MST-Department of Economic Theory

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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.
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.
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
The determinants of rural household savings in Kisumu district: a case study of South Nyakach location
(2012-04-26) Ambrose, Ramson Mwamba; Owino, Pius; Obere, Almadi
Saving play a very important role in economic development as it involves mobilization of resources, which is consequently invested with an aim to accelerate the growth process. Understanding the savings behaviour is therefore critical in formulating policy measures. As a result, the study has investigated the determinants of rural household savings behaviour. Both primary and secondary data were collected and fitted into a multiple linear regression model. Questionnaires were administered to the randomly selected households. Econometric tools were then used to analyze the data collected. The results show that income is the most significant determinant of savings. Other significant determinants include dependency, age, and education. The results also indicate a widespread existence of informal savings groups, which in contrast reveal a loose association with savings. Based on the empirical findings, the study recommends among others following: a.) That to increaser savings, dependency level should be reduced through the enhancement of family planning measures. b.) That the informal savings and credit groupings be strengthened through some form of education and credit assistance, so that they can be able to undertake economic activities. c.) That programmes on the virtues of savings be included in the existing awareness and public education programme. d.) That income generating activities and self-employment be encouraged as they contribute more to savings than the wage employment. e.) That effective ways of availing savings and credit facilities, particularly banks and cooperative societies, to the rural areas be designed.
Factors that influence clothing preferences and buying practices among the elderly in Korogocho sub-location in Nairobi
(2012-04-26) Kuria, Jane Waguthii; Dinah W. Tumuti; Muruli, Leunita A.
This study was a survey research. It was conducted to investigate the factors that influence clothing preferences and buying practices among the elderly with the available clothing on the market as they wore them were also investigated. The major objectives of this study were to: (1) determine demographic information of the elderly used in the study; (2) to determine the clothing preferences and acquiring practices of the elderly; (3) to examine the effect of physiological, psychological and socio-economic factors on clothing preferences and buying practices of the elderly and (4) to investigate the cause of satisfaction and dissatisfaction among the elderly with the clothing on the Kenyan market. Data were collected using interview schedules which were administered by the researcher to a sample of 30 males and 30 females at Korogocho sub-location starting from July to September, 1993. The data were analyzed by the use of frequencies and percentages. According to the findings, the physiological factor that most influenced the elderly as far as clothing preferences were concerned, was weight change in the form of weight decrease. The psychological factors that most influenced the elderly consumers' clothing preferences and buying practices included items in which one looked attractive, cost of the items, colours one preferred and wearing clothing for occasion. The socio-economic factors that had most influence on the elderly consumers' clothing preferences and buying practices were the social activities one engaged in, the amount of money available, religious beliefs or norms, and what was accepted by age mates, the children and the society. The elderly consumers expressed their clothing preferences. It was evident that they were dissatisfied with the available items of clothing they wore from the Kenyan market. They expressed the need to have clothing items designed for the elderly, to cater to the needs, fabric texture, colour and design. They also expressed the need for improvement on the style and the fasteners to cater to the elderly consumers.
Demand for Child Health Care Services The Case Of Suba East Division Migori District Kenya
(2013-07) Angela, Oloo Akumu
The major objective of the study was to identify which factors' affect demand for child health care services and their importance in Migori district. The high child mortality rate, morbidity rate and low life expectancy levels are a contrast to the increase in the number of personnel in the district. The study therefore set out to highlight some of the factors that contribute to these poor health indices. To achieve the objectives of the study, cross sectional primary data were allowed using a questionnaire from a sample of 123 respondent. both the descriptive and regression results were given. for multinominal econometric analysis of data, only 106 respondent were used to some incomplete data. due to discrete nature of demand for children health care, a multinomial logit model was adopted to capture the overall demand and the demand for particular health provider. The result showed that waiting time, no. of siblings, house hold size, fathers level of education, household level of income and mothers employment were the significant variables. number of siblings and household's level of income were found to be negatively related to the demand for child health care services. Waiting time, household size, father's level of education and mothers employment are positively related to the demand for child health care services.
