FACTORS INHABITING GROWTH AND PROFITABILITY OF PRIVATE INVESTMENT IN MIGORI COUNTY

BY:

NYAMOHANGA JULIUS NGOINA

REGISTRATION NUMBER: K24/6198/2011

A RESEARCH PROPOSAL SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF BACHELOR OF ECONOMICS AND STATISTICS.

SEPTEMBER-NOVEMBER 2013.

DECLARATION

This research proposal is my original work and has not been presented for a degree award in any university.

NAME : NYAMOHNGA JULIUS NGOINA

REGISTRATION NUMBER: K24/6198/2011

SIGNATURE : ……………………………….. DATE………………………

This research proposal has been submitted for review with my approval as a university supervisor.

LECTURERS NAME : DR.JENIFFER NJARAMBAH

DEPARTMENT : APPLIED ECONOMICS

SCHOOL : ECONOMICS

KENYATTA UNIVERSITY

SIGNATURE …………………………….. DATE………………………..

TABLE OF CONTENTS

DECLARATION…………………………………………………………………………………………………………………………………………i

TABLE OF CONTENTS……………………………………………………………………………………………………………………………….ii

ACRONYMS AND DEFINITION OF TERMS………………………………………………………………………………………………….ii

ACKNOWLEDGEMENT…………………………………………………………………………………………………………………………….iv

ABSTRACT…………………………………………………………………………………………………………………………………………….…v

CHAPTER 1: INTRODUCTION

1.1 Background information……………………………………………………………………………………………………..11.2 Statement of problem………………………………………………………………………………………………………..31.3 Research questions…………………………………………………………………………………………………………….31.4 Research objectives……………………………………………………………………………………………………………41.5 Significance of study………………………………………………………………………………………………………….41.6 Justification of study…………………………………………………………………………………………………………41.7 Scope and Limitation of study……………………………………………………………………………………………5

CHATER 2: LITERATURE REVIEW

2.1 Introduction...................................................................................................................6

2.2 Role of private investment in economic development...............................................7

2.3 Structural organization of Kenya Private Sector Alliance................................................92.4 Role of government regulation in promoting private investment sector.......................102.5 Factors affecting growth and profitability of private investments.................................122.6 Theoretical and conceptual framework..........................................................................15 2.6.1 Theoretical framework.............................................................................................16 2.6.2 Conceptual framework.............................................................................................172.7 Overview of literature.....................................................................................................18CHAPTER 3: RESEARCH DESIGN AND METHODOLOG 3.1 Introduction.....................................................................................................19 3.2 Research Design...............................................................................................19 3.3 Study Area.........................................................................................................20 3.4 The target population.......................................................................................20 3.5 Sample size and sampling procedure................................................................20 3.6 Data type and source.......................................................................................21 3.7 Sampling Technique.............................................................................................21 3.8 Research instrument............................................................................................21

3.9 Data collection.....................................................................................................22 3.10 Data analysis......................................................................................................22 3.11 Data presentation..............................................................................................22 3.12 Ethical issues......................................................................................................23

REFERENCES.........................................................................................................................24

ACRONYMS AND DEFINITION OF TERMS

G o K -GOVERNMENT OF KENYA

K P S A -KENYA PUBLIC SECTOR ALLIANCE

K I -KEY INFORMANTS

G N P -GROSS DOMESTIC PRODUCT

I P A R -INSTITUTE OF POLICY ANALYSIS AND RESEARCH

E P Z -EXPORT PROCESSING ZONE

F D I -FOREIGN DIRECT INVESTMENT

N S E -NAIROBI STOCK EXCHANGE

C B K -COMMERCIAL BANK OF KENYA

K C B -KENYA COMMERCIAL BANK

N B K -NATIONAL BANK OF KENYA

P F T -POLICY FRAMEWORK OF INVESTMENT

P S D S -PRIVATE SECTOR DEVELOPMENT STRATEGY

ACKNOWLEDGEMENT

Glory and honor be to God almighty for His continued guidance, grace and giving me the strength throughout the period of writing this proposal.I wish to acknowledge and appreciate my supervisor DR, Jennifer Njaramah for the patience, guidance and encouragement through the technicalities of writing this research proposal.I also acknowledge help from my friends, family and colleagues and anyone who participated in any way to make this proposal successful. I also feel indebted to my friends, Aggrey, Robert and Paul who greatly encouraged me and guided me whenever necessary.May God bless you all.

