MST-Department of Applied Economics
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Item Per Capita Income, Public Health Expenditure, Maternal Care Utilization and Their Effects on Infant Mortality Rate in Kenya(Kenyatta University, 2024-11) Thuku, Beatrice NdutaInfant mortality remains a pressing public health challenge and an indicator of socio-economic well-being globally. In Kenya, despite significant progress in reducing infant deaths, the infant mortality rate remains above global and regional targets, necessitating further investigation into its determinants. This study examines the effects of per capita income, public health expenditure, and maternal care utilization on infant mortality in Kenya. The research is guided by specific objectives: to determine the influence of per capita income on infant mortality, analyze the impact of public health expenditure, and assess the role of maternal care utilization on infant survival rates. The study employed a non-experimental quantitative research design, analyzing secondary data spanning the years 1991 to 2020. Using Grossman's Health Capital Model as a theoretical framework, the study utilized an Autoregressive Distributed Lag model to estimate the short- and long-term effects of the variables. Data were sourced from reputable institutions such as the World Bank and the Kenya National Bureau of Statistics. Diagnostic tests ensured model validity and reliability. Findings revealed that higher per capita income significantly reduces infant mortality by enabling better healthcare access and improved living conditions. Public health expenditure was found to have a strong negative correlation with infant mortality, particularly when allocated to essential maternal and child health services. Increased maternal care utilization, measured through prenatal care coverage and skilled birth attendance, demonstrated a significant positive impact on reducing infant mortality rates. However, disparities in utilization between urban and rural areas and among different socio-economic groups remain a challenge. Policy implications emphasize the need for targeted interventions to bridge socio-economic and geographic disparities in healthcare access. Increased investment in public health, particularly in maternal and child healthcare, is critical. Expanding financial risk protection mechanisms to reduce out-of-pocket healthcare expenses and enhancing health system infrastructure are also recommended. Furthermore, programs promoting maternal education and awareness of healthcare services should be scaled up. This study underscores the multifaceted nature of infant mortality determinants and provides actionable insights for policymakers to enhance child survival and achieve Sustainable Development Goals related to health equity and well-being.Item Determinants of Efficiency of Microfinance Institutions in Kenya(Kenyatta University, 2024-04) Mutuku, Calvin MutisoMicrofinance is one of the concepts that was coined and developed in order to provide saving and borrowing solution to the poor population of the world. Microfinance has come up as one of the ways to improve financial incorporation for the bottom econonomically weak population of the world and the small and medium enterprises that have always been left out by the mainstream commercial banking system. Despite this important role, microfinance institutions efficiency in Kenya has not been fully attained in recent years. The objectives of the study was to assess the efficiency determinants of Kenya’s microfinance institutions. The objectives of the study was anchored on investigating the determinants of both technical efficiency and cost efficiency of the microfinances in Kenya. This study utilized secondary data obtained from relevant sources with mix market and association of Microfinance institutions in Kenya between 2015-2019. The study employed use of Data Envelopment analysis (DEA) for cost and technical efficiency scores generation then ran panel data using tobit analysis for regression to examine the determinants for cost and technical operation efficiency among microfinances in Kenya. A sample of 10 microfinances was considered especially those which had submitted complete data with mix market. The study used non experimental research design since the researcher has no control over what was happening but can only report what is happening or what has happened. The findings of the study indicated that credit risk had a negative impact on technical efficeiy which was significant. Also, capitalization was found to have a positive significant impact on cost efficiency and total expenses was found to have negative and significant effect on cost efficey of microfinances in Kenya. Understanding factors that determine the efficient of microfinances ought to help managers know the areas to emphasize on, in order to improve on efficiency, leading to improved financial performance hence enhancing economic growth and development. Further areas of studies can be pursued on assessing the technological impact on cost and technical efficiency of microfinances. In addition, a study can be conducted on macroeconomic variables and microfinances efficiency in Kenya.Item Impact of Covid-19 on the Financial Stability of Commercial Banks in Kenya(Kenyatta University, 2024-07) Mathenge, Noah MuthonduCountries