Research Repository :: Browsing by Author "Swai, Tobias A."

Browsing by Author "Swai, Tobias A."

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Assessing the Portfolio Behavior of Commercial Banks in Developing Countries: A Literature and Methodological Issues for the Case of Tanzania Commercial Banks
(International Academy for African Business and Development (IAABD), 2011-05) Swai, Tobias A.
This paper is a work in progress and tries to analyze briefly the literature, proposed hypotheses and methodology for assessing portfolio behavior of commercial banks in Tanzania. Many developing countries have adopted various measures for the economic and trade liberalizations including financial liberalization, Tanzania being unexceptional. Financial sector is believed to be the engine for the economy and economic growth. The liberalization of the financial sector took various forms involving local financial institution and multinational banks of various sizes. The assessment of portfolio behavior of the commercial banks has received little attention to these developing countries especially on the extent to which the commercial banks invest in various assets and the return they realize out of these investments. The literature suggests an optimal profit maximization model in portfolio allocation, by the use of both choice and non choice variables to be relevant in analyzing bank behavior. In the proposed study the researcher proposed the use of quarterly bank financial statements in a panel form for a period of over 10 years and inclusion of bank qualitative variables over the period of study, in a profit maximization equation.
BANKERS’ PERCEPTION ON THE IMPACT OF COVID-19 IN THE BANKING SECTOR
(Center for Banking and Financial Services Research, 2020-05-20) Swai, Tobias A.; Richard, Evelyn
The presentation offers results from an online survey of 127 Bankers on the Impact of COVID-19 in the banking sector in Tanzania. The respondents indicated that COVID-19 might have a long term impact to businesses and the economy. Mostly affected sectors being tourism, hotel and restaurants. Banking profitability, foreign exchange exposure, new savings and risks profile of current investments likely to be affected. Intervention by Central bank on policies related, special minimum reserve, liquidity support, revision of net open position is highly recommended.
Commercial banks portfolio holdings behaviour: does size and ownership matter? Evidence from Tanzania
(African Journal of Finance and Management, 2016-10) Swai, Tobias A.; Lwiza, Daudi R.; Ndanshau, Michael O.
This study examined the portfolio behaviour of commercial banks in Tanzania by using panel financial data of 14 banks from 1998 to 2010 on a quarterly basis, making 52 quarters and 728 observations. The sampled banks had more than 85% of the total commercial banks assets on average for the time of study. The study objectives were to analyze the portfolio behaviours of commercial banks in Tanzania with respect to the size of the bank and ownership. Financial statements data was collected from quarterly mandatory publication of the bank data for the individual banks and were analysed based on an ordinary least squares model. Findings revealed that banks do hold their portfolios with very little differentiation amongst themselves which indicates that there is little or same innovation patterns. The assets allocation is more with the loan products and investment in government securities. Large banks and foreign banks enjoy returns from the interbank lending due to their relatively large capital and assets base. The study calls for innovation, organizational learning and specialization of banks, and more oversights on the foreign bank entry as well as for the large banks.
Descriptive Analysis of the portfolio behaviour of De Novo Commercial Banks in Tanzania
(The Operations Research Society of East Africa Journal, 2018-06) Swai, Tobias A.
The purpose of this paper is to examine portfolio behavior of newly established banks in Tanzania based on the ownership structure i.e. foreign vs local commercial banking firms. A total of 8 banks were observed with 216 data buckets for the period of their first 16 consecutive quarters of operations. Published financial statements of the banks investigated were drawn, summarized and analyzed. A descriptive analysis approach. The study reveals that de novo banks do maintain just the required regulatory capital in their start up and that they do not engage into lending activities in the beginning. On average, banks engage into serious lending on their sixth quarter. However, local banks engage into lending as early as second quarter of their market entry. Foreign banks suffer more losses in non-performing loans than the local banks during their first 16 quarters of their operations. In terms of capital investment, local banks operate with lower capital base than foreign banks. Foreign banks seem to attract fewer deposits as compared to the local banks though they seem to provide more attractive interest on deposits. The study provides significant contribution on the portfolio behavior of the de novo banks and comparison on ownership creates added value for foreign entry to the commercial banks in Tanzania.The paper also provides managerial insights on how to manage newly established banks and might guide investors on the return on their investment in newly established banks.
