PHD-Department of Applied Economics

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Adoption of adapted technology by micro and small enterprises in the informal sector in Kenya
(Kenyatta University, 2015-10) Kuuya, Patrick Masette
The government of Kenya, assisted by donor agencies, has since the 1980s, sought to enhance workers‘ productivity in the informal sector. To achieve this objective, the strategy adopted was to replace the use of archaic indigenous and inappropriate imported technologies with locally designed and produced adapted technology. Although since its inception in 1979,KIRDI has been adapting imported technology for use by entrepreneurs in the informal sector, the rate of adoption has been low. The main objective of this study was to investigate factors that influence adoption of adapted technology in Kenya‘s informal sector. The study adopted a logistic model, which, with the help of descriptive statistics, was used to analyse data collected from 320 respondents from six districts, two each from the Nairobi, Kisumu and Nyeri counties. The study‘s descriptive statistics showed that perceived usefulness of the technology, perceived ease of use of the technology, perceived reliability of the technology to the adopter, and the perceived suitability of the technology to the Jua Kali environment factors were important influences on the decision to adopt adapted technology. The results also showed that the overwhelming majority of adopters of adapted technology got information about the adapted technology through the interpersonal contact communication channel. The regression on the 13 predictor variables was done to get marginal effects. The regression results showed that six out of seven technology-specific variables in the logit model were important in explaining the decision to adopt adapted technology. These were: cost of machine; machine‘s maintenance cost; number of workers needed to operate the machine; wage bill of the workers operating the machine; cost of energy; and perceived conferment of higher social status (in the local community) to the owner. The regression results also showed that three out of five human factor variables, individually, made a significant difference in the decision to adopt adapted technology. These were: age of adopter; level of education; and marital status of the adopter. These regression results implied that government institutions and donor agencies involved in designing and producing adapted technology should ensure that the adapted products were cheaper and easier-to-use than their non-adapted imported substitutes; required low servicing and maintenance cost; and should not be labour intensive, but be perceived to be attractive to the adopters who wished to be self employed. The results also showed that high wages of workers were a disincentive to adoption. This implied that the government should avoid extending the mandatory minimum wage requirement to entrepreneurs in the informal sector. In addition, the results implied that the government and donor agencies should target the youth and women groups when promoting adoption of adapted technology; and that special emphasis on standardized quality products during skills training in vocational and other tertiary institutions should be prioritized. Finally, for information access, the policy implication was that government should resurrect the programme of building infrastructural facilities, such as construction of industrial sheds to be rented by jua kali artisans, as per government policy enunciated in Sessional Paper No. 2 of 1992. These sheds could double as information dissemination centres for potential adopters.
Agricultural Credit Accessibility and its Effects on Output of Smallholder Farmers in Plateau State, Nigeria
(Kenyatta University, 2023-11) Baba, Sunday; Nelson H.W. Wawire; Charles Mugendi
Agricultural credit improves smallholder farmers‘ purchasing power by allowing them to use modern technologies for their farm production. Credit is therefore imperative for agriculture which had previously been a non-commercial venture for the rural inhabitants. Studies have shown that unless credit is made available on suitable terms, majority of the smallholder farmers cannot acquire modern technology for production. Farmers are therefore faced with the challenges of low productivity, inadequate access to logistic support, input, crop infestations by pests and diseases and loss of crops and livestock. The overall objective of the study was to investigate agricultural credit accessibility and its effects on output of smallholder farmers in Plateau State, Nigeria. The specific objectives of the study were to: find out the determinants of access to agricultural credit by smallholder farmers; to investigate how credit accesses by smallholder farmers affect the agricultural output and to investigate the credit utilisation behaviour of smallholder farmers on agricultural output The target population for the study was the smallholder farmers that were engaged in agricultural practices in Plateau State, Nigeria. The sample size was 399 households that par-took in agricultural practices in sampled State. The study used structured questionnaires to collect primary data. The collection of primary data was done through the administration of questionnaires to selected smallholder farmers. From the data collection process, the researcher was assisted by research assistants that made frequent follow-up on the respondents to ensure that high response rate was achieved. In objective one, the study used probit model because the dependent variable is credit access. The dependent variable was measured using binary scale and therefore the study tried to find the likelihood of the variable, while the independent variables influencing access to credit. The study adopted treatment effect model using the method of Propensity Score Matching. Access to credit was considered in this case a treatment hence the study tried to establish veracity of access to credit on agricultural output of smallholder farmers. Utilisation behaviour was also considered in this case a treatment hence the study tried to establish the veracity of credit utilisation behaviour on agricultural output of smallholder farmer. The first specific objective was to analyse the determinants of agricultural credit access by smallholder farmers. The study found that the level of education; farm size; source of income; household size; credit information; distance to the scheme; distance to the cooperative society and the type of agricultural activity served as determinants of credit access to smallholder farmers. The second objective was to determine the effect of access to agricultural credit on agricultural output by smallholder farmers. The study found that average treatment effect on the treated (ATET) coefficient was positive and significant, meaning that the output small holders farmers realized is not much. The third objective was to investigate the effect of credit utilisation behaviour of smallholder farmers on agricultural output. The study found that the coefficient for ATET was negative and significant because the output that smallholder farmers get at the end of each farming season is insignificant. The study recommended that there is the need for government to come up with more efficient credit facilities to enable smallholder farmers to access credit easily.