worldwide were gripped by the COVID-19 pandemic for the greater part of 2020 and 2021. COVID-19 spread to virtually all nations around the globe causing contraction in the global economy and Kenya was no exception. Governments worldwide deployed social distancing, lockdowns, and curfews, resulting in employee lay-off, business closure, and suppressed demand for commodities and services eventually trickling down to commercial banks. The Kenyan banking sector experienced deterioration in asset quality which has been worsening since 2014 when it stood at 5.6 percent, reaching an all-time high of 14.5 percent in 2020, whereas Return on Assets which has also been declining since 2014 stood at 4.46 percent dropped to a record low of 2.07 percent in 2020 during the pandemic. Therefore, the researcher sought to establish how the COVID-19 shock has impacted the financial stability of Kenyan commercial banks. The study sought to specifically establish how the COVID-19 pandemic impacted both Z-score and capital adequacy of Kenyan commercial banks. The study was anchored on the financial intermediation theory, capital buffer theory, and the financial instability hypothesis. A non-experimental research design was embraced while the financial stability proxy was Z-score. The study targeted 19 commercial banks in Kenya between the years 2015 to 2022 which had complete data on all the study variables. Annual bank level secondary data was acquired from Kenya`s Central Bank annual reports of supervision from 2015 to 2022. The event study methodology was used while collecting data whereby, the event window was 2020 to 2021, the span before the event (COVID-19) was 2015 to 2019, and the spell after the event was 2022. The study embraced a panel vector autoregression methodology for data analysis whereby, impulse response functions were generated. The outcome of the impulse response functions revealed a negative impact of COVID-19 on both Z-score and capital adequacy. Based on the study findings, the Government of Kenya ought to institute non-disruptive pandemic control measures such as practicing proper hygiene and wearing of masks as opposed to quarantines and lockdowns which are detrimental to businesses ultimately leading to a decline in income for commercial banks. Moreover, since capital acts as a shock absorber for banks, Kenyan commercial banks should strive to achieve and maintain the minimum capital adequacy ratios set by the Central Bank of Kenya. This will ensure commercial banks in Kenya cushion themselves against economic shocks generated by pandemics such as COVID-19.Item Income Inequality and Household Saving in Kenya(Kenyatta University, 2024-11) Joakim GichukiHousehold saving in a country is a critical source of funding to its investments especially in a developing economy like Kenya. Household saving emerges as an integral part towards national saving level in that country. Most studies conducted in developing countries with Kenya in inclusion show that these countries savings are below 30% of their Gross Domestic Product. Currently, Kenya’s national saving stands at 12% of its Gross Domestic Product. Over the past three decades, Kenya has shown a declining trend in gross domestic savings since it was at 23% of Gross Domestic Product in the early 1990s and dropped to 12% in the early 2020s. This declining saving rate could be explained by the country’s level of income inequality which also has detrimental effects on economic growth as well as the poverty reducing effects of a growing economy. Kenya has been having a declining rate of income inequality portrayed by declining Gini indices. Observing an unconventional trend between income inequality and gross national savings in Kenya, serves as the base for this study. The general objective of this study was to determine the effects of income inequality of household saving in Kenya. This study proposed to fulfil the following specific objectives; to investigate the effects of income inequality on household saving rate in Kenya and to determine the effects of income inequality on household saving option in Kenya. The study was anchored on saving and income theories; Life-Cycle Income Hypothesis, Permanent Income Hypothesis, and Absolute Income Hypothesis. The study took stance based on the previous empirical evidences and theoretical discussions pertaining the relationship between income inequality and household saving. This study used cross-sectional financial data collected from households in Kenya using the various Kenya Integrated Household Budget Surveys and ensured that all information that was analyzed reflected households from all over Kenya. For the Gini Index, the study generated it from the available income data from FinAccess. Data analysis involved descriptive statistics, diagnostic checks, and probit regression analysis. The study showed that the mean income of the respondents is Ksh. 7834, the mean age was 38 years and 65.66% of the households are located in the rural areas at 65.66% and the remaining 34.34% reside in the urban areas. The study findings were that income inequality had a negative effect of the likelihood of a household to save. The age, location, education level, gender, occupation, income level, household size and ownership of a bank account, all had a significant effect on the likelihood of a household to save. The