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Posted: June 6th, 2022
What are the factors impeding Kenya’s economic development?”
Literature Review:
What factors impede Kenya’s economic development?” sub-question “Is grand corruption a significant factor?
Introduction
The issue of factors that are fundamental in economic growth has caused controversial debate among various stakeholders. Kenya, as a country, has been working to see its economy develop, but there are pending factors that have been impeding its achievement. Grand corruption remains the topmost concern as it has invaded almost every sector, including employment, health care, education, industry, society freedom, among others. Notably, sustained economic development is a fundamental thing that will improve its citizens’ living standards in every aspect. Therefore, when a country faces challenges in its economic growth, its people are struggling to live better lives, which trickles down to the following generations.
This literature review seeks to understand the present literature on the factors impeding economic development in Kenya and specifically the role of grand corruption. The review will consider peer-reviewed journals and articles from Google Scholar published in the last ten years, 2011 to 2021.
Literature Review
According to Semmanda (2020), different countries will have different factors that lead to economic growth. Semmanda’s (2020) research investigated the factors affecting economic growth in Sub-Saharan Africa. Through a fixed effects regression model, the research conducted, a panel data investigation was conducted to find that variables such as population growth and life expectancy had a significant impact on economic growth and development for countries in Sub-Saharan Africa. Other factors such as foreign direct investment, democracy, corruption level, expected schooling years, and economic freedom do cause some impact on economic growth but not a statistically significant effect.
Kedogo (2013) specifically looked into how Small and Medium Enterprises (SMEs) ‘ growth, which are considered engines of growth in developing countries like Kenya, affects their economic development. However, research has shown that three out of five SMEs fail after starting. Through an analysis of data collected from a descriptive survey, the research found that education and training affected the growth and development of SMEs considerably. Notably, the Business registration process, which encompasses getting the right licenses, had the most significant effect on SMEs’ growth. Other fundamental factors included innovation and physical infrastructure. Notably, peer influence was found to correlate with the growth and development of an SME negatively. Mbugua et al. (2013) focussed on the tailoring and dressmaking enterprises and specifically what factors were affecting them to indicate that inadequate finances, poor business management skills, poor marketing, and entrepreneurial attributes of its owners were fundamental in the growth of the enterprises. On the same breadth of SMEs and their impact on Kenya’s economic growth, Gachuhi (2016)looked into the social and economic factors affecting SMEs’ growth and development. Through a descriptive research design, the researcher would find that SMEs’ growth has a significant positive relationship with both social and economic factors. Factors such as reduced taxes, better security, better infrastructure, stopped corruption, innovative products, and established mechanisms for SME owners to access low-cost loans are fundamental to their growth and development.
According to Mohajan (2013), Kenya’s economy continues to be the largest in the East African region. It has one of the most literate populations in Sub-Saharan Africa; however, over 60% of Kenyan people live below the poverty line. The dramatic increases in inflation have been seen to reduce economic growth and worsen Kenyan citizens’ poverty level. A systematic review of current literature demonstrated that the country’s economic development would rely on agricultural improvement. Since 90% of the population depends directly or indirectly on agriculture for their household income, the agricultural sector needs to be industrialized if the country is economically developed and poverty levels are reduced. Mohajan (2013) did cite reports from Transparency International (TI) on Kenya’s corruption issue. The country has consistently performed poorly within a score of 2 or less on the Corruption Perceptions Index, demonstrating a severe and widespread corruption challenge. The research stated that fighting corruption would be a significant milestone for Kenya to develop economically.
Kivindu (2015) looked into the growth rate of gross domestic savings in Kenya, which has been declining over the years. The research incorporated the cointegration and Vector Error Correction model to determine the impact of factors in Kenya’s gross domestic savings. The coefficient in technological advancements was positive with a 5% level of significance, while the coefficient on inflation rate was negative with a 5% level of significance in the gross domestic savings. The research found that the growth rates in gross domestic savings determine the economy’s level of investments and have a fundamental role to play in the economic growth agenda.
Thuku et al. (2013)concentrated on the debate between population growth and economic growth in Kenya since the two factors have been found to have a positive correlation. Using the Vector AutoRegression estimation model and the annual time series data from 1963 to 2009, the findings included the fact that an increase in Kenya’s population positively impacts the country’s economic growth and development. Kenya was found to be in the second stage of the demographic transition called the post-Malthusian regime, where the relationship between the two is solid and positive. According to Peterson (2017), the problem with the population growth in Kenya, which high fertility levels have induced, reduces its people’s general well-being since there are more benign effects on their savings and economic growth. Kenya has a high population without enough resources to support its people leading to the government having a higher burden of catering for all these people making it difficult to direct resources to support their economic growth (Peterson, 2017).
Corruption culture has been one of the agonizing economic issues that have affected the business landscape and the labor productivity level of Kenya. Transparency International reported that in 2019, Kenya obtained a score of 28 out of 100 in the global Corruption Perceptions Index (CPI), which is below the global average of 43 and the Sub-Saharan average of 32 (Transparency International, 2019). The organization has raised essential concerns stating that Kenya is at a critical point. The principal arms of government tasked with fighting corruption need to put extra effort and show tangible results. According to Hope Sr. (2014), the Kenyan economy has been drastically dropping because of the corruption of top government officials as individuals and businesses “cripple” economically when they try to stay afloat in these challenging times. Corruption as a tool used by the top government officials to amass as much wealth as possible has left the Middle and Lower class citizens who feel the impact as their living standards continue to deteriorate at an alarming rate. As a country with ample resources and hardworking citizens, Kenya is not stepping up to fight corruption but rather divert the public funds to private institutions owned by the top officials. The same is echoed by Arcy & Cornell (2016) in their article as far as the scandal of devolution is concerned.
