Effects of Fund Management Practices on Financial Performance in CDF funded Water Projects in Kenya

Abstract

Kenya's CDF was a concept implemented in 2003 through an Act of parliament, whose aim was to address the challenges at grassroots level through the provision of funds to empower community-based projects in all constituencies of Kenya. The initiative targeted development projects at the constituency level aimed at alleviating poverty and addressing imbalances in regional development based on decentralization of public resources. The principle behind devolution appears to be widely accepted throughout Kenya today. Increasingly however, was the issues on Management of fund accrued from CDF funded water projects. The study used cross-sectional survey design, which emphasized on the measurement and analysis of relationships between the variables. The study used primary sources of data. The CDF funded water project managers were interviewed to obtain the primary data. Data was analyzed using SPSS program. Descriptive statistics as well as inferential statistics were used. Mean, Correlation, ANOVA and regression analysis measured the nature of the relationship between the cash management, receivable management, inventory management practices and financial performance. The study findings were that, there was a strong positive relationship between the independent variables (cash management, receivable management, inventory management practice) and the dependent variable (financial performance). The variability of financial performance attributed to changes in efficiency of Receivable Management practices, efficiency of cash management and efficiency of inventory management was 88.3%. This has a general implication that efficient fund management practices have a positive effect on the financial performance of CDF funded water projects in Kenya and therefore optimal fund Management practices should be embraced as a policy recommendation.