MDF Theses and Dissertations

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Analysis of critical success factors for Health Public-Private Partnerships: a case of the Managed Equipment Services (MES) in Narok County
(Strathmore University, 2020) Miseda, John Opudo
Health Public Private Partnerships (PPPs) have increasingly gained popularity as governments worldwide are seeking interventions to manage the ever-increasing cost of healthcare and foster development goals while harnessing private sector efficiencies. While most health PPPs have recorded a high success rate in developed nations, there is little evidence of success in relation to Low- and Middle-Income countries which are marred by complex challenges inherent in healthcare industry thereby imposing challenges to achieve their intended goals. This research focused on the Critical success factors (CSFs) for health PPP in this case Managed Equipment Services (MES), a Partnership between the government of Kenya and private companies to provide specialized medical equipment to County governments’ hospitals. Past studies reviewed in the literature focused on different health PPP models across different jurisdictions and indicated that Political goodwill, Contract Agreement, Stakeholder Involvement, Expertise, Human Resource, and Innovation were CSFs. However, these factors are unique and are not easily replicated into other jurisdiction, health PPP models, or sectors and it is against this backdrop that the current research seeks to analyze which factors are critical for MES in Narok County. The researcher conducted Key Informants Interviews of PPP experts and administered questionnaire to Sub-County and County Health Management Teams in Narok County. The Spearman rank correlation was used to measure the correlation of CSFs under review while qualitative content analysis was inductively done to come up with overarching themes on the CSFs. Among the factors tested, Political Goodwill, Contract Agreement, Stakeholder Involvement, and Expertise were found to be critical for the success of MES and exhibited a positive correlation with each other. The key recommendations of the study were employing these CSFs and strengthening PPP framework to guide on procedures and rules that govern the implementation of health PPP at the County level.
An examination of the drivers of uptake of microcredit services by customers: the case of South Sudan Microfinance
(Strathmore University, 2020) Manyuon, Daniel Athior Atem
The study examined utilization of microcredit from South Sudan Microfinance institution at the group and individual levels to minimize poverty in South Sudan. This has been intended to determine the effects and what drives various persons to seek for microcredit. In so doing, three main objectives were used which included to examine; the levels of uptake and effect of microcredit on the households’ income and savings; the drivers for the uptake of microcredit and assess interventions of South Sudan Microfinance Institution (SUM) and Government of South Sudan in enhancing the uptake of microcredit as main stakeholders. Financial intermediary and stakeholders’ theories were used together with a pragmatic approach to underpin the study. Therefore, qualitative and quantitative methods were used to collect the data from this descriptive case study with a sample size of 400 participants. These methods included interviewing and administering questionnaires. Qualitative data were descriptively analyzed to suit the themes under the study objectives. Quantitative data were coded and entered the Scientific Package for the Social Scientists (SPSS). The analysis was done by the t-test to establish the differences in minimizing poverty among groups and individual borrowers. ANOVA was also used to analyze the drivers and the extent to which stakeholders’ approaches have been essential to the borrowers. The mean results indicate a high difference in effects among the group borrowers in comparison to an individual. The findings also show that the household drivers are significant differences but institutional drivers remain significant to all borrowers. It is also indicated that drivers used like grace period and interest rates are friendly to most poor women. The study concludes by recognizing efforts made by SUM for having been one of the best intermediaries between the people and commercial banks so that those outside the criteria of such financial institutions can also access microcredit. Upon this, the study recommends continued working with the government so that it can establish more branches in rural areas to enable poor people to access credits and employ the citizens.
Influence of interest rates determinants on the quality of credit portfolio offered by commercial banks in Kenya
(Strathmore University, 2020) Ombito, Brian Chitala
The quality of credit portfolio influences the ability of commercial banks to lend to its customers in a sustainable manner. While managing the quality of credit portfolio for commercial banks remains a challenge, the issuing of loans and advances is critical to most commercial banks’ performance around the globe. Interest rates determinants affect the quality of credit portfolio offered by commercial banks. The main objective of this study is to analyse the influence of interest rates determinants on the quality of credit portfolio offered by commercial banks in Kenya. The study sought to answer the questions on whether interest rates determinants of total savings, cost of savings, operational costs and capital adequacy influence the quality of credit portfolio offered by commercial banks in Kenya. The study was guided by the Loanable fund’s theory, Keynes liquidity theory and Classical theory of interest. The positivist research philosophy was used for this study and a causal research design is adopted. Quantitative data was extracted from the financial statements of commercial banks for the period ranging from 2009 to 2018 with the population covering 40 commercial banks. The data was analysed using descriptive and inferential statistics which included mean, standard deviation, regression analysis. The findings of the study indicate that interest rates determinants of total of savings, cost of savings, capital adequacy and operational costs have a significant influence on quality of credit portfolio offered by commercial banks in Kenya. The study found out that among the interest rates determinants, capital adequacy had the greatest effect on the quality of credit portfolio offered by commercial banks in Kenya, followed by total savings then operational costs while cost of savings had the least effect to the quality of credit portfolio offered by commercial banks in Kenya. The study recommends that the government, through the Central Bank of Kenya should be instrumental in developing policies and regulations to guide commercial banks in setting up of optimal interest rate spreads in order to promote loan uptake as well as improve performance of these commercial banks. Increased loan uptake will lead to growth in the economy of the country. The study recommended banks should increase the amount of core capital since measure of capital adequacy showed that banks with high capital adequacy ratios perform better financially.
