The effect of exchange rate volatility on budget variance of international refugee non governmental organizations in Kenya
Abstract
Most of the International Non-Governmental organizations in Kenya receive a significant
portion of the budget funding in foreign currency contract. While the daily and monthly
exchange rate in Kenya keeps on fluctuating each donor and organization has strict,
different rules and technique in regard to the management of exchange rate gain or losses
in the operation of its funds.
The objective of this study was to establish the effect of exchange rate volatility on
budget variance of international Refugee Non-Governmental Organizations in Kenya. A
descriptive study was used with secondary data collected from the different Audited
Financial statement of Refugee Non-Governmental Organization and part of the data
relating to partner organization which was not available in the financial statement was
obtained through questionnaire as primary data for this study. The exchange rate data was
obtained from the Central Bank of Kenya website. The data was analyzed using a
multiple regression model to obtain the coefficients of the variables. SPSS was used to
analyze the data.
Findings of the study indicated that exchange rates do indeed have a positive correlation
to the budget variance. It is also noted in the findings that it was not the only factor
affecting budget variance hence the study concluded that exchange rates has an effect on
the budget variance besides the amount of funding in foreign currency contracts and
amount of deviation in the budgets of partner organizations among other factors which
were beyond the scope of this study.
The study recommends policy formulation and implementation to control and ensure a
reduction in the impact of exchange rates on the organization budget variance by the
international organizations. The Government should formulate policy to improve on
information dissemination to reduce exchange rate risk and allow for relative estimation
and prediction of exchange rate to foster proper financial planning.
Citation
Master of Business AdministrationPublisher
University of Nairobi