Peter Kimuyu

Corruption, Firm Growth and Export Propensity in Kenya

Purpose - This paper draws from research that sought to explore the structure of corruption in Kenya and its implications on the performance of firms. Design/methodology/approach - The research takes the form of descriptive and econometrics analyses of Investment Climate Assessment data sets. Findings - Kenyan manufacturers spent significant proportions of their annual sales on unofficial payments including kick-backs on government contracts. There is also evidence of co-movement between such unofficial payments and red-tape, suggesting that corruption does not play any greasing function. Not only does corruption undermine firm growth but also reduces the propensity to export. The findings uphold others that demonstrate the deleterious consequences of corruption. Research limitations/implications - Further work is needed in tidying up the methods of collecting corruption data. Although a battery of strategies was used to reduce potential response biases common in corruption data, the information leans towards perceptions so that the findings remain tentative. Practical implications - The results should be of interest to policy makers and researchers and should put the fight against corruption on a firmer footing. Originality/value - The paper establishes that corruption undermines the performance of firms.

How do Small Firms in Developing Countries Raise Capital? Evidence from a Large-Scale Survey of Kenyan Micro and Small-Scale Enterprises

We utilize a unique comprehensive dataset, drawn from the 1999 baseline survey of some 2000 micro and small-scale enterprises (MSEs) in Kenya. We analyze the financing behavior of these enterprises within the framework of a heterodox model of debt-equity and gearing decisions. We also study determinants of the success rate of loan applications. Our results emphasize three major findings. First, MSEs in Kenya obtain debt from a wide variety of sources. Second, debt-equity and gearing decisions by MSEs and their success rates in loan applications can all be understood by relatively simple models which include a mixture of conventional and heterodox variables. Third, and in particular, measures of the tangibility of the owners assets, and the owners education and training have a significant positive impact on the probability of borrowing and of the gearing level. These findings have important policy implications for policy makers and entrepreneurs of MSEs in Kenya.

The costs of coping with poor water supply in rural Kenya

As the disease burden of poor access to water and sanitation declines around the world, the nonhealth benefits––mainly the time burden of water collection – will likely grow in importance in sector funding decisions and investment analyses. We measure the coping costs incurred by households in one area of rural Kenya. Sixty percent of the 387 households interviewed were collecting water outside the home, and household members were spending an average of 2–3 h doing so per day. We value these time costs using an individual-level value of travel time estimate based on a stated preference experiment. We compare these results to estimates obtained assuming that the value of time saved is a fraction of unskilled wage rates. Coping cost estimates also include capital costs for storage and rainwater collection, money paid either to water vendors or at sources that charge volumetrically, costs of treating diarrhea cases, and expenditures on drinking water treatment (primarily boiling in our site). Median total coping costs per month are approximately US

Revealed Comparative Advantage and Export Propensity in Kenya

20 per month, higher than average household water bills in many utilities in the United States, or 12% of reported monthly cash income. We estimate that coping costs are greater than 10% of income for over half of households in our sample. They are higher among larger and wealthier households, and households whose primary source is not at home. Even households with unprotected private wells or connections to an intermittent piped network spend money on water storage containers and on treating water they recognize as unsafe.

Urbanization and consumption of petroleum products in Kenya

Although some Kenyan garments are sold in American and European markets, the main destination for the countrys exports are regional, and exports of manufactures marginal. Revealed Comparative advanatage analysis confirms domination by resource-based products in the export composition, and there is no evidence of a shift from such domination. Kenya has also been gradually losing its competitveness in the export markets and Kenyan exporters remain diversified to hedge against export-related risks. Large, formal food processing and metal-working enterprises are not only more inclined to export but also export a relatively greater proportion of their total production than other enterprises. Export expansion would benefit from reduction in policy induced export risks. Export promotion incentives would have greater impact if they targeted food processing and metal working enterprises. Additional export-related benefits would accrue from incentives for enterprise growth and mainstreaming, a general improvement in the level of education and labor productivity.

Innovation inputs and efficiency: manufacturing firms in Sub-Saharan Africa

Abstract Kenyas urban population has been growing at 6% per annum in the last 20 years and is expected to account for 25% of the population in the year 2000. This paper analyses the impact of urbanization on the consumption of seven petroleum products sold in the country, and finds positive urbanization elasticities for all the fuels except illuminating kerosene. LPG, heavy diesel oil and jet fuel are especially urbanization elastic. it is evident, therefore, that the transfer of an increasingly larger proportion of Kenyas population to urban centres has significant implications for consumption of petroleum products, and should be taken into consideration in energy planning.

In search of structural change surplus and perpetual growth in Ethiopia: Examining alternative sectoral growth options, an application of recursive dynamic CGE model

Purpose Countries in Africa have a common goal policy of industrialisation that is expected to be driven by investing in innovation that yields efficiency. The purpose of this paper is to investigate the technical efficiency effects arising from innovation inputs including internal R&D, human capital development (HCD), and foreign technology adoption in manufacturing firms in Africa. Design/methodology/approach This study uses cross-sectional firm-level survey data from the 2013 World Bank Enterprise Survey and the linked 2013 Innovation Follow-up Survey. A heteroscedastic half-normal stochastic frontier is used for analysing the technical efficiency effects of innovation inputs of 418 firms. Findings This study reveals that internal R&D, and foreign technology have negative effects on technical efficiency. Notwithstanding, the combination of foreign technology and internal R&D, and foreign technology and HCD reinforce each other’s effects on technical efficiency. Practical implications This study provides evidence that whereas individual innovation inputs may not yield positive efficiency outcomes, the combination of absorptive capacity enhancing inputs comprising internal R&D and HCD with foreign technology is vital for enhancing technical efficiency in manufacturing firms in Africa. This study offers important lessons for managers in manufacturing firms in Africa. Originality/value This study is virtually the first to investigate the relationship between innovation inputs and efficiency in Africa. This study demonstrates that investing in foreign technology in isolation from absorptive capacity enhancing innovation inputs diminishes efficiency. HCD and internal R&D are imperative for building absorptive capacity that enhances efficiency outcomes arising from foreign technology.

Land Tenure Reform in East Africa: Good, Bad or Unimportant?

Purpose - – The Ethiopian economy is characterized by erratic and poor performance with negative growth rates, seven times over the period 1981-2010. This trapped per capita income at 358 USD in 2010 staying far away from middle-income country status. A lot of unsolved debates regarding perpetual growth, structural change and sectoral allocation of resource emerged overtime. The purpose of this paper is to examine the alternative effects of induced sectoral total factor productivity and makes comparisons of various sectoral growth options. Design/methodology/approach - – This study uses a recursive dynamic computable general equilibrium model based on neoclassical-structuralist thought. It also calibrates coefficients that capture the impacts of openness, imported capital and liberalization on sectoral total factor productivity growth using a model of vector auto-regressive with exogenous variables. Findings - – Future economic growth rate is expected to grow at a declining trend and to be dominated by the service sector. If it keeps growing on the current path it will expose the economy to a severe structural change burden problem. Openness induced agricultural total factor productivity highly improves the welfare of households while imported capital goods induced industrial total factor productivity is also better in fostering structural change of the economy. The broad-based growth option that combines the induced total factor productivity of all sectors also enables the economy to achieve more sustainable growth, rapid structural change and welfare gain at the same time. Originality/value - – There are intensive and charged debates regarding alternative sectoral growth options. However, the debate does not derive from a rigorous analysis and holistic economy-wide approach. It is rather affiliated with politics. Therefore, the paper is original and investigates these issues meticulously.