Market In Kenya Research Articles

Macroprudential regulation, bank stability, and the credit market in Kenya

Macroprudential regulation, bank stability, and the credit market in Kenya

Decomposing the Gender Wage Gap in the Urban Labor Market in Kenya

Abstract Legislation and regulation have been effective in reducing the gender wage gap in developed countries; however, the gap still exists globally, and progress towards narrowing the gap has been unacceptably slow even in regions where it is improving. This study presents the analysis of gender wage gap in Kenya’s urban labor market by using the World Bank Skills Towards Employability and Productivity Survey (WBSTEPS). This study employed Mincer earnings regressions with Heckman selection correction and the Blinder-Oaxaca and Neumark decomposition procedures to answer the research questions. The results of the wage determination and participation in the labor market show that there is no selectivity-bias problem. Personal characteristics such as education and age, as well as work-related characteristics, are important factors in determining earnings. The magnitude of the gender wage gap varies across the wage distribution, and the results of the wage decomposition reveal that women in urban Kenya earn 84.5-to-86% of men’s earnings. The earnings gap is overwhelmingly due to differences in returns to endowments, which account for between 70% and 94.7% of the total earnings gap. Admittedly, the study found evidence of discrimination against women in the returns to endowments, but also observed pronounced favoritism towards men. However, discrimination against women is more pronounced than favoritism towards men. Addressing the gender wage gap in Kenya requires a multifaceted approach that tackles both systemic biases against women and structural barriers that hinder women from accessing equal opportunities in education, training, and career advancement and government policies that minimize favoritism towards men.

Enhancing the Financial Derivatives Market in Kenya: Challenges, Opportunities and Strategic Recommendations

Enhancing the Financial Derivatives Market in Kenya: Challenges, Opportunities and Strategic Recommendations

Quality of Listing Firms in Equity Primary Market in Kenya

Purpose: Kenya has experienced a drought in initial public offerings (IPOs) since 2014. Among varied causes of IPO Drought is decline in demand of IPO shares by retail investors. This paper assert decline in demand is partially attributed to low-quality listings in the past that underperformed in both short- and long-run. Design: The paper investigated quality of listing firms at the time of listing on all IPOs made between 2000 to 2014 in Nairobi Securities Exchange using various dimensions. Findings: The results revealed most of listing firms lacked growth opportunities, reported weak financial performances and engaged in earnings managements. Liberal listing guidelines aiming at attracting firms to list in numbers led to low-quality offerings. Implication: Strategy of liberal listing requirements is counterproductive as demand for the listings keep shrinking due to low-quality of listed firms that underperform in long-run. The study recommends reviewing of listing requirements so that only high-quality firms are allowed to list to keep the market vibrant. As long as low quality offerings are allowed, retail IPO investors will keep off the market as they suffer adverse selection costs

Strategic Agility and Performance of Pay Television Industry in Kenya.

