Strategic Factors Affecting Competitiveness Of Public Development Finance Institutions In Kenya

Abstract

After independence in 1963, Kenya government has consistently and continuously followed the world trend of ensuring development to the citizens. During 1960s and 1970s, development finance institutions (DFIs) proliferated around the world as financial intermediaries that aimed to improve social welfare. The Kenyan DFI’s especially the public, were formed around 1960's. They were to act as catalysts to economic growth with clear cut mandates, targeting specific sectors of the economy. The Kenya Vision 2030, speaks of development by aiming to transform Kenya into a newly industrializing, middle-income country, providing a high quality of life to all citizens by year 2030 in a clean and secure environment. It envisages a cut out role of the financial sector which embeds the DFI’s. Despite the government’s support, little or bare minimum seem to have been achieved by the public DFI’s. Coupled with the world desire through the United Nations call for sustainable financial development and need for governments to have sustainable approaches to budget financing for development projects, then there begs the question whether the DFI’s have been competitive enough in the local and international space. By end of year 2017, the government issued a circular to the executives of the DFI’s confirming the intention to consolidate the DFI’s into one. Currently, the government’s big talk is the big four agenda i.e., food security, healthcare, affordable housing and manufacturing that have now been allocated four hundred billion Kenya shillings in the 2018/2019 budget. The competitiveness of the public DFI’s has never been to test than now. This paper seeks to study and evaluate the strategic factors that affect the competitiveness of Kenyan Public DFI’s. The factors’ effect on the performance of the institutions then remains a clear pointer to the institutions, government and other interested players in Kenya development agenda to respond appropriately emphasizing to deliver meaningful development that mass Kenyans have desired for many years while the mirage of better lives will be extinguished. Descriptive research design will be applied for this study. A census of seven public DFI’s will be taken into consideration to examine panel data representing factors of competitiveness for ten years prior to year 2017 for each DFI. In descriptive statistics, the study will use mean, standard deviation and scatter plot. In inferential statistics, the study will use multivariate regression analysis to determine the relationship between the dependent variable (Competitiveness of DFI) and independent variables. The results of this study will be significant in reflecting how and whether long term plans that resonate to firm’s structures and international practices, innovation, funding and the government’s role in terms of policy helps the DFI’s either to thrive or deflate. The initial expectation is that there is unutilized space for the Kenyan Public DFI’s to fulfill their mandate more efficiently and effectively. The recommendations will zero in, up scaling efforts for Kenya DFI space to be competitive such as Industrial Development Corporation(IDC) of South Africa and others in developing and developed countries.