MST-School of Economics

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This collections contains bibliographic information and abstracts of Master theses and dissertation in the School of Economics held in Kenyatta University Library

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Informal Financial Sector in Kenya: The Case of Siaya District
(Kenyatta University, 1991) Ouma, A. P. S.
This paper studies factors that affect an individual's probabilities of choosing amongst different financial institutions to save with and/or borrow from. A structured questionnaire was used to collect data on attributes of financial institutions (formal and informal) and on characteristics of individuals who had used these institutions over a period of one month prior to the interview. The data were analyzed using log it techniques. The empirical findings of the study reveal coexistence of informal and formal financial institutions in the study site. However, the informal institutions are more popular, having been used by 73 per cent of total respondents. The findings also show that distance, level of education, level of monthly income and collateral are significant determinants of selection probabilities for formal and informal financial institutions. On the basis of the empirical results, the study recommends that: (i) More formal financial insitutions be built in rural areas. (ii) Education programmes on finance and banking be intensified in the rural areas. (iii) Local .moneylenders should be recruited asI extension agents of formal financial institutions in rural areas. (iv) State loans, like those provided by the ICDC loan Agency in Siaya District, be channelled via informal financial institutions, especially Mutual Assistance Groups, under an overseer body.
An empirical assessment of tax performance in Kenya: 1958 to 1989
(1991-07) Wawire, N. H. W.
Several studies have been undertaken in various countries with the aim of assessing tax performance. The most common approach in these studies has been to determine the ratio of tax revenue to gross domestic product. Recent such studies have included several other variables in the analysis of tax performance. This particular study has attempted to assess tax performance in Kenya by analysing tax ratios, tax effort indices, tax ratio buoyancy, and per capita income elasticities of various ta ratios. Data for 32 years on tax revenue, per capita -I income and on tax aspects of mining, manufacturing, quarrying, building, construction, agriculture, forestry, fishing, exports, imports, gross domestic product and inflation were collected. The data were converted to constant 1958 values by dividing them through by cumulative inflation rate. The shares of various sectors in gross domestic product were obtained by dividing their respective value addeds by gross domestic product. The methodology employed in this study involved identifying major economic factors that influence the capacity to levy and to pay taxes. Relative influences of these factors on tax revenue were then measured using regression methods. Given the coefficients of explanatory variables, a tax ratio was • predicted for each year and this ratio was divided by the actual tax ratio to obtain an index of tax effort. The influence of per capita income on tax ratio was taken as the estimate of tax ratio buoyancy. When estimating the income elasticity of the tax ratio, dummy variables were introduced to control for unobservable determinants of the tax ratio. On the basis of empirical evidence the study concludes that: (i) The tax ratio increases with per capita income, which means that a larger per capita income implies higher tax revenues. However, the tax ratio is inelastic with respect to per capita income, implying a less than proportionate response of the tax ratio to growth in per capita income. (ii) An increase in the volume of international trade increases the tax ratio. (iii) The tax ratio increases with GDP shares of manufacturing, mining, quarrying. building and construction sectors. (iv) The tax ratio is inversely correlated with GDP shares of agriculture, forestry and fishing sectors. This result, together with (iii) above, suggests that the tax ratio is greatly influenced by the structure of the economy. Other results, including their policy implications, are reported and discussed in the text.
Determining the economic viability of small-Holder caebon sequestration in Kakamega
(2011-08-12) Ouma, Levi; Martin N. Etyang; Okeri, S. O. M.