The Determinants of U.S. coffee import volumes from Uganda under the African growth and opportunity act, 2000 (AGOA): a disaggregated product level approach
(Strathmore University, 2020) Olila, Gabriel
Research on AGOA’s impact is largely scanty and findings are mixed. Most prior studies on AGOA have been carried out at a high degree of aggregation, estimating its effects on overall bilateral export flows, relying on variation by country and year that masks important differences across products. Born of a recommendation by the AGOA Response Office of Uganda, this study took a disaggregated product level approach to investigate the determinants of U.S. coffee import volumes from Uganda under the African Growth And Opportunity Act, 2000 (AGOA). Using an augmented gravity model, a random effects regression was performed on a disaggregated data panel of U.S. Coffee import volumes from Uganda that spanned the years 1994–2018 to establish; the main factors influencing the volume of U.S. coffee imports from Uganda and the effect of AGOA on U.S. coffee imports from Uganda. Artificial Neural Network (ANN) analysis was used to predict the future U.S. coffee imports from Uganda for the foreseeable future of AGOA, that is, till 2025. The main determinants of U.S. coffee imports from Uganda were found to be; air traffic, AGOA membership, U.S. openness to trade plus climatic factors like global CO2 emissions and the mean surface temperature in Uganda. AGOA had a negative effect on total U.S. coffee imports from Uganda, however, the variety of coffee products imported by the U.S. from Uganda seem to have increased post-AGOA. U.S. coffee imports from Uganda were predicted be somewhat erratic between 2019-2025 but trend upwards. This study recommends that; firms should enter into more sophisticated and specialty coffee products with AGOA-status and take special care of climatic factors; policy makers should accelerate market positioning, branding, productivity and value-chain enhancement policies for coffee; researchers should investigate the effect of climatic factors further towards developing climate resilient varieties of coffee plus explore the effects of AGOA on other commodities so as to better exploit the provisions of AGOA
The influence of business group factors on the financial performance of informal micro retail enterprises in Nairobi, Kenya
(Strathmore University, 2020) Wanjiku, Caroline Grace
The study focused on the informal micro retail sector in Nairobi researching on the enterprises in the Smart Duka project run by a Non-Governmental Organization. The study offered novelty by focusing on the most marginalized of micro enterprises in informal settlements in Nairobi while considering the effect of business groups and magnitude effect of group factors on financial performance of micro enterprises. Prior studies have focused more on areas outside the informal sectors of Nairobi and have had limited focus on the effect of group participation on financial performance of enterprises which the current study sought to address. In the project, various formal practices are used, which include training, merchandizing, book keeping, coaching, use of technology and innovation, inventory management, joint supply sourcing, loan accessibility and group associations which were considered under three main factors in the study; financial, managerial and strategic fit factors. The factors were also supported by various studies in literature review and the study motivated by research gaps in prior studies and the economic importance that the informal micro enterprise sector holds. The theories related to this study were the resource-based view theory and the social exchange theory. The study was based on an experimental research design with an explanatory purpose to explain the causal relationship between business group factors and financial performance of the enterprises and used primary and secondary data. Diagnostics, descriptive and inferential analysis using non- parametric tests were done which included correlation and ordinal regression. The financial performance and business factors of the enterprises that joined groups (treated group) were compared to financial performance and business factors of the enterprises that did not join groups (control group) in the project. Based on the results of the study, the null hypothesis of the study which stated that financial performance of enterprises in business groups (treated group) is less or equal to that of enterprises not in business groups (control group) was accepted due to the difference between the treated and control groups being statistically insignificant. However, the treated group financial performance was higher and hence ways of making this difference significant should be addressed. The managerial factors had positive insignificant effects; strategic fit factors had positive significant effects while financial factors had negative insignificant effects on financial performance of the enterprises.
