I recently read about Mumias a Kenyan sugar company whose management was involved in numerous unethical business practices that lead to the company’s eventual collapse. These practices are, payment of ghost sugarcane farmers and statement of more firm input meant for farmers which they did not issue to the farmers. They also got satellite farms fraudulently at the company’s expense. The staff collaborated with sugar suppliers to defraud the company. They brought about sugar price inflation and offered unacceptable sugar discounts to suppliers. The company also engaged in unyielding mega projects which led to major financial losses. This caused delayed payment to the sugarcane farmers which killed their morale and most of them uprooted the crop which brought about massive losses to farmers and other investors. The payment made to ghost farmers caused some real farmers to receive debit payments. This company staff also engaged in unprocedural recruitment of staff, uncontrolled expenditure, use of obsolete technology, over-paying the company staff, and suppliers.
My response to this is a task force should be formed to investigate these misconducts and those found with any ethical issue or corruption apprehended. The government should also enact the sugar act in order to promote and develop the sugar industry, foresee the sugar industries activities and of those working in it also to ensure that all parties interested in the industry have fair access to its benefits. Importation of sugar should also be regulated by the government in order to prevent sugar flooding in the local market. Modern and updated technology should be put in place to make the production process efficient. Proper support should also be given to crop farmer in order to motivate them by offering them good prices for their cane, offering farm inputs and ensuring they get paid on time.
The four major categories of assets on a commercial bank’s balance sheet and statement.
Deposits and loans to customers. These are the main source of revenue for bank and also their main operations. Loans are classified as assets because banks get a principle payment and interests from their customers. Banks lend money at a much higher rates on loans compared to the interests they give to the customers who deposit with them.
Property. This may be in form of collateral whereby banks holds a loan borrower property in case the borrower defaults payments. The property hence becomes the lenders’ property for compensation.
Trading assets. These are accounts separately managed by banks that are used for buying government securities and other securities that banks use to trade. Banks can later sell them to the public or to other banks at a profit. These are current assets hence need to be sold quickly. Most banks prefer to invest in this rather than their own portfolio.
Deposits to the central bank. Banks deposit their money to the central bank which in return offers them an interest rate using its prime rates. Banks can also withdraw their money anytime.
Core deposits are stable deposits that last a short period of time hence provide funds to the bank for a long term basis.Core deposits include stable source of lending funds for example, savings account and money market accounts. Purchased funds are sensitive to rates, have higher interest rates, more expensive and volatile compared to core deposits.They are a feature of bond indentures and preferred stock that require the issuer to buy a given amount of securities if they fall below a certain level. Purchased funds are withdrawn immediately or replaced on competitive instruments change as rates.