MST-Department of Economic Theory

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Analysis of technical efficiency and rice output of small-scale Rice farmers in Kirinyaga County, Kenya.
(Kenyatta University, 2025-05) Murimi, Henly
The demand for rice in Kenya is growing, with yearly consumption increasing at a rate of 12 per cent per year. Kenya has thus put into place measures to reduce demand-supply gap. An initiative such as National Rice Development Strategy (N.R.D.S.) Phase 2 (2019–2030) has been implemented to accelerate rice production. Despite these polices, rice output has grown slowly, widening the gap. 949,000 metric tons of rice are consumed nationally yearly, compared to 180,000 metric tons produced. Full potential of rice production hasn’t been achieved over the last decade despite government efforts such as fertilizer subsidy, aimed at increasing its output. Achieving full potential in rice production would help in increasing rice output thus reducing rice import bill and increasing food security. This research aimed to determine the technical efficiency of small-scale rice farmers in Kenya's Kirinyaga County and the effect inputs have on rice output. The study was conducted in Kirinyaga County, Kenya. Mwea irrigation scheme was chosen since it accounts for over 80% of rice produced in Kenya. The study adopted a cross-sectional research design and targeted 6000 small-scale rice farmers in the Mwea Irrigation Scheme. To get 362 farmers, the sample size was calculated using Cochran's methodology. A layered, multi-phase random sampling approach was used to choose the respondents. A survey questionnaire was used to gather quantitative data for this investigation. This research used primary data, which was collected for the agricultural season of 2023. Technical efficiency was estimated using Stochastic Frontier Analysis Model. The assumptions of regression analysis were examined before running the regression, including homoscedasticity, multicollinearity and normality. The mean of technical efficiency was found to be 87.8% and ranged between 39.9% and 98.3%. This implied that technical inefficiencies exist among the small-scale rice farmers in Kirinyaga County. The study found that the coefficients for fertilizer, farm size, labour and capital were positive and statistically significant revealing that and increase in the amount of fertilizer used, land size, labour and capital in rice production would result in an increase in rice output. The study concluded that the technical efficiencies of small-scale rice farmers in Kirinyaga County differs among the farmers. Further, the study concluded that small scale rice farmers in Kirinyaga County do experience technical inefficiencies which account for loss in rice output. The study also concluded that fertilizer, farm size, labour and capital contribute to changes in rice output. The study made recommendations that policy makers in the ministry of agriculture should formulate policies that will aid the farmers in improving technical efficiency up-scaling to adapt to technological changes, automating systems and implementing robotics and AI in production processes. This can also be achieved through process optimization that will help in reducing inefficiencies in production processes.
Efficiency and Total Factor Productivity Growth of Selected Public Chartered Universities in Kenya
(Kenyatta University, 2025-06) Ogechi, Vincent Ogaro
University education is indispensable in the economic development of economies globally. It is offered by public owned and privately-owned universities. Unlike private universities, public universities get financed by governments which allocates funds for recurrent and development expenditure to facilitate them undertake their core activities which are research and teaching. These activities can only be attained as long as the institutions are provided with adequate resources which are necessary. The prudent use of these resources is necessary to ensure maximum utilization of the limited resources allocated to these universities. Despite of their importance, Kenyan public, these institutions continue to face huge funding gaps amidst increased administration costs and operational costs which have significantly affected their efficiency and their overall productivity over time. Many Kenyan public universities have huge pending bills which have continued to negatively affect their operations thereby impacting on their performance. The main problem studied is underfunding which is clear from decline in of the universities through the Differentiated Unit Cost model over time. The study aimed at assessing technical efficiency and total factor productivity growth of public universities in Kenya from 2017/2018 to 2021/2022 academic years when the university sector has been seriously hit by huge funding gaps and resource constraints. The specific objectives were to measure the Total Factor Productivity growth and technical