The link between capital market and economic growth in Rwanda

The link between capital market and economic growth in Rwanda 1.1 Background Today most economies around the world are judged by the performance of their capital markets. The potential role of financial markets in economic growth has been well documented. Most African countries including those in Sub-Saharan Africa (SSA) have recently under gone financial sector reforms such as restructuring and privatizing of state owned banks and establishment of capital markets. In the literature there are different views on the link between capital markets and economic growth of a nation. North (1996) shows that, differences in economic institutions are the major sources of cross-country differences in economic growth and prosperity. High quality institutions have a positive influence on the depth and development of the financial sector of nations. This proposed research will mainly consult with the literature about the link between capital market and economic growth and the role that institutions play in capital markets and try to pinpoint and relate these to the Rwandan context. In developed capital markets households are the major participants as investors. Saunders and Cornett (2004) claimed that in the United States, households are the single largest holders of corporate stock. However, the capital markets of least developed countries are very shallow in terms of capitalization because of a limited number of listed companies and limited participation of households (savers) either due to lack of capacity or lack of awareness as to the capital markets. Therefore this study will also examine the impact of the households (savers) in the capital markets in least developed countries in Africa including Rwanda. 1.2 Statement of the Problem Despite a surge of global investor interest in the 1980s and 1990s, Africa has been bypassed by the massive international capital flowing to developing economies. Aggregate capital flows to developing countries have been rapidly exceeding official development assistance flows since 1980s. However, Africa remains the only developing region in which development assistance flows exceeds private capital flows (Senbet and Otchere, 2006). This was mainly attributed to the lack or absence of a well developed financial sector (capital markets, banks, finance companies, life insurance companies, and insurance companies) and the poor economic policies and institutions in African countries. Capital markets are a vital part of an economy making it possible for industry, trade and commerce to flourish without any obstacle in terms of resources. The financial markets serve a vital purpose in the growth and development of a company that wants to expand. For such companies with expansion plans and new projects in need of funding and investors looking for a better return, the financial market is the best platform. The private sector usually lacks access to credit facilities. Investment, growth and economic welfare are all too low in developing countries. This is more severe in Africa, particularly in Sub-Saharan Africa (Platt, 1998). Most African countries, particularly those in Sub-Saharan Africa, have recently undergone extensive financial sector reforms. The reform package includes restructuring and privatization of state owned banks, the introduction of private banking systems, along with bank supervisory and regulatory schemes, the introduction of a variety of measures to promote the development of financail markets; including money and stock markets (Senbet and Otchere, 2006). Rwandas economy primarily depends on agricultural productivity. The industry and service sectors are not entirely developed to push the economy towards higher growth. Rwandas long-term development plan, as articulated in Vision 2020, seeks to transform Rwanda into a middle-income country and an economic trade and communications hub by the year 2020. An effectively functioning financial sector is a fundamentally important and essential element for achieving this objective.   Rwanda seeks to develop a financial sector that is effective, in particular, by  expanding access to credit and financial services; enhancing savings mobilization, especially long term savings; and mobilizing long-term capital for investment. A key strategic goal of the Vision 2020 plan is to make Rwanda an economic trade and communications hub in the heart of Africa.   This will require significant investment in infrastructure in the form of roads, power, rail, airports and telecommunications.   These plans also call for the active participation and expansion of the private sector in Rwandas economy which will require long term investment in infrastructure and industry, which can only be provided through the mobilization of domestic savings through capital markets.   The Rwanda capital market now referred to as the Rwanda Over the Counter (OTC) market was established by the Capital Market Advisory Council in January 2008. It is from this perspective the researcher is undertaking this study to see the link between capital market and economic growth in Rwanda. How does Rwanda stand to benefit from this capital market? 