Economic Environment and Performance of Donor Funded Health Projects in Kenya

Health projects have been found to play a critical role in enhancing the well-being of society. Health projects in Kenya are funded by both the government and donors. Although the amounts of funding from donors in Kenya have been rising over the years, most donor-funded projects in Kenya are not performing well. This study sought to find out the effect of the economic environment; changes in tax rates, changes in interest rates and changes in exchange rates on the performance of donor-funded health projects in Kenya. The study was anchored on the theory of constraints. The study adopted explanatory and descriptive research designs. A census of all the sixty-nine donor-funded health projects initiated between 2008 and 2018, and are ongoing was conducted. A semi-structured questionnaire was administered to managers of the donor-funded health projects and the heads of donor-funded projects at the ministry of health. Both descriptive and inferential statistics were applied in the analysis and presentation of data. Quantitative data were analyzed using the Statistical Package for Social Sciences (SPSS), while qualitative data were analyzed by content analysis based on patterns and themes. A multiple regression model was used to explain the effect of the economic environment on the performance of donor-funded health projects in Kenya. The study found out that the economic environment had a significant effect on the performance of donor-funded health projects. The study recommends that all decision-makers and other donor-funded health project stakeholders devise policies and strategies for controlling the effect of the economic environment on the donor-funded health projects to enhance their performance.

time overruns. Solis-Carcano, Corona-Suarez and Garcia-Ibarra (2015) observed that prolonging the project execution time will result in cost overruns due to the extra expenses on materials, personnel, financial costs and contract penalties. Memon (2012) associated time overruns to both internal and external factors. Akanni et al. (2014) identified social, economic, technological, political and environmental factors as the external factors. This study investigated the effect of the external environment on the project duration, which is a measure of performance. The data collected from the respondents of the study was analysed together with cost and quality weights to determine a composite measure of a project's performance.
Cost is a measure of the total of what has been spent on the project to the current level. It is dynamic and not static ( Adeojo, 2012). According to the PMI (2013), cost is one of the measures of the performance of projects alongside time and quality. Memon (2012) concurs that cost is a critical measure of the performance of a project. In Malaysia, 53.2 percent of public projects and 62.8 percent of private projects experience cost overruns with an overrun of between 5 -10 percent of project cost (Memon). In Kenya, 48 percent of the projects experience cost overruns (Labuschagne, 2017). Cost overruns are caused by inflation on materials (Olawale & Sun, 2018), time overruns ( Solis-Carcano et al.,2015), and rework (Hwang, Thomas & Haas, 2009). This study investigated the effect of the economic environment on the cost measure of performance. Every project has an anticipated level of quality based on the details and specifications set out by the users (Stojcetovic, Lazarevic, Prlincevic, Stajcic & Miletic, 2013). According to Ng and Anuar (2011), quality performance is concerned with the quality of the project's final outcome and the quality objectives of the project. Mortaheb et al., (2012) observed that a project outcome has quality if it satisfies the client's overall expectations and if it achieves the technical specifications. Quality is a key measure of the performance of a project. To conclude that the performance of a project is good, time, cost and quality outcomes have to be considered.
The quality of a project is affected by lack of knowledge and skills to transform ideas into quality outcomes (Ng & Anuar, 2011), lack of understanding on quality expectations and the newness and uniqueness of the project ( stojcetovic et al., 2013), and project risks (Aller, 2016). The sources of project risks are both internal and external to the project. This study focused on the economic sources of project risks, which are external sources.
To achieve the expected levels of quality and hence performance, quality management practices should be adopted. According to Stojcetovic (2013), project quality management includes processes and activities of the project organization that determines quality policies, objectives and responsibilities that satisfy the needs for which the project was undertaken.

Performance of Donor Funded Health Projects
The factors that affect the performance of donor-funded health projects vary from project to project and from country to country. Thiele (2016) suggested that both internal and external environmental factors affect project performance. Thiele identified the level of community development, community cohesion, community trainings and involvement of local leadership (Barangay Captain) as the external factors that affect the performance of donor-funded projects in the Philippines.
Although donor-funded projects are considered important in the growth and development of many developing countries, their outputs in terms of quality, cost, time and stakeholder satisfaction remain the subject of debate (Azhar, 2008). According to Kuria & Wanyoike (2016), poverty in Africa is on the increase despite the increase in donor funding to government and NGOs towards poverty reduction programs. In Uganda, many donor-funded projects show signs of irrationality and a deficient risk assessment and management mechanism (Mujabi et al ., 2015). Kenya's donor-funded projects faced similar outcomes despite the country's strong economic growth and reform efforts in the period from 2008 to 2018. In that period the country's health system remained underdeveloped and the performance of donor-funded health projects was not steady.
Endemic corruption and poor reporting structures in the public sector in Kenya are causes of delays in donorfunded health projects (DFID, 2012). Gaturu and Muturi (2014), observed that delays plague the delivery of donorfunded projects in many developing countries. The consistent delays in the completion of projects and cost overruns in Kenya, just like in most parts of the developing world calls for research to determine the factors that are causing the poor project performance. The level of performance of a project was a composite measure of time, cost and quality.