estimates also showed that income inequality negatively affected household saving option for formal financial institutions. The size of the household and the gender of the household head did not determine the household saving option.Item Effect of Foreign Debt on Human Development in Kenya(Kenyatta University, 2024-05) Wafula, Gideon MakhanuHuman development places emphasis on an individual’s wellbeing using the Human Development Index indicators; education, health and income. Public debt is acquired to enhance investments in areas that promote social welfare of an economy’s citizens. Foreign debt is intended to bridge the gap between domestic savings and investments. The successful utilization of these debts is measured by improved wellbeing of the citizens using human development index. There has been a negative trend in human development indicators in Kenya in the recent past at a time when external debt is rising. In the fiscal year 2021/2022 public debt as a percentage of gross domestic product was recorded at 67 percent which was higher that the debt ceiling at 55 percent of gross domestic product. External debt accounted for 52% of this total debt as at 2022 recording a continuous increase as from 2013, surpassing domestic debt. As the public debt was bursting its ceiling, the human development indicators were showing a declining trend, which begged the question on the effect of foreign debt on human development. The study determined the effect of foreign debt on Human Development Index proxies namely; literacy rate, health and poverty. The study used secondary data published by various regional and international organizations from 1990 to 2021.The study was pegged on a consumer utility maximization of a merit good (education and health) theoretical framework constrained by the government’s financing. The relevant time series and diagnostic tests were performed on the data series and models. Auto Regressive Distributed Lag model was used for estimation using ordinary least squares. The findings were that, foreign debt had a negative effect on human development in Kenya in the long run. However, in the short run, foreign debt had a positive influence on literacy rate and led to a decline in morbidity. The study recommends prudent management of foreign debtItem Flexible Loan Products and Financial Performance of Agricultural Enterprises in Mount Kenya Region(Kenyatta University, 2024-06) Nambiro, Dennis EmmanuelAgriculture remains a top contributor to the Kenyan economy, significantly affecting the country's Gross Domestic Product. However, agricultural businesses have historically performed poorly, contributing to high food insecurity. Access to credit is crucial for improving productivity in this sector. Yet, the seasonal nature of agricultural income, due to biological processes of maturity, harvesting, and sale, complicates credit availability. Financial institutions typically offer rigid, fixed repayment schedules aimed at promoting fiscal discipline, reducing transaction costs, and simplifying procedures. These schedules, however, clash with the irregular revenues of agricultural businesses, causing disparities in cash flows and irregular loan repayments. The Agricultural Finance Corporation (AFC) has introduced flexible loan products tailored to match loan repayment schedules with projected cash flows from various agricultural enterprises, addressing the mismatch between cash flows and loan repayment. Despite the potential benefits of flexible loan products, limited evidence exists on their impact on the financial performance of agricultural borrowers. This study aimed to investigate the effect of flexible loan products on the financial performance of borrowers in the agricultural sector, specifically examining their impact on annual sales turnover and the coping mechanism index. Additionally, the study explored other factors affecting the financial performance of agricultural enterprises. A cross-sectional survey methodology was employed, gathering primary data from 198 active borrowers of AFC in the Mt. Kenya region using questionnaires. The questionnaire was pre-tested before the final survey. Descriptive statistics revealed that 159 respondents had received some form of flexible loan, while 31 had not. All respondents had attained some level of education. Among the respondents, only 32 were aged between 18-35, with the rest being older. On average, two-thirds of the respondents had undertaken the financed venture for more than five years. The average coping mechanism index was 0.55.Regression analysis indicated that flexible loan products did not have a significant effect on sales revenue. Instead, education and experience significantly affected sales revenue at a 5% significance level. However, flexible loan products significantly impacted the coping mechanism index at a 5% significance level. The study recommends that AFC and other lenders continue issuing flexible loan products and encourage agricultural borrowers to have additional income sources. There is also a need to develop youth-friendly loan products to increase their participation in agricultural activities. Further studies should investigate the trade-offs between flexible loan products, loan default, and loan repaymentItem Income Inequality and Its Implications on Households Consumption, Investment and Financial