Factors influencing intent of uptake of retirement pension and provident scheme plans in the informal sector in Nairobi County
(Strathmore University, 2020-06) Ngomba, Paul Kitheka;
When it comes to social security at retirement, the formal sector has constantly received more attention compared to the informal sector. Formal coverage stands at only twenty per cent in Kenya. The rather vibrant but fragmented Kenyan informal sector has resulted in static economic growth despite its potential as a key contributor. The 2018 Economic Survey by the Kenya National Bureau of Statistics (KNBS) shows that the Jua Kali Sector accounted for approximately eighty-three per cent of country’s total labour force and created over seven hundred and eighty-seven thousand new jobs in the period. The Jua kali sector however remains excluded, unregulated or largely underrated. Majority of the elderly in this sector have been left out of structured pension plans exposing them to poverty, health and other risks once they can no longer provide for their livelihood. The objective of this study was to determine the factors influencing intent of uptake of retirement pension and provident scheme plans in the informal sector in Nairobi County. The specific objectives were to determine the influence of the level of income, the level of education, the association links and age on uptake of retirement pension and provident scheme plans in the informal sector in Nairobi County. The study used a descriptive research design and the population was twelve million informal sector workers. The sample size employed was three hundred and eighty-four respondents and stratified random sampling was the sampling technique. Data was collected through structured questionnaires with the data subsequently being analyzed through a multiple regression model and correlation analysis. On the factor analysis it was noted that the factors explained approximately sixty five percent of the total variation based on the rotated loadings. The findings indicated that there was a positive correlation between age and intent to uptake pension and provident scheme plans. There was a strong positive correlation between association link and intent to uptake pension and provident scheme plans. There was a positive correlation between education level and their intent to uptake pension and provident scheme plans. There was a positive correlation between income level and intent to uptake pension and provident scheme plans. It was concluded that individual willingness to save in pensions plans increased with increase on age. Majority of the individuals working in informal sector considered membership in an informal sector association to be of importance. Provision of financial management education is key to ensuring that the informal sector workers invest in pension schemes and lack of sufficient earnings crippled their wish. It was recommended that irrespective of the age, NSSF and RBA should come up with sensitization strategies that ensure that employees of all age groups working within the informal sector are thoroughly educated on the importance of partaking in retirement benefits schemes. Government must come up with strategies that protect these informal sectors; which include measures such as tax reliefs, incubation programs and credit support programs, all with an aim of ensuring reliable income flows.
Influence of capital structure adjustment in mergers and acquisitions on acquirers’ financial performance in Kenya
(Strathmore University, 2020-06) Ochieng', Bob Marshell
Capital structure is an important aspect in corporate finance since the profitability and the long term existence of the firm is affected by such decisions. Capital structure is expected to change after corporate restructuring such as Mergers and Acquisitions. Existing corporate structure literature has linked capital structure decisions and financial performance of firms. The aim of the study was to find the effect of corporate structure adjustment as measured by Leverage change and adjustment in leverage deficit on the financial performance of acquirers’ listed in Kenya. Financial performance is measured by Return on Equity, return on Asset and Tobin’s Q. The use of Tobin’s Q as an additional measure of financial performance adds to the different ways that previous studies have used to measure financial performance. Financial performance is expected to improve when the deficit between target leverage and Actual leverage is bridged. Similarly, an acquirer’s debt capacity is expected to increase after a merger and this increase in debt capacity is expected to influence the financial performance after the merger. A two-stage panel least squares regression were performed to establish the relationship between capital structure adjustment and financial performance. The study focused on mergers and acquisitions that were completed between 2007 and 2013. Analysis was carried out in the pre-merger period and 5 years’ post-merger period. The findings show that both Adjustment in Leverage Deficit (ALD) and Leverage Change (LC) have a significant influence on the three measures of financial performance: ROA, ROE and Tobin’s Q. The study found that ALD had a positive significant influence on acquirers’ financial performance. Similarly, LC had a positive significant influence on acquirers’ financial performance. The study should be of interest to corporate finance managers because the findings show that managers who are intentional about their capital structure adjustment during mergers and acquisitions have their financial performance significantly improved. The study however, had a number of limitations; there are limited number of non-financial acquirers’ listed in Kenya. Secondly, The Kenyan data on mergers and acquisition is also not readily available making it difficult to know some aspects of the deal characteristics such as cash payment or equity.
Effect of pre-disaster public finance on disaster mitigation in Eastern and Southern Africa
(Strathmore University, 2020-11) Kudzanayi, Christian Maguchu
Sub-Saharan Africa has seen an increase in the frequency, intensity and cost of natural disasters. The associated effects suggest that governments are lagging on their disaster mitigation financing obligations, since countries investing significantly in this should be able to minimize the impact of natural disasters. In consideration, the objective of the study was to assess whether the relationship between the occurrence of disasters and the resulting disaster related losses (total deaths and total people affected), is affected by the level and type of pre-disaster finance (dedicated and embedded budget allocations, contingent credit lines, insurance and reinsurance, and catastrophic bonds). The study adopted a positivism research philosophy, followed a quantitative descriptive research design using panel data analysis and utilized secondary data on six countries in Eastern and Southern Africa. Findings indicate that embedded budget allocations weaken the causal relationship between disaster occurrence and disaster losses thereby improving disaster mitigation as shown by the reduction in the total deaths and number of people affected by hazards. On the contrary, dedicated budget allocations, insurance and reinsurance and contingent credit lines did not show any significant interaction with disaster occurrence and therefore no effect on the minimization of total deaths and number of people affected. The study recommends the increased use of embedded budget allocations for effective disaster mitigation.