efficiency levels of public chartered universities in Kenya as well as the determinants of technical efficiency. The study targeted 31 public universities which are fully fledged. Secondary data was obtained from the Decision-Making Units during the period under study. The study employed Malmquist Productivity Index in evaluating the total factor productivity growth and Data Envelopment Analysis in determining technical efficiency of the sampled public chartered universities using panel data covering five academic years from 2017/2018 to 2021/2022. Under the assumption of the variable returns to scale, this study found out that average TE scores for 31 Decision Making Units was 0.760. This implies that the public universities could have significantly improved their performance by 24% using the resources at their disposal during the period under study. Out of the 31 public universities only 12 public universities, 38.71% were found to be technically efficient having TE score of 1 under assumption of variable returns to scale. The Decision-Making Units recorded a mean Total Factor Productivity growth of 0.018. The results indicate that mean Total Factor Productivity growth was negative and declined by 98.2% during the period under study. From the Tobit regression analysis, employee cost negatively affected technical efficiency levels of public universities. All the other input and output variables besides employee costs positively influenced technical efficiency of the Decision-Making Units analyzed in the study. Therefore, the public chartered universities can increase their technical efficiency by increasing the number of undergraduate, master degrees and doctoral degrees graduates, amount of tuition income and government grants
Gender and Physical Location Disparities in Financial Inclusion in Kenya
(Kenyatta University, 2025-03) Maingi, Nicholas Mbithi
The economic growth of a country relies heavily on an all-inclusive working population with financial inclusion being a prerequisite to economic development. The United Nations Capital Development Fund has acknowledged that increasing financial inclusion can help reduce poverty and promote inclusive economic growth. It also plays a vital role in improving household well-being and reducing poverty levels while advancing a number of Sustainable Development Goals. Significant progress has been made in Kenya in terms of financial inclusion. Data from the Kenya National Bureau of Statistics through the 2019 Fin Access Household Survey report shows that financial inclusion statistics has increased from 75.3% in 2016 to 82.9% in 2018. While there has been progress in lowering gender, wealth, and geographical inequality, it is critical to remember that the report is cognizant of the existence of gender-specific and geographical disparities in addressing financial inclusion. Therefore, it's not enough to only provide financial services; we must also work to eliminate the disparities that prevent certain individuals from using them. This research examined gender and location-based disparities in Kenyan financial inclusion. This study aims to understand more about the gender gap in financial inclusion in Kenya by looking at how different socioeconomic variables affect it, how socioeconomic characteristics affect it, and what factors lead to geographical disparities in financial inclusion in Kenya. Secondary data for this research was sourced from the Kenya National Bureau of Statistics' 2021 Fin Access Household Survey. The Oaxaca-Blinder decomposition methodology was utilized to decompose the differences in average outcomes between the two groups (males and females) into portions that are due to observable characteristics (like education and experience) and portions that are unexplained. The study highlights that despite progress, gender and geographic disparities in financial inclusion persist, necessitating focused research and targeted interventions in Kenya. The Oaxaca Blinder decomposition regression showed significant gender and geographic disparities in financial inclusion, which were notably influenced by socioeconomic characteristics such as education and wealth quintile. By examining these disparities, the study reveals that factors such as education and wealth play crucial roles in bridging the inclusion gap, advocating for policies that promote education, financial literacy, and accessible financial services for disadvantaged groups. It is hoped that the findings from this research will play a big role in helping the country develop more robust strategies towards overcoming gender and geographical-related disparities and thus achieving financial inclusion for all the population through enabling all-inclusive access to financial services that go a long way in promoting sustainable economic growth. As such, the country will as well be achieving and realizing the economic-related Sustainable Development Goals geared towards achieving Kenya Vision 2030.
