Integrated Financial Management Information System, Procurement Performance and Customer Satisfaction in the County Government of Nyeri
Mwangi, Peter Gitau
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Public procurement has always been a big part of the developing countries‟ economy accounting for 10-40% of their Gross Domestic Products (GDPs).Public e-procurement involves the use of electronic communications and transactions by government institutions and public sector to tendering services or public works, (Biwott, 2015). Lundu and Shale, (2015) contend that beyond the simple transition from systems based on paper to those which use electronic communications, public e-procurement can provide significant improvements in the effectiveness of individual markets and the overall functioning of the markets. Their gradual introduction is part of an ambitious e-government program aimed at transforming the delivery and performance of public administration. Governments in developing countries are progressively adopting ways and systems to modernize and improve public supply chain management due to its significant contribution to the countries‟ economic growth, (Kishor, Sajeev & Callender, 2013). Qwabe (2014) notes that globally, governments are investing a great deal of resources to streamline and improve public supply chain management and are implementing new supply chain management systems that manage tenders through a web site. This is geared towards enhancing accessibility of tenders, increasing efficiency and saving costs (faster and cheaper) in government supply chain management and improving transparency (to reduce corruption) in supply chain management services. The goal of a Public Financial Management (PFM) system is to support the achievement of fiscal discipline, strategic and efficient allocation and use of funds, value for money and probity in the use of public funds Some stages in public procurement, such as the invitation, submission and evaluation stages, require bespoke solutions. According toOdolo and Gekara, (2015) the Organization for Economic Cooperation and Development (OECD) estimates the value of government procurement in the world to be over US$ 2,000 billion equivalent to 7% of world GDP and 30% of global merchandise trade. The submission, evaluation and order stages are the most complex, requiring a common set of protocols and standards in order to organize the exchange of complex documents and the interaction between public purchasers and suppliers. Odago and Mwajuma (2013) argue that in developing countries, the public procurement sector is often the largest domestic market. As Cornelia, Muhumuzaand and Basheka (2010) posited the procurement system is the bridge between public procurement and private sector providers. This gives the government the obligation of providing goods, works and services to meet a variety of citizen needs. Mosoba (2012) contends that for some aspects of public procurement, manual processing is still necessary. For example, some stages of complex contracts such as projects or tasks can be difficult to reduce to standard formats and may require human intervention. However, there are possibilities for a large part of the procurement activities to be transferred to an electronic database. Just as businesses must purchase the goods and services they need to keep their plants running and their customers satisfied, so must governments, (Goel, Dwivedi, & Sherry, 2013). Customer satisfaction is increasingly considered as a baseline standard of performance and a possible standard of excellence for any business organization, (Hendriks, 2012). Companies with a bigger share of loyal customers profit from increasing repurchase rates, increasing crossbuying potential, higher price willingness, positive recommendation behavior and less switching. Indeed, in the customer satisfaction/service quality arena, aggregate market studies have shown that higher customer satisfaction leads to better financial results (Anderson, 1996; Hallowell, 1996). This is the main reason why we have witnessed in recent years a proliferation of work on the topic of customer satisfaction and its close cousin, service quality, (Biwott, 2015).In Africa, the concept of e-procurement is just gaining popularity especially in the public sector. To deal with the problems of lack of accountability and transparency in procurement activities in the public sector, Most African countries have resorted to legal reforms and adoption of procurement. Tanzania for instance put into place e-procurement systems to allow e-sharing, eadvertisement, e-submission, e-evaluation, e-contacting, e-payment, e-communication and echecking and monitoring to ensure all public procurement activities are conducted online, (Sijaona, 2010). There are some key differences between the ways governments and businesses obtain these items. In the past decades, the public procurement system in Kenya has undergone significant developments. Public procurement should matter to citizens because they pay taxes so that the government can deliver its obligations to them, such as providing education, health, and security, rule of law and protection of property. Consequently, the public is interested in the procurement function of achieving service delivery. Importantly, public procurement accounts for a high proportion of total government expenditure, with a Kenyan estimate of 60 percent. Although several steps have been taken to reform the public procurement system, its processes are still shrouded in secrecy, and are inefficient and corruption-prone, such that huge amounts of money are wasted. Given the large amounts of money involved in government procurement, it is in citizens‟ interests that the procurement process promotes prudent use of resources, integrity and fairness, ensuring value for money in the acquisition of goods and services. According to Diamond &‟Khemani (2005) IFMIS, an