MST-Department of Business Administration

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Cash management factors that affect the business of Safaricom dealers in Nairobi and its suburban areas
(2012-06-26) Kimebur, Amos; Thuo, A. K.; Abdul, Farida
In view of the challenges faced in cash management by a number of business enterprises in the telecommunications sector, this research was set out to establish which factors do affect cash management in the said sector in Kenya today. The broader objective of this study was to establish which of the cash management factors in the telecommunications industry affect the businesses of Safaricom dealers in Nairobi and its suburban areas and explore remedial measures to mitigate their effects. The specific objectives were: to assess the extent to which inventory management, Safaricom policies, technological applications and staff competencies affect cash management of the businesses of the said dealers. This study adopted a descriptive research design. The target population was management staff of 192 dealers who are currently members of Safaricom Dealers Association. The study utilized both primary and secondary data. The study administered questionnaires to a total of 120 employees working in finance and accounts departments and also those in the top management of the 40 selected dealers in Nairobi and its suburban areas. Stratified random sampling was used to come up with a representative sample size. Secondary data was gathered from various authoritative sources including the Safaricom Dealers Association's reports, CCK's reports, surveys and journals, 'Informa' Telecoms publications among other sources. The data was collected through questionnaires edited, classified, coded and tabulated in a systematic manner to allow for accurate analysis. Tools of descriptive statistics, these are, measures of central tendency were employed to analyze data. To aid and speed-up data analysis process, Statistical Package for Social Sciences (SPSS) was used to generate the statistics. Finally, the data was presented in form of pie charts, bar graphs, frequency tables, percentages among others so as to provide a complete and accurate presentation of the findings.
Constraints to the growth of commercial paper as a source of short term finance for listed companies
(2013-01-09) Gatheru, Githambo Martin; Thuo, A.K.; Ndede, F.; Abdul, Farida
The purpose of this study was to investigate constraints to growth of commercial paper market in Kenya with reference to listed companies. Conceptual framework of the study looked at the independent variables which included issuance requirements by CMA, issuance costs and the effects of credit rating agencies while the dependent variable was growth of commercial paper market. Innovations in the commercial paper market that could popularize it as a source of short term finance was also looked at. The study population comprised of forty seven (47) listed companies in Kenya with a minimum authorized and fully paid up share capital of Kshs 50 million and net asset of Kshs 100 million as per the requirement of CMA. The study used a descriptive research design and studied the entire population. Primary data was collected using semi structured questionnaires that were self-administered to the respondents. Secondary data was obtained from past studies on the topic, CMA reports, CBK reports and published financial statements. Data analysis techniques included the use of percentages and tables for easy analysis and interpretation. A multiple regression equation was used to establish the relationship among the dependent variable and independent variables.
Determinants of choice of investment vehicles among secondary school teachers in Nandi Central Division
(2012-11-23) Sang'utei, Jimmy K.; Abdul, Farida; Ndede, F.W.S.
The purpose of the study was to determine the investment vehicles that are available to the Kenyan civil servants and more specifically the secondary school teachers. It also sought to determine the extent to which this group of employees aware about the availability of this opportunities and finally establish what determines their choice of investment vehicles. The design of the study was descriptive design since it sought to find out factors that influence the choice of investment options among secondary school teachers and it was carried out in 37 secondary schools in Nandi central District .The main objectives of the study was to identify the factors determining the choice of financial investment vehicles by secondary school teachers in Nandi Central district. The study covered the teachers who are employees of the Teachers' Service Commission (TSC) and excluded all teachers who are in temporary employment such as the teachers who are employed by the school board of governors and the teachers who are on teaching practice. The study was carried out in Nandi Central District is only enabling us to draw conclusions that may only reflect the scenario in Nandi Central District and not the rest of the country. The study was based on the Marxian theory of investment since it was easy to explain for it clearly states that the driving force behind investing is the profit attained. This is usually the essence of doing business. The study used stratified sampling technique to select the respondents, and 125 teachers were chosen from the schools in Nandi central districts, the study sample was obtained from a total of 14 schools that were selected from the four zones. The main data collection instruments were the questionnaires that were administered by the researcher to the teachers from the selected school in the zones. The results obtained were then analyzed qualitatively and quantitatively. Statistical package SPSS was used to determine the trends of the responses and to test the hypothesis developed. Conclusions of the study were developed and recommendation for further research given.
