Challenges of implementing growth strategies of firms in the unit trust industry in Kenya

Abstract

Kenya’s unit trust industry is relatively young having started off at the turn of the 21st century. The number of unit trust providers has grown to 13 since then and the size of the industry has grown to KShs 29 Billion (USD 340million) as at end of June 2011. This is therefore a small industry presenting a large untapped market given the number of players and contribution to the country’s GDP. Compared to more developed CIS markets the Kenyan Unit Trust Industry is much smaller. For example it is 300 times smaller than the South African CIS Industry pointing to a lot of room for growth. The size of the industry and slow growth is an indication that companies are experiencing challenges implementing their growth strategies. The study objectives were to establish the challenges of implementing Growth Strategies of firms in the Unit Trust Industry in Kenya. The study covered 11 members of the Association of Collective Investment Schemes. Data was collected using questionnaires which were administered using drop and pick method. Data was analysed using descriptive statistics, which involved mean scores used to show the average effect of the factors under investigation, the standard deviation used to check the variability from the mean and the mode was used to evaluate the most popular responses. The study found out that the minimum investment amounts, economic conditions and lack of awareness are the most significant factors affecting the growth of CIS in Kenya followed closely by Distribution network and political and social conditions. The study recommends that Collective Investment firms should consider lowering their minimum investment amounts to make their products affordable to the public. The Collective Investment Industry and the Capital Market Authority should collectively engage in investor education in order to educate the public and create awareness on the opportunities available via the CIS products. The Capital Market Authority as the Industry regulator needs to enlighten the public on the measures it put in place to enhance investor protection since the public is not confident that they are adequately protected.