Revenue Forecasting Approach Towards Public Sector Wage Bill Management Dilemma in Kenya

Mogere Henry Nyakundi; Justo Masinde Simiyu; Nebat Mugenda Galo

doi:doi:10.11648/j.ijafrm.20170202.15

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Revenue Forecasting Approach Towards Public Sector Wage Bill Management Dilemma in Kenya

Mogere Henry Nyakundi, Justo Masinde Simiyu, Nebat Mugenda Galo

Published in International Journal of Accounting, Finance and Risk Management (Volume 2, Issue 2)

Received: 9 March 2017 Accepted: 21 April 2017 Published: 30 May 2017

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Abstract

The Kenyan government has been working towards achieving fiscal sustainability in wage bill expenditure since independence. Fiscal sustainability is key to achieving economic growth and progress as most resources would be channeled to development expenditure. The international recognized level of wage bill to revenue ratio is between 30%-40%. However, this key ratio is not being achieved in Kenya as the Salaries and Remuneration Commission and Parliamentary Budget Office of Kenya reports indicates that in the fiscal year 2012/13, it was 47%. The reports further indicate that the ratio has been within the range 47%-49% since the fiscal year 2009/2010 to 2012/13. Notable is that revenue forecasts essentially exist to help in budget formulation. Why then would the public wage bill management be a huge task to the government since independence? This study sought to establish whether revenue forecast has an effect on wage bill management in Kenya. Causal research design was used to establish the cause and effect relationship between the independent and dependent variable. Purposive sampling was employed in choosing 13 fiscal year budget data from the fiscal year 2000/01 to 2012/13.Simple linear regression model was employed in establishing the degree and magnitude of the relationship between the variables. A t-test and F-ratio were applied to test hypothesis and overall significance of the regression model at 5% significance level. Findings of this study indicates that revenue forecast within the 13 fiscal year period under study has significant effect on wage bill management in the context of wage bill to revenue ratio. This is an implication that revenue forecasts can help in managing the wage bill.

Published in	International Journal of Accounting, Finance and Risk Management (Volume 2, Issue 2)
DOI	10.11648/j.ijafrm.20170202.15
Page(s)	80-83
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Wage Bill Expenditure, Fiscal Sustainability, Wage Bill to Revenue Ratio, Revenue Forecast, Budget, Optimal Resource Allocation

References

[1]	Alan, A. (1996). Dynamic Revenue Estimation. Journal of Economic Perspectives Vol. 10, No. 1 , 141-157.
[2]	Alberto, A., & Roberto, P. (1996). Fiscal Adjustments in OECD Countries: Composition and Macroeconomic Effects. Massachusetts Avenue: National Bureau of Economic Research.
[3]	Friedrich, H. (2006). Planning or Propaganda? An Evaluation Of Germany's Medium-Term Budgetary Planning. Public Finance Analysis, Vol. 62 No. 4 , 551-578.
[4]	National Bureau of Economic Research. (1988). Testing The Rationality Of State Revenue Forecasts. NBER Working Paper Series No. 2628.
[5]	Parliamentary Budget Office of Kenya. (2013). The Public Sector Wage Bill And Its implications on Economic Perfomance in Kenya. Policy Working Paper series NO 1 of 2013. Nairobi: Government Printers.
[6]	Republic of Kenya. (2010c). Economic Survey, Kenya National Bureau of statistics.Nairobi: Government printer.
[7]	Republic of Kenya. (2010a). Public Expenditure Review, Ministry of state for Planning, National Development and Vision 2030. Nairobi: Government printer.
[8]	Republic of Kenya. (2012c). The Public Finance Management Act. Nairobi: Government printer.
[9]	Robert, R., & Joyce, P. (Jan-Feb, 1996). The Effect of Underforecating On The Accuracy Of Revenue Forecasts By State Governments. Public Administration Review, Vol. 56 No 1. , 48-56.
[10]	Salaries and Remuneration Commission. (2013). Wage bill sustainability : what options for Kenya. A report issued by SRC to contain the public sector wage bill in kenya pp 1-20. Nairobi: Government Printers.
[11]	Poverty Reduction and Economic unit, Africa Region (August 11, 2010).Reducing Government Wage Bill in Zibwabwe.

