Empirical study of Africa macroeconomic fundamentals mismatch: Impact on economic development in Kenya

Abstract

This paper is an analysis of the extent of macroeconomic fundamentals mismatch and theconsequent impact on economic development in Africa, a case of Kenya. A key contribution ofthis paper is to show that the macroeconomic variables such as finance, unemployment,international trade, government fiscal policies, as well as savings and investments by firms andhouseholds interact in the Kenya’s economy; and their total negative impacts owing tomisalignment with key trade sectors contributing the most to economic growth, account for thecountry’s weak pecuniary performance; a trend replicable in the larger Africa. The studyemployed quantitative research design using a self-administered questionnaire and targeted apopulation of 47 managers who are regulators, and commercial bankers, working withinNairobi, Kenya’s capital. Both secondary and primary sources of data were used in eliciting therequisite information essential for the research findings. Stratified random sampling wasemployed to select the sample data. The Statistical Package for the Social Sciences (SPSS)version 20.0 was used in data processing and analyses. The findings indicate that the mismatchof macroeconomic fundamentals in Kenya is significant, with a p = 0.0001, and has far reachingnegative impacts on the country’s economic development. Government fiscal policies, exports,and finance, had more devastating negative impacts on economic development in Kenya. There isa general trend indicating that firms and households tended to take advantage of investmentopportunities despite the unfavourable environment.