Factors that limit access to formal credit by salaried borrowers at Kenya Research Institute (KEMRI) - Kilifi unit
(2012-03-26) Dzombo, Gift Kimonge; Abdul, Farida; James M.Muturi
There are many borrower-related and lender-related factors that limit access to credit by salaried borrowers at KEMRI-Kilifi-Unit. The borrower related factors may be economic, or attitudinal. Economic factors include low employment income which has an effect on the ability to qualify for credit facilities offered by mainstream credit institutions. Attitudinal factors may include fear of borrowing especially from mainstream credit institutions. Lender related factors include the terms and conditions of credit facilities in particular the interest charged, repayment terms, security/collateral requirements and unwillingness to lend to particular classes of borrowers due to credit risk considerations. The research methodology was descriptive in nature since the data to be collected was of personal nature. A structured questionnaire was the main data collection tool. Data was entered in Ms-Access 2003 and analyzed using SPSS and Microsoft Excel. Frequencies averages and percentages were computed and data was presented using graphs pie-charts e.t.c as may be relevant. The findings of this study indicated that the factors that limit access to credit by salaried borrowers at Kemri-Kilfi in the order of importance are interest rates, shortage of suitable credit products, security/collateral requirements and unfriendly repayment terms.
An investigation into factors that hinder access to housing loans: a case study of primary school teachers in Thika Municipality
(2013-02-19) Maina, John; Abdul, Farida
The study aimed at analyzing factors that hinder access to housing loans. The objectives of the study included finding out how remuneration, interest rates, collateral, land availability and transfers affect teachers in accessing housing loans. The study was important in that it would help the banks to appreciate their role in facilitating development of housing in Kenya. The government would also be able to develop policies that regulate and promote provision of loans by financial institutions. The study was limited within Thika Municipality. The study adopted descriptive research design. The study population comprised 480 public primary school teachers within Thika municipality. The study used both stratified sampling design and simple random Sampling to select a sample of 120 teachers who were used in data collection. The data was collected using questionnaire. The questionnaire included both open ended and closed ended questions. The data collected was coded and entered into the computer for analysis using SPSS. Data presentation was done by the use of pie charts, bar graphs, percentages and frequency tables. The study found out that majority of teachers do not own the houses they lived in. Teachers were found to earn very low salaries which made them to qualify for low loan amounts. The study also revealed that the high interest rates charged by financial institutions greatly discouraged teachers from accessing housing loans .Land availability was also seen as a prerequisite for accessing loans .Further, the study revealed that teachers transfers were a hindrance to the access to the of housing loans and affected their settling down. Based on the research findings, the study made a number of recommendations. Firstly, the government should consider improving on the teachers' remuneration which will empower them to secure higher loan amounts for housing purposes. Secondly, the financial institutions should consider lowering interest rates to lure more teachers to borrow from them .Thirdly, the banks should not overemphasize the need for collateral as a requirement for credit access. To solve the problem of land availability teachers should form investment groups through which they can purchase huge tracts of land and have it subdivided among themselves .The study also recommended that Teachers Service Commission should abstain from arbitrary transfers of teachers considering the destabilization such a phenomenon can cause.
An investigation of the factors determining access to housing finance by low and middle income earners in Nairobi
(2012-06-28) Mogaka, Ariemba Jared; Abdul, Farida; Jagongo, A. O.; Ndede, F.W.S.
