EFFECT OF CORPORATE GOVERNANCE ON GROWTH OF GOVERNMENT-OWNED AGRICULTURAL LENDING INSTITUTIONS: A CASE STUDY OF AGRICULTURAL FINANCE CORPORATION, KENYA
Mwatata Jonathan Piri - Master of Business Administration (Strategic Leadership and Management), St. Paul’s University, Kenya
Dr. John Muhoho - St. Paul’s University, Kenya
Dr. Stephen Macharia - St. Paul’s University, Kenya
ABSTRACT
In Kenya, agriculture plays a significant role in economic development; this is confirmed by the fact that 75% of Kenyan populace rely on it, as it contributes to 35% of the GDP and constitutes 40% of the export earnings. Due to its importance the Government of Kenya established AFC as a strategic parastatal to provide financial services to this sector. This study therefore purposed to assess the effect of corporate governance on growth of government owned agricultural lending institutions with reference to Agricultural Finance Corporation. The study was guided by four theories; Resource Based View theory, Agency theory, Value Chain theory and Contingency theory. The study used descriptive design, with a target population of 218 respondents and a sample size of 30% across all management levels from head office, regional and branch offices. Stratified random sampling was used since the population is heterogeneous. Data was collected through questionnaires. The questions were both open and close ended questions, and were analyzed using both quantitative and qualitative methods by SPSS tool (Statistical Program for Social Scientists) and presented through tables, bar graphs, pie charts and mathematical models. Recommendations on the best integrated approaches on strategic issues affecting the growth of AFC and other government owned agricultural lending institutions was based on the outcomes of the study. The study established that the findings indicated that, the value of adjusted R squared was 0.543 which was an indication that there was variation of 54.6% growth in the organization due to a change in corporate governance, at 95% confidence interval. This shows that 54.3% changes in growth within the organization could be accounted for in the adjustments in corporate governance.