ABSTRACT

Investment in Kenya is mainly in three categories, public investments, foreign investments and private investments. Private investments carry a larger percentage of around ( ).Private investments in Kenya contribute greatly and exponentially in economic growth and development.Private investment is mainly owned by, individuals, partnerships groups as well as associations.Migori County specifically has been experiencing gradual expansion in private investments in different fields, main being in agricultural sector, educational sector, in transportation, financial sector, fishing industry, wholesales, hotels and bars and many other small enterprises.Private investment in Migori County is one of the central to performance of all sectors of the economy. The private investment in Kenya makes a great contribution towards economic growth and development of the country through provision of job opportunities.Therefore owners of these sectors require favorable working environment to work effectively for more profitability and expansion.This is why the efficiency of private investment sector in Kenya remains a major concern in promoting harmony among various interested economic sectors.The study will find out the factors inhibiting the growth and profitability of private investment in Migori County.The study will be descriptive and will use the survey design methodology. Primary data will be collected using questionnaire and interview. Secondary data will be collected from published and unpublished sources.Simple random sampling will be used to draw sample of 50 respondents.The data will be analyzed by gathering statistics from both qualitative and quantitative data.The data will be presented using tables and graphs.The findings of the study should draw the nature of Migori county private investment system. It will also highlights the difficulties the private investors in Migori county are facing or are likely to face. The major challenges facing private investors in Migori county making it less profitable and hindering its growth will also be analyzed.The study aim at making recommendations based on the findings which should highlight the measures that should be taken to improve the performance, efficiency, growth and profitability of private investment in Migori County.

CHAPTER 1: INTRODUCTION

1.1 Background study

Migori County is located in south nyanza region along the boundary of Kenya and Tanzania within nyanza province in Kenya. Migori county comprises of five constituencies in seven districts; kuria west, kuria east, Migori, Rongo, uriri, awendo and nyatike districts.As a result Migori County has been attracting private investors due its strategic allocation in various fields.Migori county private investment has been experienced in many fields. Amongst them being agriculture where the investors have invested in crop production in cash crops. The main ones being Tobacco mainly grown in kuria west and kuria east districts, sugarcane plantation mainly in awendo and some few parts of the county, maize plantations that of late has greatly spread due to arising Nuru International Non Governmental Organization(N I NGo) . Still in agriculture investors in Migori County has also grown roots in animal investments, mainly seen in cattle keeping, bees in nyatike district and poultry in Rongo district.Migori County has also experienced private investments in transportation sector, which comprises of pipeline, a classified road network.The road industry is the most competitive and relatively efficiency in Migori County. The main transport services provided by Nissan matatus, minibuses buses and cars.The transport is essential for domestic economy and also an important source foreign exchange, generating at least us dollar 95- 150 per year (World Bank 1995).Apart from transport and agriculture investor in Migori County have shown an interest in investing in financial sectors through investment in bonds and shares as well as micro financial banking likes of Kenya Women Finance Trust.Another area that has shown a great interest in private investor in Migori County is wholesales sections the likes of shivling nakumatt, tusker and many others not leaving behind hardware, hotels, bars and other small enterprises all over markets in Migori County.But with all these, investments taking place in Migori County, many challenges has been hindering the growth and profitability of the sector hence it calls upon a direct intervention on these issues.Hence, the study if focused to address the issues on these factors hindering the growth and profitability of private investment in Migori County.The study will try to answer questions or predicaments in the minds of these willing investors as well as new investors planning to invest in Migori County. It will look on appropriate measures government of Kenya should put in place in order to improve on the profitability of private investment sector specifically in Migori County

Also the study will focus on improvement and encouragement on private investment as a source of job opportunities. Also the organization structure of private sector alliance will be seen as how it can promote profitability and growth of private investment in Kenya- a case study of Migori County. Since private investment is the central to performance of all sectors of the economy because it’s a service provider for all other sectors of the economy. The sector in Kenya is multi- mode, making great contribution to economic growth and development of the country through provision of job opportunities and contribution the sector makes in gross national product (G N P).Indeed, (Kenya vision 2030, 2007) identifies the private investment sector as one of the key area that is targeted to contribute to Gross National Product and also as a source of employment to the youths, hence acting as a strong pillar for economic growth, development and overall macroeconomic stability.And finally, it is against this background that the study will investigate the factors inhibiting the growth and profitability of private investment in Migori County.

