Effect of Debt Restructuring Strategy on the Financial Performance of County Government of Bungoma

Abstract

Abstract Purpose of Study: This study sought to examine the effect of debt restructuring strategy on the financial performance of the County Government of Bungoma. Problem Statement: County governments in Kenya play a pivotal role in advancing economic growth, social development and the realization of devolution objectives. However, despite these financing mechanisms, many devolved units continue to face persistent fiscal stress due to rising expenditure demands, revenue shortfalls and accumulation of pending bills. In Bungoma County, financial performance remains below optimal levels despite significant allocations from both national transfers and internally generated revenues. Methodology: The study adopted a correlational research design and targeted 86 staff 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. Both descriptive and inferential statistics were employed in the study. After analysis, data was presented in the form of tables. Result: The findings revealed that a unit increase in debt restructuring strategy would lead to a 0.323 improvement in the financial performance of the County Government of Bungoma. From the findings, the study concluded that debt restructuring strategy has a statistically significant effect on the financial performance of the County Government of Bungoma. Recommendation: To optimize debt management, the County Government of Bungoma should consider extending payment terms for debtors where feasible to foster goodwill and improve repayment rates.