Electronic Revenue Collection and its Effect on Siaya County Government's Financial Performance

Revenue collection among the devolved units has drawn interest from around the world. Some developing African nations, like Ghana, introduced devolved governments with the collection of their own revenue as part of their functions. East African nations, such as Rwanda, saw the establishment of local governments and own-source revenue collection as an urgent and necessary corrective action in response to their economic challenges. County Governments in Kenya were formed in 2013 with Article 209 of the Constitution of Kenya (2010) in respect of the collection of own-source revenue by the county governments. The County Government of Siaya utilized manual revenue collection systems until 2015 when the POS gadgets, ECR, and Mobile payment system were introduced in the 2015/2016 F/Y. County Fiscal Strategy Papers show that during the 2013/2014, 2014/2015, and 2015/2016 F/Y, the County Government recorded negative deviations of -34, -52% and -41% in Own Source Revenue, respectively. In 2017/2018, 2018/2019, 2019/2020, and 2020/2021, the County Government of Siaya also had negative deviations in Own Source Revenue of -53%, -42%, -56%, and -19% respectively. F/Y 2021/2022 recorded a positive deviation of 0.21%. An inadequate and inefficient electronic revenue collection system has been cited as the major contributor to the continued underperformance in the collection of revenue. Despite the county having a partially automated system of revenue collection, it must be noted that the revenue collected has remained significantly low over the past five years. This means that the systems may be inadequately utilized, thus the need to assess with a view to increasing the revenue collection and financial performance. The results of the research on the impact of the utilization of automated revenue collection on the financial performance were inconsistent. It is in this context that the objective of the research was to determine the impact of electronic revenue collection on the financial performance of the County Government of Siaya. To be specific, the research aimed at identifying the impact of the Point of Sale machine on the financial performance of the County Government of Siaya, the impact of the Electronic Cash Register system on the financial performance of the County Government of Siaya, and the impact of the Mobile Payment System on the financial performance of the County Government of Siaya. The study was backed by two theories, namely: Expediency Theory of Taxation and Technology Acceptance Model Theory. This study utilized the correlation research design and was directed at 98 staff serving the department of finance in County Government of Siaya. A sample of 79 respondents was selected using the formula of Taro Yamane. Primary data was employed in the study and this was collected through a questionnaire. The analysis of a pilot study of eight (8) respondents conducted in the Siaya County indicated that there was an alpha of 0.81, which exceeded the Cronbach alpha coefficient of 0.7; hence, the instruments were reliable. The 8 respondents were not included in the sample size; therefore, 71 respondents were utilized to conduct the study. Expert judgment was used to define validity. The data was analyzed with multiple regression and Pearson product-moment correlation in determining the relationship between the independent and dependent variable. The findings showed that the use of point of sale machines had the strongest positive impact on financial performance (β=.886, p=.000), followed by the use of electronic cash registers with a beta value of β=.197, p=.000 then the use of mobile payment systems (β=.093, p=.000). The findings further revealed that there existed a significant and strong positive correlation between the use of point of sale machines (r=.995, p=.000), implying that point of sale machines significantly affected financial performance. The electronic cash registers had (r=.899, p=.000), implying that electronic cash registers significantly affected financial performance. The mobile payment systems recorded (r=.861, p=.000) and financial performance, implying that mobile payment systems significantly affected financial performance. The research established that the implementation of electronic revenue collection positively and significantly affects the financial performance of the County Government of Siaya.