According to Arcy & Cornell (2016), Kenya has not balanced between human capital and economic growth. For instance, the North Youth Service (NYS) Scandal has left Kenyans begging for answers for $17 million as meant to be a spear for devolution. As a corruption scandal orchestrated by the top government officials, many governments proposed projects have not been implemented as the shadowy network of the so-called service providers did not do their job. Economically, when human capital is being hampered and taken to its drain, labor productivity, general output, and economic growth are affected simultaneously. Consequently, when the human capital is altered, the youth’s and the younger generation’s future is being affected negatively. This is a cost of fortune to the country. This is affirmed by Omar (2018), who indicated that corruption has been undermining Kenya’s economic growth via its negative effect on several important sectors such as education, health, water supply, infrastructure, among others. As the resources are drained, and the projects such as industrial development and infrastructure development, the future are not bright economically for any country, no matter the GDP level.
As deduced from the study by Hope (2017), corruption in the Kenya Government, right from the payment of bribes and mischievous scandals for the super-rich, has been the talk of the day. Hope (2017) points out that through bad governance manifested with Corruption, economic efficiency in its institutions is the end-result. For instance, in the top government parastatals, ministries, and organizations, Kenya has topped the list in reporting the most scandals in corruption. Billions of dollars lost in these institutions are felt when the middle and lower-class citizens feel basic needs and health problems. In another article, Hope (2013) points out that Corruption in Kenya has led to a hike in prices while the quality of the products is substandard. As a developing country and an emerging economy, Kenya has been at the forefront of making “Unreasonable” deals and contracts hence leading to monopolies within the public and private sectors of the economy. As a result, the provision of quality products and services is not met because the production is insufficient and less supervision of its distribution. Corruption has led to the manipulation of policies in the country through bribery and nepotism hence dragging the economy back.
Conclusion
Kenya’s economic growth is dependent on numerous factors, as reported by various scholars. Notably, corruption remains to be the main impediment to its economic growth and development. Nonetheless, the present literature fails to report on the actual causes of this corruption in the country. There is a research gap on whether the extent of corruption in various institutions is because it is a cultural thing. Finding the actual causes should aid in having the right mitigation factors.
The Ontological and Epistemological Approach
Ontology is concerned with what exists in the world about which humans can acquire knowledge. Through ontology, a researcher can determine how certain they can be on the nature and existence of an object being studied. In studying corruption and its impact on Kenyan economic development, the relativist ontology will be adopted, a philosophy of reality constructed within the human mind. There is no particular actual reality existing. Reality is relative depending on how persons have experienced issues at a particular time and space.
Epistemology is concerned with the study of knowledge, and it will influence how a researcher frames their study. In this case, the interpretive/constructivist approach is to be adopted where the primary objective is gathering information from the interviewee’s worldview. A descriptive process is used for understanding and interpreting the responses.
References
D’Arcy, M., & Cornell, A. (2016). Devolution and corruption in Kenya: Everyone’s turn to eat?. African Affairs, 115(459), 246-273.
Gachuhi, S. M. (2016). An Assessment of socio-economic factors influencing the growth of small and medium enterprises in Kenya: A Case study of Nairobi County (Doctoral dissertation, United States International University-Africa).
Hope, K. R. (2013). Tackling the corruption epidemic in Kenya: Toward a policy of more effective control. Journal of Social, Political, and Economic Studies, 38(3), 287.
Hope, K. R. (2017). Corruption in Kenya. In Corruption and Governance in Africa (pp. 61-123). Palgrave Macmillan, Cham.
Hope Sr, K. R. (2014). Kenya’s corruption problem: causes and consequences. Commonwealth & Comparative Politics, 52(4), 493-512.
Kedogo, B. K. (2013). Factors influencing growth and development of small and medium enterprises in Kenya, a case of Huruma division, Nairobi County (Doctoral dissertation, University of Nairobi,).
Kivindu, M. M. (2015). Factors determining gross domestic savings in Kenya (Doctoral dissertation, University of Nairobi).
Mbugua, J. K., Mbugua, S. N., Wangoi, M., Ogada, J. O., & Kariuki, J. N. (2013). Factors affecting the growth of micro and small enterprises: A case of tailoring and dressmaking enterprises in Eldoret.
Mohajan, H. (2013). Poverty and economic development of Kenya.
Omar, M. (2018). The implications of corruption on Kenya’s sustainable development and economic growth (Doctoral dissertation, University of Nairobi).
Peterson, E. W. F. (2017). The role of population in economic growth. Sage Open, 7(4), 2158244017736094.
Semmanda, F. (2020). Factors affecting economic growth in sub-Saharan Africa: A panel data analysis of the factors that affect economic growth and sub-Saharan African countries’ development.
Thuku, G. K., Paul, G., & Almadi, O. (2013). The impact of population change on economic growth in Kenya. International Journal of Economics and Management Sciences, 2(6), 43-60.
Transparency International. (2020). Corruption perceptions index 2019 – Transparency international. Retrieved from https://tikenya.org/corruption-perceptions-index-2019/
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