Effect of Cashless Reform on Revenue Collection Performance in Kakamega County





Cashless System Reform, County Government Reforms, Revenue Collection Performance, Structured Revenue Stream


Revenue is considered a key element for any state since the resources mobilized and collected are used to finance government projects and provide services to citizens. After the creation of Kakamega County due to devolution, Kakamega initiated revenue reforms in 2019 to mobilize its own source of revenue. Despite the reforms, the county is still facing challenges and massive deficits in revenue collection, which hinder its operation. The study specifically examined the effect of cashless reform on revenue collection performance in Kakamega County. Secondary data between the two periods was used, and the study chose descriptive, correlational, and causal comparative as the study designs. The data in this research was analyzed using both descriptive and inferential statistics. Descriptive statistics measured include mean, standard deviation, minima, and maxima. The Pearson correlation coefficient was also calculated. Pre-estimation diagnostic tests carried out in the study included unit root and Philip Perron tests for stationarity. Results indicated that after reforms, cashless reform had a moderately positive relationship with revenue collection performance (0.450). From regression analysis, model estimates after reforms were (t = 2.81, p<0.05) for cashless system reform. Post-estimation diagnostic tests carried out include the Breusch-Godfrey LM test, whose findings showed that there is no autocorrelation; the Variance Inflation Factors (VIF), which indicated that there was no multicollinearity; the Breusch-Pagan test, whose results and findings showed the error terms were homoscedastic; and finally, the Jarque-Bera test, which showed that residuals are regularly conveyed. Recommendations from the study were that Kakamega County should come up with modern ways of revenue collection. Additionally, the county should come up with a simplified and cost-effective system to enhance revenue collection. The study further recommended severe sanctions on tax evaders. The discoveries from research will be utilized by policymakers to enhance revenue collection within Kakamega County by increasing the revenues collected. Also, the findings will help the Kakamega County Revenue Agency (KCRA) staff gain insights on policy reforms within the county and their causal effect on revenue collection performance.


Akitoby, B. (2018). Raising revenue. Finance and Development, 55(1), 18-21. https://doi.org/10.5089/9781484361535.001 DOI: https://doi.org/10.5089/9781484361535.001

Baron, R. M., & Kenny, D. A. (1986). The moderator-mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of personality and social psychology, 51(6), 1173. https://doi.org/10.1037/0022-3514.51.6.1173 DOI: https://doi.org/10.1037/0022-3514.51.6.1173

Conybeare, J. A. (1982). The Rent-Seeking State and Revenue Diversification. World Politics, 35(1), 25-42.

https://doi.org/10.2307/2010278 DOI: https://doi.org/10.2307/2010278

Dix, P. (2020). Apache IoTDB: Time-series database for internet of things. Proceedings of the VLDB Endowment, 13(12), 2901-2904. https://doi.org/10.14778/3415478.3415504 DOI: https://doi.org/10.14778/3415478.3415504

George, D., & Mallery, P. (2018). Reliability analysis. In IBM SPSS Statistics 25 Step by Step (pp. 249-260). Routledge. https://doi.org/10.4324/9781351033909-25 DOI: https://doi.org/10.4324/9781351033909-25

Gichaba, Z. O., & Oluoch, O. (2019). Effect of Cashless Payment Systems on Cash Management of County Referral Hospitals in Kenya. Journal of International Business, Innovation and Strategic Management, 3(2), 81-100.

Hayes, A. (2020). Assessing and understanding entrepreneurial profiles of undergraduate students: Implications of heterogeneity for entrepreneurship education. Entrepreneurship Education, 3(2), 151-195. https://doi.org/10.1007/s41959-020-00025-5 DOI: https://doi.org/10.1007/s41959-020-00025-5

James, E. (2022). Correlation Analysis, Definition and Explanation. blog.flexmr.net.

Kanyi, P., & Kalui, F. (2015). The effects of tax policy reforms on tax revenue in Kenya. Strategic Journal of Business & Change Management, 1(2), 1-15.

Kenya Revenue Authority (KRA). (2004). Staff Quarterly Newsletter, Kenya Revenue Authority, Edition No 22, December 2004.

Kothari, C. R. (2004). Research Methodology. Methods and Techniques, New Age International Publishers.

Mabugu, R. E., & Simbanegavi, W. (2015). Tax and expenditure reforms in Africa: an overview. Journal of African Economies, 24(suppl_2), ii3-ii15. https://doi.org/10.1093/jae/eju037 DOI: https://doi.org/10.1093/jae/eju037

MacDonald, C. J. (2016). An Assessment of Tax Policy Reform and Revenue Growth in Liberia: 2005-2015.

Madegwa, E., & Namusonge, G. (2018). Effects of Automation of Revenue Collection on the Performance of County Governments. A Case Study of Trans Nzoia County Government, Kenya.

Mooij, L., Lam, J., & Wingender, M. P. (2015). China: How can revenue reforms contribute to inclusive and sustainable growth?. International Monetary Fund.

Odhiambo, O. J., & Nyariki, K. O. (2022). Effect of Cashless Management on Revenue Collection Efficiency: A Case of Kisumu County Government, Kenya. The International Journal of Humanities & Social Studies, 10(5). https://doi.org/10.24940/theijhss/2022/v10/i5/HS2205-028 DOI: https://doi.org/10.24940/theijhss/2022/v10/i5/HS2205-028

Olanipekun, W. D., Brimah, A. N., & Akanni, L. F. (2013). Integrating cashless economic policy in Nigeria: challenges and prospects. International Journal of Business and Behavioral Sciences, 3(5), 1-8.

Osoro, C. (2020). Diaspora Remittances and Stock Market Development at Nairobi Securities Exchange, Kenya. Diaspora, 11(6), 44-65.

Saunders, M., Lewis, P., & Thornhill, A. (2007). Research methods. Business Students 4th edition Pearson Education Limited, England, 6(3), 1-268.

Singhraul, B. P., & Garwal, Y. S. (2018). Cashless economy-challenges and opportunities in India. Pacific Business Review International, 10(9), 54-63.

Siraj-Ud-Doulah, M. (2019). Time Series Forecasting: A Comparative Study of VAR ANN and SVM Models. Journal of Statistical and Econometric Methods, 8 (3), 21-34

Srouji, J. (2020). Digital payments, the cashless economy, and financial inclusion in the United Arab Emirates: Why is everyone still transacting in cash? Journal of Risk and Financial Management, 13(11), 260. https://doi.org/10.3390/jrfm13110260 DOI: https://doi.org/10.3390/jrfm13110260




How to Cite

Mukhwaya, A. O., Ngala, C., & Mungai, A. (2023). Effect of Cashless Reform on Revenue Collection Performance in Kakamega County. African Journal of Empirical Research, 4(2), 244–255. https://doi.org/10.51867/ajernet.4.2.26