CONTRIBUTION OF GOVERNMENT REGULATIONS TO FINANCIAL DISTRESS FACING LOCAL AUTHORITIES IN KENYA
DOI:
https://doi.org/10.47672/ajf.128Keywords:
Government regulations, financial distress, Local AuthoritiesAbstract
Purpose: The purpose of this study was to establish the contributions of Government regulations to financial distress facing Local Authorities in Kenya.
Methodology: A descriptive research design was used to conduct the study. The study population comprised of the 175 Local Authorities in Kenya. A sample of 20 Local Authorities was selected using a stratified random sampling technique. A questionnaire was used to collect data from both the Local Authorities officers and customers of Local Authorities. The data collected was analyzed using descriptive and inferential statistics. Qualitative responses were analyzed using content analysis.
Results: Results indicated that the government regulation on Local Authority was unfair and ineffective. Results further indicated that the inadequacy or biased government regulation contributed to financial distress in Local Authorities.
Unique contribution to theory, practice and policy: The study recommended that, the sources of revenue that were taken away from the Local Authorities should be reverted back to them or the government to increase funding to LA's. Officers also suggested that some of the Acts that divert funds to other ministries/departments should be reviewed. It was also recommended that a portion of corporation tax that is paid to the government should be devolved to LA's. The Local Authorities also need to be given more powers to increase their sources of revenue. It was also recommended that perhaps the law should be amended to enable the setting up of an anticorruption committee at the Local Authority level. In addition, it was suggested that cap 265 should be amended so as to divorce politics from running of LA's.Most importantly, it was recommended that the government should liaise with the Local Authorities and conduct comprehensive consultation on how a certain law would affect them before passing it. Further regulations and amendments to the existing laws should be critically examined to avoid watering the revenue base of the newly formed county governments.
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