DETERMINANTS OF OWN-SOURCE REVENUE PERFORMANCE AMONG THE LAKE REGION ECONOMIC BLOC COUNTIES, KENYA: THE MODERATING INFLUENCE OF GROSS COUNTY PRODUCT.

Abstract

Own Source Revenue in Kenya is anchored in the 2010 Constitution, the Public Finance Management Act of 2012, and the County Government Act of 2012. Enhancing county level revenue performance is essential for fiscal autonomy and effective public financial management. However, many counties continue to face challenges including weak legal frameworks, limited citizen participation, inadequate diversification of revenue sources, and slow adoption of technology. This study was motivated by the persistent fiscal gaps in devolved governments, particularly within the Lake Region Economic Bloc, where counties have significant potential yet continue to underperform in revenue mobilization. The study examined influence of the determinants -county legal frameworks, public participation, tax diversification, and technology adoption on own source revenue performance, while also assessing how Gross County Product shapes these influences. It was guided by the Modern Portfolio Theory, the Sequential Theory of Decentralization, and the Technology Acceptance Model. A descriptive survey design was employed, targeting 170 county officials from 14 counties within the bloc. Structured and unstructured questionnaires were used, and a pilot study was conducted in Uasin Gishu County to ensure reliability and validity. Findings revealed that enforceable county legal frameworks (β = 0.198, p = 0.004) enhanced own source revenue performance. Public participation (β = 0.142, p = 0.034) built trust and compliance and tax diversification (β = 0.211, p = 0.002) strengthened own source revenue performance. Technology adoption (β = 0.338, p < 0.05) was the most influential factor, improving efficiency and transparency, while stronger Gross County Product significantly influenced the benefits of these determinants on own source revenue performance. The study concludes that institutional, participatory, fiscal, and technological reforms, supported by local economic growth, are essential for sustainable own source revenue performance. It recommends that county governments strengthen revenue laws, institutionalize citizen engagement, broaden revenue streams, and invest in digital financial technologies to achieve greater fiscal independence.