Structural adjustment programs and agricultural growth in Kenya

Abstract

The study examines the relationship between structural adjustment programs and agricultural growth in Kenya. Statistics indicate that agricultural value added growth in Kenya is important as it influences the overall GDP growth. Despite this, the performance of the agricultural sector has shown mixed fortunes since independence. Adoption and implementation of reforms such as currency devaluation, trade liberalization, privatization, and removal of subsidies in the 1980s and 1990s was seen as a way of reversing the widespread social and economic problems of developing nations. However, there exists a difference in opinions on how these structural adjustment programs have affected the agricultural sector performance. The study uses time series data spanning from 1975 to 2010 to analyze how the above reforms affected Kenyan agriculture .. Tests of normality, unit roots test and cointegration test was applied to determine the properties of the data. An error correction model was estimated to link the short run and the long run relationships. Results indicate that structural adjustment programmes had a negative and significant long run effect on per capita agriculture GDP. The study concluded that Post Election Violence has a negative and significant long run effect on the per capital agriculture GDP. The study also concluded that the lagged per capital agricultural performance has a positive and significant effect on the per capita agricultural performance. The results also show 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. The study recommends that some policies such as the removal of subsidies should be eliminated. Other policy recommendations are to enhance adaptation of privatized agricultural institutions; encouragement of value addition in primary agricultural products. on price mechanisms policies such as development of infrastructure in rural areas should be encouraged and the government should ensure political stability in electioneering years.