ABSTRACT
Kenya seeks to transform into a middle-income country by 2030 with target annual growth rates
of 10 percent. However, this target has not been realized since growth rates are under 10 percent
while 36 percent of the population lives below the poverty line. While this has been interpreted
as an underperformance by various studies, this study attempted to show that the economic
growth witnessed in the years 2007 to 2018 pointed to a resilient economy characterized by an
average steady growth rate of 5.4 percent despite the deterioration of the global economic
outlook. This resilience coincided with the adoption e-commerce, increased output in absolute
values and an emphasis of Information Communication Technology as a key industry under the
economic pillar of the Kenya Vision 2030. More importantly, this period also saw the emergence
of unique payment gateways particularly mobile payment gateways which this study argued for
and used as a key enabler for E-commerce among other enablers. E-commerce activities increase
efficiency and ease of doing business by reducing costs and barriers of operation, which are
important for achieving economic growth. This, therefore, renders e-commerce critical to
economic growth in transition countries such as Kenya. This study focused on Kenya because of
a key e-commerce enabler in the form of mobile payments services. Various studies showed
positive findings on the effect of e-commerce on output and total factor productivity. However, a
majority of the studies focused more on regions outside Africa and Kenya. This called for an
investigation into the effect of e-commerce on output and total factor productivity in Kenya. The
objectives of the study were, to investigate the contributions of e-commerce to economic output
and the effect of e-commerce on total factor productivity in Kenya. To achieve the objectives,
the study developed a framework following the neoclassical and endogenous growth theories.
The study used quarterly time-series data from the period 2007 to 2018. All relevant time-series
tests were performed. To address both objectives, the study applied Ordinary Least Squares
regression models. The results suggested that e-commerce had a positive effect on output.
However, the coefficient was not statistically significant. This is perhaps because of low
adoption by enterprises and market dominance by one mobile payment platform. The effect of ecommerce
on Total Factor Productivity was positive when considering the value of mobile
payments while that of card payments was negative. Therefore, for Kenya to experience episodes
of output growth and an increase in total factor there should be continued investments towards ecommerce in terms of capital and mobile payments technology.
KITHINJI, E (2021). Effect Of Electronic Commerce On Output And Total Factor Productivity In Kenya. Afribary. Retrieved from https://afribary.com/works/effect-of-electronic-commerce-on-output-and-total-factor-productivity-in-kenya
KITHINJI, ELVIS "Effect Of Electronic Commerce On Output And Total Factor Productivity In Kenya" Afribary. Afribary, 01 Jun. 2021, https://afribary.com/works/effect-of-electronic-commerce-on-output-and-total-factor-productivity-in-kenya. Accessed 10 Oct. 2024.
KITHINJI, ELVIS . "Effect Of Electronic Commerce On Output And Total Factor Productivity In Kenya". Afribary, Afribary, 01 Jun. 2021. Web. 10 Oct. 2024. < https://afribary.com/works/effect-of-electronic-commerce-on-output-and-total-factor-productivity-in-kenya >.
KITHINJI, ELVIS . "Effect Of Electronic Commerce On Output And Total Factor Productivity In Kenya" Afribary (2021). Accessed October 10, 2024. https://afribary.com/works/effect-of-electronic-commerce-on-output-and-total-factor-productivity-in-kenya