Domestic Debt, External Debt, and Inflation: A Case of Public Debt Liquidation Using Inflation in Kenya
(Kenyatta University, 2025-06) Buhere, Valerie Amayoka
In the period between 2009 and 2021, Kenya’s debt rose from 32.2% in 2009 to 67.3% in 2022 relative to the gross domestic product. High indebtedness has led to negative economic consequences including slowed economic growth, inflation, depreciating exchange rates, income inequality, private sector crowding-out, low capital formation, and debt overhang. Kenya adopted Medium Term Debt Strategies in 2001 with concerted policies to decrease external borrowing while allowing access to external concessional debt, slowing down the accumulation of domestic debt, longer maturities, and adopting debt ceilings. This notwithstanding, concerns about Kenya’s public debt sustainability persists. This necessitates continuous exploration of different strategies to ensure its sustainability. Shock inflation has been demonstrated to contribute significantly to public debt liquidation in developed countries. Though a potential tool for public debt management, the effectiveness of shock inflation in liquidating public debt has neither been established nor considered for developing countries like Kenya. This study used 1983–2022 Kenyan data to investigate the possibility of public debt liquidation using shock inflation, making a distinction between domestic and external debt. Following appropriate time series methodology, the autoregressive distributed lag was adopted to model domestic debt to gross domestic debt ratio as the autoregressive distributed lag error correction model was adopted to analyse external debt to gross domestic debt ratio. Five- and ten-year dynamic baseline forecasts were drawn up and investigated against the debt level after a 2% shock inflation treatment. The findings of this study suggested that two% shock inflation had a minimal impact on domestic debt in five years and only decreased by 0.024% in ten years. In contrast, it increased the external debt level by three and a half percent in five years and decreased external debt level by 282% in 10 years, possibly eliminating it. This is consistent with global findings that longer-term debt is more sensitive to shock inflation. Further, the inflationary effect may need a prolonged period to realise its benefits. Results will contribute to new literature to inform fiscal policy on the role of inflation in public debt management in developing countries like Kenya
Technical Efficiency among Smallholders Dairy Cattle Farmers in Nyandarua County, Kenya.
(Kenyatta University, 2025-06) Mwaura, Eric Kimani
Dairy farming is crucial due to its significant role in Kenya’s economy. It enhances the nation's food security, provides farmers with a source of revenue, and creates jobs. The majority of milk consumed worldwide originates from dairy cattle. The rearing of dairy cattle has supplanted tea and coffee plantations as the primary source of livelihood across Kenya's Rift Valley and central regions. Despite the sector remaining an integral part of Kenya's economy, overall dairy production has decreased over the past 20 years, even with an increase in cattle herds. Furthermore, despite the likelihood of increased demand for dairy products and milk due to urban population growth, Kenya's dairy farming industry has not yet reached its full potential. While dairy production has been rising in Nyandarua, studies demonstrate that there has not been a proportionate increase in productivity per cow when compared to neighboring counties.The attainment of maximal technical efficiency at the farm level is essential due to the scarcity of production resources (particularly land) for dairy farming and to boost food availability, which is among the Kenyan government's key targets. This assessment had two main objectives: to estimate the technical efficiency of smallholder dairy cattle farmers in the Kinangop sub-county of Nyandarua County, Kenya, and to identify the factors that influence their technical efficiency.A non-experimental research approach was adopted, and cross-sectional data were gathered using questionnaires completed by a sample of farmers. Since a complete population list was unavailable, a stratified sample from the ward was used to conveniently select participants for the study. Quantitative input and output data were collected from each sampled farmer. Multiple regression analysis was employed to identify elements that alter technical efficiency, and a maximum-likelihood estimation approach was used to establish the stochastic frontier production function.From the results, it was concluded that farmers were 71.1% technically efficient, with 95% of the dairy farmers performing above average and only 5% below average. The maximum likelihood estimates indicated that labor, acres allocated to fodder production, and concentrate and fodder fed to animals per day had positive coefficients, although these were statistically insignificant. However, expenditure on animal health had a negative, but statistically insignificant, impact on technical efficiency. The study also established that the level of education is a key determinant of efficiency in Kinangop.This study recommends that smallholder dairy farmers in Kinangop sub-county should strive to enhance their technical efficiency. This includes judiciously hiring labor to aid in farm operations, joining various societies that can provide critical services like credit, consistently using concentrates and fodder in dairy farming, and actively practicing hay and silage preservation. The study further recommends that the county government of Nyandarua should develop and implement policies that assist citizens in accessing higher education and extension services.
Demand for Contraception after Self-Managed Medical Abortion: The Case of Nakuru County, Kenya.