automated system that is used for public financial management and control, accounting, audit and reporting. A financial management information system, or integrated financial management information system, is an information system that tracks financial events and summarizes financial information. In its basic form, an IFMIS is little more than an accounting system configured to operate according to the needs and specifications of the environment in which it is installed. Generally, the term IFMIS refers to the use of information and communications technology in financial operations to support management and budget decisions, fiduciary responsibilities, and the preparation of financial reports and statements. In the government realm, IFMIS refers more specifically to the computerization of public financial management (PFM) processes, from budget preparation and execution to accounting and reporting, with the help of an integrated system for financial management of line ministries, spending agencies and other public sector operation, (Ibrahim, &Dauda, 2014).Odago and Mwajuma (2013) indicate that an IFMIS stores, organizes and makes access to financial information easy. It not only stores all the financial information relating to current and past years‟ spending, but also stores the approved budgets for these years, details on inflows and outflows of funds, as well as completes inventories of financial assets (e.g. equipment, land and buildings) and liabilities (debt).The scale and scope of an IFMIS can vary, from simple General Ledger System to a comprehensive system addressing Budget, Revenue, Expenditure Control, Debt, Resource Management, Human Resources, Payroll, Accounting, Financial Reporting, and Auditing processes across central government or even including local government and other public sector and quasi-governmental agencies and operations. Kiilu and Ngugi. (2014) indicate that in the modern world, developing countries like Kenya, Tanzania, Ethiopia and several others in the African continent have been encouraged to reform their public expenditure management systems through computerization of the entire public sectors in response to the increasing volume of data or information that need to be processed. There are, however, various factors to be considered prior to the implementation of the public expenditure management information systems. The systems implemented in Africa have had challenges with Ibrahim and Dauda (2014) arguing out corruption challenges amid other issues. Hendriks (2012) acknowledges a number of those challenges such as functional, corruption, implementation and data migration challenges. Public Procurement ranges from the purchase of routine supplies or services to formal tendering and placing contracts for large infrastructural projects. The significance of public procurement reform for developing countries is increasingly being appreciated by development agencies globally, recognizing that the social and economic costs of the weaknesses in public procurement governance are compounded by increases in sovereign risk that this represents for foreign investment, (Dzuke&Naude 2015). The application of new technology in this discipline offers a qualified potential to substantially resolve these tensions, (Sandeep, 2011).Governments worldwide continue to receive a lot of attention as providers of essential services to their citizens. This is so, because the citizens are the taxpayers of funds that the governments use in providing important services such as health, education, defense and infrastructure. To provide these critical services, governments purchase goods and services through public procurement which must be done within the legal framework and policies in place, (Odago & Mwajuma, 2013). The contribution that public procurement can make to expenditure reduction and the stimulation of economic growth is the focus of increasing policy attention. According to Njenga, Omondi, and Omete (2014) public procurement frameworks in developed and developing countries alike are recognized as being characterized by an unstable tension between the public expectations of transparency and accountability, and of efficiency and effectiveness of resource management. This conformance performance tension, manifest throughout a complex procurement environment, is further destabilized by conflicting stakeholder interests at the political, business, community and management levels and exacerbated by competing claims between executives, lawyers, technologists and politicians for lead roles in this arena. Mahmood (2010) observes that as part of efforts to adopt long-term and strategic view of their procurement needs and management, most countries have resorted to turning to their annual procurement plans as a possible problem solver. The effectiveness of procurement practice is very important in any organization for the realization of high levels of performance. Its success can be very beneficial to the organization given that it can help reduce cost and help in bringing efficiency in the organization‟s operations, contributing to the organization‟s success and giving it a competitive advantage over its competitors in terms of better services. The procurement function ensures that materials are readily available for the production of goods and services. Koskey (2010) further states that as much as the government has set up rules and regulations on how procurement should be done in all government institutions the need to have a good managerial good will in order for the effective of the procurement function is more than important for the procurement process in the organization. All government institutions follow the regulations provided for in the Public Procurement act 2005 these regulations provided there in must be followed to theletter in order for them to effectively manage and control the procurement process in such organizations, (Lundu& Shale, 2015)..