Strategy Implementation and Performance of Islamic Banks in Lamu County, Kenya
Sidhi, Najma Ali
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The Kenyan Islamic banking is faced with challenges which include global financial crisis, declining interest margins affecting the sector particularly regarding the assets performance and new regulations, reduction in trade volumes and deposits mobilization. While it is necessary for Islamic banks to be more careful in lending because they bear more burden of risk, this system could result in a more economically favorable financial performance for Kenya’s Islamic banks. In this regard, this study sought to investigate how performance of Islamic Banks in Lamu County, Kenya is influenced by strategy implementation. It will particularly examine how performance is influenced by strategic communication, strategic leadership, resource allocation and organizational structure. Leadership contingency model theory, Resource based view theory and structural contingency theory were guided the study. A descriptive survey research design was adopted. Three Islamic Banks in Lamu County, Kenya which include; First Community Bank, Gulf African Bank and Dubai Islamic Bank were targeted. 205 participants were targeted, they include employees from these banks. In respondents’ selection, simple random sampling method was used and in ensuring well representation of all cases, stratified sampling method was utilized. A 30% sample size representation of 205 study population resulting to 62 participants as the sample size. Questionnaires were used as data collection instruments. 10 participants did not take part in the final process of collecting data were used in the pilot test. Frequencies, percentages and means were made use of in quantitative data analysis. Inferential statistics used correlation and Regression. The study revealed that resource allocation, strategic leadership, strategic communication and organizational performance had influenced performance significantly. The study makes a conclusion that the banks allocate adequate financial and human resources for strategic planning implementation, audits and monitors all the allocated resources by the bank, provide for proper use of the existing physical resources, and has well trained staff in supporting strategic plan implementation. Strategic leadership improves the daily and long-term performance of Islamic banks in Lamu County by creating an environment in which every individual has a commitment to one vision, and know how to attain it. Strategic communication helps organizations in focusing on and living their purpose, mission and values through behaviors, actions and expectations alignment to business objectives. Creation and execution of a comprehensive management training plan to maintain a strong managerial core is easier when the organization operates under a strong structure. The study recommends that Kenyan Islamic banks’ management should develop strategies of obtaining new resources and optimize the resources available for such banks’ performance enhancement. Responsibilities must be distributed across all level in the Islamic banks in Kenya giving strategic leaders a chance of contributing to decision making. The management of the Islamic banks should encourage channels for two-way feedback, give management a channel to focus on strategic communications. The management of Islamic bank in Kenya should identify the different functions of their business and organizational chart be created to ensure they are staffed properly.