Determinants of Bank Capital Structure - Does Bank Ownership Matter? Evidence from Tanzania
(Business and Management Review, 2016-06) Swai, Tobias A.; Lwiza, Daudi R.; Ndanshau, Michael O.
This study examined the determinants of capital structure of commercial banks operating in Tanzania using panel financial data of 14 banks drawn from 1998 to 2010 on a quarterly basis. A multiple-indicators-multiple causes structural equation modelling was applied, with a consideration for structural break. In order of importance, bank size, profitability, non-tax depreciation shield, growth and volatility have been determined to be key determinants in capital structure decisions of commercial banks in Tanzania. Controlling for the ownership, growth of the banking firms is not significant in determining the capital structure among foreign banks. The study contributes to the understanding of commercial banks’ capital structure in relation to the ownership structure in emerging markets and provides a policy direction for foreign bank entry into developing countries.
Effect of Social and Human Capital on Access to Financial Capital for SMEs: A Comparative Study of Botswana and Tanzania
(University of Dar es Salaam Business School, 2018-09) Monametsi, Gladness L.; Mkwizu, Kezia H.; Swai, Tobias A.
The general objective of this paper is to examine the effect of social capital and human capital on access to financial capital for SMEs. The primary area of focus is the manufacturing sector in both Botswana and Tanzania. Crosssectional in design with quantitative approach. Descriptive statistics and ANOVA were used as tools of analysis. Comparative analysis of the two countries reveals some areas of divergence and some of overlap on the variables examined. Social and human capital have a statistically significant effect on access to financial capital for SMEs in Botswana. For Tanzania, contribution awaits completion of data collection which is currently ongoing. This study contributes knowledge on the effect of social capital and human capital on access to financial capital for SMEs in Botswana and Tanzania.
Energy payback time analysis and return on investment of off-grid photovoltaic systems in rural areas of Tanzania
(Elsevier, 2020-10-24) Tsuchiya, Yooko; Swai, Tobias A.; Goto, Fumiyuki
Owing to a vast land area, abundant solar radiation, and overseas support, the use of photovoltaics (PV) as a source of electricity is rapidly spreading in Sub-Saharan Africa. To understand the actual application situations, two cases of PV electricity generation systems in the rural areas of Tanzania were investigated via life cycle assessment. The energy payback time (EPBT) calculated from the utilisation of the PV systems, taking into consideration the inventory data of the International Energy Agency, revealed an unsatisfactory performance. Specifically, the EPBTs based on actual power generation at the sites greatly exceeded the expected value-based solar radiation calculations. At one site, the EPBT even exceeded the lifespan of the PV panel, indicating that energy recovery was impossible. With respect to the energy return on investment (EROI), it was evident that the income generated from the investments was insufficient to cover current operational costs, suggesting negative returns on investment. Conversely, diesel power generation appeared to be more suitable in these areas owing to the low and discontinuous demand for power. Furthermore, the operation of a more efficient PV system would require improved maintenance and management, as well as an increase in the demand for electricity.
External Equity Financing: Assessing the Interest of Construction Companies to List at Dar es Salaam Stock Exchange
(Operations Research S, 2017-09) Swai, Tobias A.; Nkunundu, Victor D.
This study examines construction companies’ interest to external equity through listing to Dar es Salaam Stock Exchange. This follows various reasons among others the fact that the sector is capital intensive and its contribution to the Gross Domestic Product. Another reason was the fact that data indicates tenders in construction industry are offered to foreign firms due to the lack of capital investment by the local companies. Despite all these, there is low motivation and interest of companies to use the capital market to acquire equity despite of it being the cheapest source of fund. Given the magnitude of construction industry business in Tanzania, there is no single company listed to the bourse to date. This study was thus done to assess the readiness, awareness, influence of profitability and internal framework of the company’s financial needs on the interest to list. A simple random sampling technique in selecting respondents and informants were selected purposively for data generated through questionnaire administered to them. Findings of the study indicates that majority of contractors prefer to use internal generated funds to finance their activities, and if external finance is necessary they prefer debt financing through lending from commercial banks and other debt financing sources so they take external equity financing as a last resort –and this follows pecking order theory. The results show that there is low interest of listing because of perceived stringent listing requirements and high costs associated with listing.
