Selected Factors Influencing Total Value of Horticultural Export in Kenya

Kenya’s horticultural export performance plays a significant role in driving the country’s economic growth. The nation engages in international trade with numerous countries, with the East African Community emerging as the leading destination for Kenya’s exports. However, an overreliance on domestic markets has contributed to lower local prices for horticultural produce, highlighting the need to tap into international markets for better returns. The primary objective of this study was to examine the factors influencing the total value of horticultural exports in Kenya. Specifically, the study aimed to assess the effects of exchange rate, interest rate, and inflation on horticultural export performance. The research was grounded in the export-led growth theory and Marshall-Lerner Condition and employed a longitudinal research design using data from the Kenya National Bureau of Statistics (KNBS) spanning a 30-year period (1995–2024).The study employed the Vector Error Correction Model (VECM) to analyze the determinants of horticultural export performance in Kenya and to provide policy recommendations aimed at promoting favorable exchange rates, terms of trade, and controlled inflation. To ensure the robustness of the regression results, stationarity tests were conducted using both the Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests. These tests confirmed that all variables became stationary after first differencing. The long-run VECM analysis revealed that inflation, exchange rates and interest rates significantly influenced the total value of horticultural exports. Based on these findings, the study recommends the implementation of inflation control measures to stabilize input costs and maintain the competitiveness of Kenyan horticultural products in global markets. The study suggested adopting exchange rate management policies to reduce excessive volatility and create a stable environment for exports. Enhancing access to affordable credit through reduced interest rates and targeted agricultural financing will empower farmers to invest in modern technologies and infrastructure.