Capital allowances and growth of listed manufacturing firms in Kenya
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Date
2020
Authors
Syuki, Winfred Makaa
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
Manufacturing in Kenya has been on the decline for a considerable period with its contribution to Gross Domestic Product stagnating at 10 % from the 1960’s. According to the Government of Kenya, the manufacturing sector has high, yet untapped potential to contribute to employment and Gross Domestic Product growth. Generally, the manufacturing sectors’ average growth percentage has continued to stagnate at three to four per cent over the years. The performance of the manufacturing sector is affected by several factors one of them been the high cost of doing business. Excessive taxation in the form of high tax rate, double and multiple taxations are some of the challenges facing manufacturing industries. To mitigate this challenge, the government has advanced various tax incentives to the manufacturing sector. However, despite the various tax incentives being made towards these firms, their effect on their performance had not been investigated. Hence, this study sought to fill this gap. Therefore, the main aim of this study was to assess tax incentives and their effect on the growth of selected manufacturing firms in Kenya. Specifically, the study sought to; examine the effect of capital allowance on growth of listed manufacturing firms in Kenya. The study employed longitudinal design to determine the effect of capital allowance tax incentive on performance of listed manufacturing firms in Kenya. The target population for the study was 13 manufacturing firms listed at the Nairobi Securities Exchange in Kenya during the years 2012 to 2018. The study adopted a census design since the entire population was considered. The study measured the entire target population and a census was carried out to systematically acquire and record information regarding secondary data on company boards for each of the thirteen listed firms. The study used secondary data sourced from the listed firms’ published annual reports and statistics. Secondary data was retrieved from manufacturing firms’ websites, Nairobi Securities Exchange websites, Capital Markets Authority Library and Kenyan Investors website. The study utilized both descriptive and inferential statistics using Standard statistical techniques including Pearson correlation coefficient and regression analysis was employed in the analysis. The study estimated a Panel Data Regression Model. All the analysis was done using the statistical package for social sciences (SPSS Version.24). Analysis of variance (ANOVA) will be used to establish if there is a statistical significance between the observed and expected values with the Pearson Chi-square giving the degree significance of the relations hence establishing the research questions. In multivariate analysis, multiple regression analysis models were used to determine the type of relationship that existed between independent and dependent variables. From the findings, the study found that there was a strong positive correlation between the listed manufacturing firms in Kenya and W&T. The study further reveals that there was a negative relationship between ID and IBD and growth of listed manufacturing firms in Kenya. Based on the study findings, the study concluded that, capital allowance incentives affected the growth of selected manufacturing firms in Kenya positively. The study also concluded that various tax incentives needed to be made sustainable in order to ensure consistency in the performance of the firms.
Description
Project
Keywords
Investement deduction