Effectiveness of performance contracts in regulatory corporations in Kenya
The importance of performance contracting has been adopted as an instrument to reform state-owned enterprise (SOE), granting SOE managers more operational freedom while holding them accountable for the performance of the enterprises through a system of rewards and sanctions. Performance contracts are being used across all sectors in Kenya in public corporations in order to facilitate efficiency of these corporations. The role of Regulatory agencies is established primarily to ensure justified pricing, equitable access to infrastructure, good quality service and security of supply. Regulatory agencies are also charged with developing rules and methodologies to provide a level playing field for companies wanting to participate and compete in the sector. The cost of these regulatory agencies is ultimately carried by the society and it is thus in everyone’s interest to ensure that these regulatory agencies are efficient and effective. And it’s under this premise that this study is looking at how effective are these regulatory bodies have been since signing performance contracts, because poorly designed, poorly implemented, or politically driven regulation can have a significant impact on the efficiency and competitiveness of any sector. Regulation has national and regional economic impacts such as attracting foreign capital into these sectors. The study was carried out through literature review, interview of Financial, Human Resources and Administrative Managers of 26 state regulatory agencies by administering the questionnaires. 33 questionnaires were responsive out of 52 administered to respondents. Data was analysed using MS Excel and presented in tables, pie-charts and percentages. From the research findings, it was established that the performance contracting has been effective and efficient because there has been more accountability and transparency which contributed to eradication of corruption. To ensure sustainability of the performance contract strategy as a management tool there is need to have legal framework enacted by parliament.