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APA Style

Mogere Henry Nyakundi, Justo Masinde Simiyu, Nebat Mugenda Galo. (2017). Revenue Forecasting Approach Towards Public Sector Wage Bill Management Dilemma in Kenya. International Journal of Accounting, Finance and Risk Management, 2(2), 80-83. https://doi.org/10.11648/j.ijafrm.20170202.15

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ACS Style

Mogere Henry Nyakundi; Justo Masinde Simiyu; Nebat Mugenda Galo. Revenue Forecasting Approach Towards Public Sector Wage Bill Management Dilemma in Kenya. Int. J. Account. Finance Risk Manag. 2017, 2(2), 80-83. doi: 10.11648/j.ijafrm.20170202.15

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AMA Style

Mogere Henry Nyakundi, Justo Masinde Simiyu, Nebat Mugenda Galo. Revenue Forecasting Approach Towards Public Sector Wage Bill Management Dilemma in Kenya. Int J Account Finance Risk Manag. 2017;2(2):80-83. doi: 10.11648/j.ijafrm.20170202.15

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@article{10.11648/j.ijafrm.20170202.15,
  author = {Mogere Henry Nyakundi and Justo Masinde Simiyu and Nebat Mugenda Galo},
  title = {Revenue Forecasting Approach Towards Public Sector Wage Bill Management Dilemma in Kenya},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {2},
  number = {2},
  pages = {80-83},
  doi = {10.11648/j.ijafrm.20170202.15},
  url = {https://doi.org/10.11648/j.ijafrm.20170202.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20170202.15},
  abstract = {The Kenyan government has been working towards achieving fiscal sustainability in wage bill expenditure since independence. Fiscal sustainability is key to achieving economic growth and progress as most resources would be channeled to development expenditure. The international recognized level of wage bill to revenue ratio is between 30%-40%. However, this key ratio is not being achieved in Kenya as the Salaries and Remuneration Commission and Parliamentary Budget Office of Kenya reports indicates that in the fiscal year 2012/13, it was 47%. The reports further indicate that the ratio has been within the range 47%-49% since the fiscal year 2009/2010 to 2012/13. Notable is that revenue forecasts essentially exist to help in budget formulation. Why then would the public wage bill management be a huge task to the government since independence? This study sought to establish whether revenue forecast has an effect on wage bill management in Kenya. Causal research design was used to establish the cause and effect relationship between the independent and dependent variable. Purposive sampling was employed in choosing 13 fiscal year budget data from the fiscal year 2000/01 to 2012/13.Simple linear regression model was employed in establishing the degree and magnitude of the relationship between the variables. A t-test and F-ratio were applied to test hypothesis and overall significance of the regression model at 5% significance level. Findings of this study indicates that revenue forecast within the 13 fiscal year period under study has significant effect on wage bill management in the context of wage bill to revenue ratio. This is an implication that revenue forecasts can help in managing the wage bill.},
 year = {2017}
}

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TY - JOUR
T1 - Revenue Forecasting Approach Towards Public Sector Wage Bill Management Dilemma in Kenya
AU - Mogere Henry Nyakundi
AU - Justo Masinde Simiyu
AU - Nebat Mugenda Galo
Y1 - 2017/05/30
PY - 2017
N1 - https://doi.org/10.11648/j.ijafrm.20170202.15
DO - 10.11648/j.ijafrm.20170202.15
T2 - International Journal of Accounting, Finance and Risk Management
JF - International Journal of Accounting, Finance and Risk Management
JO - International Journal of Accounting, Finance and Risk Management
SP - 80
EP - 83
PB - Science Publishing Group
SN - 2578-9376
UR - https://doi.org/10.11648/j.ijafrm.20170202.15
AB - The Kenyan government has been working towards achieving fiscal sustainability in wage bill expenditure since independence. Fiscal sustainability is key to achieving economic growth and progress as most resources would be channeled to development expenditure. The international recognized level of wage bill to revenue ratio is between 30%-40%. However, this key ratio is not being achieved in Kenya as the Salaries and Remuneration Commission and Parliamentary Budget Office of Kenya reports indicates that in the fiscal year 2012/13, it was 47%. The reports further indicate that the ratio has been within the range 47%-49% since the fiscal year 2009/2010 to 2012/13. Notable is that revenue forecasts essentially exist to help in budget formulation. Why then would the public wage bill management be a huge task to the government since independence? This study sought to establish whether revenue forecast has an effect on wage bill management in Kenya. Causal research design was used to establish the cause and effect relationship between the independent and dependent variable. Purposive sampling was employed in choosing 13 fiscal year budget data from the fiscal year 2000/01 to 2012/13.Simple linear regression model was employed in establishing the degree and magnitude of the relationship between the variables. A t-test and F-ratio were applied to test hypothesis and overall significance of the regression model at 5% significance level. Findings of this study indicates that revenue forecast within the 13 fiscal year period under study has significant effect on wage bill management in the context of wage bill to revenue ratio. This is an implication that revenue forecasts can help in managing the wage bill.
VL - 2
IS - 2
ER -