1.2 Statement of the problem

For as long as private investment exists, it has being experiencing exponential growth in numbers of investors and the number of people being employed in the private investment sector.This growth has however been hampered by a number of constraints. Growth profitability of the private investment sector in Migori County. In spite of the various the various constraints that affects the growth and profitability of private investment in Migori County, few studies have been done to document it.The main purpose of the study is to investigate the factors inhibiting the growth and profitability of private investment in Migori County.The study aim at making recommendations based on the findings, which should highlights the measures that should be taken to improve the performance, efficiency, growth and profitability of the sector.

1.3 Research Questions1. What is the organization structure of Kenya Private Sector Alliance (K P S A)?2. What role do government regulations play in promoting private investment in

Migori County?3. What problems hinder the growth of private investment in Migori County?4. What changes would help in improving the performance of the private investment

sector?

1.4 Research objectives The general objective of the study is investigating the factors inhibiting the growth and profitability of private investment in Migori County.

1.4.1 Specific Objectivesa) To investigate the organizational structure of K P S A.b) To assess the role of Kenya in promoting growth and profitability

private investment the county.c) To investigate the problems affecting growth and profitability of

private investment in md) Migori County.

e) To make recommendation aimed at improving performance of the private investment sector.

1.5 Significance of the studyFindings from this study will provide a sound basis for critical policy decisions by the government, policy makers, all of which will be aimed at improving both the growth and profitability of the private investment sector.The study will also of importance to current investors and potential investors in private investment sector.The study findings will also be important to the new investor and the willing entrepreneurs willing to invest in the sector.Also, the study findings will add to the existing body of knowledge especially in private investment sector.

1.6 Justification of the studyThe study is justified by the fact that based on available literature, although other has been done elsewhere regarding the private investment sector, there is limited documentation of the factors inhibiting growth and profitability of private investment in Migori County. Private investment sector is the important sub sector of Kenya private sector alliance that affects the growth and development of the Kenyan economy directly and indirectly.It is therefore necessary to have full information about the factors that affects the performance and growth of private investment sector.

1.7 Scope and limitation of the studyThe study will cover the private investments within Migori County in different towns in the county from different fields.The study will cover five towns within Migori County, Rongo town, Awendo town, Migori town, Sirare and Kehancha town.The study will majorly dwell on, agricultural sector, transportation sector, financial sector, educational sector, wholesaler and hotels.The study is based in an urban setting and is designed as a social survey and will be limited to the responses to the various questionnaire items.

CHAPTER 2: LITERATURE REVIEW

2.1 INTRODUCTION The purpose of the literature review is to set the study in a broader context through Investigation of relevant literature and other sources.The review will cover; role of private investment in economic development, the structural organization of Kenya private sector alliance, the role of government regulation in promoting efficiency and performance in private investment and the problems affecting growth and profitability of private investment.The theories and arguments in the literature will be identified and expanded.

2.2 ROLE OF PRIVATE INVESTMENT IN ECONOMIC DEVELOPMENT

Despite the growing support of market oriented strategies, and for a greater role of private investment, empirical growth models for developing countries typically makes no distinction between to private and public component of investment (Reinhart, Carmen, 26 July 1989).The government, generally perceives as investment friendly, has enacted several regulatory reforms to simplify both foreign and local investments, with the most important of these being the creation of Export Processing Zone(EPZ) The export processing zone is expected to grow rapidly through input of Foreign Direct Investment (FDI) over the next decade (Healy Consultants).Agriculture is one of Kenya’s three most economic sectors. In 1980, agriculture accounts for 30% of Kenya overall GDP. In 1990, the value of agriculture added to GDP was 30% in 2000, it increased to 32%, and in 2011 the value of agriculture added the overall GDP fell to 23%.Agriculture as one of the private investment in Kenya continuous to dominate Kenya economy, although only 15% of Kenya’s total land area has sufficient fertility and rainfall to be formed and only 7% or 8% can be classified as first class land.In 2006, almost 75% of working Kenyans made their livings on land, compared with 80% in 1980.