Inclusion in Kenya(Kenyatta University, 2024-05) Kamande, Mercy NjeriAcross the world, nations face unique challenges in the quest to deal with the problem of income inequalities. Some developing countries have the largest disparities in income distribution. In Kenya, inequality in income is a major challenge. The inequality index is about 0.416, with considerable discrepancies in education, consumption, investment, employment, and agricultural sectors as well as financial accessibility and availability. Inequality in income distribution has facilitated reduction in access of quality education, investment, consumption and financial access by households in the economy. The main focus of this study is to determine the effect of income inequality on household consumption patterns, investments and financial inclusion in Kenya. The study employed; non experimental research design with time series data for a period 1990-2021 for the variables: household’s investment, consumption, government expenditure, wealth endowment, land ownership, inflation rate, population size, domestic credit, level of education and income inequality in the Country. Data analysis was achieved through regression analysis; the Auto regressive Distribution Lag (ARDL) method was helpful to estimate the parameters in the equation. The study found that income inequality proxy by per-capita income has a negative and significant effect on household’s investment, consumption, financial inclusion in Kenya. The study recommended that government should enact policies to ensure even distribution of income to reduce inequality across the country thereby enhancing household’s investment, consumption and financial inclusion. This finding is very useful for the national government, sub-national governments, and other researchers as an insight to design long-term solutions to equality in income distribution to households. This is in line with the constitution of Kenya (2010), equality distribution of income for all and also in line with the United Nations sustainable development goals number one and two; no poverty and hunger.Item Determinants of gender wage gap in Kenya: a case of Bungoma County, Kenya(Kenyatta University, 2024-06) Machogu, Ronald OndigiDifferences in wages based on gender remain a topical policy area in all countries. Since attaining political independence in 1963, Kenya has taken legislative, administrative, programmatic and policy measures to promote gender equality. Among the major efforts are enactment of the Employment Act 2007, which provide for equal pay for work of equal value performed by men and women, and non-discrimination on account of gender in all aspects of remuneration and employment. The Constitution of Kenya (2010) also guarantees equality of opportunity and elimination of discrimination such as gender-based bias in employment and remuneration. In an effort to advance gender equality, the government also formulated the National Policy on Gender and Development in 2000, and a revised National Gender and Development Policy in 2019 to provide policy and institutional framework for promoting gender equality in the country. The policies emphasize the need to eliminate gender discrimination in access to employment and ensure equity in remuneration. The government also established the National Gender and Equality Commission as a constitutional body to provide the institutional anchor for addressing gender gaps and promoting gender equality in the country. Despite the policy, legal, regulatory and institutional interventions, gender-based bias in employment and remuneration persist. Kenya’s gender wage gap was 68 percent in 2020, implying that women earned KSh. 68 for every KSh. 100 earned by men for doing similar work. In 2014, women earned 64.7 per cent of men’s earnings, on average. This study sought to establish the determinants of gender wage gap in Kenya with a focus on Bungoma County. Through its integrated development plan, Bungoma County has made efforts to address the male-female gap as it relates to employment outcomes. A cross-sectional research design was used, and data collected from 410 employees sampled from Bungoma County. The research employed multiple regression method in the analysis. The study results reveal that, holding other variables constant, a male worker in Bungoma County earned KSh. 8,231.65 more than a female worker. The study also established that gender, education, age, marital status, work experience, religion and employer are important determinants of gender wage gap in Bungoma County. Given that the existing policy framework at national and county levels covers gender-based discrimination, increasing compliance with the policies would be necessary to bridge the wage gap. Additionally, short-term measures such as investing and promoting female education would contribute to reducing the wage gapItem Inflation Targeting and Its Effect on Food Price Volatility in Kenya(Kenyatta University, 2024-07) Wambui, Fredrick MeniInflation targeting was adopted by the Central Bank of Kenya in 2011 to control inflation and ensure price stability. Despite this strategy, Kenya persistently experiences volatile food prices, presenting substantial socioeconomic challenges. High and unpredictable food prices predominantly affect low-income households that allocate a significant fraction of their