|dc.description.abstract||The global challenges of growth, urbanisation, scarcity and environmental change
have become the key strategic drivers for business leaders in the present world.
Governments and business constituencies are shifting from thinking of climate change
and resource constraints as environmental problems to economic ones related to the
sharing of opportunity and costs which present opportunities for sustainability if
appropriate actions are taken. Over the last decade we have witnessed significant
growth in non conventional financial instruments including carbon finance products.
While opportunities for such sustainable solutions are indeed a reality in the developed
economies, for countries in the Sub-Sahara region like Kenya these opportunities are
considerable in theory; to date Kenya and other countries in Sub-Saharan Africa have
missed out. In the context of the clean development mechanism, for example, the
region’s current share in the project pipeline was only 1.4 percent only 53 out of 3,902
projects or nine times smaller than its global shares in GHG emissions as at 2010.
Despite the existing huge opportunity in the carbon finance market, the Kenyan
companies have not awaken to the reality and moved in to tap the opportunity.
The purpose of this research was to undertake a review and analysis of the factors
contributing to the low uptake of carbon finance opportunities in Kenya. The study
design used was exploratory factor analysis to get in sights and examine how
underlying factors influence the uptake of CF investment opportunities.
The research data collected related to responses from the target population on factors
that contribute to uptake of carbon finance investment opportunities analyzed to give
insight on the most prevalent factors and their rankings. The study further sought to
explain the relation of the most prevalent factors namely the high initial cost of
investment, risk and return and information gaps on valuation and certification of CF
projects. A multivariate regression model was applied to determine the relative
importance of each of the three variables in relation to the study.
The research found that among the factors that are contributing to low uptake of
carbon finance opportunities the most prevalent were: information gaps on
certification and measurement of projects, associated risks of CF projects and initial
investment cost. It was interesting to note that the three factors had a coefficient of
determination with a value of 0.7524 implying that the three variables explain 75% of
variation of uptake in carbon finance investment opportunities in Kenya.
Among the three factors analysed information gap had the highest factor loading of 0.8
while High initial cost had the most statistically significant coefficient as indicated by
the T ratio of 1.459. The study also deduced that investment uptake of CF projects
was highly correlated to initial cost of investment and the associated risks and return
posting a coefficient of 0.866 and 0.816 respectively
The study findings will be useful to the government as a reference for policy
formulation in steering investments in CF, development agencies and academic
community for future research.||en