Effects of Budget Absorption on Performance of County Governments in Kenya

Abstract

Budget absorption rate refers to the share of the actual expenditure out of the targeted(budgeted). It is a great benchmark for determining the efficiency and effectiveness of the counties on the utilization, implementation, formulation and execution of county budget. Absorption rate indicates the ability of the counties to co-finance projects and activities, macroeconomics capacity and administration performance. This research sought to establish effect of budget absorption on the performance of county government. Budget absorption is supported by planning, organizing and a quality expenditure control tool. The research focused on the forty-seven counties and the independent variables of the study were Budget allocation, Development expenditure and County Revenue Collection. The secondary data was obtained from KNBS & OCOB. The results were presented inform of tables, figures and graphs. Budget ensures efficiency and effectiveness to the limited allocated resources. Budget is a management and regulation tool used to effectively manage the public funds with the aim of efficiently optimizing financial realization performance targets. The researcher recommends the counties and national government to develop a clear development plan that will reduce non-essential expenditure. The comprehensive development roadmap will act as guidance and compass for the prudential expenditure. This will enhance optimal development of projects. Moreover, the county should determine the optimal staffing that ensure business continuity and reduce the county wage bill. The public involvement and periodic release of county budget absorption rate report will promote prudential expenditure. The study recommends the utilization of experts in budget formulation, utilization, implementation and execution to realize the budget absorption