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.