(Kenyatta University, 2025-06) Sigu, Steve Biko
The low utilization of contraception following medical abortion is a key factor in the high rate of repeated induced abortions, primarily because fertility returns quickly after the first trimester abortion. Women who obtain medical abortions through pharmacies often miss out on essential contraceptive counseling, which is crucial for informed method selection. Using data from Post medical Abortion contraception (PMAC) project pilot, the study analyzed the data from 401 women who obtained medical abortion drugs from 21 pharmacies in Nakuru to establish demographic and socioeconomic factors that determine demand for contraception use following medical abortion. Correlation between the variables, normality of data and heteroskedasticity was assessed to inform the list of variables to be included in the probit model. Marginal effect was used to establish the determinants of demand and signal the coefficients provided the extent of influence on demand. While 60% of women initially opt to bundle medical abortion drugs with contraceptive methods, only 43% were using contraception after a self-managed abortion. Significant socioeconomic factors affecting demand for post-abortion contraception include effective demand, exposure to promotional interventions, abortion decision-making, and past contraceptive use. Demographic factors such as age, marital status, and education level also play a significant role in influencing the demand for contraceptive use post-abortion. The study underscores the complexity of contraceptive seeking following self- medical abortion, contextualized by socioeconomic factors, intervention exposure, and personal decision-making dynamics. Such findings suggest an alignment between decision support and intervention delivery could be pivotal in promoting higher contraceptive utilization rates. Strengthening community based contraceptive service delivery model could potentially improve contraceptive coverage and prevalence rate.
Effects of Parental Education, Household Wealth, and Occupation on Antenatal Care Utilization in Kenya
(Kenyatta University, 2025-04) Soi, Esther Nthambi
The Kenyan government implemented a free maternity service policy in June 2013 by eliminating maternity charges in public hospitals and health centres to make maternity services more accessible and affordable, reducing maternal and perinatal deaths, and achieving the global and the Kenya Vision 2030 targets. Despite this effort, maternal deaths are unacceptably high and underutilization of antenatal care still exists among poor, illiterate, and unemployed women living in rural areas. Free maternal services may not sufficiently address antenatal care utilization challenges because other cultural, demographic, and societal factors, such as transport, area of residence, poverty levels, decision-making and literacy levels, can affect access to maternal health services. However, to date, there is limited information at the national perspective in Kenya on how parental education, parental occupation and household wealth affects antenatal care. This study assessed the effects of parental education, parental occupation, and household wealth on antenatal care utilization in Kenya. The specific objectives of the study were to establish the effects of parental education on antenatal care utilization, to investigate the effects of household wealth on antenatal care utilization, and to determine the effects of parental occupation on antenatal care utilization in Kenya. The study design was non-experimental, using the Kenya Demographic and Health Survey data (2022) on women aged 15 to 49 years. The data were analyzed using the negative binomial regression model. The findings revealed that 58.7 per cent of the respondents made at least 4-7 visits, but only 3.5 per cent attained the recommended eight ANC visits. Compared to mothers without formal education, those whose husbands/partners had primary education were more likely to use ANC services, holding other factors constant, but the mother’s education level showed no effect on antenatal care utilization. The antenatal care utilization increased with households in the middle-income quintile, and there was no relationship between the mother's or husband's occupation and antenatal care utilization. This study recommends that the government increase investment in the education sector and intensify public awareness of antenatal care services. In addition to the free maternal health care, the government of Kenya can consider formulating ANC policies to eradicate healthcare inequalities among the less privileged by effectively removing all barriers to accessing ANC and ensuring free service delivery to all women, regardless of their socioeconomic status, religion, marital status or place of residence.
Technical Efficiency of Private Security Firms in Kenya
(Kenyatta University, 2025-03) Kimulwo, Felix Kiprop
The technical efficiency of the private security company (PSCs) in Kenya has become a critical issue, keeping in view the vast ratio of 1 officer to 1,150 citizens in the country's police force as opposed to the very ideal 1:450 ratio. The demand for security services is rising, and the government cannot meet the ever-increasing need; hence, private security firms come to fill the gap. However, these firms suffer challenges such as high employee turnover, low wages, no career path, insufficient training, and the application of obsolete technology. Using data envelopment analysis (DEA), this study on 34 private security firms found an average efficiency of twenty six percent suggesting that many PSCs operate way below their capacity. Years in operation and ownership negatively influence efficiency, while the number of locations and compliance with regulations positively influence performance. This study finds improved regulatory frameworks, regular audits, and government legislation whereby only firms with valid PSRA licensure qualify to bid on government-related contracts to ease technical efficiency improvements among PSCs.