Climate change refers to the variation in the earth's global climate or in regional climates over time scales ranging from decades to millions of years. Climate change is caused in a large measure by human activity. It has many serious and damaging effects. Global warming is harmful for agricultural productivity. The working group on climate change reports that the maximum temperature in Kericho, a highland area in the Rift Valley province where most of Kenya's tea exports originate, has increased by 3.5°C during the past 20 years. In Lamu, on Kenya's north east coast near Somalia, the maximum temperature has increased by more than 3°C since the 1940s. This is potentially dangerous for two of Kenya's most important revenue earners, tourism and tea. Droughts are becoming more intense and more frequent in Kenya due to climate change. An international agreement to combat climate change is the Clean Development Mechanism under the Kyoto Protocol. This is an institutional framework for direct foreign investments in GHG mitigation projects in developing countries. It is an arrangement allowing industrialised countries with a greenhouse gas reduction commitment to invest in projects that reduce emissions in developing countries. Carbon sequestration is the process by which atmospheric carbon dioxide is absorbed by trees through photosynthesis and stored as carbon in biomass, which are biological material derived from living, or recently living organisms such as tree trunks, branches, foliage and roots, and soils. Carbon sinks where forests and vegetation are used to absorb carbon dioxide from the atmosphere and store it as carbon offer one potential route to link poverty reduction and climate change mitigation. Increased forest and tree cover can bring major social, economic and environmental benefits to rural areas as well as reducing net emissions of carbon dioxide. This study sought to explore the benefits and costs that are likely to be faced by a private firm acting as an aggregator by engaging small hold farmers in a carbon sequestration project. This was achieved by calculating the NPV. The data used for the research was secondary data collected from the Green Belt Movement. The costs and benefits were measured in current market rates. The project lifetime is 12 years and the chosen rate of discount is 12%. The NPV was calculated to be US $ -333.68 an indication that at the current conditions the project is not viable. It is necessary therefore to set a price that is high enough to yield significant economic benefits to the project implementers but low enough to encourage participation in the carbon market by the developed countries. A price that is slightly higher than US $ 10.10 ensures that the project is viable. Other alternative methods of carbon sequestration including agro-forestry, conservation tillage, cover crops and recycled waste should also be explored.
Economic feasibility of live fences: a case study of farms surrounding Kakamega forest
(2011-08-12) Kariuki, George Mbugua
The objective of this study was to assess the economic feasibility of live fences on farms adjacent to Kakamega Forest. There is a great need to conserve the forest, which has enormous local, national and global benefits. One of the sustainable ways through which conservation and regeneration of Kakamega Forest can be achieved is by developing alternative sources on farm, where households can be able to meet their demand for forest wood products. Establishment of live fences is one of the alternative methods. However, whether a live fence is economically worthwhile, remains a question that need to be answered. This study used the framework of cost benefit analysis and the Net Present Value methods to determine the economic feasibility of live fences. Projected benefits and costs were discounted at an economic rate of 12 percent for a period of 12 years. The study also identified potential advantages and disadvantages of establishing a live fence by administering an interview schedule to the residents surrounding the southern part of Kakamega Forest particularly in Shinyalu Division. Also, farmers who have established live fences in the area were purposively selected and were interviewed to identify the various costs and benefits involved in establishing a live fence. Secondary data was sourced from BIOTA studies, ICRAF and KEFRI publications. The farmers cited several potential advantages and a few disadvantages of establishing a live fence. The major advantages include, a source of firewood, boundary marking, a source of timber, wind breaking, charcoal, shade for humans and livestock, organic matter, fodder for livestock, and structural materials. Several disadvantages were also cited which include negative effects of shade and roots on crop production, source of conflict with neighbours, a high cost of establishment, inaccessibility of planting stakes and habitat for dangerous animals and insects. The results of cost benefit analysis indicated positive net benefits when a live fence is established on farms. The discount rate was adjusted upward to 18 percent. The tests provided stable results with a positive NPV. It is therefore necessary for all stakeholders involved in conservation of Kakamega Forest to encourage, train and fund farmers to aid them adopt live fences, which can positively mitigate forest degradation.