earnings on food. The study aims to add to the literature gap by investigating the efficacy of inflation targeting in stabilizing food prices within Kenya. Even though the Central Bank has met its inflation objectives over the past decade, it has found it challenging to mitigate recurring food price shocks due to various factors, including global commodity prices, exchange rate dynamics, climatic changes, and regional disputes. The research specifically delves into three primary objectives: assessing the contribution of food prices to Kenya's overall inflation, scrutinizing the influence of global food prices on domestic prices, and examining the impact of inflation targeting on food inflation. The research leverages secondary time series data from 2011-2022 sourced from Central Bank of Kenya, Kenya National Bureau of Statistics , and Food and Agricultural Organisation reports, encompassing parameters like the Consumer Price Index, exchange rates, food prices, and broader macroeconomic variables. This investigation employs a multivariate linear regression model in the STATA software. The findings reveal that inflation targeting, while meeting overall inflation objectives, has been less effective in curbing the volatility of food prices. The study suggests that to ensure food price stability, a broader approach incorporating additional policies is necessary. The findings of this study offer insights into supplementary policies required to safeguard food price stability in Kenya, highlighting the need to venture beyond mere monetary policies. The significance of this investigation is manifold. For policymakers, especially within the Central Bank of Kenya, it offers nuanced insights that can guide monetary and fiscal policies, acknowledging the layered complexity of food price dynamics. As volatility in food prices can reverberate through the socio-economic fabric of Kenya, affecting food security, farmers' incomes, and the general populace's welfare, these findings provide a roadmap for harmonizing strategies across monetary, fiscal, and trade domains. Investors and the business sector too can benefit, using the gleaned knowledge to navigate the labyrinth of food price instability and making sagacious financial choices. Furthermore, this study underscores the imperative of empirical analyses in emerging economies, which can act as touchstones for sculpting policies that aim at poverty mitigation and sustainable development.Item Financial Sources, Socio-Cultural Factors, and Government Regulation on Performance of Women-owned Manufacturing Enterprises in Kisumu County, Kenya(Kenyatta University, 2023-11) Otieno, Julia Adongo; Nelson H. W. WawireAbstractItem Effects of International Trade on Youth Unemployment in Kenya(Kenyatta University, 2023) Mwangi, Stanley Njuguna; James MaingiThe majority of Kenya's trade depict deficits with trade balances being in favour of her trading partners. The country's exports are subject to both fluctuating global pricing, which results in negative trade balances. The gains of international and bilateral trade are immense to Kenya since its independence particularly with the western allies. To facilitate trading activities in Kenya, the integration of Kenya into blocs like East African Community, the Common Market for Eastern and Southern Africa and African Continental Free Trade Area have contributed significantly to the growth and development of the economy. These blocs significantly contribute to Kenya’s trade volumes. The core of Kenya's export sector is the agricultural sector. Almost a quarter of the country's productivity comes from agriculture and related industries where Kenya's two main exports are horticulture goods and tea. However, the country has persisted in posting high unemployment levels, particularly among the youth. The latest census data demonstrated that more than a third of Kenyan youth are unemployed while World Bank data indicates, in comparative terms, that Kenya youth joblessness is the highest in East African States. In fact, Kenya is one of the nations in the region with the biggest discrepancies between youth and adults in terms of employment rates. This study empirically analysed how Kenya's liberalization of international trade affects youth unemployment for the last three decades. The specific objectives of the study were to analyse the effect of imports and exports on youth unemployment in Kenya. Non-experimental research design was used and conclusions and recommendations were presented based on the study outcomes. The findings showed that exports had a negative and substantial effect on youth unemployment, while imports had a negative and insignificant effect on Kenya's youth unemployment. The findings further indicted that youth unemployment depicts a positive relationship with the level of gross domestic product (GDP) as well as the level of trade liberalization or openness to international trade and are all statistically significant. In order to reduce youth unemployment, policymakers should tap into the local talent through improvement of skilled labour among the youth through targeted trainings and focusing on technological transfer as opposed to outsourcing or opening up the job market to the outside world.Item Relationship Marketing Strategies on Customer Retention the Postal Corporation of Kenya, Nairobi Region , Kenya(2023-06) Oduor, Consolata Adhiambo; Chrispen MaendeItem Effect of Interest Rate Capping on the Performance of Non-Banking Financial Institutions in Kenya(Kenyatta University, 2023-11) Rasare, Caroline Auma; Joseph KinyajuiItem Growth Strategies and Performance of Cement Manufacturing Firms in Kenya(Kenyatta University, 2023-07) Munyasya, Roselyne Kavata; Stephen M.A. MuatheeItem Effects of Road Improvement on Users Costs and Safety of Road Users(Kenyatta University, 2023-06) Njagi, Antony Murithi; Forah ObeboItem Effects of Diaspora Remmittances on Economic Development in Kenya(Kenyatta University, 2023-11) Issack, Fartun Adan; Charles NzaiItem Effects of Collective Action, Agency and Access to Productive Resources on Performance of Women-Owned Manufacturing Enterprises in Selected Counties, Kenya(Kenyatta University, 2023-11) Achungo, Faith Tsuma; Nelson H. W. WawireIn boosting manufacturing in Kenya, Micro, Small and Medium Enterprises are imperative. Moreover, enterprises owned by women constitute 93 percent of informal enterprises whereby only 17 percent do manufacture. Further, manufacturing currently contributes 7.54 percent to Gross Domestic Product. It falls short of Big Four Agenda’s target of 15 percent and the 10 percent per year incremental target as per the Vision 2030. Stakeholders including the government have advanced initiatives so as to promote Micro Small and Medium Enterprises by providing affordable loans and developing policies to help them thrive. Despite these efforts, there is sluggishness in the way manufacturing enterprises owned by women perform. This sluggishness in performance of these enterprises could be due to the effects of unique factors, such as collective action, agency, access to productive resources and other variables, on the enterprises. This study’s objectives were therefore to: determine the effect of collective action on performance of women-owned manufacturing enterprises; analyse the effect of agency on performance of women-owned manufacturing enterprises; and investigate how access to productive resources affect the performance of manufacturing enterprises owned by women. The study acquired primary data from interviewing 55 women who owned such businesses that were selected through simple random sampling technique and a structured questionnaire administered. This data was complimented by published data from government policy documents. Descriptive statistics, correlation and regression analyses were carried out using STATA software. This was done to establish the degree to which collective action, agency and access to productive resources influenced how women-owned manufacturing enterprises performed in Kenya. Spearman’s Rank correlation analysis established that collective action and agency were both strongly and positively correlated with the performance of women-owned manufacturing enterprises. This was further investigated through regression analysis and it was found that collective action and agency had positive effects on performance of those enterprises. However, access to productive resources was found to negatively correlate with these enterprises’ performance as established through regression. The study therefore recommends that women manufacturers should embrace networking through belonging to a group(s) or business organization(s) such as Women in Business, Kenya Association of Manufacturers, Women in Manufacturing among others. The other variable found to positively affect performance was agency, captured as independence of the woman entrepreneur in decision-making. Therefore, the study suggests that business organizations and Non-Governmental Organizations should provide training and mentorship to men and women on the importance of women entrepreneurs having independence in decision-making.Item Trade Liberalization and Female Employment in East African Community(Kenyatta University, 2023-11) Mwangómbe, Jostina Wawasi; Charles GachokiAccording to the United Nations, just 47 per cent of women of working age participated in the labour market in 2020, compared to 74 per cent of men, a gender gap that has been essentially stable since 1995. More so, although there have been significant changes in the Gross Domestic Product and trade structure, structural changes in employment have been negligible in Sub-Saharan Africa and particularly in The East African Community. Despite being above the Sub-Saharan Africa average female Employment to Population, all the East African Community member states who are the focus of this study have had a declining Employment to employment-to-population ratio. The primary goal of this study is to look into the impact of trade integration on gender outcomes in the East African Community. This was achieved by combining the Phillips and Okuns law to link the relationship between unemployment and its direct and indirect variables. Annual panel data between 2000 to 2021 was utilised. Panel unit root test was carried out to determine stationarity, and the Hausman test was used to determine between random and fixed effect models. The results show that Trade openness has a depressing effect on the share of women employment in the agricultural sector and a positive effect on the share of female employment in the services sector. This trend could be explained by the closeness of the sectors meaning that female