Government Expenditure and the Technical Efficiency in Public Secondary Schools: A Case of Narok County, Kenya.
(Kenyatta University, 2025-06) Makena, Purity
The objective of this study was to evaluate the degree to which education inputs are being utilized to achieve technical efficiency in education in Narok County. The specific objectives were to determine the technical efficiency level of government funded secondary schools, and identify factors determining technical efficiency in government funded secondary schools. A mixed-methods research design was adopted. Quantitative cross-sectional secondary data covering a period of five years was analyzed using Stochastic Frontier Analysis (SFA) to estimate the technical efficiency (TE) scores and their determinants. Qualitative insights were gathered through interviews with school administrators and education stakeholders to complement the quantitative findings. The study established that the overall mean technical efficiency of the sampled schools was 59.60%, implying a significant inefficiency of 40.40%, largely attributed to inadequate government funding and infrastructural deficiencies. Regression analysis revealed that government capitation, expenditure on infrastructure, investment in teaching and learning materials, and favorable teacher-student ratios had a significant positive effect on technical efficiency at the 5% significance level, while school size did not exhibit a significant influence. Qualitative findings reinforced that delayed remittance of government funds, insufficient infrastructure, and inadequate teaching resources hindered efficient school operations. The study recommends that policymakers prioritize increased, timely, and equitable government capitation, invest in infrastructure development, and improve the supply of teaching resources to enhance technical efficiency and optimize educational outcomes in public secondary schools.
Effects of Budget Deficits on the Balance of Payments and Exchange Rate in Kenya: 1993-2023.
(Kenyatta University, 2025-04) Rianne, Nyanchama Ricy
The balance of payments determines the extent to which a country depends on the rest of the world. On the other hand, the budget deficit is considered a significant metric for a nation’s financial health. The nation’s balance of payments has primarily been in a deficit, at the same time, the budget deficit continues to widen, which has raised much concern among economists and policy makers. This accentuates the necessity to investigate the relationship between budget deficits and the balance of payments. Furthermore, the study examined the effects of budget deficits on current account deficits because the current account makes up the largest portion of the balance of payment and the country’s current account has primarily been in a deficit. Moreover, the study was extended to capture the effects of budget deficits on the exchange rate since imbalances in the balance of payments influence the exchange rate. Theories on how budget deficits influence the balance of payments, current account and the exchange rate are contradictory, despite attempts made by empirical studies tying budget deficits to the balance of payments, current account deficit and exchange rate, there remains to be controversy in their findings with each contention faced with a counterargument. The study utilized quantitative annual time series data spanning from 1993 to 2023 and the error correction model to establish how budget deficits affect the balance of payments in Kenya. In addition, causality tests were employed to investigate the relationship between the current account deficit, exchange rate and budget deficit. The study revealed that an increase in budget deficit deteriorates the balance of payments. The results also demonstrated bi-directional causality between the budget deficit and the current account deficit. In addition, the findings indicated a unidirectional causal relationship between the budget deficit and the exchange rate. The study concluded that since budget deficits influence the balance of payments, there is need to keep the widening budget deficit in Kenya in check. Further, the study recommended the establishment of a regulatory framework tailored towards budget deficit reduction in an effort to strengthen the balance of payments because persistent deficits in the balance of payments reduce reserves and weaken the value of local currency increasing the nation’s vulnerability to external shocks
The magnitude of the informal remittances flow to Kenya: an augmented gravity model approach
(Kenyatta University, 2025-05) Mathenge, Anthony Kagiri
Global remittances reached an estimated $860 billion, with Low and Middle-Income Countries receiving over $669 billion in 2023. Despite being outdone by Official Development Assistance, remittances are a much larger financial boost for developing countries compared to Foreign Direct Investments. However, high transfer costs and the use of informal channels hinder the full impact. In Kenya remittances are now a proper source of external finances. Kenya received $4.19 billion in form of diaspora remittances. Over the years, remittances are proving to be more stable, well diversified and are promising more growth relative to Foreign Direct Investments, Official Development Assistance, private capital and exports. On the micro scale the remittances are helping achieve Kenya’s developmental goals of having a globally competitive human resource and an adequately and decently housed population as outlined in the country’s development blueprint - The Kenya Vision 2030. Though the remittances are these important, official remittance data in Kenya, as well as in many African countries, only include remittances sent through formal channel, that is, banks and Money Transfer Operators. Remittances through the informal channels such as hawalas and hundis are not recorded. This means that the recorded remittances are grossly understated impeding the capacity of policy makers to design appropriate policies aimed at encouraging remittances. This study therefore, is seeking to establish the magnitude of informal remittances in Kenya and to examine how economic conditions influence remittances to Kenya. To achieve this objective, the study employed panel data analysis and a thought experiment on remittance data between 2013Q1 and 2022Q4. Through a thought experiment, the study asks what impact a reduction of the costs of sending remittances would have on remittances if the transaction costs were reduced to that of the informal channels of sending remittances. The analysis revealed that the size of the informal remittances in Kenya is between 20% and 26% of the formal remittances. On the determinants of remittance flows to Kenya, the study establishes that Kenyans in diaspora remit more when the economic freedoms and economic conditions improve in their host nations but send less when economic freedoms back at home improve.
