Capitulo V: Propuesta del Modelo de Análisis de la Gestión Institucional
5.4. Comprobación del modelo a partir del caso de estudio de la Universidad San Agustín
5.4.1. Valoración de cada aspecto
4.4.1 High-Level Demographics
Kenya had a population of 38,610,097 million according to the 2009 Population and
Housing Census report.6432.3% of Kenyans under that report are urbanised, while 67.7%
remain rural. Only 3.6% households own at least one computer, while about 63.2% own or
have access to a mobile phone.
Chart 4.1: Selected Economic Indicators
Source: Kenya Population and Housing
For consumer-orientat
with under-14s numbering more than 16.4 million, and the over
64Kenya National Bureau of Statistics, ‘Kenya Population and Housi <http://www.knbs.or.ke/Census%20Results/KNBS%20Brochure.pdf
4.4 Analysing Kenya’s Capital Consumers: The Private Sector
Level Demographics
a population of 38,610,097 million according to the 2009 Population and
32.3% of Kenyans under that report are urbanised, while 67.7%
Only 3.6% households own at least one computer, while about 63.2% own or
s to a mobile phone.
Chart 4.1: Selected Economic Indicators
Source: Kenya Population and Housing Census Report, 2009
ated industries, persons aged 15-64 years number 20.7 million,
14s numbering more than 16.4 million, and the over-65s numbering only 1.3
Kenya National Bureau of Statistics, ‘Kenya Population and Housing Census Report’ (2009) http://www.knbs.or.ke/Census%20Results/KNBS%20Brochure.pdf.> accessed 23 0ctober 2010
a population of 38,610,097 million according to the 2009 Population and
32.3% of Kenyans under that report are urbanised, while 67.7%
Only 3.6% households own at least one computer, while about 63.2% own or
64 years number 20.7 million,
65s numbering only 1.3
ng Census Report’ (2009) .> accessed 23 0ctober 2010
million persons. This latter statistic is consistent with the low longevity among Kenyans (life
expectancy currently placed at around 58 years).65
These indices are illuminating when viewed as proxies to an entrepreneurial culture.
A majority of the populace is un-urbanised, and there are very low levels of internet
technology penetration – proxied by computer ownership and mobile phone ownership.
These facts suggest a low information and communication technology uptake in the country,
implying innovative entrepreneurship in this sector remains shallow. As drivers of risk capital,
therefore, the foregoing development indices would have a strong bearing on the type of
business enterprise that is likely to be preponderant in Kenya: one that is likely to be small or
informal.
Access to modern living amenities remains low: 74.1% of Kenyans use a pit latrine,
while a substantial 20.7% still go to the bush: a poor human development indicator. Access to
piped water remains low as well, with only 15.6% of the rural and 52.6% of urban
populations having access to piped water. The rest of the population draw their water from a
variety of sources including ponds, dams, rivers/streams, boreholes, lakes, rain-harvest and
water vendors.66 With a largely rural population, and strong indices of human under-
development, it is not surprising that the unbanked population stood at 77.4%, as shown in
the chart above. This has contributed to a low capital formation in the country – placed at
about 20%, also depicted in the chart above.67Financial exclusion (a term used to describe
lack of access to any form of banking services) has a negative effect on the quality of
65ibid 4,5 66ibid 5,6. 67ibid
collateral that organisations or business people are able to consolidate, complicating the
prospects of accessing different types of external finance.68
The debt literature suggests that ability to raise debt finance into a company’s balance
sheet operates as a positive signal to other external investors.69Firstly, it might indicate that
the company’s shares are not over-valued; secondly, since debt finance is usually through a
bank loan, the ability to acquire debt funding signals the lender’s confidence in the borrower
as a creditworthy and stable (profitable) bet; thirdly, it suggests the borrower’s ability to
generate free cash flows while still meeting its debt finance obligations. Companies without
sufficient asset depth would usually have thin balance sheets that cannot support formal bank
loans – a factor that could operate to turn private equity away.70
Applying Porteret al’s (2002)71taxonomy of factor-driven economies (that is, under-
developed economies facing multiple development challenges) to Kenya based on the
demographic profile laid out above, Kenya is a factor-driven economy with institutional,
infrastructural, macro-economic, health and primary education challenges. In World Bank
parlance, it is a ‘low income’ economy, denoting widespread under-development across all
sectors of development.72Under these conditions, the private sector labours under various
68FSD Kenya, ‘Costs of Collateral in Kenya: Opportunities for Reform’ (September, 2009) 8 <www.fsdkenya.org/pdf.../09-11-24_Costs_of_Collateral_Study.pdf> accessed 21 December 2011 69Bengt and Tirole, Financial Intermediation, (1997) ( n 7) 663.