The Pay TV market in Kenya operates in a highly competitive business environment, which in turn calls for aggressiveness and more efficient ways of keeping the business afloat. Advancement in technology also comes with several options for Pay TV customers such as online streaming which poses more threat to the market. This research seeks to assess the influence of strategic agility on the performance of the Kenyan Pay TV industry using Multichoice Kenya Limited as the case study. The objectives of this study were to establish the influence of leadership agility, determine the influence cultural agility, assess the influence of business agility, and to determine the influence of career agility on organizational performance in the Kenyan Pay TV industry. The study is of great significance to the government of Kenya since the improved performance of the Pay TV companies can generate more revenue for the government in form of taxes and license fees. New and existing Pay TV companies may also benefit from this study by employing agile strategies for competitive advantage as well as getting more information on how to handle uncertain situations in the business environment. Additionally, academicians who may want to research more on strategic agility may benefit by accessing more information from this study. The concept of strategic agility has not been sufficiently researched especially on the variables such as leadership agility, cultural agility, business agility, career agility and how they influence organizational performance. This research was anchored on four theories namely; The Great Man Theory, Theory of Change, Theory of Constraints, and the Broaden and Build Theory. The reviewed literature on these theories indicates that there is a positive influence of strategic agility on organizational performance. This is a cross-sectional study which involves 60 employees with managerial roles. Descriptive design was used in this study adopting qualitative and quantitative methods. Data collection was done through closed and open-ended questionnaires, keeping a register of questionnaire distribution and feedback collection. A pilot study was carried out to determine the accuracy, clarity and relevance of the study questionnaire. Data analysis was carried using SPSS (V29) and multiple regression analysis. The study found that leadership agility, cultural agility business agility and career agility all have a significant effect on the performance of Pay TV firms in Kenya. The top leadership of firms in Pay TV industry should establish cross-cultural collaboration initiatives to encourage knowledge-sharing and teamwork among employees from different cultural backgrounds, foster a culture that encourages and rewards agile leadership behaviors, such as risk-taking and experimentation and encourage leaders to seek mentorship and coaching to enhance their agility capabilities, should invest in technology and infrastructure that support flexibility and adaptability in responding to market changes and also develop cross-functional teams that can quickly adapt to changing business requirements and address emerging challenges, implement career development plans and pathways that align with the organization's strategic objectives and employees' career aspiration and encourage a growth mindset among employees.

Macroeconomic Factors and Stock Price Volatility at Nairobi Securities Exchange

The stock price volatility has been a problem in stock markets affecting the stock returns of firms listed at Nairobi Securities Exchange (NSE). Although some scholars have focused on the issue of high share price volatility, the issue persists and still hinders the development of the market. This study main objective is to determine the effects of macroeconomic factors on volatility of stock prices of stock market in Kenya. The specific objectives are; to establish the effects of inflation on stock prices of stock market in Kenya; to establish the effects of interest rates on volatility of stock prices of stock market in Kenya; and to establish the effects of exchange rates on stock prices of stock market in Kenya. The research was anchored on four theories and two models namely the Arbitrage pricing theory, Modern portfolio theory, information cascade theory, Fisher’s theory, Efficient market hypothesis and present value model. The research applied a causal research design, which followed the positivism philosophy of research and knowledge creation. The study focused on analyzing the effects of macroeconomic factors on volatility of stock prices of the NSE 20 share index in Nairobi Securities Exchange over a period ranging from 2009 to 2021. The design allowed collection of monthly data on the study variables and time series analysis of the hypothesized relationships between independent and dependent variables and conducted both descriptive statistical analysis and inferential statistical analysis. Descriptive statistical analysis involved generation of central tendency statistics such as mean, minimum and maximum points of the data as well as standard deviations to show the spread of the data from the mean. The inferential statistical analysis utilized in this study was Error Correction Model, guided by the results of cointegration tests. From the descriptive statistical analysis, the study found that between 2009 and 2021, interest rates demonstrated an average of approximately 9.155, inflation averaged around 150.916, foreign exchange rate maintained an average of roughly 94.219, and stock price volatility averaged 0.4%. The Error Correction Model revealed that, interest rates have no significant effect on stock price volatility of NSE 20 share index (β = -0.00034, p.value = 0.805). Similarly, inflation has no significant effect on stock price volatility of NSE 20 share index (β = -0.0000394, p.value = 0.218). However, foreign exchange has negative and significant effect on stock price volatility in Kenya (β = -0.0139, p.value = 0.017). The study concluded that interest rates and inflation have no significant effect on stock price volatility in Kenyan stock market, while foreign exchange has inverse and significant effect on stock price volatility. Thus, the study recommends that market participants, including government, investors, traders, policy makers and financial institutions, should incorporate foreign exchange rate movements into their risk management strategies. Adequate measures and policies such as market circuit breakers and enhanced risk management protocols should be in place to ensure smooth market operations and prevent any disruptions due to changing foreign exchange dynamics

