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Performance contracting is one of the initiatives of the government of Kenya aimed at improving
performance and enhanced service delivery to members of the public. The phenomenon has been
accepted by many governments all over the world. In some quarters, it has been considered as an
alternative to privatization, such that instead of diverting government investment to the private
sector, effort should be made through methods which can improve efficiency and effectiveness
like the performance contracting among others.
The government of Kenya has recognized the importance of rendering efficient service to the
citizen. Attempts have been made, since 1980s to ensure that this is achieved. Starting the year
2003, the government of Kenya introduced performance contracting as one of the tools aimed at
improving performance, both in various ministries and State Corporations. NSSF is one of the
state corporations which embraced the idea of performance contracting in the 2005/2006
financial year.
The principle of performance contracts operates on the basis of social agreements, where parties
involved, decide to pursue mutual targets and calls for commitment from either side. The target
acts as driving force. The motivating factor is that both parties are aware on how the targets were
set and ready to achieve them. Thus, performance contracting is based on mutual agreement and
commitment to achieve predeterrmined targets.
This study sought to establish whether there were challenges encountered during the
implementation of performance contracting at NSSF and on how the challenges encountered
were being addressed. The selection of NSSF as a case study was arbitrary done to represent
state corporations.
A case study design method was used in gathering facts, opinions and views of the officers who
were involved in coordinating the implementation of performance contracts. An in–depth
examination of performance contracting implementation process was done This was done
through both primary and secondary sources. The data collected was analyzed using content
Based on the research findings, the challenges encountered include: establishment of an efficient
and cost effective information management system; lack of awareness; lack of teamwork;
establishment of performance incentives/ sanctions system; damaging past image; obstructing
governance and organizational structure; unhealthy organization culture and rigidity NSSF Act
Cap 258
Despite the challenges, NSSF has identified ways of overcoming them. Some of these strategies
include: intensified awareness; establishment of special department to deal with performance
contracts; advocating for cultural change; implementation of an efficient information technology
system; proposed Change on the NSSF Act; introduction of a voluntary contribution scheme;
training and development; and intensified publicity to address bad image.
In view of the challenges identified, recommendations made include: NSSF should ensure
involvement of all employees; ensure that realistic targets are set; cascading performance
contracting to all employees; and encourage ownership of performance contracts.
The limitations experienced during the study include: the scope of the interview was limited to a
few respondents; short-time frame; lack of finance and regular transfer of offices coordinating
performance contracts. These limitations have an impact on the findings of the study.
For further study, suggested research topics have been identified. Such topics are: establishment
of the impact of the challenges on performance targets by studying the trends since inception of
performance contracting; determine whether service delivery to members of NSSF has improved
and whether it can be related to performance contracting; and comparative research with other
institutions on the same subject

Assistant Coordinator

Dr. Mose Aranga

Assistant Coordinator

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