Effect of Computerized Funds Transfer System on Management of Kenya Government Funds: A Case Study of Mbita Sub County Treasury

Abstract

Computerized Funds Transfer (CFT) system is an electronic method of exchange of money from one bank account to another either within a single financial institution or across multiple institutions, through computer based system. Due to economic meltdown in various countries around the world, it created a demand for payment system that could improve cash management and efficient way of handling government payments. The government of Kenya in an attempt to reduce receipts and payments exposure risks introduced a computerized funds transfer system in 1992 and whose effect have not yet been known. However, a number of complaints have come up in the cause of its implementation. This study, therefore sought to investigate the effect of computerized funds transfer system on government departments cash management at Mbita Sub County Treasury. Specifically it sought to: establish the association between computerized fund transfer system and time management within Mbita Sub County Treasury, determine the association between computerized fund transfer system and privacy and security of cash management in Mbita sub County treasury, determine the association between productivity of a system and Government cash management in Mbita Sub County Treasury and establish the association between authorization and inspection and cash control transactions in Mbita Sub County Treasury. Stratified random sampling was used to sample 28 respondents out of a population of 45 departmental heads. The study used questionnaires to obtain primary data while secondary data were from documented relevant sources. Reliability test was conducted on ten departmental heads that were not included in the actual data collection. A minimum Cronbach's coefficient of 0.784 was obtained, suggesting that the instrument was reliable when compared with threshold of 0.7. Data were analyzed using Pearson correlation which gave the association between the variables while regression helped in generating the relationship between the independent and dependent variables. The study established that amount payable had a significant positive association with cash control transaction (r =0.548, p=0.003) and time management (r=0.414, p=0.028). Similarly, authorization and inspection has significant positive association with cash control transaction (r=0.493, p=0.008), privacy and security (r = 0.435, p=0.021) and Time management (r = 0.841, p = 0.000). It also showed that authorization and inspection (f3 =.561, p =.001) and amount payable (f3 =.411, p=.033) both had significant positive effects on Government cash management. The positive associations mean that a 'Positive change in the elements of computerized funds transfer would imply a positive change in the government cash management. The regression results also showed that a unit change in the dimensions of the independent variable would also lead to appositive change in the government cash management as suggested by the beta coefficients.