PHD-Department of Applied Economics

Permanent URI for this collection

https://repository.ku.ac.ke/handle/123456789/470

Browse

Now showing 1 - 20 of 38

Innovation Capability and Growth of Micro and Small Enterprises in Kenya
(Kenyatta University, 2019-04) Njiraini, Peter Gachanja
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
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.
Intensity of research and development expenditure, impact of firm-level innovation, and productivity growth of the Kenya national innovation system
(Kenyatta University, 2023) Ndicu, Simon
Since the 2010s, Kenya has embraced and invested in Science, Technology, and Innovation as the key driver of economic development and firm productivity. The strategies include establishing a National Innovation System in 2013, education reforms, and incorporating Science, Technology, and Innovation in policy goals like the Kenya vision 2030. Subsequently, efforts by Kenya to invest in Science, Technology, and Innovation have led to its categorization among the leading innovation hub in Sub-Saharan Africa. Even with these innovation efforts and achievements, Gross Domestic Product growth and the performance of manufacturing and services remained below the 2022 target. This-notwithstanding, manufacturing and services firms’ Research and Development spending and innovation remained low during the 2015-2017 study period. In the context of this inconsistency, this study investigated the drivers of a firm’s Research and Development expenditure intensity, the impact of firm-level innovation on firms’ productivity, and productivity growth of the Kenya National Innovation System (2010-2018). The study utilized secondary cross-sectional data from the 2018 World Bank Kenya Enterprise Surveys and balanced panel data (2010-2018) from the World Development Indicators Data. Sample selection model, treatment effects models, and Data Envelopment Analysis were used as estimation methodologies. The results revealed that usage of innovation labs/hubs would increase propensity by 27.7% and reduce intensity by KES 27. Employee training on the innovation process increased propensity by 52% and reduced intensity by KES 29. Innovation partnership increased propensity by 45% and reduced intensity by KES 36. Further results indicated that only product/service innovation significantly impacted the firms’ productivity out of the four measures of firm-level innovation considered. Process innovation, Research and Development propensity, and Intellectual Property Rights ownership did not matter significantly to a firm’s productivity. Lastly, the results indicated that Kenya's National Innovation System was among Africa's most productive and efficient National Innovation Systems. However, it lagged in terms of technical progress. These results indicate that, at the firm level, the total gain from innovation was not realized, and at the national level, innovation was more profound. These results imply that the institutions in charge of Kenya National Innovation System, i.e., KENIA, NRF, and NACOSTI, need to re-evaluate firm-level innovation strategies to ensure maximum innovation gains are realized. Second, monitor and evaluate knowledge flow and sharing among the government industry and academia. Lastly, encourage innovation partnerships, training of employees on the innovation process, and champion for the establishment of innovation hubs to enhance firm-level research and development expenditure and innovation.
Nexus between Corruption, Government Expenditure and Economic Growth in East African Community Member States
(Kenyatta University, 2021) Mogeni, Evans Geoffrey; George Kosimbei; Kennedy N. Ocharo
The pursuit of sustainable economic development amidst corruption has become a fundamental challenge for most economies globally and East African Community states are not exceptional. East African Community states are ranked among the most corrupt countries globally. The region is characterised with ever increasing government expenditure, high fiscal deficits and retarded economic growth. Individual countries in the region have failed to attain and sustain an average of 7% per capita economic growth rate to fast-track the set Sustainable Development Goals and African agenda 2063. This necessitated a study to investigate the nexus between corruption, government expenditure and economic growth in East Africa Community states using the three indicators of corruption. Specifically, the study established the determinants of corruption, effect of corruption on government expenditure and economic growth in East African Community states. The study employed non-experimental research design using extended Becker theory of crime and Augmented Solow model of growth. In establishing the nexus, the study employed system generalized methods of Moments estimation technique. The results revealed that corruption is determined by the following variables: economic growth, government effectiveness, capital formation, Gini index, inflation, political stability, human capital and political stability. The study confirmed that for all corruption indicators there was a positive relationship between corruption and government expenditure. A positive affiliation between government expenditure and economic growth was also established. To establish a nexus between corruption and economic growth, all corruption indicators showed a negative liaison. It is thus recommended that respective East Africa Community states should promote and implement institutional reforms such as reforming the entire justice systems to ensure government effectiveness, rule of law and enhanced accountability. They region Governments should not only establish independent agencies to monitor and track government expenditures, but also put in place prudent fiscal policy measures that promote stable and high-rate of economic growth.