1.3 Purpose of the study The main purpose of this thesis is to investigate and review the literature on the link between capital market and the economic growth and prosperity of a nation, particularly in Rwanda. This study will also examine the importance of institutions for the performance of capital markets and households (savers) contribution to the capital market so that companies can raise the required capital easily in a country where financing is limited to the banking sector and yet accessible only to a few big private companies and state owned enterprises. 1.4 Objectives of the study The objectives of this proposed study are mainly to find out: Whether capital market is an alternative towards the economic growth of least developed countries such as Ethiopia. The role of institutions toward the development of capital market. Whether households savings will make a real impact on the overall performance, liquidity, and market capitalization of the capital market in Rwanda. 1.5 Research questions This thesis is intended to answer the following questions: Is a capital market an alternative towards the economic growth of least developed countries in general and for Rwanda in particular? Will institutions be vital for the performance of capital market in Rwanda? Will domestic savings in Rwanda have a role to play in the capital market? 1.6 Scope of the study This study presents the different views as to the link between capital markets and economic growth, and the role that institutions play in the performance of capital markets. The focus being the capital market in Rwanda; it also investigates the impact of households savings on capital market in Rwanda. 1.7 Significance of the study The researcher intends to collect data in order to analyse the link between capital market and economic growth in Rwanda. This study will examine the role of institutions toward the development of capital market as well as the impact of the households (savers) in the capital market in Rwanda. Additionally, this research is to fulfill the requirement of the Masters degree in Business Administration. 1.8 Definitions of terms Financial sector: The Reserve Bank of Australia (www.rba.gov.au/Glossary/text_only.asp), defines financial sector as the sector of the economy that comprises financial institutions and financial markets. Financial institution: A company whose primary function is to intermediate between lenders and borrowers in the economy. (www.rba.gov.au/Glossary/text_only.asp). Institutions: in this proposed study institutions could be defined as follows: Definition 1 (Businessdictionary.com) Establishment, foundation, or organization created to pursue a particular type of endeavor, such as banking by a financial institution. Definition 2 (Businessdictionary.com) Consistent and organized pattern of behavior or activities (established by law or custom) that is self-regulating in accordance with generally accepted norms. For example, political institutions are involved with (and regulate) competition for power; and economic institutions (such as markets) encourage and regulate production and distribution of goods and services. Least Developed Countries (LCDs): In its latest triennial review of the list of Least Developed Countries in 2003, the Economic and Social Council of the United Nations used the following three criteria for the identification of the LDCs, as proposed by the Committee for Development Policy (CDP): a low-income criterion, based on a three-year average estimate of the gross national income (GNI) per capita (under $750 for inclusion, above $900 for graduation); a human resource weakness criterion, involving a composite Human Assets Index (HAI) based on indicators of: (a) nutrition; (b) health; (c) education; and (d) adult literacy; and an economic vulnerability criterion, involving a composite Economic Vulnerability Index (EVI) based on indicators of: (a) the instability of agricultural production; (b) the instability of exports of goods and services; (c) the economic importance of non-traditional activities (share of manufacturing and modern services in GDP); (d) merchandise export concentration; and (e) the handicap of economic smallness (as measured through the population in logarithm); and the percentage of population displaced by natural disasters. REFERENCES LIST Demirguc-Kunt, A., Maksimovic, V. (1996). Stock Market Development and Corporate Finance Decisions. Finance Development, 33(2), 47-50. North, D. C., Weingast, B. R. (1996). Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England. In L. J. Alston, T. Eggertosson D. C. North (Eds.), Empirical Studies in Institutional Change: Cambridge University Press. Nyong, Michael O. (1997): Capital Market Development and Long-run Economic Growth: Theory, Evidence and Analysis First Bank Review, December 1997: 13-38. Samuel, Cherian (1996): Stock Market and Investment: The Governance Role of the Market The World Bank Review Volume 10 Number 2. Saunders, A., Cornett, M. M. (2004). Financial Markets and Institutions (2 ed.). New York: Mc Graw-Hill/ Irwin. Senbet, L. W., Otchere, I. (2006). Financial Sector Reforms in Africa: Perspectives on issues and policies. In B. Francois B. Pleskovic (Eds.), Annual World Bank Conference on Development Economics: Growth and Integration (Senegal Proceedings). Washington, D.C.: The World Bank. www.rba.gov.au/Glossary/text_only.asp Rwanda financial sector development program (2007). Retrieved January 12, 2011, from www.bnr.rw/ www.cmac.co.rw Businessdictionary.com http://www.un.org/special-rep/ohrlls/ldc/list.htm