workers do not need a new set of skills to move between the agricultural and services sectors. For women to take advantage of job opportunities in the services sector that improve inequality there is a need to reskill women so that they can take advantage of higher-level job opportunities in the services sector.Item Effect of Cost of Doing Business on the Formalization of Businesses in Kenya(Kenyatta University, 2023) Gathumbi, Lilian Wangari; James MaingiThe informal sector has been growing at a higher pace than the formal one in the last three decades. A large informal sector is undesirable because it does not pay tax, it faces a lower cost of business which leads to unfair competition and is not protected by the legal framework provided by the state. Over the years, the government of Kenya and policymakers have come up with measures to encourage the growth of the formal sector such as making business registration cheaper, easier, and more attractive; rationalizing business licenses, and creating a good business environment. These measures have been intended to increase the growth of the formal sector, which is more productive and provides more decent jobs. However, despite these efforts, the growth of the formal sector has been slow compared to the informal. According to various Kenya Economic survey reports, the sector has been increasing over the years with over 80 percent of all the new businesses formed being in the informal sector. The goal of this study was therefore to find out the cost of doing business on the growth of the formal and informal sector in Kenya. The objectives were to: find out the sectoral distribution of the formal and informal enterprises in Kenya, to investigate the effect of the high cost of electricity, licenses, and taxes on the cost of doing business on the growth of the formal and informal sector in Kenya. The study utilized the secondary cross-sectional household survey data gathered by the Kenya National Bureau of Statistics in 2016. Descriptive analysis was used to find out the sectoral and sub-sectoral distributions of firms while the second objective was answered using a logit model. The sectoral and sub sectoral distribution found that majority of the businesses were in the wholesale, retail and motor vehicle repair. Furthermore, it was found that the cost of credit and formality were negatively related, but positively related with the costs of electricity, rent, taxes and licenses. The conclusion was that high cost of business impacts the formalization of businesses in Kenya. The research recommends reduction of cost and improvement of business environment constraints that hinder business formalization. Since low education and business size contributed largely to businesses becoming informal, the government should enhance higher education opportunities for its citizens and provide training opportunities to small businesses to educate them on how to improve on their competitiveness.Item The Interplay between Military Expenditures and Economic Growth: The Case of East African Economies(Kenyatta University, 2023) Kimaita, Stanley Kinoti; Mdoe Idi JacksonOver the years, the East African Community (EAC) has experienced tremendous growth in defense spending in the advent of rising violent cross-border and domestic terrorism. The member states reported a cumulative rising share of their military expenditure in the total global military expenditure from 8.3% in the 1960s to 27.5%, in 2020. Concurrently, with a diminishing share of their global GDP from 30.7% to 21.5%. African share in the global military expenditure has revealed a 70% upsurge in the period 1970 - 2020. Irrefutably, peace and continued sustainable economic development are the prime agenda of all EAC countries. The continuous growth in military spending presents a new economic challenge as it competes against other public sector needs whose importance cannot be underscored. Using a mix of empirical strategies, this study sought to verify whether defense spending impacts economic growth in the case of the seven (7) EAC countries since their independence (1960 - 2020). This study aimed at complementing existing literature by further examining the effect of military expenditure on economic growth using the Engle and Granger (1987) two-step cointegration analysis to elucidate their long-run equilibrium relationship and the Granger tests to establish the direction of causality. The study relied on the Stockholm International Peace Research Institute (SIPRI) annual data between 1960 - 2020 to collate military expenditure estimates, World Development Indicators (WDI), and the EAC Information Repository to collate data on economic growth. Founded on the empirical findings and the analysis, the study concluded that the EAC is a diverse region with varying levels of economic development. The results from the statistical analysis indicate that the countries included in the study exhibit variations in their GDP and military expenditure. Further, there is a one-way causal relationship between GDP and military spending in Tanzania, Burundi, Rwanda, and Congo (COD), but a two-way causal relationship between GDP and spending on defense in Kenya and Uganda. This implies that rising military spending in these nations follows economic development, with Kenya and Uganda having a favorable effect on economic growth