Utilization of Mobile Money Services in Enhancing Household’s Financial Resilience and Performance of Micro and Small Enterprises in Kenya
(Kenyatta University, 2021) Kirui, Evans; Joseph Muchai Muniu; Perez O. Onono
Developments in financial innovations in Kenya has seen financial access gap drastically reduced. Specifically, mobile money has offered huge potential in boosting financial access in Kenya. As a result, 83 percent of Kenyans have been formally included into the formal financial system. This was expected to positively impact households‟ resilience to financial shocks and performance of Micro and Small enterprises in Kenya in terms of ease of financial access and transactions costs. On the contrary, at least 36.2 percent of households in Kenya experienced financial shocks and were unable to recover. In terms of performance of micro and small enterprises, majority of them continue to face challenges related to high levels of financial services exclusion and other bottlenecks in attempt to access credit. The key question was therefore on whether utilization of mobile money services has any effects on household resilience to financial shocks and performance of Micro and Small Enterprises in Kenya. Past studies on the effects of utilization of mobile money services on household financial resilience had not focused on all facets of mobile money utilization which included receiving payments, borrowing and saving money. None of the reviewed studies analyzed the effects of utilization of mobile money services, as defined in this study and majority of the studies in Kenya mainly focused on major towns leaving out rural areas where mobile money is being heavily relied on. This study analyzed the effect of utilization of mobile money on household resilience and small and microenterprise performance in Kenya. Specifically, the study established the determinants of utilization of mobile money services by households and small and medium enterprises and analyzed the effects of utilization of mobile money services on household financial resilience to shocks and performance of micro and small enterprises‟ in Kenya. The study used 2016 Micro, Small and Medium Enterprises establishment data set by Kenya National Bureau of Statistics and 2019 FinAccess data set. Heteroskedastic probit models were estimated for determinants while endogenous switching regression model and propensity score matching estimation techniques were used to analyze the effects of utilization of mobile money services. The findings indicated that household size, level of dependency, age, average transport cost to the nearest mobile money agent, residence, group membership, marital status, education and mobile phone ownership determined utilization of mobile money services by households in Kenya. Households that utilized mobile money services were found to be more financially resilient than those who did not. In the case of the small and microenterprises, the results showed that group membership, sex, credit access, education, mobile phone ownership, radio ownership, registration of business, number of business units and total number of employees determined utilization of mobile money services. On average, the monthly firm income was shown to increase when an enterprise utilized mobile money services than when it does not. The study recommended the need for the government to design supportive policies that would scale up the utilization of mobile money services to more financially excluded households and MSEs in Kenya.
Effects of Value Added Tax Reforms on Household Welfare and Collection Efficiency and the Determinants of its Compliance Gap in Kenya
(Kenyatta University, 2020-01) Omondi, Francis
The study evaluated the Value Added Tax reform process in Kenya, and established its effect on welfare of households and collection efficiency of Value Added Tax. In addition, the study estimated the Value Added Tax gap in Kenya and evaluated its determinants. The study made use of the Quadratic Almost Ideal Demand System model to assess the effects of Value Added Tax reforms on household welfare, Value Added Tax efficiency was measured using the Collection-Efficiency model and Value Added Tax gap was estimated using the International Monetary Fund Revenue Administration- GAP model. Secondary data was used from the year 2015/16 Kenya Integrated Household Budget Survey, whereas data on value added tax revenue, final consumption, Gross Domestic Product, was obtained from Statistical Abstracts, Economic Surveys, Kenya Revenue Authority and World Bank Data base. The study found the VAT reforms in Kenya to have led to decline in welfare of households, since the uncompensated price elasticities for all the selected ten food items were found to be negative; tea leaves, sugar, beans, salad, white-bread, rice, cooking fat, spices, soda, maize, which was an indication that consumers would respond to increase in prices of the commodities by cutting down their expenditure on them. Further, coefficients of eight out of the ten food items exhibited positive expenditure elasticities; sugar, beans, salad, white-bread, rice, cooking fat, soda, and maize. The results demonstrated that households were under consuming these commodities and required either a reduction in their prices or income compensation to consume more, this was another pointer of decline in welfare of households as a result of VAT reforms in Kenya whose net effect was general increase in price levels. The tax reforms were found to have significantly improved VAT collection efficiency but also contributed to widening of VAT compliance gap in Kenya. The ARDL model run to estimate the determinants of VAT compliance gap obtained the following results; standard VAT rate (0.097), VAT reforms (0.150), number of VAT rates (-0.022), manufacture value added growth (0.032), population growth (-4.91), import as a percentage of GDP (0.066), final consumption as a percentage of GDP (-0.122), and export as a percentage of GDP (-0.087), all significant at one, five and ten percent levels. These results revealed that tax evasion and avoidance were quite rampant in Kenya and also laxity on the part of Kenya Revenue Authority to effectively collect VAT revenue. This study will be useful for future policy formulation in Kenya and in designing more effective tax reforms with consideration to welfare of households by the National Treasury, Kenya Revenue Authority and Scholars.
