Effects Of Policy Intervention Of Domestic Investment On Devolved Systems Of Government. A Case Of Nairobi City County

ABSTRACT

In the past, Kenya has experienced changes in its investment policy formulation process and strategic trade and industrial policies have been mainly influenced by the changing political set-up of the country. However Kenya is faced with a number of challenges which include structural reforms’ poor economic policies and inconsistent efforts, corruption and bad governance, public services deteriorations made the foreign investors to be discouraged since 1980s when things began to change negatively. This has resulted to Kenya certainly lagging far behind in terms of domestic investment contribution to Gross fixed capital formation (GFCF) compared with other developing countries. The study general objective was therefore to analyze the effects of policy intervention of domestic investment on devolved systems of government. Specifically the study aimed at evaluate the effect of risk policy, funding policy, promotion policy and management policy on domestic investment in devolved systems of government in Nairobi City. Keynesian Theory the Public Debt and the Ricardian Equivalence Theorem underpinned the study. Descriptive survey research design was adopted. The population of this study was the top management of Ministry of Industry, Trade and Cooperatives in Kenya, Kenya National Bureau of Statistics, Kenya Investment Authority, Kenya Private Sector Alliance (KEPSA) and Nairobi Business Association who totaled to 447. A sample of 134 was arrived at and to pick the study sample both stratified and systematic sampling were used. A semi structured questionnaire was used to collect primary data. Data collected was analyzed by descriptive analysis. Descriptive statistics was used to analyze the mean score and standard deviation. Further, regression analysis was used to measure the correlation coefficient between the dependent and independent variables. The study established that respondents agreed with statements on risk policy and its impact on domestic investment in Kenya to a great extent. From the analysis, it was established that funding policies ensured promotion of domestic investment in Kenya to a great extent. Further, the study highlighted that investment policy covered in domestic investment principles to a great extent. The study established that management policies effect domestic investment in Kenya. The study concluded that risky policy effect domestic investment in Kenya. It was established that funding policies ensured promotion of domestic investment in Kenya. The study established that management policies effect domestic investment in Kenya. This study recommends that, in implementing the devolution framework, the institutions1 overseeing1 its1 implementation1 must1 guard1 against1 the1 risks1 that1 could1 hinder1 successful1 1decentralization. The1 study1 further1 recommends1 that1 during1 the1 formative1 stages1 of1 the1 implementation1 of1 1devolution, the1 national1 government1 must1 set1 aside1 sufficient1 funds1 for1 capacity-building1 of1 county1 governments1 in1 terms1 of1 development1 of1 the1 necessary1 infrastructure1 and1 human1 1resource. The1 study1 also1 recommends1 that1 upgrading1 and1 improving1 legal1 and1 regulatory1 frameworks1 to1 reduce1 investment1 risks1 by1 putting1 in1 place1 measures1 addressing1 unlawful1 1expropriation. From1 the1 above1 1analysis, it1 is1 clear1 that1 democratic1 decentralization1 has1 the1 potential1 to1 reduce1 1inequalities.