Industry and manufacturing as another area of private investment in Kenyan economy, where the experienced private investors in Kenya account for only 14% of GDP. This level of manufacturing represents only a slight increase since independence.Expansion of the sector after independence, initial rapid has stagnated since the 1980s.However, due to urbanization, the industry and manufacturing sector have become increasingly important to the Kenyan economy, and has been reflected by an increasing GDP per capita.Kenya is east and central Africa’s hub for financial services. The Nairobi Stock Exchange (NSE) is ranked 4th in Africa in terms of market capitalization.The Kenya Banking system is supervised by the Central Bank of Kenya (CBK).As of late July 2004, the system consisted of 43 commercial banks (down from 48 in 2001), several non bank financial institutions, including mortgage companies, four saving and loan association and several score foreign exchange bureaus. Two of the largest banks, the Kenya Commercial Bank (KCB) and the National Bank of Kenya(NBK), are partially government owned and others are foreign and family owned.Private investment in Kenya has risen from 1989 to 2009(World Bank).In 2009 the World Bank estimated 2.7 million men and women in the nonfarm self employment category. The men up to 1.4 million and 1.3 of women.As a result it calls upon further studies to be done on the role of private investment in our economy particularly in Migori County.

2.3 THE STRUCTURAL ORGANIZATION OF KENYA PRIVATE SECTOR

Schein (1987) defines an organization as a rational coordination of activities of number of people for the achievement of some explicit goal or purpose through division of labor and functions and through hierarchy of authority and responsibility.Cole (2000), defines structural organization as the sum total of the ways in which it divides its labor into distinct tasks and then achieves coordination between them. He cites that organization is a social structure that is composed of people working towards a common goal.An association on the other hand is a number of people who comes together to meet their common interest. In developing countries, associations are the main ways of working with and supporting one another in target groups.Private investment is essential for economic growth and development and poverty eradication. It increases the productivity capacity of an economy, drives job opportunities, brings innovation and new technologies and boosts income growth. But amount of private investment, particularly in Kenya and other developing economies, fall short of development needs. And the benefits of investment in emerging and transition economies are unevenly shared among sectors and region.The policy framework for investment (PFT) was developed to help government overcome this private investment deficit. Founded in the 2002 united nation monetary

consensus on financial for development which ascribes to government the responsibility for creating the coordination for private investment flourish, the PFT aim to support development and the fight against poverty and promote responsible participation of all government in the global economy.When the NARC government comes to power in 2003, there was a great energy and optimism about Kenya’s potential. In 2003 the government of Kenya developed economic recovery strategy for wealth and employment creation as a basis for channeling this energy and optimism into productive activity.The ERS provided the broad platform for the social and economic development of Kenya between 2003 and 2007.Since 2003, progress has been made in implementing the strategy. However. Some challenges remain in to be overcome if Kenya to achieve the sustainable high level of growth envisioned by the ERS. A critical component of this effort will be to remove existing constraints to private sectors growth and development. As part of this effort, the government of Kenya, under leadership of the ministry of trade and industry began extensive consultations with a wide range of stakeholder in order to develop the Private Sector Development Strategy (PSDS).

2.4 PROBLEMS FACING PRIVATE INVESTMENT IN KENYA

Historically, Kenya has welcomed foreign investments, but the government has talks overall, entrepreneurs express resentment at being unable to break out of the traditional agricultural sector and into the small businesses rank much of the hostility to foreign control counter more on Asian entrepreneurs than on western multinational. Asian much of the domestic manufacturing, redistribution and retail industry.In the late 1960s, a campaign to kenyanise the economy achieved few of its desired results. Businesses owners of both Asian and European descent benefited from governmental schemes since they could claim Kenyan citizen.Today, tactics have changed. The call now is for indigenization of the economy. Indigenization is aimed at maturing Kenyan entrepreneurs instead of foreign who holds Kenyan passport.Direct Foreign Investment (DFI) in the economy is dominated by British companies with US firms in second place. Among the British multinational in the country is Lonrho East Africa which has interest in tourism industry, printing, transportation, office equipment and agriculture.A number of US companies have sold their Kenyan subsidies to local interests. Firestone East Africa ltd, union carbide ltd and Fox Theater ltd were all sold to national Kenyans.But these sales are more consequences of economic condition in the united state than deteriorating investment climate in Kenya.