Determinants of performance of internet cyber cafes in Nairobi Province
(2013-09-03) Masika, Alexander Opicha
The informal sector has been recognized for its role in contributing towards national output and employment. In particular, the information and communication technology (lCT) sector has become a vital part in its contribution to the economy. In Kenya, especially the urban centers, the ICT sector has been recording a significant change facilitated by the Internet. This has been possible due to the proliferation of Internet cyber cafes that provide access to the Internet at a minimum cost. This research paper analyzed the performance of the Internet cyber cafes in Nairobi province. A total of 70 cyber cafes from Nairobi were selected using the two-stage cluster sampling technique out of which four (4) cyber cafes were identified as outliers and hence the sample population was reduced to 66 cases. The data was analyzed using both descriptive statistics and the use of an econometric model. Performance of the cyber cafes was measured by output per month in terms of total hours used on the Internet by the customers and was regressed against explanatory variables. These explanatory variables included; monthly rent, cost of maintenance of computers per month, distance between the cyber cafes, age of the cyber cafe, total wages paid to the employees per month and the total hours of operation per month. The regression results revealed that rent (bigger space) was the most statistically significant variable in determining the performance of the cyber cafes. Other factors that significantly affect output are the age of the cyber cafe and total hours of operation per month. Based on the findings of the study, it is recommended that the cyber cafes should be encouraged to expand their services which in turn would result in increased employment opportunities. This could be achieved by expanding business space in the province that will enable the cafes to acquire more equipment and thus hire more labour and as a result increase their respective output. The government should also ensure that high security measures are attained and maintained to encourage the cyber cafes to operate for longer hours which in turn will generate higher output levels.
Wage determination in the unionized Private sector in Kenya, 1980-1997
(2013-09-12) Omolo, Odhon'g Jacob
Abstract This paper analyses the determinants of real wages in the unionized private sector In Kenya from 1980 to 1997. Despite the existing wage policies being enforced by the Kenya government through its various machineries such as the industrial court and Continued union representation of workers in collective bargaining, real wages of Unionized private sector workers have continued to fall overtime. In the period 1980-97, Real wages of unionized private sector workers fell by 36.84 percent despite an overall Improvement in the private sector real wages of 11.34 percent during the same period. Unionized workers were therefore 48.18 percent worse off than their non-unionized Counter-parts in the same sector. The main objective of this study was to find out factors that determine unionized Private sector real wages in Kenya. Empirical analysis was carried out using time series Secondary data to determine how various factors affect negotiated real wages. These Factors included one year lagged negotiated real wage, statutory minimum real wage, Union strength, real GDP growth, labour productivity, tax rate, rate of interest on capital And its one year lagged effect, and a dummy variable to capture the effect of wage Guidelines. Using two stage least squares (2sls) regression technique, the parameter Estimates of one year lagged negotiated real wage, statutory minimum real wage, rate of Interest and its one year lagged effect were found to be statistically different from zero At the 10 percent significance level. However, when the results were analysed at 95 Percent confidence level, coefficients of all the variables above remained to be Statistically significant except that of current rate of interest. The rest of coefficients of The variables in the model namely, union strength, real GDP growth, labour productivity, Tax rate and the dummy for wage guidelines were found to be insignificant both at 90 and 95 percent levels of confidence. The regression results further showed that lagged real Wage, statutory minimum real wage, union strength, tax rate and the dummy for wage
Wage determination in the unionized Private sector in Kenya, 1980-1997
(2013-09-12) Omolo, Odhon'g Jacob