Agricultural Trade and Economic Growth in East African Community, 2000 - 2012
(Kenyatta University, 2015) Ouma, Duncan O.
Agricultural activities contribute about 33% of the East African Community‟s Gross Domestic Product (World Bank, 2009), 80 per cent of the populace depend on agriculture directly and indirectly for food, employment and income, while about 40 million people in EAC suffer from hunger. Intra-EAC trade is very low, that is, at 9 per cent of the total regional trade, but it is on upward trend. Agricultural trade accounts for over 40 per cent of the intra-EAC trade. This study investigated the causes of intra-EAC agricultural trade, effect of EAC regional trade agreement on the regions agricultural trade by analyzing the degree of trade creation and diversion effects, and examined relationship of the regional agricultural trade with the region‟s economic growth. Several Augmented gravity models were estimated using the Pseudo Poisson Maximum Likelihood (PPML) Approach. Several bi-variate Vector Auto-Regressive (VAR) and Vector Error Correction (VEC) models were also estimated. Granger causality test and Impulse response analysis on trade and economic growth were performed using panel data from UNCOMTRADE, International Financial Statistics and World Development Indicators for the period 2000 – 2012 on the five EAC members and other 77 trade partners. The empirical findings showed mixed results for the different EAC member states. The intra-EAC agricultural exports depended on various factors, including GDP of exporter, GDP of the importer, Exchange rate, distance between the economic centres, language similarities, adjacency and population of the exporter. EAC regionalism had no significant effect on agricultural exports of Burundi, Rwanda and Uganda, while Kenya and Tanzania had reported significant effect of regionalism on their agricultural exports. Furthermore, the study findings showed that there existed bi-directional relationship between agricultural exports and economic growth in Kenya, uni-directional relationship in Rwanda, and no relationship at all in Burundi, Tanzania and Uganda. EAC secretariat in collaboration with governments of EAC member states should enhance integration among the member states, as membership to EAC had significant effect on trade volumes for Kenya and Tanzania. EAC secretariat and respective governments in EAC should also reduce currency value disparities among the member states as a means of promoting intra-regional agricultural trade. The proposed monetary union and harmonization of currencies would significantly promote agricultural trade within the region. The EAC member states should also enhance border liberalization, as this will also promote intra-regional agricultural trade. Finally, to achieve and sustain high economic growth, Kenya and Rwanda governments should promote agricultural exports to both the EAC region and beyond, this is because empirical results show that a shock in agricultural exports for the two countries have a long run positive effects on their economic growth. This study concluded that EAC regional trade agreement has a potential of promoting EAC regional agricultural trade. Intra-EAC agricultural trade can still be improved and that the regional trade promotes economic growth in Kenya and Rwanda.
Agricultural trade and economic growth in East African Community, 2000 - 2012
(Kenyatta University, 2015-03) Ouma, Duncan O.
Agricultural activities contribute about 33% of the East African Community‟s Gross Domestic Product (World Bank, 2009), 80 per cent of the populace depend on agriculture directly and indirectly for food, employment and income, while about 40 million people in EAC suffer from hunger. Intra-EAC trade is very low, that is, at 9 per cent of the total regional trade, but it is on upward trend. Agricultural trade accounts for over 40 per cent of the intra-EAC trade. This study investigated the causes of intra-EAC agricultural trade, effect of EAC regional trade agreement on the regions agricultural trade by analyzing the degree of trade creation and diversion effects, and examined relationship of the regional agricultural trade with the region‟s economic growth. Several Augmented gravity models were estimated using the Pseudo Poisson Maximum Likelihood (PPML) Approach. Several bi-variate Vector Auto-Regressive (VAR) and Vector Error Correction (VEC) models were also estimated. Granger causality test and Impulse response analysis on trade and economic growth were performed using panel data from UNCOMTRADE, International Financial Statistics and World Development Indicators for the period 2000 – 2012 on the five EAC members and other 77 trade partners. The empirical findings showed mixed results for the different EAC member states. The intra-EAC agricultural exports depended on various factors, including GDP of exporter, GDP of the importer, Exchange rate, distance between the economic centres, language similarities, adjacency and population of the exporter. EAC regionalism had no significant effect on agricultural exports of Burundi, Rwanda and Uganda, while Kenya and Tanzania had reported significant effect of regionalism on their agricultural exports. Furthermore, the study findings showed that there existed bi-directional relationship between agricultural exports and economic growth in Kenya, uni-directional relationship in Rwanda, and no relationship at all in Burundi, Tanzania and Uganda. EAC secretariat in collaboration with governments of EAC member states should enhance integration among the member states, as membership to EAC had significant effect on trade volumes for Kenya and Tanzania. EAC secretariat and respective governments in EAC should also reduce currency value disparities among the member states as a means of promoting intra-regional agricultural trade. The proposed monetary union and harmonization of currencies would significantly promote agricultural trade within the region. The EAC member states should also enhance border liberalization, as this will also promote intra-regional agricultural trade. Finally, to achieve and sustain high economic growth, Kenya and Rwanda governments should promote agricultural exports to both the EAC region and beyond, this is because empirical results show that a shock in agricultural exports for the two countries have a long run positive effects on their economic growth. This study concluded that EAC regional trade agreement has a potential of promoting EAC regional agricultural trade. Intra-EAC agricultural trade can still be improved and that the regional trade promotes economic growth in Kenya and Rwanda.