Functions of Retail Management

FUNCTIONS OF RETAIL MANAGEMENT When attempting to start a business, having a keen understanding of the goals of management through the main four management functions is one key to seeing success, both with the operation and with employees. With this said, a vital part of planning of the management end will involve three important activities. The first stage, â€Å"planning involves developing a systematic process for attaining the goals of the organization†¦ Leaders make change happen through planning instead of reacting to change† (EntEd 2007). The first of which will be to lay out the goals that will be set for the hypothetical sporting goods store used as the example, the second will be to create a business plan since â€Å"the development of the business plan greatly helps to clarify the organization's plans and ensure that key leaders are all ‘on the same script. ‘ Far more important than the plan document is the planning process itself† (McNamara 2007). During the process of coming up with this business plan, hopefully as a manager we can begin to foresee any challenges we might face, especially if those challenges arise because of unpredictable circumstances that even the most careful planning could not predict or take measures to prevent. In short, having a process that all members present at the beginning of the organization can understand and work with in the form of a business plan is the key to success. During this planning process as we begin to decide what some of the most basic building blocks of this business are going to be (location, inventory, costs, marketing, etc. ) and through this act of working things out together in a permanent fashion, brainstorming about coming changes and challenges should naturally occur. The four functions of Management will clearly demonstrate how the functions operate in this business operation and how, in the light of the tangible situation being presented, management can avoid possible pitfalls and see how these functions operate simultaneously and are interdependent on one another. With a solid business plan firmly in place and a list of goals and anticipated changes recorded and recognized, the second important function of management, organization, is necessary. â€Å"Organizing brings together the nonhuman resources needed to achieve the project's objectives. To organize is to manage†¦ It begins with the need to define requirements† (Richman 2006). In order to serve this important function of management, it is necessary to use what was established in the planning stages to begin to carry out the first measures to live out the plan. As a manager, this will involve a great deal of research and personal organization as I look for the best strategies to carry out different smaller aspects of the business plan. This is also the stage where I begin to look to my subordinates for assistance and when I give them the chance to assist with the many activities necessary before the sporting goods store opens. This stage involves a great deal of gathering of supplies and building processes that will sustain the store and in order to make the best use of the time spent organizing, directing will become one of the most important functions of management. As one definition states, â€Å"Directing communicates the goals, purposes, procedures, and means to those who will do the work. Directing is the process of communicating the plan, whether orally or in writing† (Richmond 2006). This is particularly succinct definition in terms of the sporting goods store because so much will be required to adhere to the business plan. The organization alone must be managed with attention to detail and it will be one of my primary duties to help workers understand the value of each of their functions through careful and organized direction. Throughout the organization process and especially as things are moving along according to the plan and the business nears opening, it is vital that directing is a main focus. Since I plan on having two managers and four employees, I want everyone to be on the same page as I am. It will be important for them to realize how every task they complete connects to the goals or the business plan so there is a sense of value and something at stake. Directing will not end at this stage or even after the business is open, it will continue to be a necessary component that I must actively keep p with in order for this sporting goods store to succeed. Controlling goes hand in hand with directing as it will be important for me as a manager and owner to match the tasks delegated with the business plan and goals so that I can keep firm tabs on how we are progressing. This not only involves monitoring of progress but being vigilant so that if negative changes are occurring I can resolve the issue. A s Richman (2006) more succinctly puts it, when it comes to controlling, â€Å"in project management terms, it involves determining variances from the approved plan, then taking action to correct those variances. Through my fulfilling of these four important functions of management, I would be a permissive leader. For a small business like this sporting goods store that has a very small number of employees and only two other managers, it is necessary to allow everyone to have an equal hand in important decisions. While directing is a large part of my responsibility, I would still like to allow employees and managers a great deal of leeway concerning how they perform the tasks assigned and if those decisions on how to work are not productive, only then will I step in and be directive. This is a rather democratic way to manage this store, but hopefully it will foster the sense that the few people involved have a great deal at stake since they've personally and professional put distinct efforts into the business. By employing the for functions of Management effectively and in particular, emphasizing my role in directing and controlling, I can maintain a less structured management style while still seeing profits.

The Impact Of Caribbean On The Caribbean - 852 Words

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This report will investigate all impacts effecting the Caribbean and what could be done to alter those effects that are having a negative impact. 2.0 PROCEDURE 2.1 Research on the growth of the Caribbean due to cruising 2.2 Analysis of the impacts cruising has on the environment and economy 2.3 Research on concern about pollution and what is being done by cruise lines to prevent further damage 3.0 FINDINGS 3.1 Growth of the Caribbean due to the cruise industry. 3.1.1 Public investment has had a great impact on the history of Caribbean growth. The region has over time developed its tourism products, emphasising natural aspects like sun and sand, whilst also developing its potential for cruise tourism. Mentioned by Brida, J.G. and Zapata, S. 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Taking a Look at the Reconstruction Era - 1313 Words

The Reconstruction Era the period most memorable during the 1860 to the 1877. The period passed through out a lot of problem like violence the assassination of president Abraham Lincoln, country been divided over the issue of slavery and a lot of reconstruct had to be made after the fight of the civil war. At the time the civil war won the victory around 3 million slaves had their freedom. But their where still problem in rebuilding the nation. When president Abraham Lincoln died in April 14,1865. A new president was elected named Andrew Johnson under his supervision south state submit ‘’black codes’’ to control the attitude and behavior of all African Americans. During the reconstruction era the united stated faced many challenge in rebuilding the nation. The period of Reconstruction During the reconstruction era the united stated faced many challenge in rebuilding the nation. When African America and white citizens where fighting between each other homes and farms were destroyed. 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