Economic Environment
According to Akanni et al. (2014), the economic environment zeroes in on the general level of economic activity. The economic environment factors such as taxes, economic growth or recession, government economic policies, exchange rates, interest rates and minimum wages affect the consumption decisions of individuals and organisations. They affect the affordability in financing and the flow of funds. According to Musa et al. (2015), the economic factors include low-interest rates, availability of credit facilities, a stable macroeconomic environment and long facility repayment periods. A stable macroeconomic environment will enable the project team to prepare fairly accurate cost estimates and ensure the project cost is controlled. Unstable macroeconomic policies will push up the project cost.
Studies by Akanni et al., (2014) and Musa et al., (2015) agree that the economic factors have an effect on the performance of building and construction projects. The factors affect the performance of the projects differently. Economic factors affect consumption decisions of individuals and organisations and they include taxes, government policy, interest rates, currency exchange rates, and labor costs. According to the UN-Habitat (2012) report, economic aspects of the macro-environment factors have been inadequately addressed in the housing policies of many developing countries.

Theoretical Foundation
The study was anchored on the theory of constraints by Dr. Eliyahu M. Goldratt, which was developed his 1984 book '' The Goal". According to this theory, a very small number of constraints limits any manageable system in achieving more of its goals (Chowdhary, 2009). The attainment of project goals is affected by both internal and external constraints. If these constraints are not managed well, projects are bound to fail (Kisilu et al., 2016). The theory provides for ways of identifying the key factors that limit (constrain) the achievement of goals. It also provides for ways of ensuring that the constraint is not a limiting factor by improving it in a well-organized manner. Kiprop, et al. (2017) suggested that the overall performance of a project could be improved by focusing on fixing the main problem (constraint). This study sought to determine the effect of the economic environment on the overall performance of the donor-funded health projects in Kenya. The determination will guide project managers in the development of project plans and their execution to achieve expected levels of performance in the projects.
According to Maina & Gathenya (2014), every system is limited in getting more of what it strives for by at least one constraint. Were it not so, then the system's output would be infinite. The theory of constraints has been applied to production planning, production control, project management, supply chain management, accounting and performance measurement and other areas of business such as hospitals and military depots, which are not-forprofit facilities. Although performance constraints may be acknowledged or not, they determine the output of a system. To achieve organizational goals, it is in a manager's best interest to identify and reduce the organization's system constraints (Maina & Gathenya).
Projects are designed with specific cost, time and quality objectives in mind. The attainment of these objectives results in good performance for the project. However, the attainment of the project goals faces several external and internal environment constraints (PMI, 2013). The external environment constraints are economic, socialcultural, technological, political, legal and environmental. The theory of constraint provides a good base for determining the most limiting constraint to the attainment of project goals. This base was applied in this study to determine the effect of the economic environment on the performance of donor-funded health projects in Kenya.

Economic Environment and Project Performance
Economic environment is known to affect the economic workability of the project including the local economic conditions adjustments of the beneficiary country or imprecise project development plan due to economic conditions that are erratic (Maina & Gathenya, 2014). Sang, (2015) identifies exchange rate fluctuations, interest rate and inflation as economic factors. The successful completion of projects depends on the availability of resources as well as finance (Maina & Gathenya, 2014). According to Maina and Gathenya (2014) the success of projects is affected by project financing, foreign currency exchange rate as well as foreign investments and joint venture in various ways. These economic factors affect the economic workability of the project including the changes in domestic economic conditions of the recipient country and may lead to the development of inaccurate project plans (Maina & Gathenya, 2014).
In their investigation to find out the effect of economic factors on the performance of project management among petroleum marketing firms in Kenya, Maina and Gathenya (2014) focused on economic factors as predictor variables and project management performance as the predicted variable. Their study was anchored by the agency theory, theory of constraints, bargaining theory of distribution channels, and the theory of resources and capabilities. The study which applied a descriptive research design attributed the project management performance to various economic factors such as foreign currency exchange rate, funding, joint ventures and foreign investments. The study by Maina and Gathenya found out that project management among the firms is poor. The results of this study further infer that the success of projects in oil marketing companies is affected by the use of efficient project-specific technology, good forecasting of work plan, efficient procurement of materials and equipment and exchange rate on the acquisition of resources. Although the study concludes that economic factors have an effect on the performance of project management among petroleum marketing firms in Kenya, its focus was not on donor-funded health projects.
The Akanni et al. (2014) study on the impact of environmental factors on building project performance in Delta state, Nigeria investigated the economic factor as an independent variable amongst other independent variables. The study revealed that economic factors have an effect on the building project performance in Delta state. The fluctuating economic environment affects the project's financial position, which then influences the project performance. Although this project studied the effect of economic factors on the performance of building projects, the focus was not on donor-funded projects.
In their study on the influence of external environmental factors on the success of public housing projects in developing countries, Musa et al. (2015) investigated the economic environment as an independent variable. The study found out that the success of public housing projects is affected by economic factors. The study further revealed that only government could control economic factors and not any individual donor-funded project. The study identified a stable macroeconomic environment, available credit facilities to intended recipients, low-interest rates, implementation of sound economic policy, loan repayment periods that are long term and low down payment requirements as the economic factors. This study focused on changes in tax rates, changes in interest rates and changes in the exchange rates.

