Effect of Cashless Management on Revenue Collection Efficiency: A Case of Kisumu County Government, Kenya

Abstract

The purpose of this study was to investigate the effect of cashless management on revenue collection efficiency: A case of Kisumu County Government. The study aimed at determining the level of electronic point of sale on efficiency of revenue collection. Whether electronic point of sale enhanced easy payment of revenues and improved the revenue collection in the County, whether it enhanced transparency in service delivery. Revenue collection is a fundamental constituent of fiscal policy and administration in any economy. County Governments in Kenya experience a myriad of financial challenges, key among them being low revenues. The budget director's audit reports for fiscal years 2016/2017 and 2017/2018 showed that Kisumu County's revenue was significantly lower than target, especially due to revenue leakage. In addition, in the 2018/2019, its internal revenues fell below the budgeted figure for the same financial year. To counter these losses, the County Government embarked on a cashless payment system in revenue collection. This was to be achieved by computerizing the tax collection system from the Local Authority's Integrated Financial Operations Management System (LAIFORM) to the integrated Financial Management Information System (FMIS). The overall goal was to explore the impact of the cashless payment system and management on the efficiency of tax collection in Kisumu County. The research adopted Technology Adoption Model theory by Davis (1986) and Planned behavior theory by Ajzen (1991). A case study research design which is an intensive description and a holistic analysis of a bounded case was adopted. The study targeted all the 200 staff members from revenue departments at Kisumu County and sampled 60. Stratified sampling technique was utilized. The research utilized secondary and primary data. The primary data was acquired through opened and closed-ended questionnaires distributed among the sampled staff while secondary data was obtained from the County revenue Office financial records. The collected data were analyzed using descriptive statistics and inferential statistics. Descriptive statistics involved the use of mean, mode, standard deviation, frequency, and percentage. Pearson's correlation and ANOVA were utilized to show the relationship between the independent variable (cash management) and the dependent variable (efficiency in revenue collection). The qualitative data from the open-ended questionnaire were analyzed according to the goal setting theme and was presented in the form of tables, charts and graphs. The study findings revealed that use of electronic point of sale enhances easy payment of revenues, improved and increased efficiency of the revenue collection in the County and enhanced transparency in service delivery for customs authority. The study recommended it is essential to create awareness of the existence of the system, how it works, and its benefits among taxpayers to enhance its use and raise compliance level.