FACTORS INFLUENCING THE RETURN ON EQUITY A Comparative Analysis of Manufacturing and Financial Service Companies Listed in Dar es Salaam Stock Exchange
(Department of Finance Seminar Series, 2017-02) Moshi, John S.; Swai, Tobias A.
This study analyzed the factors that influence the Return on Equity for domestic manufacturing and financial companies that are listed on Dar es Salaam Stock exchange. Three factors were analysed based on Dupont System namely Profit Margin, Total Assets Turnover and Equity Multiplier. A comparison of the factors was between manufacturing sector and financial sector to determine if there were any significant differences of the two sectors. Unbalanced panel data obtained from the financial statements of the companies from 2000 to 2015 was obtained, based on the fact that at least included candidate has 5 years of trading and financial reporting. A total of 93 observations was collected, and when cleaned, 86 observations remained with 22 on the financial services sector. Data was cleaned and tested based on various measures such as normality tests, unit root test and model specification test. A multiple regression model was used and the results indicated that Profit Margin had the most influence on the return on equity followed by Total Assets Turnover and lastly the Equity Multiplier. Profit Margin and Total Assets Turnover had a positive relationship with Return on Equity while Equity Multiplier was negatively related to Return on Equity, the comparative results between the two sectors indicated that there were significance means difference between the factors that influenced the Return on Equity in manufacturing and financial sectors.
Impact of Capital Structure on the Portfolio Behavior of Commercial Banks in Tanzania
(International Academy for African Business and Development (IAABD), 2015-05) Swai, Tobias A.
This study examined the impact of bank capital structure on the portfolio behaviour of commercial banks in Tanzania by using panel financial statements data of 14 banks from 1998 to 2010 on a quarterly basis. The studied banks had more than 85% of the total commercial banks assets on average during the time of study. The study objectives were to analyze the impact of the capital structure to the portfolio performance of commercial banks with respect to the size of the bank and ownership. Financial statements data from the 14 banks were collected from published bank data. Findings revealed that banks are heavily financed by debt sources of finance. It is also revealed that bank expansion to attract deposits through branch network and various products are important in shaping the capital structure. Deposits are cheap sources of finance for commercial banks. Based on the bank size model, it was revealed that the size of the bank has impact on capital structure of the bank which was measured by leverage ratio. Foreign banks have more been found to have impact on their leverage as compared to the local banks.
Impact of Capital Structure on the Portfolio Behaviour of Commercial Banks in Tanzania
(African Journal of Economic Review, 2019-07) Swai, Tobias A.
This study examined the impact of bank capital structure measured by leverage ratio as defined in Based III based on tier 1 capital to total assets, on the portfolio behaviour of commercial banks in Tanzania by using fixed balance panel of annual financial statements data of 20 banks from 2002 to 2017. The studied banks had more than 89 percent of the total commercial banks’ assets in 2017 and 79 percent of total loans. Consideration of portfolio behaviour was explained based on choice assets (loans, investment in government securities and interbank loans) and non-choice items (non-earning assets including cash, required reserved and investment in fixed assets). The study examined the impact of capital structure on the bank portfolio holding with respect to the size of the bank and ownership. Findings revealed that only 35% of the banks are undercapitalized as at the end of 2017. The variables tested were significant at p <0.01 and p <0.001 except for the bank size measure. This means size of the bank is not a measure for its leverage structure, but with positive relationship.
The Impact of Human Capital on Access to Financial Services for SMEs: A comparative Study of Botswana and Tanzania
(International Journal of Research & Methodology in Social Science, 2018-12) Monametsi, Gladness L.; Mkwizu, Kezia H.; Swai, Tobias A.
The paper aims to analyze the impact of human capital on access to financial services for SMEs by comparing results of two developing countries, Botswana and Tanzania. The objective of this study is to examine the impact of human capital for male and female entrepreneurs on access to financial services. This study used a survey questionnaire to collect primary data in the manufacturing sector from a sample size of 115 SMEs for Gaborone in Botswana and 81 SMEs for Dar es Salaam in Tanzania. Descriptive statistics and one way ANOVA were deployed to analyze the data. In Botswana, the majority of SMEs (52.2%) were females while in Tanzania males were (54.3%). The findings indicate that there is a statistically significant impact of human capital on access to financial services for Botswana in terms of education (p=0.002), work experience (p = 0.000), years of experience as owner manager in business (p = 0.000), and lapse of time of attending training related to business (p = 0.002). Findings also show that there is a statistically significant impact of human capital on access to financial services for Tanzania in terms of work experience (p = 0.009), and years of experience as owner manager in business (p = 0.048).
