Enhancing public financial management in Nairobi County: an assessment of budget reliability & transparency of public finances

Abstract

Public Financial Management (PFM) plays a critical role in promoting fiscal discipline, accountability, transparency, and effective service delivery within Kenya’s devolved governance system. This study examined the influence of budget reliability and transparency on PFM performance in Nairobi City County. The study was anchored on New Public Management Theory and Agency Theory, which emphasize accountability, efficiency, and prudent management of public resources. A descriptive research design was adopted within a pragmatic research approach, integrating qualitative and quantitative methods. The findings revealed that budget reliability in Nairobi City County remained weak throughout the period under review. Actual expenditures consistently fell below approved budgets, ranging from approximately 75% to 84%, indicating delays or non-implementation of several planned projects and programmes. Significant reallocations of funds across sectors were observed, with recurrent expenditure, particularly personnel costs, receiving priority over development expenditure. The County also consistently failed to achieve its own-source revenue targets, collecting between 62% and 72% of projected revenues. The study concluded that although Nairobi City County has established formal budgeting and reporting structures, weaknesses in budget execution, revenue performance, fiscal disclosure, and public access to information continue to undermine effective PFM performance. The study recommends strengthening revenue forecasting and collection systems, improving compliance with approved budgets, enhancing fiscal disclosure practices, integrating extra-budgetary entities into financial reporting frameworks, and promoting timely publication of financial and performance reports to improve accountability, transparency, and service delivery.