According to US embassy in Nairobi, American firms currently own currently 73 subsidiaries in Kenya.Overall, private investment has decline in Kenya recently at it has in most of Africa. This trend has alarmed the Kenyan government to try to counter the trend. The government established an investment promotion counter to act as an intermediary between the key economic ministries of the government and private investors. The Investment promotion counters goal is to develop a business climate more conducive to investment by both foreign and local investors. This problem is clear: lack of adequate incentive for investors, a limited domestic and government red tape. The centre has tried to streamline bureaucratic procedures. In the best potential investors had to get their approval of several government offices be a proposal could finalized. It was sometimes a 6 months process. The IPC has tried to whittle that down to a maximum of two months.According to annual report, challenges facing private sectors by Altius Associates (Altius), The USA buyout market faces a challenging environment of rising purchase price multiple for high quality companies.

2.5 FACTORS AFFECTING GROWTH AND PROFITABILITY OF PRIVATE INVESTMENT

The establishment of Development finance institution, such as CDC was to provide finance for private investment in developing countries. High levels of private investment are associated with faster rates of economic growth and in turn, growth is critical factor in reducing poverty.The literature review addresses two sets of questions: what are hindrances in private investment in Kenya as a country; the cases of lack access to finance by private investors in Kenya, and particularly in Migori County. A good investment climate provides opportunities and incentive for firms to invest profitably, create jobs and expand output, thereby increasing private investment and growth. The literature review has shown that the better the investment climate the high the private investment are likely to be.However, in Kenya and in Migori County in particularly, businesses frequently operates in investment climate that undermine investment incentives to invest and grow. Businesses seek to maximize the risk adjusted rate of return to investment after tax. Investment climate constraints serve to depress the potential rate of return on investment, increase risks and prevent the entrepreneur from capturing the return an offer. The literature highlights some investment climate constraints that affect the rate of private investment and the survival and growth as:1. Macro instability i.e. economic, social and political that deter investment by

making future rewards more uncertain or undermining the values of assets.Studies has shown that the greater the level of instability, the lower the rate of private investment and growth. Instability also increases the risks of firms going

bankrupt, suffering slow growth or contracting if potential conflict issues. Fiscal and monetary policies that reduce inflation, policies that help to establish a competitive exchange rate, and political and social stability are needed to sustain high rate of investment and growth.

2. Business regulation and licensing , whereas firms need to be regulated an licensed, if the cost they incur in complying with regulation are unnecessary high, business entry and firm growth will be lower.The literature points to faster growth countries improve their rank in the World Bank’s doing business index, especially if they move from being one of the worst perfumers to being amongst the best.The literature also has shown that poor licensing and regulation leads to low entry rate of new investors and lower productivity and growth of established investors. However, by itself, better businesses regulation may not result in faster economic growth.

3. There is strong cross country evidence in the literature that weak institutions particularly for the protection of property right, an effective that is unable to enforce contracts, reduces investments and growth. This is supported by firms’ level evidence which shows that secure property right and better contract enforcement enable firms to grow. They increase their incentive to invest longer term, feed secure in trying on new supplier and enter into more complex contracts.

4. Excessively high rate of tax exact a high cost in terms of lower private investment and growth. They reduce the incentive to invest because the after tax returns to invest are lower. In addition of companies with the administration of tax can decrease business entry and the growth of established firms.As well as reducing tax rate, policies that the tax base, simplifying the tax structure, improve administration and give greater autonomy tax agencies help to reduce these constraintsAnd finally financial constraints and infrastructure. Firms need to be able to access to external finance to invest more. The higher the cost of capital the low the expected rate of return to the entrepreneur.The literature has shown that financial has deeply measured by the ratio private credit to GDP, results in high rate of growth and faster growth in the income of the poor, especially in the poor countries with less developed financial sectors.Studies have shown that investors able to access the external finance are more likely to survive, invest and grow than those denied access.Access to infrastructure allow firms to become more productive, reduce transaction (ICT) and transportation cost.There is ample evidence to show that investment in infrastructure leads to fast growth.Studies also points to high level of investment, greater productivity and faster growth of firms that have better access to infrastructure.