RESEARCH METHODOLOGY
This study applied explanatory and descriptive research designs. The combined designs have the potential to offer a more robust research (Caruth, 2013). A combination of explanatory and descriptive research designs will provide more insights into the subject of investigation and capture information that could have been left out when using only one study design. While the descriptive research seeks to answer the question "what is going on?" explanatory research will answer the question "why is it going on? This will enable the researcher to understand mechanisms simultaneously, explore associations and document risks (Morse & Niehaus, 2016).
In a descriptive research, respondents will answer a set of questions administered by either interview or a questionnaire from which the researcher will describe a study phenomenon. By measuring the relationships between the independent variable and the dependent variable, explanatory research was used to test hypotheses by analyzing the collected data using statistical techniques. Explanatory research will not just describe, but explain the phenomena being studied (Given, 2008).

Empirical Model
To determine the relationship between the economic factors and the performance of donor-funded health projects, the collected data was analysed and regressed as suggested by Muthen and Muthen, (2012) who observed that for continuous outcome variables linear regression models would be applied. This model is suitable for this study since performance is a continuous variable. According to Gujarati & Sangeetha (2007), where the dependent variable Y is quantitative in a model, estimation of its expected mean or mean value from the values of the independent variable given is the objective. The empirical model was; = % + ' ₁ + * ₂ + , ₃ + / Where % is the constant, ' , ₂, ₃ are the coefficients of the economic factors analysed and / is the error term.

Sample Design
According to Saunders, Lewis and Thornhill (2012), an optimum study sample is one which meets efficiency, representativeness, reliability and flexibility requirements. Since the population in this study was small, a census study was conducted to ensure representativeness and reliability.

Data Collection Instruments
To empirically study the effect of the economic factors on the performance of donor funded health projects in Kenya, a semi-structured questionnaire was applied. Saunders et al., (2012) observes that in a questionnaire research, objectives are translated into specific questions whose answers provide data for hypothesis testing. A questionnaire allows for the collection of data from large samples, has no bias, upholds confidentiality and saves time. The questionnaire was made up of open and closed-ended questions, with some of them being measured on a likert scale of 1-5.

Data Analysis and Presentation
Descriptive and inferential statistics with the aid of the Statistical Package for Social Sciences (SPSS) version 20.0 was used to analyse quantitative data. This involved the computation of mean scores, frequencies, percentages, standard deviations and variances (Berenson, Levine, Krehbiel, O'Brien, Jayne & Watson, 2013). Correlation analysis was conducted to determine the strength of the relationship between the predictor and the predicted variables. To determine the relationship between the predictor and predicted variables, regression analysis was applied since the study's model has many predictor variables and one possible outcome. According to Muthen and Muthen (2012), regression analysis is the best statistical approach in analyzing continuous dependent variable outcomes.