Agricultural trade and economic growth in East African Community, 2000 - 2012
(Kenyatta University, 2015-03) Ouma, Duncan O.
Agricultural activities contribute about 33% of the East African Community‟s Gross Domestic Product (World Bank, 2009), 80 per cent of the populace depend on agriculture directly and indirectly for food, employment and income, while about 40 million people in EAC suffer from hunger. Intra-EAC trade is very low, that is, at 9 per cent of the total regional trade, but it is on upward trend. Agricultural trade accounts for over 40 per cent of the intra-EAC trade. This study investigated the causes of intra-EAC agricultural trade, effect of EAC regional trade agreement on the regions agricultural trade by analyzing the degree of trade creation and diversion effects, and examined relationship of the regional agricultural trade with the region‟s economic growth. Several Augmented gravity models were estimated using the Pseudo Poisson Maximum Likelihood (PPML) Approach. Several bi-variate Vector Auto-Regressive (VAR) and Vector Error Correction (VEC) models were also estimated. Granger causality test and Impulse response analysis on trade and economic growth were performed using panel data from UNCOMTRADE, International Financial Statistics and World Development Indicators for the period 2000 – 2012 on the five EAC members and other 77 trade partners. The empirical findings showed mixed results for the different EAC member states. The intra-EAC agricultural exports depended on various factors, including GDP of exporter, GDP of the importer, Exchange rate, distance between the economic centres, language similarities, adjacency and population of the exporter. EAC regionalism had no significant effect on agricultural exports of Burundi, Rwanda and Uganda, while Kenya and Tanzania had reported significant effect of regionalism on their agricultural exports. Furthermore, the study findings showed that there existed bi-directional relationship between agricultural exports and economic growth in Kenya, uni-directional relationship in Rwanda, and no relationship at all in Burundi, Tanzania and Uganda. EAC secretariat in collaboration with governments of EAC member states should enhance integration among the member states, as membership to EAC had significant effect on trade volumes for Kenya and Tanzania. EAC secretariat and respective governments in EAC should also reduce currency value disparities among the member states as a means of promoting intra-regional agricultural trade. The proposed monetary union and harmonization of currencies would significantly promote agricultural trade within the region. The EAC member states should also enhance border liberalization, as this will also promote intra-regional agricultural trade. Finally, to achieve and sustain high economic growth, Kenya and Rwanda governments should promote agricultural exports to both the EAC region and beyond, this is because empirical results show that a shock in agricultural exports for the two countries have a long run positive effects on their economic growth. This study concluded that EAC regional trade agreement has a potential of promoting EAC regional agricultural trade. Intra-EAC agricultural trade can still be improved and that the regional trade promotes economic growth in Kenya and Rwanda.
Budget deficits and macroeconomic performance in Kenya (1963- 2007): An empirical analysis.
(Kenyatta University, 2009-09) Kosimbei, George Kipng'etich
Budget deficits have attracted a great deal of attention over the past two decades. They have been blamed for the assortment of ills that beset developing countries. The objectives of this study included: describing the budgeting process, explaining the sources of budget deficits, investigating the various methods used by the government of Kenya to finance budget deficits, analyzing the effects of budget deficits on selected macroeconomic variables and finally establishing the types of relationships that exists between budget deficits and selected macro variables. This study was underpinned on the Mundel- Fleming model. It applies Vector Auto regressions (VARs) together with annual time series data for the period 1963 to 2007 to evaluate the empirical effects of budget deficits on macroeconomic performance. The data used were selected macroeconomic variables that included; current account of the balance of payments, private consumption, private investment, money supply, Treasury bill rates, and real GDP. The study established that the budgeting process had loop holes which perpetrated budget deficits. Also, the sources of budget deficits include: level of economic development, low growth of revenue, instability of government revenues, government control over expenditures and the extent of government participation in the economy. The impulse response functions (IRFs) revealed that budget deficits have a significant effect on: private consumption, private investment, money supply (M3), treasury bills rate, current account and real GDP. These effects usually lasted for more than five years. Johansen co integration tests revealed a long run relationship between budget deficits and the selected macroeconomic variables. The overall ecommendation of this study is that the government of Kenya should formulate a firmer fiscal policy that would minimize budget deficits because they affect economic performance in Kenya.
Budget deficits and macroeconomic performance in Kenya (1963-2007): an empirical analysis
(2011-07-21) Kosimbei, G. K.
Budget deficits have attracted a great deal of attention over the past two decades. They have been blamed for the assortment of ills that beset developing countries. The objectives of this study included: describing the budgeting process, explaining the sources of budget deficits, investigating the various methods used by the government of Kenya to finance budget deficits, analyzing the effects of budget deficits on selected macroeconomic variables and finally establishing the types of relationships that exists between budget deficits and selected macro variables. This study was underpinned on the Mundel- Fleming model. It applies Vector Autoregressions (VARs) together with annual time series data for the period 1963 to 2007 to evaluate the empirical effects of budget deficits on macroeconomic performance. The data used were selected macroeconomic variables that included; current account of the balance of payments, private, consumption, private investment, money supply, treasury bill rates, and real GDP. The study established that the budgeting process had loop holes which perpetrated budget deficits. Also, the sources of budget deficits include: level of economic development, low growth of revenues, instability of government revenues, government control over expenditures and the extent of government participation in the economy. The impulse response functions (IRF ) revealed that budget deficits have a significant effect on: private consumption, private investment, money supply (M3), treasury bills rate, current account and real GDP. These effects usually lasted for more than five years. Johansen cointegration tests revealed a long run relationship between budget deficits and the selected macroeconomic variables. The overall recommendation o f this study is that the government of Kenya should formulate a firmer fiscal policy that would minimize budget deficits because they affect economic performance in Kenya.
