting and Finance Department, Kenyatta University, Kenya
ABSTRACT
County governments in Kenya occupy a central position in promoting fiscal decentralization, delivering services, and stimulating local economic growth. They are tasked with raising locally generated revenue (LGR) to support devolved functions, complement national transfers, and strengthen fiscal independence. The viability of devolution therefore rests on the soundness of county financial management systems, which shape their ability to fund operations, provide essential services, and ensure accountability. Despite these responsibilities, counties such as Marsabit continue to experience revenue shortfalls that compromise service delivery and expose fiscal vulnerabilities. This study investigated the effect of financial management practices on LGR in Marsabit County, focusing on revenue diversification and budgetary control. Covering the period 2019 to 2024, the study was guided by Portfolio Theory and Budgetary Control Theory. A descriptive research design was employed, targeting 73 respondents consisting of 13 finance officers, 53 revenue collection officials, and 7 policymakers. A census approach was adopted to avoid sampling error and capture the perspectives of all relevant officers. Both primary and secondary data were used. structured questionnaires formed the basis of primary data, while audited financial statements and budget implementation reports provided secondary evidence. Diagnostic tests including tests for normality, multicollinearity, heteroscedasticity, autocorrelation, and linearity were performed to validate the strength of the regression model. Data analysis was carried out using SPSS, applying descriptive statistics such as means, medians, modes, and measures of dispersion, as well as inferential analysis through correlation and multiple regression. The correlation results revealed positive and significant associations between revenue diversification, budgetary control and locally generated revenue. Regression analysis showed that revenue diversification practices and budgetary control practices had positive and statistically significant effects on LGR. The study recommends that counties adopt innovative and technology-driven diversification strategies, strengthen participatory and transparent budgetary processes National oversight bodies such as the Commission on Revenue Allocation and the Office of the Controller of Budget should enhance monitoring and provide technical support to counties to institutionalize accountable and innovative financial practices.