Influence of digital lending platforms design on loan performance among small business owners in Gikomba open-market, Nairobi County
(Strathmore University, 2020-12) Zeituna, Mustafa
Access to loans is instrumental in deepening financial inclusion and supporting small business growth. With the increasing digitization in the Kenyan economy, many digital lenders' availability has been integral in financial inclusion. The penetration of digital loans in the country is seen as a sign of a healthy market. However, determining the loan's quality to the loanee is yet to be determined since the loans are processed instantly. This study sought to establish the effect of digital lending platforms design on loan performance among small business owners in the Gikomba Open air market. The study specifically examined the effect of instantaneous processing, service automation, and remote processing on loan performance. The study further sought to establish the moderating effect of demographic factors on the relationship between digital lending platforms design and loan performance. The research was grounded on the financial inclusion and fmancial intermediation theories. The study adopted a positivism research philosophy that relied on descriptive research design to determine the association among the variables. The target population of the study was the registered small-scale business owners operating within Gikomba Open-Air Market. A pretest was carried out on the same population on a smaller sample before embarking. The study relied on primary research data collected using a structured questionnaire, with analysis involving descriptive and inferential statistics. The research further applied a partial correlation to examine the moderating effect of demographic factors. This study presented the findings using various graphical representation tools such as charts and tables. The results indicated a positive correlation between instantaneous processing, service automation, remote processing, and loan performance. This implied that the lending platforms' design had enabled borrowers to access multiple lenders, improve their repayment time, and are less likely to default on their loans than when accessing conventional loans. The study concludes that digital lending platform design had a positive and significant relationship with loan performance. The partial correlation results indicate that age, gender, education, and income level significantly moderated the relationship between digital lending platforms design and loan performance. The study recommends that digital lenders should be regulated to adopt the protection of consumers of their products. Further, lenders need to invest in newer technologies that will foster instantaneous processing, improving the accessibility of funds, and increased automation in customer service as this can enhance their client engagement. To lenders, recommendations were for additional emphasis to be made on payment to reduce the default rate. Lenders were also advised to ensure that the borrower's demographic profile is taken into account in loan screening to ensure different limits for different demographics.
Effect of drivers of responsible banking activities on performance of Commercial Banks in Kenya
(Strathmore University, 2021) Chege, Denis Gathu
Globally, commercial banks have been keen on executing responsible banking initiatives in developed countries at a higher pace than in developing economies. This has resulted in major international banking institutions recording better financial returns. Locally, as of 2015 only 9 commercial banks had made strides in the adoption of responsible banking, despite the immense impact the activities have on the banks’ bottom line. Further, with increased evidence of the importance of adopting responsible banking initiatives to support financial performance there has been less than adequate examination of their contribution within Kenyan banks. The aim of this study was to examine the drivers of responsible banking-related initiatives and their effects on financial performance of commercial banks in Kenya. The study specifically analyzed the extent of adoption of responsible banking initiatives, the drivers of adoption and the impact of the drivers of responsible banking activities on the performance of banks. The study was grounded on the market power theory and institutional theory with a positivist philosophy being adopted in the research. The study further applied a descriptive research with the unit of analysis being the operational 41 commercial banks. The study sampled 135 officials drawn from the operational commercial banks. The study data were collected from structured questionnaires and the audited financial statements of the commercial banks and Central Bank of Kenya (CBK) reports. The study utilized descriptive analysis, explanatory factor analysis and regression analysis. The findings were presented graphically using charts and tables. The study was able to obtain a 76% response rate. The Spearman rank correlation tests indicated there was a positive and significant effect of management support, strategic position, regulatory environment on responsible banking activities and performance of banks. The ordinal regression findings showed there was a significant and positive effect of responsible banking activities and regulatory environment on bank performance. Further, findings indicated a negative and significant effect of management support on adoption of responsible banking and bank performance. Lastly, findings established a positive and insignificant effect of strategic planning on the bank performance. The study recommends that commercial banks should improve alliances and collaborations that can support meeting of sustainable banking standards within the banking industry. The study also recommends that commercial banks should continuously review their adoption of responsible activities that can support development of green finance within the industry. Further banks should review their internal operations, improve coordination, positioning and adherence to regulations which can all lead to better performance
Effect of blended finance approaches on the extent of implementation of water and sanitation projects in Kenya
(Strathmore University, 2021) Stephen, Eunice Mueni
Investments in water and sanitation are critical ingredients for the development and growth of economies. Blended financing is a structuring approach that enables different stakeholders to pool their resources together in investments for financial return, boosting economic growth in developing countries. The development of the blended financing market has led to eminent traction towards developing sustainable infrastructure, bridging the financial gap to attain the Sustainable Development Goals enabling the private sector's participation. However, little has been documented on the effectiveness of blended financing on the implementation of Water and Sanitation and Hygiene (WASH) projects in Kenya. As a result, information on funding blended and its efficacy on attracting commercial funding is not known and where it is known; that information is limited or has not been shared with the public, creating a gap in knowledge use of blending financing. Therefore, this study sought to evaluate the effectiveness of different blended financing models in Kenya's WASH projects. Specifically, the research was after investigating the effects of output-based approach, credit guarantee approach, technical assistance approach, credit rating approach and the moderating effect of type of investor on the relationship between blended financing approaches and the implementation of water and sanitation projects in Kenya. The research was anchored on the resource dependency theory. The study utilized a descriptive research design to collect both quantitative and qualitative data. The population of the study is 100, and the sample size of the survey is 80, comprising of representatives from donors of the projects, water service providers, staff members from the Water Sector Trust Fund, and officials from banks which provided credit towards financing the WASH projects from 9 projects in 6 counties namely; Murang’a, Nyeri, Kajiado, Embu, Kisumu, and Nakuru. The Water Companies in the selected regions have implemented World Bank projects funded through the blended financing approaches that form this research's objectives. The analysis was quantitative and utilized both primary and secondary data. Primary data was collected through questionnaires, while secondary data was sourced through secondary data collection guides. The data was analyzed through the use of descriptive and inferential statistics. The study was able to obtain a 64% response rate from the sample of 80 stakeholders in the WASH projects. The regression results showed that blended financing approaches predict 20.1% of the changes in implementation of water and sanitation project in Kenya. Further, the moderate regression indicated that 46.4% of the changes in implementation of WASH projects are determined by blended financing approach and the type of investor. The study concluded that credit guarantees, and technical assistance have a positive and significant influence on WASH projects. The research further concluded that output-based approach and credit rating approach have no significant influence on implementation of water and sanitation project in Kenya. Further, the study concluded that donors and water service providers investments had a significant effect on the implementation of WASH projects in Kenya. The study recommends that project managers should seek strategic alliances that will open the financing options to the WASH projects. Further, collaboration with donor agencies and devolved governments will help in expanding the capacity and implementation success of WASH projects in the country.