Competition and profitability of commercial banks in Kenya
(2017-05) Mdoe, Idi Jackson
The banking sector in Kenya is characterized by intermediation inefficiency in the form of interest driven exceptional bank profitability.Competition among commercial banks should remedy this situation by driving bank profitability to the competitive norm. This study examined how competition is correcting this inefficiency byinvestigating competition and profitability of commercial banks in Kenya.Specifically, the study ascertained the level of competition among commercial banks; determined the speed of adjustment of commercial banks profitability to the competitive norm; and investigated the effect of changes in the competitive landscape on commercial banks profitability. The study used a balanced panel data set for 36 commercial banks covering the period 2001 to 2014.The study used the performance dynamics approach and the generalized method of moments to estimate the resulting dynamic panel models. The investigation established thatthe level of competition among commercial banks in Kenya was low and characterized by 96.1 per cent persistence in profitability. The speed of adjustment of commercial banks profitability to the competitive norm was 3.9 per cent per year with a half-life of 17.42 years. The study also found that in the short run,increase in level of technology reduces exceptional bank profitability by 0.852 per cent. The study further found thatconsolidation has a negative effect on exceptional bank profitability in the short run and a positive effect in the long run. Finally, the study established that the progressive increase in core capital requirement for commercial banks in 2008 enhanced persistence of exceptional bank profitability and reduced bank competition. Arising from the study findings, it is important that the government intervenes to rectify the intermediation inefficiency occasioned by ineffectiveness of competition and the slow speed of adjustment towards the competitive norm. It is also important that small sized banks in the sector voluntarily merge with other smaller banks in order to exert substantial competition to the large and medium sized banks. For effectiveness, the findings imply that intervention by government should target swift adoption of technology by all commercial banks and trigger consolidation among the target tiers of commercial banks up to the optimal level. In addition, the findings imply that banks with exceptionally low levels of profitability should seek other forms of recovery. The options here include exiting the market, or mergers and acquisitions. This is because as established in the study, market forces may not help such commercial banks to return to sustainable profitability in the short run.
Cultural and social determinants of entrepreneurial behaviour among small enterprise owners in eldoret municipality, Kenya
(2011-08-16) Korir, Michael Kirwa; Kibas, Peter; Thoruwa, T. F. N.
The role of culture and social factors on the development of entrepreneurship is an emerging theme of research but results remain ubiquitous. Others have concluded that an individualistic culture fosters entrepreneurial behaviour while collectivist culture retards them. Others have argued that culture and socialisation process does not have any bearing on entrepreneurial behaviour. Besides, empirical studies that forge these propositions in an African setting, and specifically in Kenya, are scanty. This study examined cultural and social determinants of entrepreneurial behaviour among smallscale entrepreneurs within Eldoret Municipality in Kenya. It anchored on hypotheses that relate several cultural and social factors to the development of entrepreneurial mindset, motives and orientations as components of entrepreneurial behaviour process. The study employed a triangulation of descriptive and explanatory designs. Using cluster, simple random and systematic sampling techniques with the support of key informant interviews, a cross-sectional survey of 387 entrepreneurs running small businesses within Eldoret municipality was conducted. A self-administered questionnaire was used to collect primary data. Data was analysed using descriptive and inferential statistical tools. Specifically, factor analysis was used to validate and construct indices for the preconceived variables while Analysis of Variance and Structural Equation Modelling in the form of Path analysis were utilised to test hypotheses. Theory testing results show that the Hofstede's cultural value dimensions remains conceptually valid, albeit explaining a small proportion of variance (38.4%); thus suggesting some extension. Similarly, the 'Push-Pull' theory of entrepreneurial motives (57.37% of variance explained) and the Entrepreneurial Orientations model (48.0% of variance explained) remain valid in explaining entrepreneurial behaviour in an African developing country context. Results of hypothesis testing indicate that entrepreneurs from the six referenced ethnic groups exhibited significant (P<.05) varying degrees in business start-up motives variables and propensity to employ, but generally displayed similar post start-up orientations. Other significant (p<.05) sociomicro factors that were found to have moderating effects on entrepreneurial behaviour include level of education, gender, religion, parental occupation, age and marital status. Paradoxically, findings from Structural Equation Models show a positive but not significant causal relationship between cultural value dimensions and business start-up motives but a negative causal relationship between cultural value dimension and post start-up orientations. Specifically, cultural value dimensions of Collectivism, Long-term orientation and Orthodoxy appear to impede entrepreneurial behaviour. While the presence of role models was found to have a positive effect on all the stages of entrepreneurial behaviour process, the bonding dimensions of social capital seem to impede its development. These findings hold implications for the intensification of entrepreneurship education and training, mooting of entrepreneurship policies that target the youth, retiring and women groups, more involvement of religious organisation in entrepreneurship development, and a call for cultural and social transformation, if the goal of building an entrepreneurial economy and culture in Kenya is to be realised. Future research should explore more linkages between culture and entrepreneurship using longitudinal research designs. The validation of measurement tools and use of case approach in exploring effects of role models is also open for further research
The data envelopment analysis and stochastic frontier approaches to the measurement of hospital efficiency in Kenya
(2013-07-25) Korir, J.K.