Performance of micro and small enterprises supported by women enterprise and development fund in Eldoret town, Kenya
(2011-08-12) Rono, Gladys J; Wawire, N. H. W.; Gachanja, Paul Mwangi
Women are the individuals who suffer more in the society although they perform multiple responsibilities in the home, workplace and in the community. Organizations have come up with ways seeking to uplift and empower women economically. But still little has been achieved. The government of Kenya, in realizing the women potential, established Women Enterprise and Development Fund so as to empower women both socially and economically. This study, examined performance of enterprises supported by Women Enterprise and Development Fund in Eldoret town. This study had four objectives: first, was to find out the types of activities carried out by women entrepreneurs. Secondly, was to determine the factors that influence the performance of MSEs. Thirdly, was to establish the relative importance of these factors. And lastly, to recommend possible actions that can be taken to improve the performance of MSEs. Stratified sampling technique was used to identify the sample, a sample of 60 enterprises was used, and interview schedule was used to collect the data. Descriptive statistics was applied to compute relevant statistics regarding performance of MSEs. The estimated log-linear model revealed that market size was the most significant determinant of MSEs performance. Other variables that determined MSEs profits were loan volume and business management skills. The rest of the remaining variables in estimated model were statistically insignificant. These include: technical training; size of the business; input price; level of education; age of the entrepreneur; marital status and the level of competition. Based on the findings of the study, it is recommended that the women enterpreneurs should undertake courses that will improve their business management skills. It is also important to formulate programmes to enhance marketing products of MSEs. Finally, the government should increase the loan volume and encourage women to borrow.
The impact of institutional factors and liberalization policies on private investment in Kenya (1965-2007)
(2011-08-12) Karumba, Mary Muthoni; Charles Ombuki
Private investment is an important strategy of achieving economic growth, through its ability to stimulate economic activity by expanding the capacity for production of goods and services, and creation of employment opportunities. To increase private investment, bi-lateral organizations have emphasized the need to liberate the economy in most developing countries. However, even with liberalization policies, the trend in private investment in these developing Countries, Kenya included has not been very encouraging as had been envisaged. Given the poor performance of private investment in Kenya, it is questionable whether liberalization policies advocated by the IMF have had any significant effects. It could be the case that proper institutional base was not laid down for the liberalization policies to have any meaningful results. Using Structural Vector Autoregression (SVAR) and data from 1965 -2007, this study analyzed the extent to which institutional factors impacted on private investment in Kenya and attempts to filter out the relative impact of liberalization measures against institutional factors in increasing private investment flows in Kenya. This study found out that tax administration had a negative impact on private investment and that Investment promotion impacted negatively on private investment in Kenya. The impact of shocks due to tax administration were found to be dominant compared to those of liberalization policies, while the impact of investment promotion shocks was lesser, compared to that of liberalization of the Kenyan Economy. This study concluded that among the institutional factors that were considered for analysis, tax administration was of a greater importance to private investors and should have been put in place and properly enhanced before liberalization of the economy, if the latter was to achieve its objective of enhancing economic growth through increased private investment.
Government expenditure and economic growth in Kenya: An empirical analysis (1963-2006)
(2011-08-12) Njuguna, Joyce N; Nelson H. W.Wawire; Patrick M. Kuuya
This research was triggered by the need to analyze the effects of Government Expenditure on economic growth. This was informed by the fact that, since 1963, economic growth has experienced upswings and downswings. On average, the economy grew at an annual average rate of 6.71 percent between 1963 and 1973. The years that followed saw a recess in economic growth hitting a nadir of -0.3 in the fiscal year 2000/2001. This saw a revival of the economy in the fiscal year 2003/2004 accelerating to 6.1 percent in the fiscal year 2006/2007. The above scenario was beside the fact that expenditure allocations in the various sectors of the Government exhibited an upward slope since 1963 except in the fiscal year 1969/1970 when there was a sharp drop in the expenditure allocations. Thus, there is a cause of concern to policy makers on the implications of the expenditure levels to economic growth. A methodology adopted from Abedian and Standish (1984) is used to analyze the trends and composition of Government expenditure and the contribution of such expenditure components to economic growth. The results of the analysis show that there is need for the Government to prioritize expenditure allocations in the productive sectors of the economy for example, agriculture, health, infrastructure and education and streamline others. These sectors would help to improve the investment environment to the private sector which is the engine of growth. Moreover, it would improve the welfare of the citizens by increasing employment levels and per capital income.