Effect of Taxpayer Education, Penalty and Tax Rates on Vat Compliance amongst Micro and Small Enterprises in Nairobi City County Kenya, 2020
(Kenyatta University, 2025-07) Muhanji, Alex Olando
In many countries, tax is an essential aspect and revenue collected from these taxes aids any nation in provision of general public and social goods to the citizens and holistic growth of its economy. VAT is a major indirect tax head in Kenya contributing much revenue to the total collections. Notably, Kenya has not been able to collect substantial value added taxes as expected despite many taxpayers who have registered for the obligation because of the high informality in the micro and small enterprises sector. The incidence of not complying with tax rules remains a grim concern to the country. Non-compliance undermines both voluntary efforts and resource mobilization in an economy. The medium and small enterprises, in particular, can generate a lot of value added tax collections for the state; however, it has not been the scenario due to widespread non-compliance. This problem of non-compliance led to the Kenya Revenue Authority to design and implement programme of education of the medium and small enterprises. However, the Kenya Revenue Authority also uses tax rates, fines and penalties also influence tax compliance. Although the successes of these initiatives are imperative for revenue mobilisation in the country, their effects on tax compliance are yet to be looked at. Given the above justification, this study aims at looking into how payer education has affected vat compliance by medium and small and (or) micro businesses operating in Kenya by examining medium and small enterprises in Nairobi Central Tax. The key objectives are to determine how taxation knowledge and tax awareness affect value added tax compliance among mid-sized and small businesses in Nairobi Business Centre, to find out effect of the tax fines, penalties on value added tax compliance amongst the medium, small enterprises in the specified area of research, and to determine effect of change of tax rates on medium and small enterprises value added taxes compliance in Nairobi Central Business. The research will be cross section involving collected data from the chosen sample of medium and small enterprises in Nairobi Central Business. Regression analysis will be used to estimate equations. Relevant diagnostic tests such heteroscedasticity, autocorrelation, multi-collinearity and normality of the error terms will be undertaken. From the regression analysis, Tax education coefficient was positive and of statistical significance at five percent confidence level in explaining the variation tax compliance. The results on imposition of penalties and fines implied that it does not increase the likelihood of compliance while having the changes in tax rates increases the likelihood of compliance and VAT collection but subject to laffer-curve effect.