Abstract This paper analyses the determinants of real wages in the unionized private sector In Kenya from 1980 to 1997. Despite the existing wage policies being enforced by the Kenya government through its various machineries such as the industrial court and Continued union representation of workers in collective bargaining, real wages of Unionized private sector workers have continued to fall overtime. In the period 1980-97, Real wages of unionized private sector workers fell by 36.84 percent despite an overall Improvement in the private sector real wages of 11.34 percent during the same period. Unionized workers were therefore 48.18 percent worse off than their non-unionized Counter-parts in the same sector. The main objective of this study was to find out factors that determine unionized Private sector real wages in Kenya. Empirical analysis was carried out using time series Secondary data to determine how various factors affect negotiated real wages. These Factors included one year lagged negotiated real wage, statutory minimum real wage, Union strength, real GDP growth, labour productivity, tax rate, rate of interest on capital And its one year lagged effect, and a dummy variable to capture the effect of wage Guidelines. Using two stage least squares (2sls) regression technique, the parameter Estimates of one year lagged negotiated real wage, statutory minimum real wage, rate of Interest and its one year lagged effect were found to be statistically different from zero At the 10 percent significance level. However, when the results were analysed at 95 Percent confidence level, coefficients of all the variables above remained to be Statistically significant except that of current rate of interest. The rest of coefficients of The variables in the model namely, union strength, real GDP growth, labour productivity, Tax rate and the dummy for wage guidelines were found to be insignificant both at 90 and 95 percent levels of confidence. The regression results further showed that lagged real Wage, statutory minimum real wage, union strength, tax rate and the dummy for wage
Determinants of adoption of organic manures in urban vegetable production:
(2013-10-31) Perez Ayieko, Onono
This study was conducted to estimate the rate of adoption, identify and analyze factors determining adoption of organic manures in urban vegetable production by fanners in Migori municipality. A household survey was conducted among 89 farm households between lOth and 14th of December 2007. A logit model was used to analyze the impacts of age, gender, experience, extension, education, training, objective, land tenure, type of labour, membership in organization, off farm income and distance to main market, on probability of adoption. Analysis of the data reveals a rate of adoption of 58.4 %. The estimation results of the logit model indicate that; age of household head, college education, and training in aspects of organic manure use, are significant in explaining the difference in adoption by the farmers. Although the impact of the other factors were found not significant at 5% orlOOIolevel of significance, the coefficient estimates indicate that extension, experience, subsistence production, tenure security and membership in farming organization increases probability of adoption, while hired labour and longer distances to main market reduces probability of adoption. The study recommends that activities to enhance adoption of manure use in vegetable production in Migori should put into consideration these factors in their design and implementation.
Factors affecting adoption of organic farming by maize farmers in Meru South District
(2014-01-18) Mwiathi, Peter Silas; Wawire, N. H. W.; Okeri, S. O. M.
Organic farming of which Stoyer, trash and farm composite are components, offers considerable promise for increasing food production in Kenya. It nonetheless remains unclear whether, organic farming techniques lend themselves easily to adoption by smallscale farmers. And if so, why do some farmers adopt organic farming while others fail to adopt? Using survey data collected from 119 households in Meru-South District, this study investigated factors that influence adoption of organic farming by small-scale maize farmers. A structured interview schedule was used to collect data on the socio-economic characteristics and the institutional factors affecting adoption of organic farming. The data collected was analyzed using econometric software known as Statistical Program for Social Scientists (SPSS). Both descriptive and regression results of the logit model are presented. The farmers reported several constraints to adoption of organic farming, including inadequate knowledge, lack of market for organic products, inadequate market information, labour availability and expensive certification process. Conventional farmers reported uncertainty about the supply chain (market for organic product), strict certification procedure and reduced yield as the most important reasons for not converting to organic farming Major factors associated with adoption included farm size, awareness, social capital proxied by membership to farmer association, household size, farmer experience and ecological zones. These findings raise important questions as to whether organic farming techniques era really affordable to smallholders. To spur adoption, it is recommended that the government should come up with policy decisions and legislate organic laws that favor organic farming, while training activities should develop further into marketing, processing and certification of organic producs. Extension messages should be focused on younger less experienced farmers and women who are more likely to adopt organic farming practices.
Public Health Expenditure and Health Outcomes in Kenya
(2014-03-07) Kyalo, Kevin Munywoki; Korir, J.K.; Wamama, Martin C.