Fast growth and slow policy: a decade of digital credit in Kenya

Abstract The proliferation of mobile enabled instant credit products (digital credit) across emerging markets and developing economies poses challenges for policy-makers and practitioners that seek to expand access to credit while protecting consumers. The Kenya market, which experienced tremendous commercial innovation and growth from 2012 to 2022, but also significant consumer harms and unequal competition, offers a valuable reference case for actors in other markets facing rapid expansion of new fintech products and firms. Despite the substantial and often polarized debate around the country’s experience, there has been little systematic effort to capture and interpret key facts from the development of the digital credit market in Kenya during its first decade. This paper aims to fill that gap by providing a policy case study informed by original interviews of key stakeholders and extensive review of related academic and grey literature. The analysis suggests that policy responses were often inadequate to address the growing risks in Kenya’s digital credit market and presents five policy reflections from Kenya’s experience to support consumer protection and competition in emerging digital credit markets.

An Analysis of the Derivatives Market Performance in Kenya: A Case of Nairobi Securities Exchange Derivatives Market

The growth of the financial derivatives market has been identified as a significant channel to drive the overall growth of the capital market, and the development of capital market efficiency has been widely regarded as crucial. The performance of derivatives in Kenya has been fluctuating causing uncertainty in the market. The study analyzed the performance of the Nairobi Securities Exchange Derivatives Market in Kenya since its establishment in July 2019. The study draws on secondary data from the Capital Markets Authority and Nairobi Securities Exchange from July 2019 to December 2023. Descriptive statistics was adopted for data analysis with the help of SPSS software. Findings indicated that Safaricom Plc has been active and the best-performing company in trading single futures derivatives contracts at NEXT with the highest total turnover in Kenya shillings. The other companies that followed Safaricom closely were Equity Group Holdings and Kenya Commercial Bank. The overall performance of other companies in terms of derivatives contracts traded over the years has been fluctuating. Overall, the NEXT has made many strides in terms of derivatives trading in Kenya. The securities market regulators need to encourage all listed companies to participate in the Nairobi Securities Exchange Derivatives market to increase options available at the market and improve the Country’s economy.

Determining the combined effect of financial system architecture, macroeconomic factors and governance on the development of local currency government bond market in Kenya

This study sought to examine the current state of the local currency government bond market in Kenya to determine the effects of financial system structure, macro-economic factors and the country’s governance on its development. The study used secondary data from the World Bank’s WDI and DataStream databases for the period 1998 to 2019. Descriptive statistics - applying trend analysis, measures of central tendency and dispersion and documents analysis were employed to conduct a stocktaking of Kenya's government bond market development since its inception, while multiple linear time series regression using Ordinary Least Square (OLS) technique was employed to examine the determinants of the government bond market development in Kenya. In the findings, the combined model, corporate bond, political stability and general election were largely positively significant. Bank credit to the private sector and fiscal balance were positively significant, whereas inflation and interest capping were negatively significant at a 5 per cent confidence level. GDP_ growth rate was significant at 10 per cent. The study thus recommends that the government's efforts should focus towards building the financial markets, controlling its micro and macro-economic factors and building a strong administrative structure in its quest to achieve its Vision 2030 objectives of financial independence. It is this structure that will encourage bond market growth and liquidity that will, in future, enable them to achieve financial independence.

Comparing simple and complex regression models in forecasting housing price: case study from Kenya

