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Audit reports by the office of the controller of budget in Kenya revealed gross financial mismanagement and a fall in revenue collection even after County Governments have put in place the Integrated Financial Management Systems (IFMIS) and e-pay systems in accordance with the requirements of the Public Finance Management Act 2012. This raises the question of the level of utilization of information systems in revenue management in the county governments in Kenya. It is worth noting that public revenue collection is an integral component of fiscal policy and administration. It is the main instrument through which government funding is ensured. The recent move to adopt decentralization has led a paradigm shift on governance, revenue collection, and management. Kenya through the 2010 constitution adopted the devolution system of decentralization. Devolution entails the transfer from the central government to local governments the power to plan, mobilize resources and implement development programs (Prud’homme, 2003). County governments are required to raise revenues to bridge gaps between the county budgets and the equitable share from the national government. Guidelines on the revenue collection and allocation are based on the county finance bills.
An audit report by the office of the controller of budget revealed that Nakuru County had put in place the Integrated Finance Management Information System (IFMIS) as per the requirements of the Public Finance Management (PFM) Act, 2012 however, the report cited limitations in the level of application of the system. The report further cited declining local revenue collections which was partly attributed to revenue leakages due to inadequate application of the IFMIS (ROK, 2016).
According to (Bird 2010; Martinez-Vázques & Smoke, 2010) in a decentralized governance system, a sound revenue system for local governments is an essential pre-condition for the success of fiscal decentralization. This is essential because, in addition to raising revenues, local revenue mobilization has the potential to foster political and administrative accountability by empowering communities (Shah, 1998). Information System (IS) is a management mechanism that helps people collect, store, organize, and use information. According to (Duff & Asad, 1980), Management Information System (MIS) is a collection of people, procedures, a base of data, hardware and software that collects, processes, stores, and communicates data for transaction processing at operational level and analyses information for Managerial decision making. Electronic revenue collection system has many benefits; nonetheless, the inherent weaknesses and insecurity of the e-revenue collection system have thwarted the benefits (Lai, 2006).
Audit reports by the office of the controller of budget in 2012, 2013, 2014, 2015, and 2016 revealed that the county’s revenues fell significantly below the targets. Despite that, the county has already put in place the IFMIS and e-pay systems in accordance with the requirements of the PFM Act 2012, its level of utilization remains low.
As a result, there are possible revenue leaks which hinder the county from achieving its revenue targets which has a long-term effect on development. In addition, empirical evidence points out that poor infrastructure (ICPAK, 2014), willingness to accept change, staff technical capacity (ROK, 2014) can influence the utilization of ICT in revenue collection. Similarly, theoretical evidence shows that perceived ease of use and perceived usefulness play key roles in utilization of new technologies (King, & He, 2006; Bagozzi & Warshaw, 1989). However, it is not clear whether these factors are responsible for the situation in the County Governments in Kenya. The purpose of this study therefore was to analyse the effects of staff technical capacity on utilization of information systems in revenue management in the County Governments in Kenya.
The study sought to test the following hypothesis: