Browsing by Author "Gumede, Lungelo"
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- ItemOpen AccessDeterminants of Foreign Direct Investment in Malawi(2018) Chimbalu, Mkondana; Gumede, LungeloThis study examines empirically the determinants of Foreign Direct Investment in Malawi, by employing annual data that covered the period 1970-2016. The study used a dynamic model, the Autoregressive Distributed Lag bounds-testing approach to co-integration and error correction model, to explore these determinants. The study found that a long run relationship between Foreign Direct Investment and the selected determinants: market size, infrastructure, human capital, broad money, real exchange rate, population growth, government consumption, and inflation. The study further found that the determinants that were significantly associated with attracting Foreign Direct Investment in Malawi included infrastructure, broad money and government consumption. Specifically, the study results found that government consumption is negatively and significantly associated with Foreign Direct Investment both in the short and long run; infrastructure is positively and significantly associated with Foreign Direct Investment in the long run; broad money is positively and significantly associated with Foreign Direct Investment in the long run; and no significant relationship was found between market size, human capital, real exchange rate, population growth, and inflation both in the short and long run. These results have important policy implications for Malawi. These include the need for Malawian authorities to focus on strategies that create incentives to increase the level of physical infrastructure in the country; implementing monetary policies, fiscal incentives and subsidies that promote financial development; as well as promoting FDI-friendly government policies that minimise the impact of distortionary fiscal policies such as distortionary taxation and deregulation.
- ItemOpen AccessDeterminants of Foreign Direct Investment in Malawi(2019) Chimbalu, Mkondana; Gumede, LungeloThis study examines empirically the determinants of Foreign Direct Investment in Malawi, by employing annual data that covered the period 1970-2016. The study used a dynamic model, the Autoregressive Distributed Lag bounds-testing approach to co-integration and error correction model, to explore these determinants. The study found that a long run relationship between Foreign Direct Investment and the selected determinants: market size, infrastructure, human capital, broad money, real exchange rate, population growth, government consumption, and inflation. The study further found that the determinants that were significantly associated with attracting Foreign Direct Investment in Malawi included infrastructure, broad money and government consumption. Specifically, the study results found that government consumption is negatively and significantly associated with Foreign Direct Investment both in the short and long run; infrastructure is positively and significantly associated with Foreign Direct Investment in the long run; broad money is positively and significantly associated with Foreign Direct Investment in the long run; and no significant relationship was found between market size, human capital, real exchange rate, population growth, and inflation both in the short and long run. These results have important policy implications for Malawi. These include the need for Malawian authorities to focus on strategies that create incentives to increase the level of physical infrastructure in the country; implementing monetary policies, fiscal incentives and subsidies that promote financial development; as well as promoting FDI-friendly government policies that minimise the impact of distortionary fiscal policies such as distortionary taxation and deregulation.
- ItemOpen AccessEffects of Capital Structure on Company Performance, A Perspective of Small Cap Companies In South Africa(2019) Chikeya, Richard; Gumede, LungeloThe Johannesburg’s Alternative Exchange (JSE’s Altx) is a public equity exchange for small and medium enterprises (SMEs) with high growth potential. It was established with the main objective to mentor the firms, provide them with the necessary support and management capacity building so as to grow them into large companies that will eventually list on the Johannesburg Stock Exchange (JSE) main board. This study sought to evaluate the effects of capital structure on company performance of small cap companies listed on the AltX of the JSE. The results from this may be used as proxy for general SME’s in South Africa. A quantitative research was used to determine the relationship between the independent variables (capital structure variables of trade finance, long-term debt and short-term debt) and the dependent variable (financial performance which was measured using: 1. return on assets (ROA); 2. return on equity (ROE); and 3. gross profit (GP) margin). The study used secondary data from financial reports of small cap SMEs listed on the JSE’s AltX. The data collected from these financial reports was analysed and discussed using descriptive statistics. Inferential analysis was undertaken using correlation tests and multiple regression analysis. The study finds the following: trade credit is the most prevalent capital source used by small cap firms but has no statistically significant effect on the company’s performance. Short-term debt is second most used financing mechanism and has a significant effect on ROE. On the other hand, long-term debt was the least used source of capital by the firms but in terms of financial performance, it had a significant effect on the ROA. Results also showed that firm size has a positive effect on all the performance variables of ROA, ROE and GP margin. It was also confirmed that trade credit, short-term debt and long-term debt are expensive financing mechanisms as the results showed inverse relationships with financial performance. Hence, an increase in either trade credit, short-term or long-term debts by the small cap SMEs leads to a decrease in their profitability.
- ItemOpen AccessThe management of foreign exchange risk by listed companies: an empirical study(2017) Mogaladi, George Tshegofatso; Gumede, LungeloThis study explored the foreign exchange risk management practices by JSE-listed companies, specifically non-financial companies. The investigation was based on the experienced practices in 2015. A web-based survey was used to source data from the population and yielded a 37% response rate. Transactional risk is the most prioritised form of foreign exchange exposure. Surprisingly, economic exposure is also highly regarded by JSE non-financial firms. Translational risk is the least prioritised form of foreign exchange risk. There is a significant statistical relationship between the frequency at which firms manage economic risk, and the industry to which they belong. Consistent with the prescriptive theory, the study found that a significant majority of firms used internal or operational hedging techniques in combination with financial derivatives. Netting is the predominately used internal hedging technique by the survey respondents. There is a significant relationship between a firm's usage of netting as an internal hedging technique and the percentage of foreign currency denominated expenses. Forward contracts are the preferred financial derivative used to hedge foreign exchange exposure. The study reveals that the manner in which firms use forward contracts is significantly influenced by their percentage of foreign currency denominated expenses. It is noted that a strategic decision with respect to management of foreign exchange risk in JSE non-financial firms falls within the purview of a firm's executive management.
- ItemOpen AccessPerformance determinants for emerging agricultural cooperatives in South Africa(2019) Komape, Kwena; Gumede, LungeloSouth Africa has seen an increase in the number of cooperatives (co-ops) registered since 2005, following the new policy aimed at the promotion of cooperative enterprises. Newly registered co-ops received over R5.28 billion in direct financial support, comprising a combination of grants and loans from government. Over and above the financial support, co-ops also receive non-financial support in the form of capacity development. Some of the co-ops received support in the form of inputs and farming equipment. In spite of the support that government provides to emerging co-ops, the majority remain vulnerable and weak. This study seeks to establish the factors that determine the performance of emerging agricultural cooperatives in South Africa. In order to attain this, data were obtained from the Cooperative Data Analysis System (CODAS) of the Department of Agriculture Forestry and Fisheries. Cooperatives considered for the study have been in operation for at least five years by 2017. Results of the Spearman’s correlation used to analyse the results indicate that membership, wages, training and number of years in operation have a significant impact on the dependent variable, turnover. The main limitation of the study is the use of turnover alone as a measure of performance, due to limited data. Other variables such as growth in membership could be used as additional measures of performance; however, the numbers per cooperative in the study are constant throughout the observations.
- ItemOpen AccessThe determinants of the Choice between Green and Conventional Buildings in the Gauteng Office market(2019) Phillips, Leandre; Gumede, Lungelo; Azasu, SamuelThe purpose of this study is to identify the key factors which drive investment in or occupancy of green buildings by landlords and tenants and to identify the benefits they derive over traditional buildings. In order to assess the significance of certain factors such as rental, hypothesis tests were conducted with logistic regressions and verified by interviews. Three hypothesis were tested two of which looked at the rentals and operational cost for each type of building , these revealed that the medians as well as distributions of each showed no significant differences between the two type buildings. The last hypothesis test various other factors for any significance between the buildings and no significant findings were found. The importance of sustainability is increasingly being emphasized across industries and more so the property industry given their contribution to greenhouse gas emissions. Green buildings were developed to address these consequences. As such it is important to know the financial returns realized in property portfolio to support the case of green buildings in emerging markets.
- ItemOpen AccessUnlisted investments by pension funds in Namibia: an evaluation of social impact(2022) Endjila, Ester Tegelelomuwa; Gumede, LungeloEmpirical evidence indicates that private equity in Africa is important for proliferating social and economic development in the form of job creation, poverty reduction, economic empowerment and reducing dependency on foreign aid. Namibia presents a unique case in that ‘unlisted investments', as they are known in the country, are both required and regulated for pension funds, creating an opportunity to evaluate the impact thereof. This study uses objective company data to examine the effect of pension fund unlisted investment capital on social outcomes in Namibia, by reviewing this data qualitatively in the first instance and then quantitatively. The qualitative findings indicate that 92% of the Special Purpose Vehicles (SPVs) examined have impact objectives in their investment plans and therefore aim to have some kind of impact as a starting point. However, it is found that frameworks for measuring the desired impacts are not well demonstrated. The quantitative regression analysis does not provide enough evidence to prove a significant and positive relationship between incremental unlisted investment capital contributed and variation in total employment (used to represent social impact). The study identifies the lack of impact data in the industry as a concern and recommends the incorporation of an impact measurement framework as part of the regulatory framework for unlisted investments, in order to appropriately meet the objectives for which the unlisted investment requirement was created