70H. Kent Baker and Halil Kiymaz (eds),The Art of Capital Restructuring: Creating Shareholder Value through Mergers and Acquisitions(new Jersey, John Wiley & Sons, 2011) 210, 211.
71Michael E. Porter, Jeffrey D. Sachs, and John W. MacArthur, ‘Executive Summary: Competitiveness and Stages of Economic Development’ in M.E. Porter, J.J. Sachs, P.K. Cornelius, J.W. MacArthur and K. Schwab (eds),The Global Competitiveness Report 2001-2002 (2002, New York, NY, Oxford University Press) 16-25. 72World Bank Country Classification: Kenya – using the GNI methodology, <
http://data.worldbank.org/about/country-classifications/country-and-lending-groups#Sub_Saharan_Africa> accessed 23 October 2011
structural inefficiencies, and the entrepreneurial culture is necessity-driven, meaning people
are forced to create self-employment to survive.73
Private equity, chapter 3 illustrated, follows fast-growing and innovative firms. Given
the statistics set out above, it is defensible to observe that an economy that fails to address
human development issues would find it extremely difficult to culture and nurture conditions
that support creative enterprise, and consequently would not be likely to support the growth
of an influential private equity industry. Public policies aimed at addressing the preceding
human development needs would indirectly help unlock entrepreneurship in Kenya. It was
suggested in the introduction to this chapter that the type of private sector that prevailing
economic conditions permits to emerge would significantly shape the forms and types of
financing solutions that emerge and develop within that economy. These are thus
interdependent factors.
4.4.2 Selected Economic Indicators
According to the World Bank, in 2010, Kenya’s GDP stood at USD31,408,632,915,
while GNI per capita stood at USD790, and the estimated population stood at 40,512,682.74
As depicted in Chart 4.1, above, dependency on agriculture (27% of GDP), exports (27% of
GDP) and services – including financial intermediation - (54% of GDP) are the defining
symptoms of the developing nature of Kenya’s economy.75 These features are largely
73N. Bosma and J. Levie, ‘Global Entrepreneurship Monitor (2009) Executive Report’ 8
<http://www.gemconsortium.org/download/1280955713663/GEM%202009%20Global%20Report%20Rev%20 140410.pdf> accessed 3 August 2010.
74ibid (employing the GNI methodology).
75Kenya National Bureau of Statistics, ‘Facts and Figures’ (2008)
<http://www.knbs.or.ke/knbsinformation/pdf/Facts%20and%20Figures%202009.pdf> 5, 11,17 accessed 23 0ctober 2010
consistent with the demographic profile set out in the preceding section: that a majority of
Kenyans are remain un-urbanized
Inflation largely remained in single digits for the most part of the 2000s decade, save
the year 2008 when it hit 13.1% as a result of exogenous circumstances arising from a violent
protest at disputed presidential elections. In 2011, inflation jumped above 20%, and lending
rates increased as the cost of inter-bank borrowing rose. In effect, economic volatility in
Kenya is a substantial impediment to a robust entrepreneurial space. High interest rates, low
gross capital formation as a percentage of GDP, and an overwhelming section of the populace
remaining unbanked, limit opportunities for a high quality private sector to emerge, stifling
the demand for enterprise capital.
Between 2003 and 2007, Kenya’s economy was strongly resurgent, registering growth
rates between 4.5% and 7.1%.76In 2008, it dipped to 1.8% in the first two quarters of that
year following political instability, but recovered during the fourth quarter and the following
year to the region of 5%.77In 2011, the target growth rate was revised downwards as a result
of exogenous shocks in the global commodities markets, debt crises in Europe and the cost of
imports into Kenya.
