Credit Management Strategies on the Financial Performance of County Government of Bungoma

Abstract

Most county governments rely on various sources of revenue to finance their operations and deliver essential services to citizens. However, the majority of counties rarely meet their revenue targets. Just like other counties across the country credit management remains a significant challenge for the County Government of Bungoma. The county has numerous creditors, with land and house rates constituting the highest categories. Despite implementing various credit management strategies, such as penalty waivers, the effectiveness of these measures remains questionable. Therefore, the study sought to assess the effect of credit management strategies on the financial performance of the county government of Bungoma. Specifically, the study sought to assess the effect of credit monitoring strategy, revenue management strategy, dispute management strategy, and debt restructuring strategy on the financial performance of the county government of Bungoma. The study was anchored on the public financial management theory, agency cost theory, institutional theory and stewardship theory. The target population consisted of 86 staff members at the county government of Bungoma involved in credit management. The study used a census technique and adopted a correlational research design. Primary data was collected through a structured questionnaire. The pilot study was conducted in the neighboring Kakamega County. The data were analyzed using the Statistical Package for the Social Sciences. Both descriptive and inferential statistics were employed in the study. Descriptive statistics involved the use of percentages, frequencies, mean, standard deviation, and standard deviation, while inferential statistics encompassed the use of correlation and regression analysis. After analysis, the data were presented in the form of tables. The study findings indicated that credit monitoring strategy was positively and significantly associated with financial performance of the County Government of Bungoma (β = 0.312, p < 0.05). Revenue management strategy also exhibited a statistically significant relationship with financial performance of the County Government of Bungoma (β = 0.284, p < 0.05). In addition, dispute management strategy showed a moderate but significant association with financial performance of the County Government of Bungoma (β = 0.227, p < 0.05), while debt restructuring strategy similarly demonstrated a positive and statistically significant link with financial performance of the County Government of Bungoma (β = 0.241, p < 0.05). From the findings the study concluded that credit monitoring strategy has a significant effect on the financial performance of the County Government of Bungoma. In addition, the study concluded that revenue management strategy has a statistical effect on the financial performance of the County Government of Bungoma, Furthermore the study concluded that dispute management strategy has a statistical effect on the financial performance of the County Government of Bungoma. Finally, the study concluded that debt restructuring strategy has a statistical effect on the financial performance of the County Government of Bungoma. From the study the study recommended that the County government of Bungoma should prioritize regular credit reviews and implement robust credit risk assessment frameworks to manage its credit portfolio effectively. In addition, the study also recommended that to enhance financial stability, the county government of Bungoma should adopt sustainable revenue growth measures, such as expanding the tax base and improving tax collection efficiency.