Implications of Financial Institutions Regulations on Assets and Liabilities Management in Depository Financial Institutions in Tanzania
(2002-12) Swai, Tobias A.; Chijoriga, Marcelina M.
Financial sector reforms in Tanzania had posed a number of challenges to the Depository Financial Institutions (DFIs), particularly on assets and liabilities management. In line with the reforms, are the regulations issued by the Bank of Tanzania as guidelines to maintain an efficient and sound financial system. The regulations pose a challenge to DFIs in their assets and liabilities management, since apart from the need for profit, they also need to comply with the regulations. This study was designed to analyze the impact of Financial Institutions (FIs) regulations on the assets and liabilities management in depository financial institutions in Tanzania. The study has used both primary and secondary data. Interviews were made with the senior officials of depository financial institutions in particular with emphasise to the members of Assets and Liabilities Committees (ALCO). The results show that, significant importance is given by the top management to the assets and liabilities management function. It also revealed that, there is a positive influence of regulations on the composition of assets and liabilities. However, the current FIs regulations promote efficient utilization of assets and liabilities in the FIs. The critical regulations and the general laws in implementation of assets and liabilities management were identified.
INDUSTRIALIZATION DRIVE, FISCAL POLICYAND CROSS BORDER TRADE PERFORMANCE AMONG EAST AFRICAN COUNTRIES
(University of Dar es Salaam Business School, 2020-08) Swai, Tobias A.; Magai, Petro S.
Industrialization has been considered as a key to the development of nations. Since its re-established in 1993, the East African block has been striving to develop various strategies to ensure equitable development within the region and increasing trade opportunities. For the past four years, the industrialization has been the key budgeting focus of the states. This study as analyses the policy reforms towards industrialization drive among the countries and its implications to the performance of the trade across the nations. A contextual analysis of the fiscal policies was undertaken based on Pelkmans (2006) industrial policy framework and review of the performance of the regional cross border trade based on the Country Similarity Theory and Porter’s National Competitive Advantage Theory. The results suggests that Tanzania’s fiscal focus have been industrial infrastructure development while the rest of the countries has been local manufacturing initiatives. EAC countries through common external tariffs have been in the recent years focusing on the promotion of local industries by setting high tariffs on the importation of processed food items and vegetable oils. However, Tanzania has been in the past five years a net exporter of raw food items and Kenya a net importer of food items across the member states. Kenya seems to leading the EAC bloc in industrialization and incentives provided as well as local tax revenues to the fiscal policy. It is therefore recommended from this study that strategic alliances for clustering and promotion of industrial policies based on the Pelkmans (2006) should be adopted for sustainable industrial policy in the region.
Leasing Potential for SMEs in Tanzania: Experience from Lessors and Lessees
(2016) Swai, Tobias A.; Ndonde, Moyo Violet
Lease finance has been referred to as one of the best alternative sources of long-term finance for Small and Medium Enterprises (SMEs). There is a lack of literature on the engagement of both lessors and lessees in relation to lease finance in Tanzania. The researchers employed seven case studies consisting of two lessors and five lessees, in order to present the current experience and perspectives of the leasing business in Tanzania. The findings suggest that the lease finance has potential in Tanzania based on the needs of SMEs. Good clientele, good suppliers and the availability of credit in a good regulatory environment are important for lessors. Commitment to the business, quality of suppliers, good tracking of cash flows and the availability of markets are important for SMEs which seek lease finance.
Measurement of the Urban Water and Sewerage Authorities in Tanzania: A Data Envelopment Analysis
(African Journal of Finance and Management, 2011) Swai, Tobias A.
This paper attempts to measure the efficiency of Urban Water and Sewerage Authorities (UWSAs) in Tanzania for the years 2005/06 and 2006/07 using input oriented measures by utilizing Data Envelopment Analysis (DEA), as well as Malmquist Productivity Index (MPI). The study utilized financial data for the 19 UWSAs taking two inputs (total own operating expenditure and amount of water produced); and outputs (revenues generated and total number of connections) measures. The results indicate that category A authorities, which are self-sufficient, are the least efficient when compared to other categories that receive government support to run their activities. The result indicates that the increase in the performance of the UWSAs is not a result of technological change; rather, it is from operational efficiency. The study calls for a close monitoring of UWSAs, especially those with decreasing returns to scale as well as apply more sophisticated techniques to monitor the efficiency of UWSAs.