The Determinants of sustainability content integration in graduate business programs in Kenya
(Strathmore University, 2021) Waireri, Cecilia
Business schools have traditionally been seen to teach courses that are geared towards shareholder wealth or profit maximization at the expense of society or the environment. However, in recent times there has been a surge in business failures and corporate scandals and the reason for this has been identified as a loss of values. Due to this university business schools have been pressured to incorporate sustainability to focus the attitudes and perceptions of future business leaders to sustainable businesses that consider not only the shareholder wealth but also the society and environment. There is limited research carried out in African countries such as Kenya in examining the extent of sustainability integration. Given that economic sustainability is a given in business programs the study sought to examine the extent of integration of environmental, social and cross-cutting sustainability content in business graduate programs in Kenya. Previous research has highlighted that the determinant factors of size, status of the university, gender of the dean, accreditation status and mission/vision statement are the main determinants of sustainability integration in business programs. The study thus sought to determine whether these factors do have an impact on sustainability integration in Kenyan business graduate programs. A census was carried out on the graduate business programs. Descriptive research design was used. Data was analyzed using descriptive statistics, inferential statistics, factor analysis and content analysis. For social sustainability, the findings indicate that the extent of integration had an aggregate mean of 2.1 and standard deviation of 1.0 implying that social sustainability aspects in the course programs had been integrated to a small extent. For environmental sustainability, the findings indicate that the extent of integration had an aggregate mean of 1.2 and standard deviation of 0.4 implying that environmental sustainability aspects had not been integrated in the course programs. For cross-cutting sustainability, the findings indicate that the extent of integration had an aggregate mean of 2.1 and standard deviation of 0.7 implying that cross-cutting sustainability aspects in the course programs had been integrated to a small extent. Non-parametric mean comparison statistics showed statistically significant differences in status of the university, size of the university and sustainability inclusive mission/ vision statement in relation to the integration of social, environmental and cross-cutting sustainability aspects in business graduate programs. Further logistic regression tests carried out showed that the factors of status and size of the university were only factors that showed significant results in analyzing the relationship between the explanatory factors and social sustainability. The model (explanatory factors) explains 48.2% of the variance in the dependent variable (social sustainability integration). The logistic regression showed that for size and status of the university there is a likelihood of higher integration of social sustainability in private universities and in small and medium sized universities. The determinant factors of size, status of the university, gender of the dean, accreditation status, and mission/vision statement did not have significant logistic results in influencing environmental and cross-cutting sustainability. The study recommended that business schools in Kenya should integrate relevant social, environmental and cross-cutting sustainability aspects in graduate business programs. The universities should also streamline their mission and vision statements to become sustainability inclusive.
The Relationship between government expenditure on education and fertility in Sub – Saharan Africa
(Strathmore University, 2021) Mwangi, Susan Wanjiku
This dissertation estimates the changes in fertility rates in SSA, achieved by targeting government expenditure on education towards women’s education. Additional determinants of fertility were included in the model to ascertain the predictive validity and significance of government expenditure on education. They include the contraceptive prevalence, female unemployment rate, gross national income per capita, infant mortality rate, male employment rate, urbanization growth rate, and the Tax to GDP ratio. The theoretical foundation for this dissertation is the Theory of Increasing Prosperity, Theory of Human Capital and Wagner’s Law of Increasing State Activities. Panel Data spanning 1980 – 2017 of a sample of twenty – one countries was coded into a series of simultaneous equations executed through a Structural Equation Modelling tool. The results reveal a positive and significant correlation between government expenditure on education and the female school enrollment rate. Additionally, the findings show a significant and negative relationship between government expenditure on education and fertility. More importantly, the magnitude of this effect intensifies with women’s education as a mediator. Furthermore, the aforementioned relationships remain significant in the presence of other determinants of fertility. This dissertation concludes that government expenditure has the potential to achieve a reduction in fertility as an outcome, and specifically through women’s education, resulting from the benefits of Human Capital.