Great private investment in infrastructure, public and private and high expenditure maintenance are needed to reduce this constraint.Generally a good investment climate provide opportunity and incentive for firms to invest productively, create jobs and expand, therefore promoting economic growth and poverty reduction.(World Bank (2005).

2.6 THEORETICAL AND CONCEPTUAL FRAMEWORK

2.6.1 THEORETICAL FRAMEWORKTheoretically, the private investment sector exhibit competitive market.The market has many producers of both goods and services that they sell them to different consumers.The study will test the hypothesis that:

1. Profitability and growth of private investment is enhanced when there is good organization of Kenya private sector alliance.2. There is positive relationship between the roles played by the private investment and growth and development of the Kenyan economy.3. Government regulation influences positively the growth and profitability of the private investment sector in Kenya.

2.6.1 CONCEPTUAL FRAMEWORKThe major aim of research should be either relate data to a theory or generate a theory from data. Thus, in order to hold existing and new knowledge, theory should provide a conceptual framework so that knowledge can be interpreted for empirical application.The conceptualization is based on the following variables;a) Organizational structure of private investmentb) Problem affecting growth and profitability of private investment businessesc) Role of government regulation in promoting efficiency and profitability of private

investment sector.These variables form the study’s independent variables. The dependent variables are profitability and growth of private investment.

FIGURE 1.1 THE CONCEPTUAL FRAMEWORK

2.7 OVERVIEW OF LITERETUREDespite the important role played by the private investment sector our economy, the objective of making the private sector profitable well regulated, attractive to invest in and efficient in service delivery has not yet been met.There is therefore a gap posed on the need to study the factors that hinder growth and profitability of the private investment in Migori County.

CHAPTER 3: RESEARCH DESIGN AND METHODOLOGY

3.1 INTRODUCTIONThis chapter gives the various method used to carry out the study and gather the necessary data.It gives the study Area, the Target population, the sample size, Research design, sampling procedure and also discusses the data collection and analysis procedure.

3.2 RESEARCH DESIGNThe research design will be descriptive. The major purpose of this research design is to give an explanation of the state of affairs as it exists at present.The researcher will apply this design in investigating the current situation pertaining the factors inhabiting the growth and profitability of the private investment in Migori County.

3.3 STUDY AREAThe study area of this research will be private investment in Migori County. This area comprises of five constituencies. The area is at the boarder of Kenya and Tanzania. The area of study of Migori county will only cover five major towns; Rongo, Awendo, Migori, Sirare, and Kehancha.The area experiences various types of private investment but the study will majorly dwell on; agriculture, financial, transport, education, wholesales and hotels as the main area of study.

3.4 THE TARGET POPULATIONThe target population of this study includes all private investors; including employers and employees who have operated in Migori County at least for the past six months.The study will also consider the young entrepreneurs in Migori County and focuses on the challenges they are facing.

3.5 SAMPLE SIZE AND SAMPLING PROCEDUREThe sample for this study will be drawn through a mixture of methods.This will target 50 informants as follows:

Informants Numbers percentage

Agricultural investors 15 30

Transportation investors 10 20

Investors on Education 5 10

Investors on financial sector

8 16

Investors on hotels 6 12

Investors on wholesales and other small enterprises

6 12

TOTAL 50 100

The private investigate target population must have served on the market for at least six months.The sample size will be considered appropriate based on the ground that social researchers agree that on the extreme 30 cases are generally regarded as minimally adequate for statistical data analysis (Singleton, 1993).To come up with the sample size proposed above, multistage sampling methods will be used.To come up with the sample from the sample frame, the names investors and their employees who have served the markets for more than six months will be extracted and then using random sampling, 15 investors on agriculture, 10 investors on transportation, 5 investors on education, 8 investors on financial sector, 6 investors on hotels and 6 investors on wholesales and small businesses.The list of investors with more than 12 months in the market will be extracted and this will be treated as Key Informants (KI) and information will be gathered from them through interviews and questionnaires.

3.6 DATA TYPE AND SOURCEBoth primary and secondary data will be collected and used. Primary data will be collected by administering questionnaires to private investment operators and their workers.The questionnaires will be useful in collecting data that the researcher can’t observe and will also allow respondents the freedom in answering questions and a chance to provide in-depth responses. For those who will indicate inability to comprehend the questionnaire, the researcher will use the questionnaire to conduct a face interview.In addition, the researcher will also use secondary data from published sources to supplement the primary data.