Applicability of lintner's dividend policy to companies qouted on the Nairobi stock exchange
(2011-08-25) Ikame, Raphael Muigai; Khakame, E. W.; Wawire, N. H. W.
Distribution of profit through dividends is a problem unique to companies due to segregation of management from the ownership. In 1956, John Lintner laid the foundation for modern understanding of dividend policy a model that has been used over the years to explain companies' dividend policies. Researches done in the developed world provide insights into the dividend policy of companies based on Lintner's earlier findings. In the developing world however, few studies on the dividend policies of companies exist. More research is therefore required to understand the dividend policy of companies in the developing world and in particular, Kenya. This study examined whether companies quoted on the Nairobi Stock Exchange follow Lintner's model in their dividend policies and planning as is the case in the developed world. In which data from the 48 Nairobi Stock Exchange (NSE) quoted companies for the period 1998 to 2004 was used giving a 336 firm-year data. The data was analyzed to ascertain applicability of the model. The research indicated that on average, NSE companies paid 59.4 percent of their net earnings as dividends and had a dividend yield of 6.1 percent. Also, it emerged that the NSE companies while declaring dividends to be paid in any particular period did not apply the Lintner's dividend model
Pension fund management strategies in Kenya and their impact on the average return of the fund
(2011-10-25) Yano, Renee Peninah; Khakame, Elijah W.; Wesonga, Wekesa M. J.
The pension industry in Kenya has been characterized by rampant mismanagement and misappropriation of funds that led to underperformance. The management strategies employed by the Kenyan fund managers have been questioned and therefore been a major issue of concern. In an effort to establish the best management strategy that maximized returns of the fund, the study sought to establish the management strategies employed by the Kenyan fund managers, the predominant strategy, its effectiveness and challenges. The target population was all pension fund managers, registered with the Retirement Benefit Authority (RBA). The data collected through questionnaire was analyzed using descriptive statistics with the aid of Statistical Package of Social Sciences (SPSS) and results presented by use of frequency tables and pie charts. Microsoft Excel was also used in the determination of averages and weighted averages. The study found out that the performance of hybrid managers was superior. Hence, its recommendation for adoption in the management of pension funds in Kenya. The study makes recommendations to investors, fund managers, RBA, and the security markets officials. The study contributes to the existing literature on pension fund industry in Kenya while suggesting on further researchable areas, to form basis for further scholarly work.
The relationship between inflation and economic growth in Kenya, 1963-2003
(2011-12-27) Kigume, R. W.; Wawire, N. H. W.; Obere, Almadi
Low economic growth and fluctuating inflation rates have been experienced over the years in Kenya. The relationship between inflation and economic growth has brought a lot of controversy both in theory and empirical literature. This study sought to establish if there is significant causality between inflation and economic growth, the specific nature of this relationship and to determine whether there is a short run or long run relationship between these two variables. The study examined the relationship between these two variables using annual data covering the period 1963 to 2003. The Phillips curve approach was used in this study. To undertake this study, published data was used. The data were tested for the presence of unit roots, which revealed that inflation was an 1 (1) and real GDP growth rate was an 1 (0). Granger causality tests revealed that there was no causality between inflation and economic growth rate. Estimations were done using OLS estimation technique. Various diagnostic tests were also carried out to confirm the statistical soundness of the models. The study found that there was a negative short run relationship between inflation and economic growth. Further, this relationship was positive in the long run. These results showed that inflation was affected by its own first and second lags, economic growth, climatic shocks (for example drought), monetary policy interventions and external shocks like the oil price. On the other hand, economic growth was affected by its first and second lags only. In this case, the Phillips curve approach was not applicable since it presents a short run positive relationship between inflation and economic growth while the results presented an inverse short run relationship and a direct long run relationship between inflation and economic growth in Kenya.
The relationship between budget deficit financing and private investment in Kenya
(2011-12-27) Kimani, R. N.; Wambugu, A.