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Author Information

Mogere Henry Nyakundi

Department of Business Administration, Faculty of Business Studies, Chuka University, Chuka, Kenya
Justo Masinde Simiyu

Department of Business Administration, Faculty of Business Studies, Chuka University, Chuka, Kenya
Nebat Mugenda Galo

Department of Business Administration, Faculty of Business Studies, Chuka University, Chuka, Kenya

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APA Style

Mogere Henry Nyakundi, Justo Masinde Simiyu, Nebat Mugenda Galo. (2017). Revenue Forecasting Approach Towards Public Sector Wage Bill Management Dilemma in Kenya. International Journal of Accounting, Finance and Risk Management, 2(2), 80-83. https://doi.org/10.11648/j.ijafrm.20170202.15

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ACS Style

Mogere Henry Nyakundi; Justo Masinde Simiyu; Nebat Mugenda Galo. Revenue Forecasting Approach Towards Public Sector Wage Bill Management Dilemma in Kenya. Int. J. Account. Finance Risk Manag. 2017, 2(2), 80-83. doi: 10.11648/j.ijafrm.20170202.15

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AMA Style

Mogere Henry Nyakundi, Justo Masinde Simiyu, Nebat Mugenda Galo. Revenue Forecasting Approach Towards Public Sector Wage Bill Management Dilemma in Kenya. Int J Account Finance Risk Manag. 2017;2(2):80-83. doi: 10.11648/j.ijafrm.20170202.15

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@article{10.11648/j.ijafrm.20170202.15,
  author = {Mogere Henry Nyakundi and Justo Masinde Simiyu and Nebat Mugenda Galo},
  title = {Revenue Forecasting Approach Towards Public Sector Wage Bill Management Dilemma in Kenya},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {2},
  number = {2},
  pages = {80-83},
  doi = {10.11648/j.ijafrm.20170202.15},
  url = {https://doi.org/10.11648/j.ijafrm.20170202.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20170202.15},
  abstract = {The Kenyan government has been working towards achieving fiscal sustainability in wage bill expenditure since independence. Fiscal sustainability is key to achieving economic growth and progress as most resources would be channeled to development expenditure. The international recognized level of wage bill to revenue ratio is between 30%-40%. However, this key ratio is not being achieved in Kenya as the Salaries and Remuneration Commission and Parliamentary Budget Office of Kenya reports indicates that in the fiscal year 2012/13, it was 47%. The reports further indicate that the ratio has been within the range 47%-49% since the fiscal year 2009/2010 to 2012/13. Notable is that revenue forecasts essentially exist to help in budget formulation. Why then would the public wage bill management be a huge task to the government since independence? This study sought to establish whether revenue forecast has an effect on wage bill management in Kenya. Causal research design was used to establish the cause and effect relationship between the independent and dependent variable. Purposive sampling was employed in choosing 13 fiscal year budget data from the fiscal year 2000/01 to 2012/13.Simple linear regression model was employed in establishing the degree and magnitude of the relationship between the variables. A t-test and F-ratio were applied to test hypothesis and overall significance of the regression model at 5% significance level. Findings of this study indicates that revenue forecast within the 13 fiscal year period under study has significant effect on wage bill management in the context of wage bill to revenue ratio. This is an implication that revenue forecasts can help in managing the wage bill.},
 year = {2017}
}

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