Interest Rate and Performance of Value-Added Tax in Kenya
(Kenyatta University, 2023-11) Nyambu, James Kitogho
Abstract
The Effect of Rule of Law on Total Factor Productivity in Kenya
(Kenyatta University, 2023-11) Mungai, Peter Muchugu
Abstract
Kenya’s Export Potential in The African Continental Free Trade Area Arrangement
(Kenyatta University, 2023-06) Oiro, Rosebela Akinyi
Abstract
Kenya’s Export Potential in the African Continental Free Trade Area Arrangement
(Kenyatta University, 2023-06) Oiro, Rosebela Akinyi
Abstract
Influence of Franchising on the Success of Fast-Food Restaurants in Nairobi City County, Kenya
(Kenyatta University, 2024-11) Tundura, Janet Okeng’aya
Franchising concept is a multidimensional structure that controls a tiny proportion of the global business. Fast-food restaurants sector has expanded globally through the franchising arrangement in spite of operating in a competitive and unpredictable environment. The study assessed influences of franchising on success of fast-food restaurants within Nairobi City County. Specific objectives for this study were; to evaluate the application of the franchising model on the success of fast-food restaurants, to establish the influences of franchising trends on the success of fast-food restaurants, to establish the impact of Convenient Location on the success of franchised fast-food restaurants and, to investigate the moderating effects of the franchising strategy on the relationships between influence of franchising and, the success of fast-food restaurants. The significance of this study was to provide a framework for the development, adoption and, implementation of franchising models that support growth and, development of franchises in Kenya. The study adopted an embedded mixed method research design and target population of 438 participants comprising of 27 restaurant managers, 27 supervisors and 384 customers. All the respondents were drawn from 27 franchised fast-food restaurants within Nairobi City County. A sample 404 respondents were considered where purposive sampling was applied for managers and supervisors and convenient sampling technique for customers. Pretesting exercise calculations produced a 0.753 reliability coefficient, indicating that the tools used in the collection of data were reliable with an output of coefficient alpha above 0.70. Data collection instruments included questionnaires for customers and supervisors and an interview schedule guide for restaurant managers. Qualitative data obtained was ordered, coded and, summarized into specific objectives as thematic areas while quantitative data analysed through the inferential and descriptive statistics. Descriptive analysis was conducted on numerical data and presented in tables in additional correlation and regressions analyses on hypotheses. A total of three hundred and two (302) usable responses were obtained yielding an 86.29% response rate which was considered sufficient to manage generalization on the subject under study. Multiple regression analysis was applied in evaluating the impacts of predictors on the study’s dependent variable. Results established that there was a statistically-significant influence of franchising model on success of fast-food restaurants (p=0.000<0.05). The findings also established the trends in franchising and success of fast- food restaurants had a statistically-significant correlation (p=0.000<0.05). Analyses established a significant correlation between convenient location and success of franchised fast-food (p=0.000<0.05). Additionally, the study established that there was a statistically-significant relationship between the strategy in franchising and the Success of fast-food restaurants variables (P=0.000<0.05). The R-value obtained at 0.829 denoted a high correlation degree between predictors and the adjusted R2 was 0.615. This indicated that application franchising model, trends in franchising, location and convenience, and strategy in franchising explained 61.5% of success of franchised fast-food restaurants. From the ANOVA table, the F value (15.617) was greater than the F value calculated (3.272) at the 5% level, which confirmed the value of the model. From Multiple Regression coefficients table, the resulting F-value (3.654) and p-value (0.001<0.05) confirmed that the franchising Strategy had a positive-significant relationship and moderating effect on the Predictor and dependent variables. The study recommended that the practitioners and policy makers develop, adopt and implement the franchising model and create awareness about its benefits for the success of fast-food restaurants. The study also recommended further research on the remaining proportion of factors (38.5%) that accounts for other variables not studied
Urban Youth Savings Mobilization: A Case Study of Nairobi City County, Kenya
(Kenyatta University, 2024-08) Thuku, Jeremiah Thuku
Savings play a vital role as they act as backstop for capital formation and economic growth. A better saving behavior is the basis of a sound economic and financial policy. Studies on savings have historically taken a central position in several economic research areas. Issues and problems related to savings among households and individuals have gained significant importance in microeconomic studies as savings stimulate larger investments and higher gross domestic product growth. Studies conducted in developing countries have shown that savings remain low particularly among the youth due to various factors such as high unemployment rates, low incomes,limited access to financial services and high dependency rates among other factors. Low saving culture inhibits the availability of investment funds. Low savings among the youth in Kenya stems from almost similar factors which have hindered substantial increase in domestic savings for economic growth. This research study therefore sought to examine the effect of income and employment on the urban youth savings using Ordinary Least Squares estimation method. The goal was to get an understanding on the effect of income and employment factors on the uptake of savings by the urban youth in Nairobi City County. A cross-sectional research design was adopted where primary data was collected from the youth in Nairobi City County. Random samping technique was used to select the respondents in the survey where self-administered questionnaires were used to collect data from 400 urban youth. The study’s results demonstrated a positive relationship between employment and income on the urban youth level of savings in Nairobi City County. Other factors such as rate of return was found to positively affect savings while factors such as age, number of dependants and education affected savings negatively.The study concluded that creating more employment opportunities for the youth, promoting their incomes through quality jobs and through revitalizing both the formal and informal sectors and offering higher rate of returns on savings would be critical in mobilization of savings.