After independence in 1963, the government of Kenya pledged to fight diseases, ignorance and poverty in the country. The policies that the government has pursued over the years have had a direct impact on health status of Kenyans, as evidenced by a steady reduction in crude death rate, a decline in fertility, and an increase in life expectancy at birth among others. These gains notwithstanding, reversal in health status trend is evident, as the child mortality rate is now on the increase. Despite the massive expansion of health infrastructure after independence, the inability of the government to effectively provide health services became acute in the 1980s due to a sharp increase in demand for health services. The growing lack of resources in the public health sector resulted in a decline in efficiency and quality of government health services. The government responded to these adverse developments by undertaking a bold programme of reforms aimed at improving efficiency at public health facilities. The purpose of this study was to measure efficiency in government hospitals over the period 1995-2000 when the reforms were implemented. In order to achieve this objective, a frontier cost model was estimated using data from a sample of 41 public hospitals in Kenya. This sample size represented about 40% of the public hospitals in the country. Secondary data on recurrent expenditure, number of inpatients and outpatients during the study period augmented the data from the hospital sample. The estimation results showed that all the 41 hospitals recorded steadily increasing efficiency levels during the study period. The amount of recurrent expenditure incurred by the sample hospitals was approximately Ksh 13 billion over the study period, against a background of gross inefficiency in resource use. Had the hospitals operated efficiently over this period, savings in financial terms could have been between Ksh 1 billion and Ksh 1.4 billion. The results showed that the reforms implemented by the Ministry of Health contributed to efficiency improvements in public hospitals. Another finding is that efficiency measures by the two methods employed (data envelopment analysis and stochastic frontier approach) were similar for the overall sample but differed significantly across individual hospitals. The results suggest that the Ministry of Health should put more effort to reducing inefficiency in service provision, as this can be done. Moreover, there is need for the Ministry to maintain a database on the inputs used by each hospital and services it provides, to facilitate measurement of efficiency on an annual basis, as efficiency information is key to the upgrading of service quality.
The Determinants of Adoption of Information and Communication Technology by Small and Medium Enterprises within the Health Sector in Nairobi, Kenya
(Kenyatta University, 2010) Muathe, Stephen M. A.
Small and Medium Enterprises (SMEs) playa very important role in the economy in terms of wealth creation and provision of employment opportunities. However, competition from more established firms poses a great challenge to their existence. With the adoption of Information and Communication Technologies (lCTs), it was envisaged that SMEs would compete more effectively and efficiently in both domestic and international markets, but recent research portrays a gloomy picture about the adoption of ICT by SMEs. Most SMEs have failed to adopt ICT citing significant impediments. Since literature on ICT adoption by SMEs in Kenya is limited and inconsistent, this study examined the effects of various contextual factors such as individual factors, organizational factors, technological factors, and the external environment on the adoption of ICT by health-related SMEs in Kenya. A cross-sectional descriptive survey design was used. The target population was 17 health-related SMEs. In addition, 172 end - users were sampled using purposive and simple random sampling techniques. Both primary and secondary data were used. Primary data was collected using a semi-structured questionnaire and an interview guide. Secondary data was collected through review of records and documents. Descriptive statistics were used to summarize the properties of the mass data. The Logit model was used to predict the potential effects on the determinants of ICT adoption by SMEs. Open-ended questions were analysed by capturing the common themes, categorizing them, and drawing conclusions from the findings. The research findings showed that age, CEO's ICT knowledge, quality of ICT systems, information intensity, ICT specialization, organizational readiness, relative advantage, government policies on ICT applications, and pressure from suppliers and patients were the main determinants of ICT adoption. The study concludes that, for the health related- SMEs to cope with the dynamics of the global competition and move Kenya towards middle level income country as envisaged in the Vision 2030, the above nine determinants must be addressed. The study, therefore, Recommends that government should develop a differentiated ICT policy arid incorporate compulsory training in computer applications in the national school curriculum. In addition, SMEs should invest in quality systems that are functioning and also technically usable. They should set a mechanism for monitoring the changes in technological innovations as the electronic marketplace evolves. Finally, SMEs should adopt ICT within a participatory plan.
Determinants of demand for family planning services in city slums in Kenya
(2011-07-25) Okech, Chrispinus Timothy
The Kenya government, in collaboration with other stakeholders involved in the provision of family planning services, have put in place various strategies and policies to increase uptake of family planning services. These are aimed at increasing contraceptive prevalence rate (CPR), reduction in both total fertility rate (TFR) and unmet need for family planning services. Despite the various strategies and policies, total fertility rate still remains high at 4.6 percent, while CPR and unmet need for family planning are estimated at 46 percent and 24 percent, respectively. The purpose of the study was therefore to analyze the determinants of demand for family planning services in city slums in Kenya. To realize this objective, a survey design was adopted. The target population constituted women in city slums in Kenya, who were identified through multistage random sampling. Primary data were collected from the women using a structured interview schedule. A fact sheet was used to summarize the data collected before it was cleaned, coded and edited for completeness and accuracy. A binomial logic model was developed and estimated using two-step regression procedures. The study revealed low usage of family planning services, among women in the city slums attributed to various factors. These include in order of significance, partner's approval, religious background of the woman the woman's knowledge about family planning services and friendliness of the staff administering the services. Other factors included quality of the services, proximity to the facility, while the woman's income level was the least significant factor. The studv recommends that to increase the use of family planning services among women n slums, promotion of family planning education and activities at the household level should be carried out, the activities of community based distributors should be revived and enhanced. Formation of lobby groups to enhance cultural change, awareness creation and counseling, integrating family planning services with HIV/AIDS have also been recommended.