Government health spending remains a critical element of the social and economic development of any country. Internationally health outcomes have received a great attention; Millennium Development Goals has 3 of its 8 goals related to health issues, the Abuja Declaration in 200 I committed countries to increase health budget allocation to 15 percent of total government budget for provision of health services and improving health outcomes. Kenya total public health expenditure as a percentage of Gross Domestic Product has increased from 1.2 percent in 1980/81 to about 2.0 percent in 2010111 with health indicators in the same period not following the same trend. The objective of this study was to determine the relationship of public health expenditure and health outcomes in Kenya. The study was based on Grossman (1972) theoretical model that applies a vector of inputs in production of health status. Longitudinal research design was adopted and Ordinary Least Squares multiple regression technique applied using data for over the period of 1980-20 II. The research finding revealed that public health expenditure has a negative and signi ficant relationship with both Under-Five Mortality Rate and Infant Mortality Rate. Life Expectancy at Birth was found to have a positive relationship with public health expenditure. However primary gross enrolment ratio, child immunization for measles and the ratio of doctors to the population were found to improve health outcomes more than public health expenditure. The study recommends that based on the findings specific health programmes targeting specific health outcomes and infrastructure development should be encouraged for better health outcomes to be realized,
Supply Response of Kenyan Coffee in the World Market
(2014-03-10) Njaramba, Stephen Githae; Kosimbei, G. K.; Etyang, Martin N.
The drastic drop in Kenya coffee supply in the last twenty years has severely affected the country's export revenues as well as the livelihoods of two million small scale producers and over six million people who directly or indirectly depend on coffee. In spite of the central role which coffee has played in the county's development, Coffee production has shown a steady decline over the last two decades. Coffee production declined from an all time high of about 130,000 metric tons in 1987/88 to a low of about 42,000 metric tons in the 2010 coffee calendar year In this study the objective was to estimate the response of Kenyan coffee which is supplied at the world market. Coffee is an important crop to Kenya since it is a source of foreign exchange. It is also the main agricultural enterprise in some of the districts in the country and the major source of income to these districts. Therefore the research project sought to come up with the supply function of Kenyan coffee to the international market. Coffee supply in Kenya has continued to decline despite policy reforms in the coffee sector. The principal of cointegration and Error Correction Model were used to establish the effect of various variables to the supply of coffee to the international market. Despite the popular belief that falling international prices paid for coffee is the course of decline of supply from Kenya.,this study found out that the international prices did not have significant effect on the supply of coffee from Kenya to the international market. Rather the supply is affected by cost of inputs both in the short and long run, the cost of moving coffee from the farm to the market, weather and the policies employed by the government. All the other variables were found to be insignificant at 5 percent level.
Determinants of the real gross domestic product growth rate in Kenya, 1973-97
(2014-03-24) Maingi, James N.; Masya, F. M.; Obere, Almadi
The Kenya Government has pursued stabilization and structural adjustment policies for more than ten years in an attempt to restore and sustain the high growth rates experienced in the 1960s and early 1970s. Despite these measures, real GDP in Kenya has continued to be characterized by positive and negative rates of change of real GDP growth rates. The cyclical fluctuations have been more marked, especially after 1973. The objectives of the study were to identify the factors that determine fluctuations in real gross domestic product (GDP) growth rate in Kenya, measure the relative effect of the factors, and to give policy recommendations. Time-series data were collected from government and world bank publications for the period 1973 to 1997. Data collected were integrated to make it stationary. Ordinary least squares (OLS) method of estimation using time-series programme (TSP) was applied on stationary data. Both linear and log-linear models were run and on the basis of results linear model was adopted. From the linear regression results, growth of capital stock, export growth, financial development, external debt, exchange rate, and real interest rate were found to be significant determinants of real gross domestic product. On the basis of these findings, policy recommendations were then drawn on these variables so as to accelerate the pace of GDP growth rate in Kenya.
The Determinants of Coffee Supply in Gichugu Division in Kirinyaga District: Kenya
(2014-06-05) Kariuki, G. J.; Okeri, S. O. M.; Njuguna, A. E.
The general objective of this study was to investigate the factors that determine the supply of coffee in Gichugu Division in Kirinyaga District in Kenya. Data were collected from a sample of 67 fanners in Kirima, Kabare and Bar~gwi locations of Gichugu Division. The data were analyzed using both descriptive statistics and-the use of econometric model. Four versions of the model were estimated. The interpretation of the results was based on regression results that are consistent with economic expectations on the coefficients of the model and their statistical significance. Coffee supply was found to be positively related to expenditure on inputs, the price of coffee received by the farmers, the size of the farmer's household, the number of coffee trees owned and managed by the farmer, and the farmer's off-farm activity. The distance from the farm to the factory and credit extension to farmers in form of loans and school fees were found to be negatively related to coffee supply. Furthermore, the study found that expenditure on farm inputs is the most significant determinant of coffee supply. Based on the findings of the study, it is recommended that fanners should diversify their farm activities to include activities for example, poultry keeping and zero grazing methods of cattle rearing to supplement their incomes as well as increasing their investment in coffee farming. Credit extension to farmers in form of material farm inputs should be enhanced to boost expenditure on farm inputs in order to increase coffee supply. To increase coffee supply, the government should stabilize the coffee prices to remove the price uncertainties that demotivate fanners to give maximum attention to their coffee farms.
