Impact of tasaf grants on household income for economic growth:

Abstract

This study examined the impact of TASAF grants on the household income for economic growth: A case of Hai District, Kilimanjaro Region in Tanzania. The study was guided by three specific objectives each with one null hypothesis. The first specific objective was to examine whether there was cointegration between the two variables of TASAF grants and household income .The second specific objective was to examine whether TASAF grants can granger cause household income and the last specific objective was to assess whether household income can granger cause TASAF grants .The study was guided by the social democratic theory of poverty as it was advanced by Piero Sraffa who argued that class struggles went beyond production spheres and therefore restricting poverty explanations to productions .The theory was supported by notable scholars including but not limited to Magombeyi and Odhiambo ,2016, Manjoro ,2017,Gichane ,2020 just to mention a few .After reviewing the literature it was found that most of the studies used regression analysis and some descriptive analysis and none of them used granger causality . Therefore the author of this study found there was a knowledge gap that required to be filled by conducting a study using the granger causality test .Mwaitete, 2018 argued that unlike regression that focuses on the relationship among variables granger causality goes beyond and focuses on the impact of the variables under investigation (Mwaitete, 2018). Conceptually TASAF grants was set as an independent variable (X) and Household Income was set as dependent variable (Y). Adora, 2021 stated that a variable X is causal to variable Y if X is the cause of Y or Y is the cause of X or both (Adora,2021). Moreover the granger defined the causality relationship based on two principles, one the cause happens prior to its effect and two, the cause has unique information about the future values of its effect (Robert, 2020). The study opted to causal research design which enabled the researcher to test the hypotheses. The study was guided by three hypotheses first, there is no co-integration between TASAF grants and household income, second, TASAF grants cannot granger cause household income and lastly household income cannot granger cause TASAF grants. Quantitative research approach was adopted in this study since the results obtained were generalized to the entire population. The study used annual secondary data obtained from the office of Hai District and website of the National Bureau of Statistics. All data were measured in Tanzania shillings. TASAF grants annual data were obtained from the office of Hai district (DEDHai, 2022), while household income was computed by the researcher based on the data of regional GDP per capita, number of households and population projections retrieved from the website of the National Bureau of Statistics (NBS, 2019). Number of Households and Population Projections were computed by NBS based on 2002 National Population and Housing Census. A pilot study was conducted to assess if the data were fit for the study and the results indicated that data were not fit for the study and they need to be transformed. Two stages of transformation were performed by using excel computer software, first logarithm was applied but data were not fit and lastly first difference was applied and data were found to fit the study. The transformed data were analysed by using STATA computer software version 11.2R. Diagnostic tests were conducted and the results indicated that data were valid and reliable to predict and forecast the outcome of the study. Decision criterion of all tests was made based on the 5% level of alpha. The study was guided by three specific objectives each with one null hypothesis. The first specific objective was to examine whether there is co-integration between TASAF grants and household income. A null hypothesis was set and stated that there is no cointegration between TASAF grants and household income. Johansen tests for cointegration was carried out on this hypothesis. Johansen tests for cointegration is used to test integrating relationship between several non-stationery time series data. The results of the test indicated that TASAF grants and Household income were integrated. The results were significant at 5% level of alpha and was presented in table 4.4. Moreover the analytical review conducted on the trend of the data of TASAF Grants and Household income indicated that the two variables have long run association and were moving together in a positive direction. The result was presented graphically in table 4.11. Moreover, the second and third specific objectives of the study were carried out by using Granger Causality Test. Granger Causality Test is a technique for determining whether one-time series is helpful in forecasting another. It can decide if there is causality relationship between variables. The results of performing the granger causality Wald test indicated that TASAF grants can granger cause household income and the results were significant at 5% level of alpha. The results were presented in table 4.5. Furthermore, the third and last specific objective of the study was to assess whether household income can granger cause TASAF grants. The study was guided by a null hypothesis which stated that household income cannot granger cause TASAF grants. A granger causality Wald test was performed and the results revealed that at 5% level of alpha, household income cannot granger cause TASAF grants. The results were presented in table 4.5. The results in table 4.5 show that TASAF grants can granger cause household income at 5% level of significant. The results mean that TASAF grants can be used to predict household income of the people of Hai and Tanzania at large. The two variables are cointegrated based on Johansen tests for co-integration as indicated in table 4.4, the value of t-statistics which is 16.1058 is greater than the critical value which is 15.41 at 5% level of significance therefore the null hypothesis which state that there is no co-integration between TASAF grants and Household income was rejected. The predicted model was assessed using Shapiro Wilk W test, test for heteroskedasticity, and test for serial correlation and found to be a valid model for prediction. The study recommends the need of enhancing collaboration of the Government of Tanzania with other national and international stakeholders interested in the development of people in the local communities initiatives through TASAF grants financing framework on the programme implementation to ensure sustainability in Tanzania and worldwide.