Difficulties faced by eastern and southern African trade and development bank in implementing the strategy for capital resource mobilization
Abstract
Strategy implementation is the way in which a company creates the organizational
arrangements that allow it to pursue its strategies most effectively. Problems with
implementation have resulted in failed strategies. Even first class strategic plans can fail
if implementation is not handled with care. Strategy implementation is complex and is
accompanied with a lot of challenges that organizations need to manage to ensure smooth
execution of their strategic plans.
The findings of this study are that PTA Bank has adopted several strategies in an attempt
to fully achieve its main objective of capital resource mobilization. The study established
that the main sources of capital for the Bank are: Subscriptions by member countries;
Borrowing from the international commercial banks and financial institutions; investment
income and issuing of bonds and promissory notes.
Several strategies to achieve the goal of capital resource mobilization have been adopted,
which are: Allowing member countries to pay capital subscription by installment thereby
reducing burden on their budgets and reducing the risk of default in subscriptions; using
lines of credit to obtain capital from developed nations; maintaining healthy balance sheet
that act as security or guarantee when borrowing; devising alternative methods of raising
capital such as issuance of bonds and promissory notes; broadening and diversifying
shareholding base.
However, several challenges have been encountered in the implementation of these
strategies. Some of these challenges are: that decision making process is based on
political considerations rather than commercial due to diversity as PTA Bank is owned by
several countries, which may have different ideologies. Countries have different priorities
at any given time, and may not consider subscriptions a priority resulting in default in
paying subscriptions. There is always a negative perception towards Africa by the
developed world who perceive African governments as corrupt and mismanaged, and
therefore the risk of default in repayment of loans is seen to be high. This makes
borrowing from the developed countries very expensive as a premium is added to loans
as a measure to cushion against the perceived risk. Poverty and diseases are other
challenges.
VB
This research is a case study focusing on the difficulties faced by PTA Bank in
implementing the strategy for capital resource mobilization. PTA Bank was established to
contribute towards the socio-economic development of PTA sub-region, promote intra-
PTA trade, and economic integration. To achieve this mission, it was necessary for the
Bank to mobilize resources, particularly capital as an objective to achieve the broad
objective. The study examines strategies adopted by PTA Bank to achieve the goal of
capital resource mobilization. The Bank was chosen because of its unique position in the
region and as a pioneer regional development Bank in the COMESA sub-region.
The source of data for this study was from personal interviews with senior managers of
the Bank who are charged with the responsibility of strategy development and
implementation. The study is not an end in its own, but should be evaluated in view of
the limitation that were experienced. It should not only be useful to PTA Bank but to
other regional development banks. Those intending to conduct research in strategy
implementation will also find the findings of this study useful.
Citation
Masters of business administrationPublisher
school of Business, University of Nairobi