Effects of Prudential Capital Regulations on Systemic Risk and Financial Stability in the Banking Sector in Kenya
(Kenyatta University, 2020-02) Kinuthia, Isaac Kimunio
The prudential regulation's main objective is to mitigate financial instability's threat and macroeconomic costs. In the last decade (2007 to 2018), the banking sector in Kenya has expanded rapidly, making some banks operate within thin capital margins, while others have begun regional operations exposing themselves to cross-border country risks. The country needs to be cautious about risks to the financial system and spillovers of these risks to the economy. The aim of this research was to analyse the effect of the implemented prudential capital regulations policies on systemic risk and financial stability in Kenya. The first objective of the study was to analyse how prudential capital regulations policies can effectively curb financial risks in Kenyan banks. To achieve this objective, the dynamic Generalized Method of Moments model was estimated. The results suggest that banks with capital adequacy ratios, either above or below the applicable regulatory minimum limits, have reduced portfolio risk of assets in response to stringent risk-based capital requirements. It may be impossible to implement effective capital regulations where transparency, deterrence and accountability are very weak. Therefore, the Kenyan government must fix the vulnerabilities that remain in the institutional environment in order to ensure the effectiveness of regulatory capital requirements. In addition, bank capital is a required but insufficient prerequisite to stab a bank. The second objective was to investigate the impact on financial stability in Kenya of the existence of foreign banks. The analysis found a double result, i.e. the lower or higher financial strength for international capital-owned banks than for all the country's banks. The analysis used the regression of binary logits. The findings indicate that there is no substantial direct link between the share of foreign banks and stability in the banking sector in Kenya; rather, financial stability depends on the credit policy of banks and their balance sheet structures, regardless of ownership form. Positive macroeconomic development drives Kenya’s financial stability, increase foreign banks penetration, and encourages them to expand through aggressive credit policies. The findings suggest that it is the conditions of the host country that affect the stability of foreign-owned banks, which implies that they have to react to local conditions. The success of foreign banks is same as the success of the host country. The study analysed objective three by investigating the effectiveness of prudential capital regulations on Financial Stability using panel vector autoregression model. The research results indicate the importance of capitalization of the banking system in ensuring financial stability that can be used to shape and size the policies being applied. To increase transparency, regulatory and supervisory authorities need specific guidelines to maintain financial stability. Including mitigation of systemic risks should be viewed as an explicit goal for the concerned central banks and regulators. The purpose of the study was to shed some more light on the effectiveness of the implemented prudential capital regulations policies.
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.
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.
