IMPACT OF STRUCTURAL ADJUSTMENT PROGRAMS ON AGRICULTURAL SECTOR GROWTH IN KENYA

Abstract

Purpose: The study was an examination of the impact of structural adjustment programs on agricultural growth in Kenya.Methodology: The study examined the short run and long run determinants of agricultural sector performance in Kenya. To achieve this, the study use time series regression modeling for data spanning from 1975 to 2010. Tests of normality, unit roots test and cointergration test was applied to determine the properties of the data. Upon proof of cointergration, an error correction model was estimated to link the short run and the long run relationships.Results: The results indicated that structural adjustment programme (SAPs) had a negative and significant long run effect on per capita agriculture GDP. The study concluded that Post Election Violence had a negative and significant long run effect on the per capital agriculture GDP. The study also concluded that the lagged per capital agricultural performance had a positive and significant effect on the per capita agricultural performance. The results also led to the conclusion that the long run per capita agricultural growth may be linked to the short run growth by an error correction term of -0.242583 which indicates that 0.242% of the disequilibria in short run per capita agricultural sector GDP achieved in one period are corrected in the subsequent period. The results also led to the conclusion that weather indicators (temperature and precipitation), and per capita infrastructure did not have a significant effect on the short run and long run per capita Agricultural GDP.Unique contribution to theory, practice and policy: The study recommends that some harmful policies need to be eliminated such as the removal of subsidies. Other policy recommendations are to enhance the adaptation of privatized agricultural institutions; encouragement of value addition in primary agricultural products; non price mechanisms such as infrastructure should be encouraged especially in the rural areas; and enhancement of the political stability of the country especially during electioneering years.