Technical Efficiency Analysis of the Kenya Agro-Processing Industry
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Date
2016-05
Authors
Ndicu, N. Simon
Ngui, D. Muchai
Gachanja, P. Mwangi
Journal Title
Journal ISSN
Volume Title
Publisher
The International Journal Of Business & Management
Abstract
This study sought to provide empirical evidence on technical efficiency levels and trend of the Kenya Agro-processing
industry. The major problem of the industry is that it has been under performing in terms of value addition and Kenya is
known to be a net exporter of primary agricultural produce instead of high-quality value-added products. This study sought
to determine the efficiency estimates of the industry and analyzed the trend in efficiency changes. Panel data covering three
years (2011, 2012, and 2013) for 41 firms in this industry was collected from the Kenya National Bureau of Statistics
(KNBS). Econometric production frontiers were estimated in each period. The findings showed that the industry had an
overall efficiency score of 44 percent. The efficiency score was distributed as 53 percent, 60 percent and 57 percent for the
food, beverage, and non-food subsectors. This study concluded that an average 56 percent technical potentiality was not
achieved by the industry in the period 2011, 2012 and 2013. This study recommends that the policy export promotion of
locally processed products of the Kenyan government should be complemented with an industrial policy that enhances the
technical efficiency of local exporting firms to increase international competition of Kenyan manufacturers.
Description
A Research Article in the The International Journal Of Business & Management
Keywords
Efficiency measure, Agro-processing, Stochastic production frontier function, Decision making unit
Citation
Ndicu, N.S., Ngui. D.M. and Gachanja, P.M. (2016): Technical Efficiency Analysis of the kenyan Agro-processing Industry. The International Journal of Business and Management, 4:5 Pp. 100-109.