An efficiency analysis of hospitals owned by faith based organisations in Kenya
(2014-08-01) Kinyanjui, George Kariuki; Gachanja, Paul Mwangi; Muniu, J. M.
The desired goal for Kenya's Vision 2030 and the millennium development goals is to provide efficient and reliable healthcare that will reduce child mortality rates, improve maternal health and ~ombat HIV/AIDS, Malaria and other diseases by the year 2015. Kenya's health care sector has been among the most inefficient in the world characterized by high disease prevalence, high mortality rates, low life expectancy, and poor access to healthcare services and corruption. Addressing the above challenges and attaining the millennium development goals on reduction of child mortality rates, improvement of maternal health and combating of HIV/AIDS makes efficiency in health care services delivery a requisite obligation in addition to sound government policies and stakeholder goodwill. Hospitals owned by the faith based organizations are a vital component of health care institutions in Kenya. They form a key component of the private sector healthcare provision with about 40 percent dominance. The operations of these hospitals depend on donor funding, user fees and government subsidies. Dwindling donor assistance, falling government subsidy, poor human resource for health employment and distribution coupled with financially poor citizenry that seek the services of hospitals owned by faith based organization has been a compelling datum to pursue efficient ways of providing healthcare. Therefore, the question on how the scarce resources allocated to the hospitals owned by faith based organizations are been utilized, has been of urgent need for address. This study sought to unravel the technical and scale efficiency of hospitals owned by faith based organizations in Kenya. The study employed the Data Envelopment Analysis which is either input oriented or output oriented. Input orientation was adopted for this study. The input variables included medical officers, nurses, beds and cots and an aggregate of other hospital workers; while the number of inpatients and outpatients were the output variables for the analysis. The sample size included 30 FBO hospitals drawn from the Kenya Conference of Catholic Bishops (KCCB), the Christian Health Association of Kenya, (CHAK) and the Supreme Council of Kenya Muslims (SUPKEM) as the major FBO blocks in the country. The results were that only 36.67 percent of FBO hospitals were operating efficiently under the Variable Returns to scale technical efficiency. Scale efficiency revealed that approximately 20 percent of the FBO hospitals were scale efficient. Tn general the study concluded that if FBO hospitals operated as a group, the technical efficiency would be 79% while scale efficiency would be 59 percent. The key recommendation of this study is that FBO hospitals and the other health facilities need to have a yearly efficiency analysis to ascertain proper resource allocation. The desired goal for Kenya's Vision 2030 and the millennium development goals is to provide efficient and reliable healthcare that will reduce child mortality rates, improve maternal health and ~ombat HIV/AIDS, Malaria and other diseases by the year 2015. Kenya's health care sector has been among the most inefficient in the world characterized by high disease prevalence, high mortality rates, low life expectancy, and poor access to healthcare services and corruption. Addressing the above challenges and attaining the millennium development goals on reduction of child mortality rates, improvement of maternal health and combating of HIV/AIDS makes efficiency in health care services delivery a requisite obligation in addition to sound government policies and stakeholder goodwill. Hospitals owned by the faith based organizations are a vital component of health care institutions in Kenya. They form a key component of the private sector healthcare provision with about 40 percent dominance. The operations of these hospitals depend on donor funding, user fees and government subsidies. Dwindling donor assistance, falling government subsidy, poor human resource for health employment and distribution coupled with financially poor citizenry that seek the services of hospitals owned by faith based organization has been a compelling datum to pursue efficient ways of providing healthcare. Therefore, the question on how the scarce resources allocated to the hospitals owned by faith based organizations are been utilized, has been of urgent need for address. This study sought to unravel the technical and scale efficiency of hospitals owned by faith based organizations in Kenya. The study employed the Data Envelopment Analysis which is either input oriented or output oriented. Input orientation was adopted for this study. The input variables included medical officers, nurses, beds and cots and an aggregate of other hospital workers; while the number of inpatients and outpatients were the output variables for the analysis. The sample size included 30 FBO hospitals drawn from the Kenya Conference of Catholic Bishops (KCCB), the Christian Health Association of Kenya, (CHAK) and the Supreme Council of Kenya Muslims (SUPKEM) as the major FBO blocks in the country. The results were that only 36.67 percent of FBO hospitals were operating efficiently under the Variable Returns to scale technical efficiency. Scale efficiency revealed that approximately 20 percent of the FBO hospitals were scale efficient. Tn general the study concluded that if FBO hospitals operated as a group, the technical efficiency would be 79% while scale efficiency would be 59 percent. The key recommendation of this study is that FBO hospitals and the other health facilities need to have a yearly efficiency analysis to ascertain proper resource allocation.