Determinants of Scheme Design in Occupational Defined Contribution Schemes in Kenya
(Kenyatta University, 2015-01-22) Tari, Justus
Defined contribution schemes involve no promises about the size of the benefits and no risk to the employer. The risk of ending up with low or no benefits falls entirely on the scheme members. It is necessary therefore, that determinants of scheme design are carefully considered in establishment and review of defined contribution schemes to deliver adequate benefits to members. Based on modern portfolio and the life cycle theories, the study investigated the key determinants of scheme design in occupational defined contribution schemes in Kenya. First, the study evaluated employer related determinants of scheme design; secondly, it evaluated trustee related determinants of scheme design and lastly it evaluated regulatory related determinants of scheme design. Primary data were collected using a questionnaire administered to scheme administrators in the sample. Descriptive statistics were used to profile respondents, describe sample characteristics and a logistic econometric model was applied to evaluate the determinants of scheme design. Overall, the majority of retirement benefits schemes in Kenya were designed as pension schemes and contributory. The average employee and employer contribution rates were 11.96 and 14.84 percent respectively, with most schemes reporting the basis of contribution as the basic salary. However, most schemes did not allow additional voluntary contributions to augment member benefits. Most schemes had undergone some form of design change since inception, with the overriding change being conversion from defined benefit to defined contribution. Most schemes had a bigger proportion of their investments in treasury bonds and bills, with a majority not setting any investment performance targets. In addition most schemes did not target any level of pensions to their members and paid pension through purchase of annuities. In addition, most scheme administrators reported that their scheme design was poor. The study showed that the key employer related determinants of scheme design were the employer‘s budgetary constraint and recognition of the length of service of scheme members, while the key trustee related determinant of scheme design was investment strategy. The results also revealed that the key regulatory related determinant of scheme design was the existence of a separate public pillar. Gender was important but was mostly associated with poor scheme designs. From the findings, it was recommended that employers should consider pensionable salary, budget constraint, length of service, retirement age and occupation in designing schemes while trustees should consider investment returns, target pension, charges by service providers, annuity rates and the investment strategy. Lastly regulatory agencies should consider incentives for participation, taxation rules, existence of a separate pillar and gender in the design of occupational defined contribution schemes. This would guarantee members a reasonable standard of living after retirement.
The determinants of tax Revenue in Kenya
(2011-12-16) Wawire, N. H. W.
Several studies have been undertaken on the responsiveness of tax revenues to changes in GDP in Kenya. These studies have found a positive relationship between tax revenues and GDP. However, the studies omit some key determinants of tax revenues, such as the nature of the tax system and institutional, demographic and structural features of the economy. Due to this omission, the estimated income elasticities of tax revenues are unreliable for planning purposes, a situation that might be responsible for recurring budget deficits. The main objective of this study was to examine the composition of tax revenues and properly estimate income elasticities of various taxes. The study is important because its results can be used to design pro-growth tax policies and implement tax changes that are equity enhancing. The thesis uses Paul Samuelson's (1955) fundamental general equilibrium analysis of the public sector to derive its main results. In my framework, the demand function for the public good is derived from a constrained model of utility-maximization. In the same vein, tax revenues are taken as functions of household incomes, which paves the way for the estimation of Engel curves for public goods. The study finds that tax elasticities for total taxes, income taxes, and excise duties with respect to GDP are less than unity. Elasticities of excise duties with respect to the volume of imports and volume of trade are less than unity, as is the elasticity of import duty with respect to the volume of trade. On the other hand, growth elasticities for direct taxes and sales taxes are all greater than one. The elasticity of the direct tax revenue with respect to GDP is found to be unitary. The estimation results show that total GDP elasticities of tax revenues are less than the elesticities with respect to monetary GDP, suggesting the existence of an underground economy in Kenya over the period analyzed. The study shows that population growth has adverse effects on tax revenues. It is found that tax revenues respond with substantial lags to changes in tax determinants and that tax revenues are sensitive to unusual circumstances. The study concludes that Kenya's tax revenues are only moderately responsive to changes in their determinants. There is therefore the challenge of creating flexibility in the tax system so that tax revenues can increase rapidly as the economy grows.