Participation in microfinance and its effects on household welfare and performance of micro and small enterprises in Kenya
(Kenyatta University, 2018) Obebo, Forah Mokua
The development of microfinance in Kenya is seen as a catalyst for promoting household welfare and performance of micro and small enterprises (MSEs). Through various policy frameworks, the sub-sector has recorded considerable increases in; microfinance gross lending, usage of informal microfinance and the number of licensed microfinance banks. Despite these developments, households continue to face low levels of welfare while MSEs continue to suffer from high levels of financial exclusion and shortage of operating funds. This contrasting scenarios raise policy questions on whether participation in microfinance has effects on household welfare and performance of MSEs. Past studies on Kenya demonstrated that participation in microfinance had positives effects on household welfare and MSE performance. However, such studies did not account for the distributional effects of participation in microfinance and also, the studies only focussed on a small area. In addition, there is need to account for microfinance developments that have taken place in the last decade. In light of this, the purpose of the study was to determine the effect of participation in microfinance on household welfare and performance of MSEs in Kenya. To address various objectives, the study used the 2016 FINACCESS dataset. Analysis of the determinants of household participation in microfinance was done using a heteroskedastic probit while the effect of household participation in microfinance on household welfare was estimated using the endogenous switching regression model. The determinants of MSE participation in microfinance was assessed using the probit model while the effect of MSE participation in microfinance on MSE performance was estimated using propensity score matching model. From the results, the key determinants of household participation in microfinance were; residence, age, household size, vulnerability level, financial literacy and gender. In the case of MSEs, the key determinants of participation included, age, financial literacy level, numeracy level, possession of business permit, age of firm and number of employees. On welfare, the results showed households increased their annual per capita expenditure by Kshs 28,713 when they participated in microfinance. In addition, welfare levels were higher among female-headed households than male-headed households. Also, the welfare effects generally increased with increase in wealth quintiles. On MSE participation, annual firm income increased by Kshs 36.660 when a firm participated in microfinance. Further analysis revealed that, participation in microfinance had an impact on male-owned firms only, firms aged 2 years and below and firms whose owners were above 34 years. From the results, it’s recommended that the government should enact policies that would increase participation in microfinance by both households and firms. This may be through scaling up financial literacy programmes, extending microfinance outreach to the rural areas and women.. To increase MSE performance, the government should encourage acquisition of permits and licences. Finally, policy should address obstacles that hinder youth and women-owned firms from benefiting from microfinance.
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.
Trade liberalization and performance of the manufacturing sector in Nigeria
(2017-11) Kanang, Amos Akims
International trade has broadened possible opportunities available to countries for upgrading economic activities, including the development of manufacturing. Since the late 1980s, Nigeria has progressively pursued trade liberalization which has significantly exposed manufacturing activities to the international market. The goal was to raise the GDP share of manufacturing, share of manufactured exports in total merchandise exports, and manufacturing sector capacity utilization to 25 per cent, 8 per cent, and 60 per cent respectively by 2010. However, the GDP share of manufacturing remained at 9.69 per cent in 2015, share of manufactured exports in total merchandise exports was 2.92 per cent in 2015, and level of capacity utilization in the sector stood at 53.6 per cent in 2015. Therefore, concerns arise as to what the effect of freer trade is on performance of manufacturing in Nigeria. This study sought to analyze the effects of trade liberalization on performance of the manufacturing sector in Nigeria by specifically determining the effects on firm productivity, exports, and competitiveness. To address the specified objectives, the study made use of the quarterly firm-level data from the survey of manufacturing industry in Nigeria for the period 2008 to 2010. The data reported information for firms in organized cohorts based on their location, industry activity and size characteristics. Appropriate Fixed Effects and Random Effects estimation techniques were employed for the analysis. The results obtained are indicative of the position that whereas the import aspect of trade liberalization impedes productivity, the exports component enhances productivity. Thus, measures aimed at encouraging exports would be relatively more effective in improving productivity. Also, the findings show that higher productivity does not influence the decision on whether or not a firm would participate in exports, but higher productivity increases the share of exports in total sales for firms that are already participating in foreign markets. Furthermore, the results provide some evidence on the import discipline effect of trade liberalization thereby attesting to the notion that trade liberalization is a channel through which the competitiveness of firms in the manufacturing industry in Nigeria can be improved upon. Based on the findings, it is important that the government engages in more bilateral and multilateral trade negotiations, and establish certification centres across the country to expand exports. Also, it is necessary that the Nigeria Export Processing Zones Authority continue the expansion of free trade zones to encourage exports of local produce.Additionally, exporting firms should invest in the development of their human capital to improve the productivity of their employees towards increasing their share of exports in total sales. These measures are essential if trade liberalization is to enhance performance in the manufacturing sector in Nigeria