PurposeThe housing market in Kenya continues to experience an excessive imbalance between supply and demand. This imbalance renders the housing market volatile, and stakeholders lose repeatedly. The purpose of the study was to forecast housing prices (HPs) in Kenya using simple and complex regression models to assess the best model for projecting the HPs in Kenya.Design/methodology/approachThe study used time series data from 1975 to 2020 of the selected macroeconomic factors sourced from Kenya National Bureau of Statistics, Central Bank of Kenya and Hass Consult Limited. Linear regression, multiple regression, autoregressive integrated moving average (ARIMA) and autoregressive distributed lag (ARDL) models regression techniques were used to model HPs.FindingsThe study concludes that the performance of the housing market is very sensitive to changes in the economic indicators, and therefore, the key players in the housing market should consider the performance of the economy during the project feasibility studies and appraisals. From the results, it can be deduced that complex models outperform simple models in forecasting HPs in Kenya. The vector autoregressive (VAR) model performs the best in forecasting HPs considering its lowest root mean squared error (RMSE), mean absolute error (MAE), mean absolute percentage error (MAPE) and bias proportion coefficient. ARIMA models perform dismally in forecasting HPs, and therefore, we conclude that HP is not a self-projecting variable.Practical implicationsA model for projecting HPs could be a game changer if applied during the project appraisal stage by the developers and project managers. The study thoroughly compared the various regression models to ascertain the best model for forecasting the prices and revealed that complex models perform better than simple models in forecasting HPs. The study recommends a VAR model in forecasting HPs considering its lowest RMSE, MAE, MAPE and bias proportion coefficient compared to other models. The model, if used in collaboration with the already existing hedonic models, will ensure that the investments in the housing markets are well-informed, and hence, a reduction in economic losses arising from poor market forecasting techniques. However, these study findings are only applicable to the commercial housing market i.e. houses for sale and rent.Originality/valueWhile more research has been done on HP projections, this study was based on a comparison of simple and complex regression models of projecting HPs. A total of five models were compared in the study: the simple regression model, multiple regression model, ARIMA model, ARDL model and VAR model. The findings reveal that complex models outperform simple models in projecting HPs. Nonetheless, the study also used nine macroeconomic indicators in the model-building process. Granger causality test reveals that only household income (HHI), gross domestic product, interest rate, exchange rates (EXCR) and private capital inflows have a significant effect on the changes in HPs. Nonetheless, the study adds two little-known indicators in the projection of HPs, which are the EXCR and HHI.

Characterising the HIV self-testing market in Kenya: Awareness and usage, barriers and motivators to uptake, and propensity to pay.

HIVST has a key role in ensuring countries meet their 95-95-95 goals. For HIVST to be sustainable, we should explore sharing costs with users as well as the overall experience. This research explores why a consumer would use HIVST and willingness to pay for HIVST through surveying 1,021 participants 18-35 living in Nairobi or Kisumu who were not diagnosed as HIV positive and who are not currently taking PrEP for HIV. A majority (89.8%) would pay 100 KSH and 64.7% would pay 300 KSH, at higher prices likelihood of paying dropped sharply. Price reduction or subsidization coupled with interventions to address the identified barriers may increase HIVST uptake. We identified 5 distinct groups based on willingness to pay and drivers/ barriers to HIVST uptake. These were created using dimension reduction, hierarchical clustering, and k-means analysis to group respondents. 79% of participants had ever heard of HIVST, and 24% had ever used HIVST. The 5 groups included active users, unlikely users, and three segments interested in HIVST with different barriers: need for HCP support, need for increased privacy/confidentiality, and fear of positive result/disclosure.

An Empirical Study of Regulatory Capture in Kenya's Maize Seed Sector.

In sub-Saharan Africa, public sector breeding programs depend on local seed companies to deliver new maize varieties to farmers. Such varieties are needed to adapt cropping systems to climate change. While dozens of small and medium seed companies have emerged in the last two decades, the maize seed market in Kenya remains dominated by the parastatal seed company Kenya Seed Company, with multinational seed companies making major inroads. We assess whether parastatal and multinational seed companies have captured Kenya's seed laws to the detriment of local small and medium seed companies ('regulatory capture'), negatively effecting competition and the capacity of local companies to introduce new varieties in the hybrid maize seed market. We conducted in-depth interviews based on legal clauses with maize seed companies active in Kenya, as well as interviews with regulators and stakeholders. Results show that local companies do not feel disadvantaged compared to their multinational counterparts or the parastatal. However, all of them are wary of the entry of new actors. Moreover, through excessive procedures, the Kenyan government keeps a sovereign grasp over the seed sector. Despite frustrations with some of these excessive procedures, seed companies felt comfortable in the protective environment of the Kenyan seed market and were generally happy with the technical aspects of Kenya's seed laws, which are based on international norms. We suggest some improvements to make Kenyan seed laws more conducive to varietal turnover, in line with seed companies' suggestions and taking into account the political sensitivities of the Kenyan government.

Spatial Price Transmission of Maize Grain Prices among Markets in Kenya, Tanzania, and Uganda: Evidence from the Nonlinear ARDL Model

Despite the commercial links that exist among Tanzania, Kenya, and Uganda, with maize as the most heavily traded agricultural commodity, there is a deficiency in the empirical literature on the price transmission of maize or any other traded agricultural commodity among these countries. This study attempts to fill this gap in the literature by examining the spatial price transmission of wholesale maize grain prices among these countries using the Nonlinear ARDL model. The empirical results indicate that there is no statistically significant relationship between wholesale maize prices in Uganda and those in Tanzania. However, a 1% increase (decrease) in wholesale maize prices in Kenya leads to a 0.8943% (0.7363%) increase (decrease) in wholesale maize prices in Uganda. Similarly, a 1% increase (decrease) in wholesale maize prices in Kenya leads to a 0.6079% (1.1752%) increase (decrease) in wholesale maize prices in Tanzania. On the other hand, a 1% increase (decrease) in wholesale maize prices in Uganda leads to a 0.5652% (0.6487%) increase (decrease) in wholesale maize prices in Kenya, while a 1% increase in wholesale maize prices in Tanzania leads to a 0.3635% increase in wholesale maize prices in Kenya. These findings are relevant for the development of strategies to improve market conditions and enhance growth in trade among the three countries.

Transitioning to Electric Mobility: Low Hanging Fruits in the Two and Three-Wheeler Public Transport Market in Kenya

Transitioning to Electric Mobility: Low Hanging Fruits in the Two and Three-Wheeler Public Transport Market in Kenya

Impact of Gross Domestic Product on the Growth of Bond Markets in Kenya

Purpose: Bond markets are an example of financial markets that are very essential in promoting greater economic efficiency by channeling funds from savers to investors. This study investigated the influence of gross domestic product on growth of bond market in Kenya. The study further examined the moderating effect of diaspora remittance on the relationship between gross domestic product and the growth of bond market in Kenya.
 Methodology: Secondary data was obtained from the CBK, KNBS and NSE and covered a period of 20 years. Time series regression analysis was used in the study. The study employed descriptive research design.
 Findings: The study established that the gross domestic product had a major effect on the growth of bond market for the period of study. The study findings revealed that the GDP had a strong positive influence on the growth of bond markets. After moderation the effect improved more with the significance p-value. The study concluded that there was a positive statistically significant effect of GDP on bond market growth in Kenya.
 Unique Contribution to Theory, Policy and Practice: The study recommended that the capital market authority as a policy maker should enhance policies that promote investment in the bond market. Further studies should also be carried out incorporating other macroeconomic variables not included in this study. Finally, the study also recommended that CBK should ensure that it improves on measures that control the GDP and diaspora remittance as they influence the growth of bond market.

Analysis of Product Differentiation on the Performance of Supermarkets in Nairobi City County, Kenya

The rapidly changing Kenya market creates challenges for retail stores to retain their customers and build new competitive strategies against modern retailing. The study sought to analyze the influence of product differentiation strategy on the performance of supermarkets in Nairobi, to evaluate how cost leadership affect performance of supermarkets in Nairobi. The target population consisted of 147 managers and supervisors form the 7 main supermarkets in Nairobi City County. Primary data was collected using a semi—structured questionnaire and the data was analyzed using SPSS. Descriptive and Inferential statistics were used to analyze the data. The study used a multiple regression model to show the relationship between the study variables. The results obtained were represented on tables, charts and graphs. The findings revealed an R squared of 0.696 and adjusted R squared of 0.663 at 95% significance level, implying that the competitive strategies adopted in this study explained 69.6 percent of the variation in performance of supermarkets in Nairobi City County. The study also found that product differentiation strategy as an aspect of competitive strategies had a positive and significant effect on the performance of supermarkets in Nairobi (β =.357, p=.029<.05). The study concluded that product differentiation as a competitive strategies adopted had positive and significant effect on the performance of supermarkets in Nairobi. The study thus recommended that the supermarkets in Nairobi City County should consider fully implementing competitive strategies such as product differentiation as ways of enhancing their performance. Keywords: Product Differentiation, Performance, Supermarkets, Competitive Strategies

