Question

QUESTION TWO

You have decided to invest in the financial services sector in Kenya. You are aware of the ranging debates on interest rate caps, exchange, and inflationary rates and how these affect the sector’s performance. You are not yet sure whether to establish a bank, a microfinance or deposit taking Sacco with a few friends.

REQUIRED

1. How would you go about gathering data? Give examples
2. What kind of data would you require and where would you find the data (Explain kind of data and source
3. Assuming you decide to establish a deposit taking Sacco, with the help of examples, discuss in detail the sector’s current debates and trends which will help you in your new venture

Answer 1

In order to start an deposit taking financial service in kenya , the market survey in the region of operation in the country do be done in order to have a holistic view about the business risk before the investment is done.

A Gathering of sectoral data

· Data regarding the market share and operations of the existing commercial banks

· Data regarding the employment and the sources of income for the people

· Type of savings need for the people.

· Amount of target savings.

· The relative proportion of the use of formal and informal sector in the financial services.

B The required data are collected from the following databases -

No	Type of data	Collection Source
1	The market share of Commercial banks	Finaicial sector deepening FSD kenya
2	Employment and the sources of income	World bank Database
3	Financial data of the regional banks	Financial database like Bloomberg and TR Eikon Database
4	Macro-economic data for the country	World bank Database
5	Market share of formal and informal sector in the financial services	Central bank of kenya database

C For establishing a deposit taking SACCO Savings and CrediIt Co-operative Organization, this informal sector is currently suffering due to lack of customer confidence and the use of credit recovery procedures along with the requirement for the third party for the asset side operations of these SACCCO. Hence their operations are already under debates and their success potential is still questionable .

· In order to improve the financial inclusoion where the banks have not been able to reach , this model can still prove to be a reliable mode of opeartion

· A partnership in value generation and wealth creation is established as these are Co-operative societies

· The Conclusive growth can be achieve by serving tailor made small savings and joint lending products in order to meet with the small demand in the the fiancailiiy deprived regions of the Kenya

Thanks .