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
Out-Of-Pocket Payment for Healthcare and Its Effects on Household Welfare in Rural and Urban Areas of Kenya
(Kenyatta University, 2017-06) Rono, Gladys Jelagat
Good health plays an important role in boosting economic growth, poverty reduction and the realization of social goals. However, the Survey of Health Care Utilisation and Expenditure of 2013 found that the high cost of health care was one of the major reason cited by households for not seeking health care. Moreover, out-of-pocket (OOP) payment for healthcare is the main source of health care financing in Kenya. OOP spending on outpatient care and inpatient services accounted for approximately 78 percent (KShs 48.4 billion) and 22 percent (KShs 13.7 billion) respectively of total household health expenditures. The consequences of OOP are regressive: they lead to catastrophic financial payment and impoverishment, especially among the poor and are a barrier to health care utilization. Regional differences in the incidence of poverty exist in Kenya, where 50.5 and 33.5 percent of rural and urban areas are poor. The objectives of this study were: to investigate the incidence of OOP payment for health care among different economic groupings; establish the level of inequity of OOP health expenditure among different economic groupings; examine the determinants of catastrophic OOP, establish the effect of catastrophic OOP payments for healthcare to households’; find out the households coping mechanism to OOP payments for healthcare. Household Survey data of Health Care Utilisation and Expenditure of 2013 was utilized by the study. Logit regression was estimated to predict the probability of catastrophic health expenditure in respect to the selected background indicators. This included social, economic and demographic indicators. To measure impoverishment due to OOP, two methods were adopted: poverty headcount and poverty gap. Engel curves were estimated to analyze the coping mechanisms to catastrophic health care expenditure. The results of the study showed that the poorest households in the rural and urban areas had the highest number of households experiencing catastrophic health expenditures than urban households. However, the burden of OOP payment for healthcare fell more on the rich. The results also showed that household size, income, mission hospital, and age of household member below 5 years, accidents/injuries, sex of household head, age of above 50, chronic illness, malaria, disease of respiratory, type of hospital, insurance status, and income were the factors determining catastrophic health care expenditure. The effect of OOP payment for healthcare on poverty head count was higher in urban areas than in rural areas. In addition, the average amount by which people go below poverty line because of OOP payment for healthcare, increased more in the urban areas compared to rural areas. Lastly, the results of the study showed that households were not able to smoothen their non-medical consumption in an event of catastrophic health care expenditure. From the findings of the study, there is need for the governments at both national and county levels to design health financing system that will protect poor households from catastrophic health payment. One way is to provide health insurance for the poor households.
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.
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.
Household Consumption of Medicinal Plants. A Case Study of Kakamega Forest in Kenya
(Kenyatta University, 2016-08) Ombok, Maurice Ochieng
Herbal medicine, commonly referred to as alternative medicine, has been treated with a lot of skepticism among the conventional medicine practitioners. It has been described as inferior to conventional medicine with no proven safety and efficacy, perhaps only associated with rural areas where conventional medicine is not easily accessible. Thus, with economic progress and advancements in conventional medicine, one would expect decline in herbal medicine consumption. In Kenya, 70% of the population is dependent on herbal remedies for their ailments. This is against a backdrop of improved access to conventional medical facilities, attributable to increasing sector development expenditure. Therefore, this thesis sought to analyse the factors that influence herbal medicine consumption by univariate logit approach; establish joint consumption for both conventional and herbal medicine by bivariate probit approach; estimate economic value of herbal medicine by Willingness-To-Pay approach and; establish herbal consumption relationship to herbal medicine availability in Kakamega forest by qualitative analysis. Overall, the thesis makes contribution in terms of both literature and methodology. Results showed that consumption of conventional medicine and herbal medicines were indeed inter-dependent. This decision was influenced by gender, education, price of conventional medical treatment, distance to medical facilities, and health insurance cover. Kakamega forest herbal medicines were found to have an economic value. Herbal medicine cultivation influenced 72 percent of the total economic value. Herbal medicine biodiversity was found to be declining due to over-harvesting for consumption. This was influenced by wild exploitation from the forest. The policy implication of these findings is that, herbal medicine remains important but its efficacy should be verified and regulated to protect consumers. In the short and medium term, the government should provide well targeted subsidies on medical services to eliminate the dangers of consumers falling into the traps of unscrupulous providers of unproven herbal remedies. To harness their economic value and reduce wild exploitation, the government and non-governmental organizations should implement incentives that will encourage production of herbal medicines with proven safety and efficacy. This could be tenable by monitoring wild exploitation and developing herbal inventory.
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.

Browse

Recent Submissions