Economic convergence, political integration and prospects of a monetary union in theEeast African Community
(2017-10) Simon, Githuku Nyokabi
The East African Community partner states are in the process of forming a monetary union and it is expected to be complete by the year 2023. The idea of a monetary union is not new in East Africa, this is because, Kenya, Uganda and Tanzania already had a monetary union during the British colonial administration under East African Currency Board. These countries had the East African shilling as a common currency. However, the East African countries have been unable to form a monetary union in the absence of a political federation. The main objective of this study was to determine the levels of real economic convergence and political integration necessary for the establishment of a monetary in the East African Community. This overall objective was achieved by assessing income convergence, business cycle synchronization, political integration and its influencing factors in the East African Community. In the case of income convergence, panel unit root tests of variables was undertaken to determine the order of integration. Variables indicated that they were integrated of order zero I (0) and one I (1) suggesting that autoregressive distributed model had to be applied in regression analysis. Empirical findings supported the presence of conditional convergence and that per capita gross domestic product growth was positively influenced by physical capital and nominal exchange rate depreciation and negatively affected by human capital and inflation rate. Business cycle synchronization was examined using three stage least square regressions and revealed that it is positively affected by trade integration and negatively affected by sectoral specialization. Graphical and correlation matrix was used to analyze political integration and factors influencing it. Study findings indicated that the level of political integration was low and was weakly related to institutional distance, social integration and economic interconnectedness. From the foregoing, it can be concluded that reduction of income differences among the partner states can be fostered through increased investments in physical capital, maintenance of a competitive exchange rate regime and a low inflation rate regime. Increased trade among partner states and promotion of sectoral homogeneity of the partner states should promote synchronization of business cycles among the partner states. Finally, low political integration can be enhanced through reduction of institutional distance, increased social integration and increased intra-EAC trade as captured by economic interconnectedness variable
Effect of Exchange Rate Misalignment on Bilateral Trade between Kenya and European Union
(Kenyatta University, 2020) Gachoki, Charles Munene
The exchange rate is an important variable in international trade due to the expectations that trade reacts to its movements and therefore determines a country’s international competitiveness. Prudent management of trade and exchange rate policies have been associated with faster growth in developing countries. In order to orient the economy outwards, Kenya has pursued various measures from 1990s to 2000s. Despite these export oriented efforts, Kenya’s trade has remained skewed towards imports and a widening trade deficit which seems to follow the weakening of the Kenya shilling. The main policy dilemma is therefore how imports accelerated in an environment of unhindered European union market access, and hence the motivation of this study. The key objective of this study was to investigate the effect of exchange rate misalignment on Kenya’s bilateral trade with the European Union. Secondary data was used on variables considered instrumental in influencing trade between Kenya and EU for the period between 2000 and 2016. Data was collected from Kenya National Bureau of Statistics, Central Bank of Kenya, EuroSTAT and IMF financial statistics. The study adopted a dynamic modelling approach since exchange rate and trade are affected by previous as well as present values. The study results show that the real exchange rate is driven by the economic fundamentals and in terms of misalignment the exchange rate is overvalued to maximum of 5.9 percent and undervalued up to 5.2 percent. The estimated misalignment has a negative effect on imports but positive statistically insignificant for exports. Finally, the exchange rate has a positive effect on trade balance. The results of this study suggest that the monetary authority should ensure the exchange rate remains stable and within the 6 percent range while monitoring all the underlying determinants. Coupled with this, hedging instruments should be made available and affordable.
Effect of the Size of the Informal Sector on Economic Growth, Total Factor Productivity and Poverty Alleviation in Kenya
(Kenyatta University, 2020) Opondo, Mary Awuor
The Kenyan economy is predominantly informal. The informal sector employed 132,100 workers in 1974; and 13,442,200 workers in 2016, which translate to 19 percent and 84 percent of the total work force in the respective time periods. The government has from 1986 put in place policy measures to develop the sector for employment creation, economic growth, and poverty alleviation. Among the country‟s Big Four Agenda as contained in the Medium Term Plan (2018-2022), is the development of the manufacturing sector for economic growth and improved welfare. The manufacturing sector in the country is largely informal with 80 percent of firms and 84.3 percent of the total workforce being informal. The development of the sector is therefore central in the achievement of the country‟s macroeconomic targets of 10 percent annual economic growth rate and a reduction in poverty rates to 28 percent of the total population by the year 2030. However, theoretical and empirical literature point at a sector that has low productivity with some studies attributing poor economic performance to the existence of a large informal sector. This study aimed at establishing the effect of the size of the informal sector on economic performance in Kenya. The study objectives were; to analyze the contribution of the informal sector to output growth in Kenya, to determine the effect of the informal sector on total factor productivity in Kenya; and to examine the effect of the informal sector on poverty alleviation in Kenya. The study used secondary time series data for the period 1974 to 2016 and employed Ordinary Least Squares in analysis. Data was sourced from the country economic surveys and statistical abstracts, the Central Bank of Kenya website, the World Development Indicators and the Global Financial Development database. A growth accounting exercise was conducted using the standard Cobb-Douglas production function to address the first objective. The study used the residual from the growth accounting exercise, commonly referred to as total factor productivity as the dependent variable to address the second objective based on endogenous growth models with the growth in the average annual wage in the informal sector as an indicator of the size of the sector following efficiency-wage theories. The third objective was based on the Marxist and Liberal theories of poverty. The poverty headcount index was used as the dependent variable with the depth of informality as an indicator of the size of the informal sector. From the study findings, the informal sector is the lowest contributor to output growth in the country; the sector has a negative and statistically significant effect on total factor productivity; and significantly increases poverty in the country. Based on the findings, and given the size of the informal sector, the study concludes that there is a need to target increased productivity in the sector for increased output growth, increased total factor productivity and poverty alleviation in the country.