The large budget deficit and its financing from the sale of government securities in the open market has rekindled debate on the possibility of crowding out of private investment in Kenya. The debate is especially relevant given that the Economic Recovery Strategy Paper (2004) has put emphasis on the private sector and private investment as sources of growth. This study examines the relationship between budget deficit financing through selling of treasury bills and bonds in the open market and private investment to establish the possibility of crowding out. Two schools of thought exist on the crowding out phenomenon. One school of thought believes that excessive domestic borrowing from the open market to finance the budget deficit reduces private investment through making interest rates to increase and thus making borrowing expensive. The Ricardian equivalence on the other hand, through its assumptions disputes the existence of a relationship between private investment and budget deficit financing. To carry out the study, data from IFS, February 2005 CDROM and various Statistical Abstracts were collected and used. Data were tested for stationarity and cointegration after which a cointegrated VAR model was estimated. The results of the VAR estimation show that private investment is significantly affected by its first lag and the first lag of domestic debt to GDP ratio. From the impulse response analysis, private investment responds to innovations of domestic debt, public investment, and growth in GDP and interest rates within the first 10 to 15 years. In light of the findings, it can be noted that government domestic borrowing from the open markets crowds out private investment.
Characteristics and the impact of rotating savings and credit associations on the growth of micro and small enterprises in Nairobi-Kenya
(2011-12-29) Mbwiria, Esther Kathure
Micro and Small Enterprises (MSEs) promotion in Kenya is a viable and dynamic strategy for achieving National goals such as poverty alleviation. In recent years the sector has gained widespread recognition. However, the sector has continually faced several constraints to growth and development. One of them being financial due to limited access to credit facilities. A number of informal micro-finance institutions have come to the rescue of MSEs in access to credit. One such institution is Rotating Savings and Credit Associations (ROSCAs). ROSCA is an indigenous organization of a group of people who make regular contributions to a fund, which in turn is given in whole or in part to each contributor in rotation. The purpose of this study was to examine the impact of ROSCAs on the growth of Micro and Small Enterprise in Nairobi. Though the number of ROSCAs is generally on the increase among citizens, little research has been done on their impact on the growth of MSEs. The study is important because the findings will provoke interest and encourage the various stakeholders to provide an enabling environment for the growth of the sector. The study is descriptive survey that sought to evaluate the impact of this type of credit to growth of MSEs. It was conducted in Nairobi and selection of the sample, involved a combination of techniques, viz. cluster, stratified random sampling, simple random, and snowballing. A sample size of 130 MSEs and seven, ROSCA groups were selected. Data was collected through personal interviews incase of individual enterprise owner-manager, and direct administration in case of ROSCA groups leaders. In addition to ROSCA - member enterprises interviewed, 49 nonmember enterprises were also interviewed to establish reasons why they have not joined or formed ROSCAs. Both qualitative and quantitative data were collected. Descriptive statistics, with in-depth content analysis, were summarized under common themes and presented in form of tables, frequencies and percentages. The findings indicated that ROSCA credit was mainly used in the following areas: buying stock (82% of the respondents), buying assets (62%) and domestic activities (58%). As a result of credit intervention, respondents reported improvement in income, with a positive change ranging from 8% to 500% increase with an average of 115.3% Other changes included savings (82.3%), sales (57.7%), assets/stock vi (54.6%), market skills (52.3%) and employing more workers (46.2%).Management practices and working capital also improved. The enterprises registered a minimal horizontal expansion through opening of new enterprises and business diversification. Only 11.5% of the respondents reported opening new branches on acquiring loans from ROSCA groups. However, no enterprise reported vertical growth, i.e, none changed from micro to small, or small to medium. Other changes reported included improvements in entrepreneurial skills, networking, and family welfare, among others. Nevertheless the enterprises reported a number of constraints, which may have contributed to minimal growth in the enterprises. These included limited amount of working capital, lack of suitable premises, economic uncertainties, lack of adequate equipments for manufacturing enterprises, and socio- political factors, among others. The main reasons given as to why some enterprise owners did not join or form ROSCAs include conflicts, gossips, small loans and negative attitudes. Some respondents, especially men, said that ROSCA micro-finance is highly for women. In conclusion, the ROSCA micro-finance system / network were found to be effective in assisting the Micro and Small Enterprise to progress and reach some measure of growth. It is therefore recommended that ROSCA groups should be supported and strategically used to promote self-reliance and to help the economic viability among the individuals who source this type of credit. Aggressive dissemination of information regarding ROSCAs as a source of credit should be done in order to promote this type of microfinance.