Determinants of domestic private investment in Kenya (1970-2001)
(2014-08-19) Njuru, Stephen Gitahi; Wawire, N. H. W.; Obere, Almadi
This study analyse the determinants of domestic private investments in Kenya using a time series data in the period between 1970 and 2001. DPI needs to remain the cornerstone of renewed growth in Kenya if the economy is to be successful and efficient. Kenyan government has tried to put its economy on a faster and stable growth by use of private investments through some economic reforms. Despite these measures, domestic private investment has continued being characterized by decline, volatility and unpredictable trends. The objective of this investigation was to identify the factors that determine cyclic and declining trend of DPI in Kenya. The study also analyzed relative effects of each variable and gives policy recommendations based on the research findings. Flexible accelerator model which put investments as a function of economic growth was used in modelling determinants of domestic private investments. Data used in the study was obtained from secondary source and refined to make them reliable in estimating the. econometric model. Some variable were not stationary at levels. Non stationary variables in the series were differenced to make them stationary in order to avoid spurious regression results. Linear mod,el was estimated by use of ordinary least squares and this gave the most reliable results. Lagged domestic private investment was found to be the most statistically significant and positively related with DPI. The question of investment climate in the country should therefore be addressed in order to ensure continuing participation of the private sector in the investment. Exchange rates, fiscal deficit, inflation rates and real interest rates were found be statistically significant and negatively correlated with DPI. Economic liberalization and return on investment were statistically significant and positively correlated with DPI. Policies that address each of these variables should be put in place. All other variables were found to have negligible effects on DPI.
The Optimal Size of Government Expenditure and Economic Growth in Kenya 1963 – 2012
(Kenyatta University, 2015-02) Magana, Julius Munene
The effect of government size on economic growth has given rise to conflicting views among economists. Some view a large government size as harmful to economic growth due to inefficiencies inherent in government. The other group of economists argues that a larger size of government is likely to enhance economic growth. Kenya’s public expenditure has been experiencing rapid growth since 1963, while GDP growth over the same period has not followed the same path. The main objective of this study was to examine the effects of government size on economic growth in Kenya for the period 1963-2012. The specific objectives for the study were to determine the effect of government size on economic growth in Kenya; determine the relationship between government size and economic growth in Kenya, and estimate the optimum size of government expenditure that maximizes economic growth in Kenya. This study adopted the basic growth accounting and used the production function of Solow to relate the rate of economic growth to capital and labour accumulation and total factor productivity. The estimation model examined Armey’s idea of a quadratic curve that explains the level of government expenditure in an economy and the corresponding level of economic growth. Time series data was used for the period under investigation. The regression equation for this study was quadratic or a second-degree polynomial function and since it does not present any special problems Ordinary Least Square (OLS) estimation technique was used. The major findings of this study are that Government size has indeterminate relationship with economic growth. The growth maximizing government expenditure as a percent of GDP was estimated to be 23 percent. Private investment and Trade openness had positive relationship with economic growth in Kenya. On the contrary labour force growth had negative relationship with economic growth. Recommendations drawn from this study are: Government size downsizing to 23 percent of GDP, increasing trade with other countries, privatization to encourage investment and finally government check population growth through family planning programs

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