The marginal and low-income groups face a number of obstacles in their quest to secure housing finance to improve their living conditions. Compared to the neighbors, Kenya has a more developed and effective finance system. However, it appears that the only beneficiaries from it are the middle and upper income groups of the housing market. Housing represents a major investment requiring a substantial capital outlay. As illustratedelsewhere in this document, personal residences account for 75% to 90% of household wealth in emerging market countries. In Kenya, it is estimated that out of a total 150,000 housing units required annually in urban areas, only an estimated 35,000 are produced. The shortage of housing is even acute for low-income households acute in urban areas, since only an estimated 6,000 units, or 20 per cent of the total number of all houses produced, cater for this group. In Kenya, only a small proportion of households of 10%, have traditionally qualified for mortgage loans from housing finance institutions, and borrowers generally consist of high net worth individuals. This study was aimed at determining the effect of level of income, interest rates, lack of a collateral, information asymmetry and requirement for a predetermined deposit on access to housing finance. The research design was a causal research whereby stratified random sampling technique was adopted to select a sample of 120 i.e. 1 % of the employees. A questionnaire was administered and the responses recorded. The data collected was analyzed using various measures of central tendency, measures of dispersion, correlation and ANOV A test. Also, various percentages and ratios were calculated. It was presented through the use of charts and graphs. Only 27% of the respondents owned houses while 65% rented their current houses and 7% stayed in houses owned either by their employers or stayed with relatives and friends. Only 23% financed the houses they owned from their personal savings. The rest got finances from the different institutions, for example, commercial banks, mortgage institutions, co- operative societies, investment groups and loans from their employers. Low monthly income was a factor that influenced the realization of home ownership. While 68% of the respondents said the interest rates are not a problem, 32% saw it as a big factor in accessing housing finance. Lack of security was a factor denying respondents access to finance. Majority of the respondents would not raise the high pre-determined down payment hence could not access housing finance. Therefore, the housing finance providers need to restructure the monthly repayments so that they are affordable to the low income earners. They should give attractive and affordable interest rates to encourage more people to own homes, the issue of down payments should be reviewed and the applications procedures should be made simpler. Also, the high pre determined down payments need to be reviewed so that those who cannot raise can still access housing finance. The nature of the collateral required to borrow especially from commercial banks need to be reviewed so that more options are available for the low and middle income earners.
Managing price risk using futures: case of oil companieis in Kenya
(2011-08-18) Nzuki, V. G.; Abdul, Farida; Muturi, J.
Disruptions and supply insecurity in the world oil markets as a result of growth in demand, shrinking buffers, speculation and underinvestment in exploration and refining have important implications in the use of financial tools in the management of oil price risk in Kenya. The study surveyed the use of futures contracts as means to mitigate price volatility by oil companies registered in Kenya. Daily data on the WTI crude oil futures and spot prices were used to work out the hedge ratios and the measures of hedging effectiveness resulting from using the six-month contract for the period 1997-2006. The study also sought to establish the derivatives used by Kenyan registered oil companies and the extent to which the oil companies in Kenya apply Futures to hedge price volatility and the ratio they hedge when they use the futures as a return balancing portfolio. Exploratory survey design involving both descriptive qualitative and quantitative analysis was adopted in conducting the study. The target population for this study was all the 364 registered oil companies in Kenya. A representative sample of 36 cases was selected using systematic sampling method. Semi-structured questionnaires were utilized to collect primary data while secondary data was sourced from the U.S. official energy website. The descriptive and OLS methods were used to analyses the data. Statistical data analysis was done using excel, SPSS and STATA. The results show that oil companies in Kenya seem to give due consideration to crude oil price volatility and as a consequence, they use a hybrid of derivatives, mainly futures market and forward contracts. Further, oil spot and futures prices don't seem to vary significantly as the two prices move together. The results also indicate that majority of the oil companies in Kenya hedge about thirty one to sixty percent of their oil volumes using futures market and this compares unfavorably to the optimal hedge ratio of 93%. The results imply that oil companies in Kenya are currently under-hedging their futures markets and are therefore exposed to high price risks resulting from the underlying price volatility. The companies are therefore recommended to scale up the value of the hedged oil volumes in line with optimal hedge ratio. Majority of the oil companies indicated that their use of futures contracts impacted positively on their profit margins. However, the oil firms indicated that they usually review their petrol pump prices whenever international crude oil prices go up. This implies that that even as the oil companies sustain their earnings as a result of hedging, they continue to pass the prices hikes to their customers. The findings of this study suggest that in terms of risk reduction, the MV method is an appropriate method for estimating optimal hedge ratio. The empirical results in this paper reveal that NYMEX crude oil futures contract is an effective tool for hedging risk. In conclusion, under the assumption that the hedger's objective is to minimize risk regardless of the risk-reduction trade off, that is the hedger is highly risk-averse, an OHR of 93% for Oil is recommended. By applying the optimal hedge ratio, a company may reduce their risk exposure up to 81.03% compared to an unhedged position. This means that the optimal proportion of future contracts that oil companies in Kenya should hold to offset the spot prices position is 93%. This implies that futures contract deserves consideration as a possible hedging instrument for international oil market price risks by oil firms in the country

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