Factors influencing access to finance among enterprises in the cultural and creative sector in Nairobi County, Kenya
(Strathmore University, 2021) Ogutu, Erick Otieno Jean
Businesses within the Cultural and Creative Sector (CCS) are credited with contributing substantially to the economies of many countries worldwide to the extent of being described as the next frontier for economic growth through creating jobs and contributing to tax revenue. Whereas Kenya’s regulatory framework for the broader segment of Micro, Small and Medium Enterprises (MSMEs) is in place and interventions by public, not-for-profit and private sectors well established, little focus has been placed on facilitating the growth of cultural and creative enterprises which have mostly remained small-sized and informal. This study seeks to investigate the influence of business owner attributes, firm characteristics and exogenous factors on access to finance by cultural and creative sector enterprises. Using descriptive survey research design, the study targets research on a sample of 215 simply randomly selected firms in Nairobi City County, Kenya. Data analysis is objective based while analytical techniques range from descriptive frequencies to inferential statistics. Results show that, mobile money and SACCOs had the highest success rates (above 94%) of access to financial services for creative sector enterprises in Nairobi even though they were the least preferred. Creative sector enterprises preferred commercial banks whose success rate of access to financial services was low at 25%. CCS enterprises seek financing mostly to innovate on products through research (M=4.00, SD=1.04), to digitize operations such as sales (M=3.89, SD=1.35), marketing and communication (M=3.77, SD=1.08). The greatest constraints to access to finance in the creative sector were high interest rates (M=4.44, SD=1.009), cumbersome funding requirements such as collateral (M=4.14, SD=2.877) and lack of be-fitting credit product (M=3.77, SD=1.432). Key challenges facing CCS the firms include investors not understanding the creative sector (M=4.53, SD=0.964), lack of supportive policies such as intellectual property protection (M=4.24, SD=0.887), lack of IP collateral tools (M=4.04, SD=0.882). The probability of cultural and creative sector enterprises accessing finance in commercial banks decreases by 0.076 among younger business owners, increases by 0.012 among businesses that have operated for longer and increases by 0.194 for managers with a lengthy business experience and good business networks (ceteris paribus for each variable). The probability of access to finance within SACCOs increases by 0.024 among businesses that have operated for longer and, ceteris paribus, by 0.133 among businesses whose owners had entrepreneurship training. Access to finance among informal savings groups (chamas) decreases by 0.036 among businesses with higher duration of operation in the creative sector and also, separately, increases by 0.415 among businesses whose owners have entrepreneurship training. Registration status of the business was critical with access to finance within commercial banks, SACCOs and informal savings groups (chamas) increasing by 8.7%, 36% and 67%, respectively, if the business was registered. Favorable financial services provider (FSP) policy on CCS financing, ceteris paribus, increases the probability of access to finance within commercial banks and SACCOs by 7.5% and 14.5%, respectively. In conclusion, there is a desirable mix of individual attributes, business characteristics and exogenous factors which, if addressed, would increase chances of access to finance for majority of CCS businesses in Nairobi. These attributes include years of experience (the more the better), access to technical training in CCS business, access to business networks as well as having the owner register their creative enterprise to formalize business operations to increase access to finance.
The Effect of foreign direct investment on tax revenue in Kenya
(Strathmore University, 2021) Nasibu, Sharon Makena;
Raising adequate domestic revenue is a challenge particularly for low and middle-income countries with low domestic savings rates. Domestic revenue shortfalls have persisted in Kenya for the last several years and in this time, public debt has ballooned and borders on unsustainability. Globalization and increased capital mobility have created pressure for governments to provide tax incentives in order to attract and retain foreign direct investment. Consequently, a “race to the bottom” has ensued in which foreign investors benefit from these tax incentives, at the expense of governments which lose much needed revenue particularly in developing countries. This study sought to determine the effects of FDI on aggregate and disaggregate tax revenue in Kenya, as well as the moderating effect of GDP per capita and trade openness on the association between FDI and tax revenue. The study was based on the theory of public fiscal behaviour and theories of tax competition. A descriptive correlational research design was adopted with the unit of analysis being Kenya. Secondary time series data was collected from relevant databases including KNBS, UNCTAD, The World Bank, and IMF. In relation to the first study objective, the findings showed that FDI stock had a negative effect on aggregate tax revenue in the short run and FDI inflows had no effect. In the long run, FDI stock did not have any effect on aggregate tax revenue but FDI inflows had a negative effect on aggregate tax revenue. Regarding the second objective, FDI stock had a positive effect on disaggregate tax revenues in the short run but no effects were observed in the long run. On the other hand, no interaction was observed between FDI inflows and disaggregate tax revenues. The third objective was to determine moderating effects of macro-economic variables (trade openness and GDP per capita) on the relationship between FDI and tax revenue. Results from hierarchical regression models revealed that trade openness and GDP per capita had a positive but insignificant effect on the relationship between FDI and tax revenue. The study concludes that FDI stock has a negative effect on aggregate tax revenues in the short run but no effect in the long run. Moreover, it is the study’s conclusion that FDI inflows have no effect on aggregate tax revenue in the short run but they have a negative effect in the long run. The study concludes that an increase in FDI stock increases disaggregated tax revenue indices while no effects are observed in the long run. The study further concludes that FDI inflows have a negative effect on disaggregated tax revenue indices in the long run, however this is not statistically significant. Furthermore, GDP per capita and trade openness do not exhibit moderating effects on the relationship between tax revenue and FDI. Among the key policy implications from this study, it is recommended that tax incentives be reduced but not completely eliminated, so as to attract and retain foreign investment while safeguarding revenue collection efforts. Gradually scaling back tax incentives while promoting other measures of attracting FDI is proposed, including but not limited to; enhancing infrastructure and technology, enhancing access to domestic markets, strengthening supply value chains and setting up investment promotion agencies to target and link foreign investors and the domestic economy. Policy makers should also focus on designing economic policies that encourage retention of existing FDI stock.