The determinants of supply of Kenya's major agricultural crop exports , 1963-2003
(2011-12-29) Maugu, K. Lenity
Kenya has been experiencing low export growth rate in general, and agricultural exports in particular and yet an increase in agricultural crop exports can contribute significantly to economic growth and improve the citizen's welfare. This study investigated the determinants of agricultural crop exports supply for Kenya over the period 1963-2003. Annual time series data were collected from Kenya's Statistical Abstracts and the IMF's International Financial Statistics (IFS). A disequilibrium model of agricultural crop export was utilized. The data for all variables were tested for the presence of unit roots. The tests revealed that all variables, apart from productive capacity proxied by GDP, were integrated of order zero. Consequently, the Ordinary Least Square (OLS) estimation technique was used. The regression results showed that the real exchange rate was a significant determinant of tea, pyrethrum and horticulture exports but not coffee exports. The pyrethrum export was more elastic with respect to real exchange rate. Productive capacity as proxied by GDP was found to be a significant factor in determining coffee, tea and aggregate exports. El-Nino rainfall, as captured by a dummy, was significant for coffee exports, while trade liberalization, also captured by a dummy was only significant in determining pyrethrum exports.
Macroeconomic factors affecting stock prices on the Nairobi stock exchange, 1990-2002
(2012-01-03) Mutai, K. Nahashon
This study empirically tested the relationship between the stock prices on Nairobi stock exchange and Kenya's macroeconomic variables that included; inflation, exchange rates. current account balance, money supply, budget deficit and treasury bill rates. This was in recognition of the fact that the market efficiency tests done by other researchers examined whether markets incorporate available information, but did not determine what information the market responds to and to how important this was. The objectives of this study were therefore to identify the macroeconomic variables that influence the stock prices and to estimate a long-run relationship between them, utilizing the VAR technique. Monthly data for the period 1990 to 2002 were used. The model was specified based on the Arbitrage Pricing Theory. Before any analysis of the data was done, stationarity tests for time series data were conducted. By applying the Augmented Dickey Fuller test, it was found that alt the variable were I (1) except GDP and current account balance, which were I (2) and 1(0) respectively. Johansen's procedures for cointegration were used and it was found that cointegrating vectors existed. The findings of the study suggest that the stock prices and inflation, exchange rates, current account balance, money supply, budget deficit, treasury bill rates tend to evolve together over time. The relatively small coefficient of the error term in the Vector Error Correction Model (VECM) indicated a slow rate of adjustment to restore equilibrium in the dynamic model. In order to get a deeper insight of the interrelationships among the variables identified, Granger-Causality analysis was performed. The empirical results show that bi-directional relationship existed between stock prices and inflation, exchange rates, money supply, budget deficit, treasury bill rates and Gross Domestic Product. Unidirectional relationship was found to exist between stock prices and current account balance. Thus, stock prices are caused by inflation, exchange rates, money supply, budget deficit, treasury bill rates and GDP.
Determinants of aggregate domestic private savings in Kenya, 1980-2003
(2012-01-12) Tiriongo, Samuel Kiplang'at
This paper studied the determinants of aggregate domestic private savings in Kenya capturing the reform period 1980 to 2003.It was motivated by the existence of substantial fluctuations in the ratio of aggregate domestic private savings to GDP and the interest to test the impact of demographics and financial sector development on private savings. The study included demographic variables like young and old age dependency ratios, and the different measures or indicators of financial sector development: the ratio of M2 money to GDP, the ratio of liquid liabilities to GDP and the ratio of the assets of commercial banks to the assets of' central bank as new variables previously not used in any study on Kenya. Among the other variables were income tax, deposit rate used at central bank, current account deficit. The interest rate spread, terms of trade, inflation rate and real gross disposable per capita income. A hybrid model was specified consisting of all the variables identified from the Life Cycle hypothesis on savings and consumption, the permanent income hypothesis and the simple Kevnesian hypothesis was used in the estimations. The results of the estimations showed that aggregate private savings in Kenya is significantly determined by the current account deficit, the ratio of M2 money to GDP, real gross per capita income growth, deposit rate and the old age dependency ratio.
