Academic journal article Global Journal of Business Research

Community Perspectives on Accountability and Transparency in the Management of Local Authority Transfer Fund in Kenya

Academic journal article Global Journal of Business Research

Community Perspectives on Accountability and Transparency in the Management of Local Authority Transfer Fund in Kenya

Article excerpt

ABSTRACT

The Local Authorities Transfer Fund (LATF) is one of the funds that the Kenyan Government has decentralized to local authorities to supplement the financing of service delivery, enhance financial management and accountability, as well as reduce debts accumulated by the authorities. The purpose of this study was to assess and document community perspectives on accountability and transparency in the management of LATF resources. We sourced primary data from 162 community members, including opinion leaders and civil servants. The study found that participants were satisfied with community involvement in the planning and budgeting process (48.8%), enhancing accessibility of external auditor's reports (42.0%) and liability management (34.0%). However, they expressed dissatisfaction with indicators such as transparency in the procurement process (58.0%), management of Council assets (57.4%), publicization of expenditure reports (44.0%), cash flow management (42.0%), budget execution discipline (35.2%), accounting system (30.9%) as well as internal control and audit system (30.2%). The success of LATF largely depends on the Government's enforcement of existing regulations, identifying gaps and formulating additional controls, as well as taking public officers and political leaders through the change process. This will provide necessary safeguards against political interference and corruption in the management of LATF projects.

JEL: 016

KEYWORDS: Accountability, Transparency, Local Authority, Service Delivery, Decentralization, Fiscal Decentralization

INTRODUCTION

The Local Authorities Transfer Fund (LATF) was established through the Local Authorities Transfer Fund Act, No. 8 of 1998 (GoK, 1999), to achieve three objectives - improve service delivery, enhance financial management and accountability as well as reduce outstanding debts accumulated by local authorities (Kibua & Mwabu, 2008; Mboga, 2009). LATF is one of the public funds devolved to peripheral governance units, within the decentralization framework. As noted by Rondinelli (1999), decentralization entails the transfer of authority and responsibility for public functions from the central government to subordinate or quasi-independent public institutions as well as the private sector. Decentralization involves a combination of dimensions, including fiscal, administrative, political, and economic functions (Rondinelli, 1999; Cheema, 2007; Phillip, 2009). Public finance scholars have applied the concept in various fields, including public administration, economics, management science, law, and public finance, among others. Whatever the area of application, decentralization responds to limitations and challenges associated with centralized governance systems (Conyers, 2007).

Fiscal decentralization is one of the components of decentralized government functions, whose purpose is to improve efficiency in handling, management, expenditure, and accountability for public funds. As noted by Menon, Mutero, and Macharía (2008), fiscal decentralization involves the passing of budgetary authority from centralized governance systems to elected sub-national governments in the form of the power to make decisions on matters revenue and expenditure. Fiscal decentralization has four key attributes, including assigning clear expenditure and revenue responsibilities; intergovernmental fiscal transfer mechanisms from central to local governments; as well as authorization for borrowing and revenue mobilization through loan guarantees from the central government (Phillip, 2009). According to Wachira (2010), governments pursue fiscal decentralization to facilitate the participation of citizens in identification of community priorities, planning and budgeting, implementation as well as monitoring and evaluation. According to Bonoff and Zimmerman (2010), fiscal decentralization stems from the premise that local communities have the ability to prioritize projects in line with their needs, and that, local resources are easily accessible where community members are involved in development processes. …

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