3.7 SAMPLING TECHNIQUESProbability random sampling strategy will be made use to ensure the selection of an appropriate sample of the study.The investment function will also be used:

I=F(r, Y G) Where;

r is the interest rate.Y is the real incomeG is government.

3.8 RESEARCH INSTRUMENTSPrimary data will be collected by use of questionnaires. Questionnaires will be administered during off peak hours when the respondents are less busy and a polite deadline will be agreed between the researcher respondents. After the stipulated period, filled questionnaires will be collected for analysis.Secondary data will be collected from published and unpublished sources to help the researcher in coming up with the recommendations.

The attached is the questionnaire sample that will be used during data collection.

A PROPOSED QUESTIONNARE TO BE USED DURING DATA COLLECTION

MIGORI COUNTY PRIVATE INVESTORS QUESTIONNAIRES

DISTRICT..............................................................................................................................

NAME OF AN INVESTOR......................................................................................................

TYPE OF BUSINESS..............................................................................................................

PERIOD OF TIME OF HIS/HER BUSINESS IN MIGORI COUNTY.............................................

CHALLENGES FACING HIS/HER BUSINESSES

1..........................................................................................................................................

2.........................................................................................................................................

3..........................................................................................................................................

4..........................................................................................................................................

5..........................................................................................................................................

INVETORS RECOMMENDATION ON THESE CHALLENGES

...........................................................................................................................................

............................................................................................................................................

............................................................................................................................................

3.9 DATA COLLECTIONData will be collected by administering questionnaires to Migori count private investors and their workers as well.The questionnaires will be useful in collecting data that the respondent can’t observe and will also all respondents the freedom in answering questions and a chance to provide in-depth responses.For those who will indicate inability to comprehend the questionnaires, the researcher will use the questionnaire to conduct a face to face interview.In addition, the researcher will also use secondary data from published sources to supplement the primary data.

3.10 DATA ANALYSISDescriptive statistics will be used to analyze the data to meet the study’s objectives.Both qualitative and quantitative data will be analyzed and adopted so that it can be possible to extract meanings from the study results.Quantitative analysis will involve use of graphs and percentages to determine the factors hindering growth and profitability of private investment in Migori County.

3.11 DATA PRESENTATIONThe data will be presented in form of tables and graphs to show the factors inhibiting growth and profitability of private investment in Migori County.Calculations of percentages of respondents per each effect will also be shown.The findings of the study will be able to show to what extend the identified factors affects the growth and profitability of private investment in Migori County.It will also show the organization structure of the Kenya private sector alliance in Kenya and how the regulatory framework has affected profitability and performance of private investment in Migori County.

3.12 ETHICAL ISSUESThe study will be conducted with the permission of relevant authorities who will facilitate in the researcher in getting the necessary data to achieve the research objectives.Answering of questionnaire items will also be done by willingness of the respondents and no one will be forced to answer what they don’t want to do or answer.

REFERENCES

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2. Balassa, Beca, 1978, Exports and economic: further evidence, Journal of Development economics Elsevier, vol 5(2), pages 181-189.June.

3. Palm, Thomas/Qayum, Abdul, 1985. Private and Public investment analysis, Cincinnati. South.4. Gen, Jack D, 1980- 83. Trend in private investment in private investment in development

country. Washington DC world Bank.5. Pfeffernmam, Guy Pierre/Madrassy,1989. Trends in private investment in development control.

Washington DC World Bank.6. Asante, Yaw, 2000. Determinant of private investment behavior. Nairobi Africa economic

Research Consorktium.7. Milica, c. 2001. British investment in Kenya. Page 5 col: 1-3.8. Mwabu, Germano M. 1989 Foreign direct investment in Kenya. Nairobi Kenyatta university9. Impact of institutional f.10. Karumba, Mary Muthoni. 2009. The actors and Linearization policies on private investment in

Kenya (1965-2007). Nairobi Kenyatta University.11. Mukala, G.K, G.K. 1996. Determinant of investment in the informal carpentry sub-sector; a case

study of kitui Town in Eastern Kenya. Nairobi Kenyatta University.