Effects of central bank rate pass through on Kenya’s selected macroeconomic variables
(Kenyatta University, 2024-03) Musimbi, David
The study focused on the effects of central bank rate pass through on Kenya’s selected macroeconomic variables. Up until now, most research concentrated on other, shorter-term interest rates such as the repo and interbank rates, which are almost entirely endogenous to the bank rate. After controlling for other variables, there is a significant negative correlation of five percent between the central bank's interest rate and the overall market capitalization. There is a 0.7513 connection between them. According to the study, real GDP growth in Kenya increases by 0.29 percentage points whenever the central bank rate is changed. The interest rate pass through loans as the CBR changes was found to be 0.9666 percent in the short run, while it was 1.29 percent in the long run. Stock or asset values rise by 2.957 percentage points for every percentage point increase in the central bank rate.This study made use of time series data collected between 2010 first quarter and 2021, fourth quarter. The Blanchard model (based on the Exponential Generalized, Autoregressive Conditional Heteroscedastic estimating technique), the cointegration approach (based on the co-integration strategy and the Johansen and, Juselius (1980) approach), and the co-integration approach (based on the Engle and, Granger (1987) approach) were the methods employed in the study to estimate the Autoregressive Distributive Lag model. The study concluded that the real gross domestic product, stock market capitalization, and lending rates were not fully impacted by changes in the central bank's bank rates. For policy implication, Kenya needs a comprehensive review of its current monetary policy framework. This should be done in tandem with ongoing efforts to modernize the nation's banking and financial sector. The Monetary Policy Committee should be aware of the character and structure of commercial banks. Timing is of utmost importance when it comes to altering the Central Bank Rate. The research discovered an unsatisfactory pass-through effect when analyzing the impact of CBK on real GDP, lending rates, and stock market capitalization
Effects of Fiscal Decentralization on Poverty Reduction Outcomes, Income Inequalities and Human Development in Kenya
(Kenyatta University, 2017) Mwiathi, Peter Silas
The Kenya government has instituted fiscal decentralization over the years to promote social economic development, reduce poverty and income inequality and ensure balanced regional development. These include: local government system that was inherited from colonial rule and remained relevant until 2013 when it was replaced by county government; District Focus for Rural Development 1983; devolved funds such as Local Authority Transfer Fund 1999; and Constituency Development Fund 2003. Despite these efforts on decentralization, Kenya has experienced economic growth below national targets. Poverty levels have remained high and there has been widening income and regional inequality. Literature on the relationship between fiscal decentralization and poverty, income inequality and human development has been rather inconclusive about the effects of fiscal decentralization on poverty and income inequality. The main objective of this study was to analyse the effects of fiscal decentralization on poverty reduction outcomes, income inequality and human development in Kenya. The cross-county panel data from 2002 – 2014 was used. The published data was from government agencies, United Nation Development Programme and World Bank. Various empirical models were estimated to find out the effects of intergovernmental transfers, county own-source revenue and county expenditure on poverty, income inequality and human development in Kenya. The study established that the effect of fiscal decentralization on poverty and human development depends on the nature of decentralization and the extent of fiscal decentralization. Intergovernmental transfers and the share of county expenditure were found to increase poverty at low levels below 18.42 per cent and 0.52 per cent respectively beyond which they would reduce poverty head count. Own-source revenue was found to reduce poverty at low levels below 44.47 per cent after which further increase in own source revenue would increase poverty head count. The study also established that there are differences in the effects of fiscal decentralization between marginalized counties and other counties. The effect of fiscal decentralization is reinforced in the marginalized counties. The difference in the effect of fiscal decentralization on poverty between marginalized counties and other counties was estimated as 8 percentage points, 0.2 percentage points and 5.38 percentage points for intergovernmental transfers, own revenue and expenditure respectively. All fiscal decentralization indicators had no significant effect on the income inequality in Kenya. Arising from the study findings, it is important for county governments to have adequate own-source revenue to finance their expenditure as opposed to relying on intergovernmental transfers from national government. However, very high level of county own-source revenue may not necessarily serve the interest of the poor, as evidenced by the non-linear relationship between county own revenue and poverty in this study.
Effects of fiscal policy on private investment in Kenya (1964 – 2010)
(2013-08-14) Njuru, Stephen Gitahi
Private investment in Kenya has been low for the last four decades. This has stimulated much concern to the policy makers‟ bearing in mind that investment is a key variable influencing economic growth. The government of Kenya has over the years designed economic policies with an aim of rejuvenating private investment which was robust during the first decade of independence before deteriorating in the other decades. Fiscal policy has been a major focus towards this direction. The main purpose of this study was to investigate the effects of fiscal policy on private investment in Kenya from 1964 to 2010. The study adopted modified flexible accelerator model to enlighten on the economic relationship between private investment and the other variables. It applied vector auto-regression modeling technique and error correction model to estimate the effects of fiscal policy variables on private investment. The study made use of semi-annual time series data for the period 1964 to 2010. Since some of the variables were stationary at levels while others became stationary at first difference, the study used Johansen cointegration tests to determine long-run relationship between private investment and the aforementioned fiscal variables. Further, the Granger-Causality test was undertaken to determine economic relationship between the variables. The results of the study revealed that fiscal policy design and implementation matters to private investment levels in Kenya. The study found that taxes, government expenditure, government debt servicing and fiscal reforms could either promote or deter private investment both in the short-run and in the long-run. The study concludes that appropriate measures xv ought to be taken while coming up with fiscal policy framework to ensure that as it achieve other objectives of the government, growth of private investment is taken into account

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