The relationship between fiscal deficits and the current account balance in Kenya (1964-2000)
(2012-01-24) Kosimbei, G. K.
Fiscal and current account deficits have been a common phenomenon on the Kenyan macroeconomic scene from the 1960s. This study examines the relationship between these two deficits using annual data covering the period 1965 to 2000. The relationship between fiscal and current account deficit "twin deficit hypothesis" was presented. These are the Ricardian, neoclassical and Keynesian schools of thought. The Ricardian equivalence argues the absence of any relationship between the deficits, while the Keynesian proposition affirms that fiscal deficits lead to a current account deficit. To enable to undertake this study, data from International Financial Statistics is used. Granger causality tests are performed on the fiscal and current account balances series. The tests revealed that there was no causality between fiscal and current account deficits. Estimations are done using OLS estimation technique. Wald tests are performed to ascertain the overall significance of the coefficients. The estimations are repeated using growth values of fiscal and current account balances, to ascertain if short-run dynamics are the same as long run equilibrium relationships. The study confirmed that there is no relationship between the two deficits. In this study, the Ricardian equivalence is valid in the Kenyan case. The study also found out that the short-run dynamics are the same as long run equilibrium relationships. Since, the results in the study show independence, one important implication for policy is that if the government would wish to reduce both deficits, it should deal with them separately.
The demand for prenatal health care services in Nyando district, Kenya: a case study of lower Nyakach division
(2012-04-05) Oremo, Hellen; Oloo, K. O.; Kuuya, P.M.
Women play an important role in the production of goods and services in any economy. For maximum production, they need to be healthy. Maternal and child health is an essential and integral element of health care programme aimed at improving general health status of women since better maternal health helps to reduce the risk of death and disability in pregnancy and child birth. On the other hand, prenatal health care is an essential component of maternal and child heath care. Good prenatal heath care helps to reduce morbidity and mortality on women and children. However, there is low attendance of prenatal health care especially in the rural areas. However, there is low attendance of prenatal heath care especially in the rural areas. It is therefore necessary to understand factors that determine demand for prenatal health care in the rural areas. This study has investigated the determinants of prenatal health care services in Lower Nyakach Divisions of Nyando District. To meet the objectives of the study, primary data was collected and analysed using both econometric and descriptive methods. Econometric analysis involved estimation of a log linear model using Ordinary Least Squares (OLS) estimation technique. The empirical results showed that price of prenatal health care, waiting time, perceived quality, distance traveled and the duration of the pregnancy at which the first prenatal health care visit was made are significant determinants of demand for prenatal health care. Descriptive results showed that contrary to the beliefs that people are moving away from the traditional health care, women in the rural areas are still visiting both modern and traditional health care facilities. The results also showed that demand for prenatal visits late (between five and six months of pregnancy). Based on the empirical findings, the study recommends that health care planners should design and modify the hours of operation of certain facilities to reduce waiting time, since waiting was found to be a significant determinant of demand for prenatal health care; that prenatal health care services should be further subsidized. On the other hand, mobile clinics should be provided to reduce distance travelled to the health care facilities. Distance was found to negatively influence demand for prenatal health care and was also a significant determinant. The study also recommends that awareness campaigns for prenatal health care be intensified and also included in public education programmes and that when planning for health care services, the feelings and opinions of potential users should be taken into consideration. For example, health care providers can adapt some aspects of their services to satisfy the patients’ expectations.
Determinants of investment demand in the informal sector: A case study of shoe making in Kibera, Nairobi
(2012-04-05) Oketch, T. C.; Etyang, Martin N.; Oloo, K. O.