Assessing the effect of cross border facilitation measures on trade costs in the East Africa region
(Strathmore University, 2021) Atieno, Donna
Successive rounds of multilateral trade negotiations over the years have progressively reduced traditional barriers to trade such as tariffs and quotas which are readily measurable. However, as trade becomes more liberalized, focus has now shifted to other determinants of international trade that add costs to goods as they cross borders such as procedures, paperwork and administrative formalities. Reducing these costs enabled firms take advantage of new market openings. Cross border trade facilitation particularly has been identified as a tool for increased and smoother trade between countries. In Africa, the East African countries have followed suit to encourage intra-regional trade among Partner States resulting in the need to assess the effects of these facilitation measures on trade cost. This study was guided by two objectives: to assess the effect of cross-border trade facilitation measures on trade costs in East African region; and to assess the control effect of GDP per Capita on the relationship between cross-border trade facilitation measures and trade costs in the East African region. The study was underpinned by the positivism philosophy with three theories: Comparative Advantage; Heckscher – Ohlin Model: and Simple Iceberg partial equilibrium model used as guiding principles. Panel data from secondary sources was collected and analyzed in relation to the objectives. The research conducted diagnostics tests and utilized the random effects panel regression in testing for the magnitude of the relationship between the study variables. The analysed research data was presented using tables. The findings of the study showed that overall, trade facilitation measures and GDP per capita had a positive and significant influence on the trade costs. The study concluded that: customs and border management (time to import and export and cost to import and export) have an insignificant influence on average trade costs within the region; infrastructure development index had a positive and significant influence on trade costs; the regulatory quality index had an insignificant influence on trade costs; and GDP per capita had a negative and significant influence on the trade costs. The study recommended that member states should invest more in improving their infrastructure which is critical in conducting trade in the region; that member states should formulate and implement policies that can boost economic growth and development; and that member states should ramp up their efforts to implement the trade facilitation measures by taking advantage of the technical capacity building being offered by WTO as part of the Trade facilitation Agreement (TFA) to build its capacity to implement the trade facilitation reforms.
Factors undermining the effectiveness of social protection programmes as a poverty eradication mechanism in Kenya
(Strathmore University, 2021) Okoth, Frankline Manyala
Social protection has become a fundamental focus of governments and policymakers to eradicate poverty. They are key in protecting vulnerable and marginalized population from sinking into absolute poverty and thus evolved from emergency and disaster interventions to long-term policies for social and economic inclusion, human development, and poverty eradication. To this end, the Kenyan government has made significant investments in this agenda, but poverty remains prevalent in the economy. Hence the objective of the study was to investigate the factors undermining the effectiveness of social protection programs as a poverty eradication mechanism in Kenya. The study used a mixed-method research design to conduct the study. Feedback was sought from key informant interviewees who were experts in their field. The findings indicated that there was still insufficient coverage of the social protection programs due to the skewed dispersion of the programs. This can be attributed to insufficient targeting mechanisms and designs. ASAL region is among the worst affected due to the logistical challenges of reaching them to create awareness. The findings also indicated that despite the programs role to create a safety net, the amount offered is insufficient and unreliable. Amongst the recommendations shared is scaling up of social protection programs using robust targeting mechanisms as well as sustainable investments of the social protection funds to increase its reliability and effectiveness in helping to combat poverty.
Portfolio manager’s perception of the determinants of digital credit repayment in Kenya
(Strathmore University, 2021) Ndung’u, Eva Wangari
The critical problem most digital credit-lending agencies face is poor loan repayment. Statistics show that loan default has been a tragedy and loan repayment problem is an unsolved issue faced by the majority of digital lending institutions. The study sought to establish the perception of the determinants of digital credit repayment in Kenya. The study specifically looked into the effect of individual/borrowers factors, loan factors and lender factors on digital credit repayment in Kenya. The research was based on prospect theory and the theory of delegated borrowers monitoring. To determine and be able to characterize the features of variables of interest, a descriptive research design was used. The study targeted all the main credit digital lenders in Kenya but the unit of observation was the credit managers, credit analysts and account relationship managers. The study adopted stratified sampling and employed the Yamane (1967) formula below to calculate the sample size of 204 respondents. The study relied on primary data gathered through questionnaires. The questionnaires were self-administered using a drop-and-pick method. Both descriptive and inferential statistical approaches were used to analyze the data. For simplicity of analysis, the data was sorted, categorized, and coded before being tabulated. The information was grouped and summarized based on common topics. The data was analyzed using descriptive statistics. The Statistical Package for Social Sciences (SPSS) was used to conduct the analysis (SPSS Version 25.0). The qualitative data from the open-ended questions was evaluated and presented in prose using content analysis. Further, inferential statistics was done using multiple regression and correlation analysis. Tables and other graphical presentations as appropriate were used to present the data collected for ease of understanding and analysis. The study established that the number of dependants; marital status; level of education; and gender affect digital credit repayment to a great extent. The study also found that repayment period and type of loan/security provided affect digital credit repayment to a great extent. The study found that number of loan installments affect digital credit repayment to a moderate extent. The study concludes that individual/borrowers factors positively and significantly affect digital credit repayment in Kenya (β=0.792, p=.000<0.05). The study further deduced that there is a negative but significant relationship between the loan factors and digital credit repayment (β=-0.229, p=.006>0.05). The study also concluded that there was a negative but significant relationship between lender factors and digital credit repayment in Kenya (β=0.457, p=.000<0.05). The study therefore concluded that individual/borrowers had the greatest effect on the digital credit repayment in Kenya, followed by lender factors while loan factors had the least effect on the Digital credit repayment in Kenya. When building loan products for the Kenyan market, digital credit lenders should take into account borrowers' demographic factors such as age, gender, marital status, occupation, education, and income, according to the study. This is because demographic elements are important and measurable population data that aid in the identification of target markets, are easier to quantify, and are appropriate for psychographic and sociocultural research. Furthermore, Kenyan digital credit lenders should take more steps to perform broad market surveys so that they can better understand the regions where they can tap into and produce lending products that are relevant to market needs. Lenders should do a better job of reporting and clarifying key loan elements so that borrowers have a clear understanding of the loan's cost, payment due dates, and the repercussions of late repayment and default.
