Browsing by Author "Mwangi, Samuel C."

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    The effects of exchange rate liberalization in Kenya on French beans exports
    (Pak Publishing Group, 2014) Mwangi, Samuel C.; Mbatia, Oliver; Nzuma, Jonathan Makau
    The adoption of a floating exchange rate system in Kenya was an effort to make it more aligned to the market determined equilibrium rate. However, there is limited empirical evidence that success has since been achieved in realizing the objective for which the foreign exchange market was liberalized. The exports of French beans are one of the leading contributors to foreign exchange earnings in Kenya. Nevertheless, the economic impacts of exchange rate liberalization on French beans exports in Kenya are unclear. This paper evaluates the magnitude and direction of the effects of exchange rate liberalization on French beans exports from Kenya to its major trading partners in the European Union. Monthly data for a fixed exchange regime represented by the period from 1990-1993 and a flexible regime represented by the period from 1994-2011 was used in the estimation of an export demand model. The empirical results show that the liberalization of the exchange rate led to an increase in the French beans export volumes from Kenya to the European Union. The paper recommends that, even if the Kenyan exchange rate system is flexible, exchange rate stability is necessary to avoid adverse effects of exchange rate volatility on French beans exports. Therefore, stability of the exchange rate is needed, not at a fixed level but by controlling exchange rate volatility using the exchange rate target band.
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    Effects of Exchange Rate Volatility on French Beans Exports in Kenya
    (Springer, 2014-01) Mwangi, Samuel C.; Mbatia, Oliver; Nzuma, Jonathan Makau
    In Kenya, exports of French beans are one of the leading foreign exchange earners. Nevertheless, the economic impacts of exchange rate volatility on French beans exports in Kenya are unclear. This paper evaluates the magnitude and direction of the effects of exchange rate volatility on French beans exports from Kenya to its major trading partners in the European Union using monthly data from January 1990 to December 2011. The generalized autoregressive conditional heteroscedasticity model was employed to measure exchange rate volatility. The analytical framework used encompasses estimation of an export demand model, cointegration and specification of an error correction model. The results reveal a negative and significant short and long run effect of exchange rate volatility on French beans exports. Specifically, the empirical results show that a unit increase in exchange rate volatility in Kenya leads to more than proportionate decrease in French beans exports to the European Union. The paper recommends firms to hedge their currency exposures in the short run and implementation of economic policies aimed at stabilizing the exchange rate in the long run to improve Kenya’s export performance.
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    The Effects of Market Reforms on Irish Potato Price Volatility in Nyandarua District, Kenya
    (University of Nairobi, 2010-08) Mwangi, Samuel C.
    In the early 1990’s, the Kenyan government implemented refor ms in the agricultural sector that affected the volatility of agricultural product prices. However, there is lack of empirical evidence on the effects of these reforms on the level and volatility of Irish potato prices. This study evaluates the effects of market reform policies involving the decontrol of input and output prices on the evolution and volatility of Irish potato prices in Nyandarua district. The purpose of this study is to examine the effect of market reforms on Irish potato price variability. By using an Autoregressive Conditional Heteroscedasticity in Mean model, a monthly time series data set for the period 1986-2005 was utilized to identify the effects of the market reforms on the volatility of Irish potato prices. Results indicate that the implementation of market reform policies led to higher prices and reduction of price volatility. An increase in price level coupled with a decrease in price volatility after the implementation of market reform policies implies that with the reforms the Irish potato producers were better off than without the reforms. The high prices and low price volatility served as an incentive for the Irish potato farmers to boost production during the post reforms period. The study recommends development of storage and communication infrastructure, use of commodity exchange markets, improvement in productivity, and provision of an efficient market information system as necessary measures to enable the farmers to realize maximum benefits from the effects of the implementation of market reform policies.
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    Effects of Market Reforms on Irish Potato Price Volatility in Nyandarua District, Kenya
    (2013) Mwangi, Samuel C.; Mbatia, Oliver; Nzuma, Jonathan Makau
    This paper evaluates the effects of market reform policies on the volatility of Irish potato prices in Kenya through an analysis of a 20 year monthly time series data set from Nyandarua district using an autoregressive econometric approach. The empirical results show that there has been a rise in Irish potato prices and lowering of price volatility after the implementation of market reform policies. The real prices exhibit seasonal variations around an upward trend with the prices being depressed during the harvesting period. The price risk premia is found to be negative revealing that the cost of carrying out Irish potato business declined, and farmers were better off with the implementation of the reforms. The collection and distribution of price information, storage of Irish potatoes during periods of glut, improvement in productivity and use of commodity exchange markets can help to reduce price volatility.
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    An Evaluation of Effects of Exchange Rate Volatility on Kenya’s French Bean Exports
    (University of Nairobi, 2015-04) Mwangi, Samuel C.
    During the period after the adoption of a floating exchange rate regime in Kenya, there has been substantial volatility produced by the regime. In spite of the considerable foreign exchange contribution of Kenya’s French beans subsector to the economy, the effects of exchange rate volatility on it remains unclear. This study evaluated the effects of exchange rate volatility on Kenya’s French bean exports to major markets in the European Union. Monthly secondary data for the period January 1990 to December 2011 were used in the estimation of an export demand model. In measuring exchange rate volatility, this study employed the generalized autoregressive conditional heteroscedasticity (GARCH) model. The empirical results show a negative effect of exchange rate volatility on French bean exports and a stimulation of the exports by a shift in the exchange rate regime from fixed to floating. An increase in the level of income in the importing countries led to a rise in the volume of Kenya’s French bean exports while an increase in the relative price led to a decrease in demand in the European Union. From these results, this study recommended that policy makers need to maintain a robust exchange rate regime that will ensure a non-volatile behaviour. Policy measures should be instituted aimed at mitigating the high exchange rate volatility to promote French bean exports from Kenya. In order to cushion exporters from high exchange rate volatility, the government could set up a export stabilization facility and develop forward market for French bean exports. There is need for policy makers to work towards increasing the volume of exports through diversification of market destinations by targeting local, regional and export markets as opposed to the current practice. This can be realized through regional and export market promotion initiatives as well as consistent compliance with quality standards. Innovative ways of meeting the standards and facilitation of smallholder farmers to meet these standards is required. In addition, French bean export promotion incentives such as input subsidies and tax concessions need to be considered. To limit over-reliance on exporting as a major channel for French beans produce in Kenya, the government and key stakeholders in the industry need to be proactive in promoting utilization of French beans locally through value addition and creating awareness to the local consumers on the nutritive value of the vegetable coupled with research and extension initiatives. To reduce the relative price of French bean exports from Kenya, there is need for structural reforms that contribute to increased productivity and the enhancement of international competitiveness.