The informal sector has an important role to play towards the industrialization process and generation of employment opportunities. The sector provides to potential employees for both the informal and formal sectors, thereby helping to improve the quality of life to those who would otherwise be without any source of livelihood. Also, the informal sector has a capacity to mobilize investments and produce affordable goods and services to the ever-increasing population. For these reasons, various stakeholders are targeting the sector so as to enhance the potential benefits. Despite these efforts, the sector has not become the expected solutions to Kenya's developmental problems. The concern of this study was to investigate the determinants of investment in the informal shoe-making sub-sector in Kibera area of Nairobi Province. Data was collected from a sample of 40 shoemakers in the area. Both linear and log-linear multiple regression models were specified and estimated and the results interpreted based on the log-linear model, which was adopted as the suitable one for analysis because it had more significant variables, and higher R2 and F-statistics. The results suggest that output of the firm; price of investment goods, entrepreneurs' dependants and of investment in the sub-sector. Contrary to a prior expectations, the coefficients of transfer payments, training, accessibility of the enterprise was negative. Further, the study found that none of the respondents had benefited from the assistance package provided by the government, donors, and other stakeholders. Thus, these shows that the promotion services aimed at the sector do not reach the entrepreneurs in the sub-sector. This paves way for various policy recommendations.
Profits and linkages in the urban informal sector: a case study of the food sub-sector in Kamukunji division in Nairobi province
(2012-04-11) Mbuthia, Aflonia
The informal sector has been recognized for its role in contributing to national output and employment. In particular, the food sub-sector has continued to be a source of livelihood to a substantial size of the urban population. This research paper analysed the profitability and linkages of the food kiosks sub-sector in Kamukunji division of Nairobi. A total of 80 food kiosks were selected using cluster-sampling technique. Data was collected from entrepreneurs, and was regressed using both linear and log-linear estimations. Regression results revealed that there was no theoretical difference when either linear of log-linear profit functions were regressed. Working capital was the most statistically significant variable in profit determination in informal food kiosks. Other factors that significantly affect profits are output price, level of competition and gender differences. Study findings showed that there is a stronger backward linkage with the formal sector while the forward linkage was stronger with other informal sector activities. Based on the findings of this study, the government and other stakeholders of the informal sector should help in financing the operations of the entrepreneurs. In particular the government should give subsidies and reduce tax on inputs utilized more in the sector. The entrepreneurs should keep records of their activities so that proper accounting can be done for every expense or income. To reduce the level of competition, the city council should allocate plots to build food kiosks based on population density.
The characteristics of the poor people in rural Kenya. a case study of Kisii central district
(2012-04-17) Sevelius, Barongo Yophen
All countries worldwide view poverty as an enemy to development. This is why governments' efforts are directed towards the alleviation of poverty. In Kenya, poverty has been and still is one of the main problems facing the country and particularly in rural areas. To achieve any sustainable economic growth and development in Kenya, is important to alleviate poverty in rural areas , but first by understanding the major causes of poverty in rural areas even in areas with agricultural potential like Kisii Central District. The purpose of this study was to investigate the characteristics of the poor people in rural Kenya. The setting of the study was Kisii Central District. The respondents consisted of 64 rural households. Data were collected through the questionnaires and interviews. Out of the total 64 households, 37 were classified as poor and 27 were classified as rich by using food consumption expenditure to total income ration method. The study sought to find out the characteristics of the poor in rich agricultural Kisii Central District. Descriptive statistics were employed in the analysis of the collected data. The results revealed that large family sizes, lack of enough land, high illiteracy level, lack of access to rural credit facilities, theft of the farm produce, and diseases especially malaria were some of the characteristics of the poor in Kisii Central District. The policy recommendations suggested by the researcher included: the government and NGOs to promote literacy level in rural areas, provision of rural credit facilities to the farmers, reduction of large family sizes through the spread of education on the importance of having small family sizes, spread of education on how to control malaria and punishing heavily all those caught stealing farm produce.

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