Possible causes of poor investment portfolio: an empirical study of development financial institutions in Kenya.

Abstract

This study sought to find out the possible causes of poor investment portfolio of Development Financial Institutions (DFIs). The need of the study arose from the fact that DFIs projects are normally problematic as evidenced by high level provisions for bad and doubtful debts. In or-der to achieve the objectives, pnmary data was collected from Investment Managers or their equivalent of DFIs operating in Kenya. This was accomplished through the use of a questionnaire administered by the researcher. The results show the following to be possible causes of poor investment portfolio of DFIs: * Engagement in risky business Overemphasis of developmental role * Oversights b..y officers during the appraisal process * Corruption * Undue influence by promo tors during appraisal process * Weak research department or lack of the same * Delays in project realization * Impediments in monitoring exercise * Failure to identify symptoms of failing projects * Inefficient management of the project * Unfavourable or adverse Government policies and Government interferences Insufficient raw materials Stiff competition Lack of generous dividend policy

These results should be interpreted in consideration of the limitations of the study and the findings of the study should be viewed as a tool to aid Investment Managers in their efforts to maintain clean investment portfolio.