Chart 4.2 below compares the growth trajectory of Kenya’s economy to a few
comparator African economies: Nigeria, South Africa and Egypt. The chart demonstrates that
it is only the South African and Egyptian economies that have sustained constant and
dynamic growth paths over the last three decades, with South Africa’s being more dramatic.
The Nigerian economy grew robustly in the 1970s, and fell sharply in the 1980s,
recovering modestly in the 2000s. Kenya’s economy, in comparison, recorded near-flat
76ibid
growth in the two decades between 1970s and 1990s, recording some modest growth in the
early 2000s, and doubling up in the late 2000s.
Chart 4.2: GDP Per Capita in Current Prices
Source: UNCTAD 2008 Statistics, 8.2
It has been suggested
study is viewed as a contributing factor to Kenya’s poor economic performance over time
Private equity has in its short history tracked a clear pathway after robust economies.
It is of anecdotal significance to draw parallels based on this yardstick: the South African
private equity industry is the largest in Africa
largest and most sophisticated in Africa.
economy, and strikingly, Nigeria has enjoyed higher fundraising for private equity compared
to Egypt. These trends hold true for Kenya: a much smaller economy, whose private equity
industry is also much smaller.
From an economic growth perspective,
preceding short review of economic fundamentals in Kenya, for the proposition that public
policies that support robust economic growth are likely to contribute to private equity’s
78Emerging Markets Private Equity Association, Quarterly Review, ‘The State of Emerging Markets Private Equity: Turning a Corner’ 4/2008, 1 <
Research/Quarterly-Review/Quarterly
Articles/EMPE_QR_VolIV_1_Article1_StateofMarkets.pdf.aspx?FT=.pdf
cades between 1970s and 1990s, recording some modest growth in the
early 2000s, and doubling up in the late 2000s.
Chart 4.2: GDP Per Capita in Current Prices – Comparative View (in USD thousands)
Source: UNCTAD 2008 Statistics, 8.2
above that economic volatility has been a problem
study is viewed as a contributing factor to Kenya’s poor economic performance over time
Private equity has in its short history tracked a clear pathway after robust economies.
otal significance to draw parallels based on this yardstick: the South African
private equity industry is the largest in Africa – just as the South African economy is the
largest and most sophisticated in Africa. The Egyptian economy is smaller than the Ni
economy, and strikingly, Nigeria has enjoyed higher fundraising for private equity compared
These trends hold true for Kenya: a much smaller economy, whose private equity
industry is also much smaller.78
From an economic growth perspective, there seem to exist reason
preceding short review of economic fundamentals in Kenya, for the proposition that public
policies that support robust economic growth are likely to contribute to private equity’s
Emerging Markets Private Equity Association, Quarterly Review, ‘The State of Emerging Markets Private , 1 < http://www.empea.net/Main-Menu-Category/EMPEA
rly-Review-Individual-
Articles/EMPE_QR_VolIV_1_Article1_StateofMarkets.pdf.aspx?FT=.pdf> accessed 29 October 2011
cades between 1970s and 1990s, recording some modest growth in the
Comparative View (in USD thousands)
conomic volatility has been a problem, and in this
study is viewed as a contributing factor to Kenya’s poor economic performance over time.
Private equity has in its short history tracked a clear pathway after robust economies.
otal significance to draw parallels based on this yardstick: the South African
just as the South African economy is the
The Egyptian economy is smaller than the Nigerian
economy, and strikingly, Nigeria has enjoyed higher fundraising for private equity compared
These trends hold true for Kenya: a much smaller economy, whose private equity
reason, grounded in the
preceding short review of economic fundamentals in Kenya, for the proposition that public
policies that support robust economic growth are likely to contribute to private equity’s
Emerging Markets Private Equity Association, Quarterly Review, ‘The State of Emerging Markets Private Category/EMPEA-
growth. The discussion on barri
illustrates how legal tools can aid public policy in delivering these objective.
4.4.3 Business Informality
The Government estimated that 65% of the small and microenterprise sector in Kenya
is informal – and this segment, as seen below, accounts for 80% of the private sector. Even
where businesses are ‘formal’, they demonstrate features suggesting relative under
sophistication. For instance, only 16% of surveyed business entities indicated th
business website, while a lower 14% indicated they operated regularly through their websites.
Source: Various (PSDS 2006- 0% 20% 40% 60% 80% 100% 120% 140%