Municipal Owned Community Bank: Capital Raising Dilemma
(Emerald Emerging Markets Case Studies (EEMCS), 2019-10-05) Swai, Tobias A.
This is a Case study for Business students. The case introduces student to basic understanding of banking sector in Tanzania as well as the strategies and struggle to raise capital through shareholders’ funds. Application of Banking theory and Pecking order theory is evidenced from the case. The case outlines why the bank struggled to raise capital and what triggers the capital raising strategies. It also give students an opportunity to think about applicable theories of capital structure and bank capital, and strategies the bank could use to rescue its capital crunch in the future. Case overview/synopsis The case provides details of how the Capital Community Bank (CCB) raised its capital through strategic financial engineering which enabled it to raise the minimum regulatory capital required to be licensed as a financial institution unit, to a regional financial institution, to a fully fledged commercial bank. The bank started with a paid up capital of TZS 472.3m in 2002, involving four Local Government Authorities and individual investors. Capital raised to TZS 31.3bn in 2014 and down to TZS 20.6bn at the end of 2016. The minimum regulatory capital required is TZS 15bn, while paid up capital was 16.9bn. With the change of the management team in 2017, the bank is looking for avenues to raise further capital to meet the regulatory limits and continue to survive as a commercial bank, given dramatic changes in the banking sector in Tanzania. Complexity academic level The case is suitable for third year students in Bachelor of Commerce/Economics specializing in banking/financial services. It also suits postgraduate/master's students seeking a Postgraduate Diploma or Master of Business Administration in financial institutions/banking course
Prospects for Lease Finance in Tanzania
(Bank of Tanzania, 2008-11) Swai, Tobias A.
The paper examined current global trends in lease financing and then focuses on the role of this product in promoting lending in Tanzania. It observed that leasing industry has been growing rapidly in developed countries – a development attributed to effective policy environment conducive to flexible financing to SMEs, and other small businesses. As regards to Tanzania, the paper focuses on the role of financial leasing in accelerating growth, existing potential in the lease market, and challenges ahead.
Social Capital and Financial Services: A Study of SMEs in the Manufacturing Sector in Tanzania
(International Journal of Research & Methodology in Social Science, 2018-12) Mkwizu, Kezia H.; Swai, Tobias A.; Monametsi, Gladness L.
This paper examines the relationship between social capital on access to financial services for Small and Medium Enterprises (SMEs) in the manufacturing sector. The study area is Dar es Salaam, Tanzania. A cross-sectional design was used and surveyed semi-structured questionnaire to collect data from respondents using convenience sampling. A total of 81 completed questionnaires were subjected to descriptive statistics and ANOVA analysis. The descriptive results for social capital reveal that majority of respondents regularly talk with other business owners (90.1%), meet frequently with family and friends to talk about business (90.1%), and belong to a religious group (93.8%); while for access to financial services the results show that majority of respondents (82.7%) strongly agree that friends and family provide extra capital when needed. Among the inferential statistics findings on the relationship between social capital and access to financial services indicated that regularly talks with other business owners is statistically significantly to access to grants (p = 0.003), regularly talks with other business owners is statistically significantly to friends and family provide extra capital when needed (p = 0.035), meeting frequently with family and friends to talk about business is statistically significantly to access to grants (p = 0.012), having strong ties with people or entities in business with is statistically significantly to access to grants (p = 0.008), and having strong ties with fellow SMEs is statistically significantly to access to grants (p =0.012), fellow SMEs have strong ties with one another is statistically significantly to access grants (p = 0.025), belonging to a football club is statistically significantly to access to grants (p = 0.000), belonging to a Golf Club is statistically significantly to friends and family provide extra capital when needed (p = 0.001), and belonging to a community social group is statistically significantly to friends and family provide extra capital when needed (p= 0.004). This paper adds knowledge to the issue of the relationship of social capital and access to financial services for SMEs in the manufacturing sector in Tanzania. Future studies can explore financial cultures by SMEs and access to financial services in the manufacturing sector.

Browsing by Author "Swai, Tobias A."

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