The Future of Smallholder Farming in Eastern Africa - Uganda ...

Specifically, the Government policies focused on deregulation and adoption of a market
based incentive system to channel resources to productive uses as well as the
liberalization of trade and marketing and removal of price controls to make the
economy more competitive. Kenya had recognised the need to open up its economy
and there has been arguments advanced to explain the stalling of the reforms. 9, 10
KEGEM uses the 1986 Kenyan input-output and social accounting matrix tables to
explore the implications of the trade liberalization process on the country’s agricultural
economy. There are three sectors identified in our analysis: agriculture, manufacturing
and services. The original input-output tables and social accounting matrix have 37
production activities. Ten household groups (three urban and seven rural) are used and
disaggregated on the basis of level of income for the urban and land ownership for rural
households. Five labour categories are also identified.
Elasticity parameters used in KEGEM (Table 3 and Table 4) are assumed since no
estimates existed for Kenya. Table 4 shows the income elasticities of the linear
expenditure system. The Frisch parameter shows the relationship between price
elasticities and expenditure elasticity in the context of an additive utility specification,
which is assumed in the linear expenditure system.
9 Some authors have noted that the implementation of reforms since inception to late 1991 was not
characterised by public controversy (Ikiara et al. 1993)
10 A key argument for the policy inertia that developed towards the end of the 1980s was that Kenya’s
economic agenda could not resist political change that was encompassing Africa. The government
concentrated its energy ensuring political survival rather than undertaking much needed economic
reforms. Given the short-term costs of policy prescriptions made, political expediency overruled the
significance of economic reforms.