RESEARCH FINDINGS AND DISCUSSIONS
The economic environment variables investigated were changes in tax rates, changes in currency exchange rates and changes in interest rates. The findings of the study on the economic factors were as presented in the table below. The findings indicate that the changes in the tax rates have the highest mean of 2.68 followed by changes in currency exchange rates with a mean score of 2.56, while changes in interest rates had the lowest mean of 2.11. The mean of the changes in tax rates and changes in currency exchange rates approximate to 3 on the likert scale which indicates the two variables have a medium effect on the performance of the donor-funded health projects, while the changes in interest rates approximate to 2 indicating that the factor has a low effect. The changes in currency exchange rates had the highest standard deviation of 1.501, and were followed by changes in tax rates, which had a standard deviation of 1.396. The changes in interest rate had the least standard deviation of 1.350. The data on changes in currency exchange rates had the highest variability from the mean, while the data on changes in interest rate had the least variability from the mean. Overall the economic environment had a mean of 2.45, which approximates to 2 on the likert scale and a mean standard deviation of 1.416. This suggests that the economic environment affects the performance of donor-funded health projects to a low extent. These results concur with those of Musa et al. (2015) that the economic environment affects the performance of projects.
The respondents who indicated low and very low rating on changes in exchange rates suggested that, funding was provided in Kenya Shillings, thus minimizing the effect of exchange rates. The projects were also not affected by interest rates since the funding was not obtained on loan. Further, the respondents indicated that most of the grants are tax-exempt; thus, they suffer little on changes in tax rates. Those who rated the changes in exchange rates high and very high held that; donor funding is in US dollars and that they suffer highly when there is a change in exchange rates, especially when the Kenyan shilling gains value against the dollar. Other respondents held that, changes in tax rates like the addition of Value Added Tax on petroleum products in the 3 rd quarter of 2018 by the Government of Kenya increased the cost of transport thus affecting the performance of donor-funded health projects.
The collected data were analysed to test the empirical model applied in the analysis. The table below summarised the findings. The correlation coefficient R = 0.756 indicates that there is a strong correlation between the economic factors and the performance of the donor-funded health projects in Kenya. The coefficient 0.572 of R squared indicates that the economic factors explain the performance of donor-funded health projects up to 57.2 percent.

Model
The ANOVA test was also conducted to determine the suitability of the model in explaining the relationship between the economic factors and the performance of donor-funded health projects. The ANOVA test results were as in the table below. The model was found to be significant at 95 percent confidence level (p value = 0.000 < 0.05).

Regression Coefficients
The economic factors were regressed against the performance of donor-funded health projects and the results were summarised as in the table below. The regression determined a constant β0 =3.638 which explains the performance of the donor-funded health projects while holding all the economic factors at zero. The coefficient was found significant at 95 percent confidence level (t value = 74.136; P value = 0.000). All the predictor variables were found to have a negative effect on the performance of donor-funded health projects in Kenya as is evident from their beta coefficients. Changes in currency exchange rates had a beta coefficient of -0.031 which was the highest, followed by changes in interest rates with a coefficient of -0.030 and the changes in tax rates had the least effect with a coefficient of -0.018. In addition, the predictors were found significant at 95 percent confidence level based on the t values and p values ; Changes in currency exchange rates (t value = -3.556, P value = 0.000 <0.05), Changes in interest rates (t value = -2.315; P value=0.001 <0.05) and Changes in tax rates (t value = -3.099; p value =0.012<0.05).

Model
From this study the relationship between the economic factors and the performance of donor funded health projects in Kenya was presented as; The β values explain the relationship direction between the predicted and the predictor variables (Nathans, Oswald & Nimon 2012). Nathans et al. further argued that beta weights for the independent variables indicate the expected gain or fall in the predicted variable value given a gain or fall in the predictor variable. Therefore, an upward adjustment of economic factors such as exchange rates, tax rates and interest rates affects project performance negatively. The economic factors have an inverse relationship with the performance of the donor-funded health projects in Kenya. According to Maina & Gathenya (2014), the economic feasibility of a project, including the adjustments in the local economic conditions of the receiving country, or the imprecise project development plan due to the erratic economic conditions are influenced by the economic factors. The findings of this study concur with Akanni et al. (2014) and Musa et al. (2015) that economic factors have significant effect on the performance of projects.

Summary
The economic factors were found to affect the performance of donor-funded health projects. However, the results indicated that the economic factors such as change in tax rates, change in currency exchange rates and change in interest rates have a medium to low effect. The reasons provided for the low and very low rating on economic environment as explained by the respondents is that, funding is provided in Kenya Shillings which minimizes the effect of exchange rates. Others held that, the donor-funded health projects were not affected by changes in interest rates because they don't borrow for their projects. Further, it was also found out that, most of the grants are taxexempt thus minimizing the effect of taxation. A weak negative but significant correlation was established between the economic environment and the performance of donor-funded health projects in Kenya. The regression analysis also confirmed that, the economic factors are significant factors that have a negative effect on the performance of donor-funded health projects in Kenya.

Conclusion
The economic environment comprising of changes in interest rates, changes in exchange rates and changes in tax rates affects the cost of implementing the donor-funded health projects hence affecting their performance. The regression analysis established that all the three analysed economic factors had a significant negative influence on the performance of donor-funded health projects. This implies that an increase in taxes, interest rates and exchange rates will increase the project expenditure causing a budget overrun.

Recommendations
The study recommends that the government of Kenya should develop policies and frameworks that will minimize the effects of the economic factors; changes in tax rates, changes in interest rates and changes in the foreign exchange rates on the performance of donor-funded health projects. The study also recommends that all decisionmakers and other donor-funded health project stakeholders devise strategies for enhancing the performance of the projects within their economic environment.