Interest Rate Capping and Performance of Nairobi Securities Exchange, Kenya
(Kenyatta University, 2024-10) Musungu, Andrew Masinde
This study sought to find out the effect of interest rate capping on the performance of Nairobi Securities Exchange in Kenya after the adoption of the Banking Amendment Act (2016) which introduced restrictions on lending rates and bank savings rates. Prior to capping, banks were charging high interest rates on loans but paying low interest on bank savings, thus resulting into a wide interest spread. However, after the adoption of capping of interest rates, there was a downward trend in the performance of Nairobi Securities Exchange. The effect of lending rates, treasury bills rates, savings rate as well as well as the moderating effect of the volume on the relationship between interest rate capping performance of Nairobi Securities Exchange in Kenya were the specific objectives of the study. Classical Theory of Interest Rates, Fisher’s Theory, the Arbitrage Pricing Theory and the Efficient Market Hypothesis were used in the study. All the 20 firms which yield the Nairobi Securities Exchange (NSE) 20 Share Index constituted the target population. The study used secondary data collected from the Central Bank of Kenya and Kenya National Bureau of Statistics. Diagnostic tests, including the test for autocorrelation, homoscedasticity, multicollinearity, normality, model specification and model stability tests were done. Tests for time series properties including stationarity and cointegration were performed. Model specification and model stability checks were also performed, after which data was analyzed using Autoregressive Distributed Lag Model and Autoregressive Distributed Lag Error Correction Model to establish the long run and short term relationships respectively. Ethical issues including seeking approval for data collection, confidentiality, accuracy and honesty were considered. The study concluded that interest rate capping affects performance of Nairobi Securities Exchange in Kenya. In the long run, lending rate had no relationship with the performance of Nairobi Securities Exchange but there was a negative relationship in the short run. Treasury bill rates did not have an effect on the performance of Nairobi Securities Exchange in the long run but there was a negative relationship in the short run. The study concluded that volume of credit had a negative moderating effect on the relationship between interest rate capping and the performance of Nairobi Securities Exchange in the long run, but had a positive moderating effect on the relationship between interest rate capping and the performance of Nairobi Securities Exchange in the short run. In conclusion, it’s recommended that Central Bank of Kenya should maintain low lending rates during interest rate capping since it results into an increase in prices of stocks, thus attracting investors and promoting economic growth.
Effects of Government Expenditure on Sectoral Growth in Kenya
(Kenyatta University, 2013-10) Nyagwachi, Abel Otwori
The rapid growth of both sectoral government recurrent and development expenditure in Kenya as well as the slow growth of wage employment levels has raised concerns among policy makers on the effects of these growth levels on sectoral economic growth. The agriculture and forestry sector is one of the most important sectors for the Kenyan economy contributing 24% of national GDP in 2011. M’amanja and Morrissey (2005) found that human capital development which is achieved through investment in the education and health sectors was the most important determinant of overall GDP growth in Kenya. According to Barro (1990) the public administration and defense sector plays a critical role in encouraging private sector investment, savings and economic growth through enhanced property rights. Although the whole economy has experienced positive growth in most years since 1972, the above sectors have all experienced negative growth in some years between 1972 and 2011. The specific objectives of this study were to determine the effects of sectoral government development and recurrent expenditures as well as public and non-public wage employment on the economic growth of the above four sectors. The study used Panel Least Squares method for the period 1972-2011 and found that development expenditure, public sector and non-public sector wage employment have a positive effect on sectoral growth while recurrent expenditure had a negative effect on sectoral growth. Therefore, the government needs to reduce wasteful recurrent expenditure in the above four sectors and increase expenditure on priority development projects as well as pursue employment creation policies to ensure sustained growth in these four important sectors.

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