Modeling the dynamic effects of macroeconomic factors on housing performance in Kenya

PurposeThis paper studies the dynamic effects of selected macroeconomic factors on the performance of the housing market in Kenya using Autoregressive Distributed Lag (ARDL) Models. This study aims to explain the dynamic effects of the macroeconomic factors on the three indicators of the housing market performance: housing prices growth, sales index and rent index.Design/methodology/approachThis study used ARDL Models on time series data from 1975 to 2020 of the selected macroeconomic factors sourced from Kenya National Bureau of Statistics, Central Bank of Kenya and Hass Consult Limited.FindingsThe results indicate that household income, gross domestic product (GDP), inflation rates and exchange rates have both short-run and long-run effects on housing prices while interest rates, diaspora remittance, construction output and urban population have no significant effects on housing prices both in the short and long run. However, only household income, interest rates, private capital inflows and exchange rates have a significant effect on housing sales both in the short and long run. Furthermore, household income, GDP, interest rates and exchange rates significantly affect housing rental growth in the short and long run. The findings are key for policymaking, especially at the appraisal stages of real estate investments by the developers.Practical implicationsThe authors recommend the use of both the traditional hedonic models in conjunction with the dynamic models during real estate project appraisals as this would ensure that developers only invest in the right projects in the right economic situations.Originality/valueThe imbalance between housing demand and supply has prompted an investigation into the role of macroeconomic variables on the housing market in Kenya. Although the effects of the variables have been documented, there is a need to document the short-run and long-term effects of the factors to precisely understand the behavior of the housing market as a way of shielding developers from economic losses.

Excess demand amid quality misperceptions: the case for low-cost seed quality signalling strategies

Abstract Planting quality seed is essential for increasing crop productivity. We study the potato seed market in Kenya and estimate farmers’ willingness to pay for certified, clean and ware potato seeds that use reputation and certification strategies at varying costs to provide quality signal. We find that farmers are prone to quality misperceptions and adjust their bids for high (low) quality seed upward (downward) in response to positive (negative) quality signals. Effective demand for quality seeds exceeds supply 286 per cent after correcting quality misperceptions. We make a strong case for the need of low-cost alternatives to meet this excess demand for quality seeds.

“Sitawahi Sahau Hasara Nilipata” (I Will Never Forget the Losses I Incurred): Impact of Covid-19 on Food System Actors at the Eldoret Food Market in Kenya

ABSTRACT The corona virus disease of 2019 (COVID-19) is a global public health crisis that disrupted the food supply chain. The aim of the study was to investigate the impact of COVID-19 on food vendors at the Eldoret Food Market in Kenya. A qualitative study was conducted and data was collected using in-depth interviews among 12 food vendors. Data was analyzed using thematic analysis and three themes emerged: challenges faced, lessons learnt, and government interventions needed. Market food vendors are an integral part of the food system and should work at improving the quality of their food system to make it resilient.

The Cryptocurrency Market in Kenya: A Review of Awareness and Participation by the Youth

This study examines Kenyan youths' level of knowledge and involvement in the cryptocurrency industry. Digital currencies, known as cryptocurrencies, use a peer-to-peer technology to speed up internet transactions. The idea of cryptocurrencies started in the 1980s but has since developed significantly. The study collected secondary data and conducted online surveys. In this study, panel data from four different cryptocurrencies' values, transaction fees, and volumes over a six-year period were studied. The findings indicate a connection between the number of cryptocurrency transactions, their prices, and their transaction costs. The research also demonstrates how much the youth in Kenya are aware of and use cryptocurrencies. This paper also highlights some factors that may be considered when engaging in crypto business. It also highlights some of the principal properties of cryptos. The study concludes that there is a need for both local and international regulation of the cryptocurrency market to boost investor confidence and improve security.