The Effect of demonetization and COVID-19 on mobile money transactions in Kenya
(Strathmore University, 2021) Omanga, Gabin Nyamweya
Mobile money has been identified as having several advantages over cash. It has the potential to boost economic growth and financial inclusion while closing the related gender- and rural-gaps in the process. It has further been found that demonetization, through a money supply shock can enhance use of other non-cash forms of money. This study sought to determine the effect of demonetization on mobile money in Kenya. The focus of the study was Kenya which demonetized its largest denomination, the one-thousand-shilling note, in May 2019. This dissertation is motivated by the need to determine the efficacy of demonetization as a tool for digitization and expansion of non-cash transactions in an economy, specifically mobile money. The study employed an event study methodology using the Mean Adjusted Model. The timeframe under review was split into two between April 2017 and May 2019 (25 observations) and May 2019 and June 2021 (25 observations). The study found that there was a significant increase in mobile money transactions attributed to demonetization. Further, the study concluded that measures on mobile money taken by the Kenyan government to cushion its citizens against economic effects of SARS COVID-19 pandemic in early 2020 did not have a significant moderating effect on the association between demonetization and mobile money transactions. This study has contributed to existing literature that demonetization through a cash supply shock, leads to use of alternative non-cash forms of payments. Additionally, the study deduced that demonetization is a good policy tool for expansion of currency digitization.
Influence of firm-level financial characteristics on credit extension by microfinance institutions: a case of Kenyan licensed microfinance banks
(Strathmore University, 2021) Karanja, Winnie Njeri
Empirical evidence has shown that the growth of the microfinance sector in Kenya has been constrained by increasing competition in the microfinance industry from other emerging models such as digital lending institutions, short-term unsecured lenders as well as micro-lending activities from commercial banks. These constraints have also resulted in shrinking lending capacity and declining profitability due to attrition of high-quality borrowers to competing lenders. However, there is limited research on the factors that affect credit extension by Kenyan microfinance banks, which is vital in understanding the dynamics of the sector. This study examined how firm-level financial characteristics influence credit extension by microfinance banks. The study sought to find out the effect of firm size, liquidity, NPLs, deposits, and interest rates on credit extension by microfinance banks. A descriptive research design was applied, focusing on the 13 licensed microfinance banks as at December 2019. Panel data was collected for the period between 2011 to 2018 from financial submissions by these microfinance banks, which are published by the Central Bank of Kenya. Data analysis involved descriptive, correlation testing, and panel regression analysis. The study found that firm size and interest rates had a positive relationship with microfinance banks credit extension, while non-performing loan, liquidity and deposits were found to have a negative relationship with credit extension by licensed MFBs in Kenya. In the Panel estimation model, only Firm size and Liquidity were found to be good estimators of Credit Extension. The main recommendations from the study were that, as firm size supports the growth ambitions of a microfinance institution and the microfinance sector in general, microfinance banks should aim to maintain high asset quality of their loan book as it has an implication on the institution’s ability to absorb the impact of risk, and hence affects the institution’s ability to target credit extension growth. The study also recommends that, given the findings that deposit mobilisation is not a good predictor of credit extension, Microfinance banks should focus on mobilising capital from diversified sources, including low-cost funding from microfinance developmental funding institutions, as they are not able to rely on deposits as a cheap source of funding. On interest rates, while findings indicate that interest rates are not a good estimator of credit extension, care should be taken to avoid overly expensive loans so as to observe fair lending practices and support welfare of borrowers. To the regulator, the recommendation is that the sector should be watched closely to ensure liquidity levels remain above the minimum statutory level of 20% which was found to have a negative relationship with credit extension. Study limitations included the exclusion of external factors such as macroeconomic factors and competition, and the exclusion of primary data – both qualitative and quantitative.

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